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These are the user uploaded subtitles that are being translated: 1 00:00:00,560 --> 00:00:03,640 You're watching CNBC On Demand. 2 00:00:07,540 --> 00:00:13,619 In this episode of American Greed, Carlos Wanzeller and James Merrill 3 00:00:13,620 --> 00:00:18,019 Internet hotshots through videos like these as they peddle a dream come true 4 00:00:18,020 --> 00:00:22,180 work from home opportunity to people who are desperate to succeed. 5 00:00:22,660 --> 00:00:25,500 Very poor people, people that had two or three jobs. 6 00:00:25,880 --> 00:00:28,420 And as these kinds of videos go viral. 7 00:00:29,340 --> 00:00:30,400 So does the scheme. 8 00:00:31,360 --> 00:00:33,060 And it was like a religion. 9 00:00:33,760 --> 00:00:37,100 People wanted to invest every single last penny they had. 10 00:00:39,880 --> 00:00:45,139 Spreading their message to almost every country in the world, they conned 1 .8 11 00:00:45,140 --> 00:00:49,760 million believers to shell out $3 billion on their bogus business. 12 00:00:50,220 --> 00:00:51,800 We put another $4 ,500. 13 00:00:52,540 --> 00:00:57,100 And then a couple months later, we said, oh, gee, the money's coming back. 14 00:00:57,530 --> 00:00:59,550 So we put another $15 ,000. 15 00:01:00,310 --> 00:01:04,910 And back at fraud headquarters, their victims' money is piling up. 16 00:01:05,209 --> 00:01:09,730 We have stories of people showing up literally with duffel bags of cash. 17 00:01:11,170 --> 00:01:14,710 And where do investigators find the stolen millions? 18 00:01:15,110 --> 00:01:16,160 Where else? 19 00:01:16,550 --> 00:01:17,750 In a mattress. 20 00:01:35,690 --> 00:01:42,569 In January 2017, in downtown Boston, at the Office for Homeland Security, a 28 21 00:01:42,570 --> 00:01:46,530 -year -old man from Brazil named Kleber Rocha is under arrest. 22 00:01:50,990 --> 00:01:57,289 Earlier, Rocha handed $2 million in cash to a man he doesn't know is an 23 00:01:57,290 --> 00:01:58,770 undercover federal agent. 24 00:01:59,850 --> 00:02:01,770 He just said that he's not a bad guy. 25 00:02:03,850 --> 00:02:09,809 His interrogators believe the money was stolen in a $3 billion fraud, and the 26 00:02:09,810 --> 00:02:12,650 agents want Rocha to tell them who he is working for. 27 00:02:13,230 --> 00:02:16,190 Carlos. Carlos Wanzeller. Carlos Wanzeller? 28 00:02:16,410 --> 00:02:17,460 Yeah. 29 00:02:18,610 --> 00:02:20,530 That's the name they are looking for. 30 00:02:21,070 --> 00:02:26,469 Carlos Wanzeller, a man who uses videos like these to attract victims in what is 31 00:02:26,470 --> 00:02:30,990 reportedly the largest pyramid scheme ever prosecuted in the U .S. 32 00:02:32,750 --> 00:02:38,389 And at this moment, as Rocha sits facing potential criminal charges, Wanzeller 33 00:02:38,390 --> 00:02:43,730 is more than 4 ,000 miles away in Vitoria on the southeast coast of 34 00:02:46,270 --> 00:02:48,710 It's a sort of homecoming for Wanzeller. 35 00:02:49,070 --> 00:02:55,149 He grew up in Vitoria, but left in the late 80s looking for a better life in 36 00:02:55,150 --> 00:02:56,200 America. 37 00:02:56,590 --> 00:03:00,320 His father had died. He felt like he had to support his mother and his family. 38 00:03:00,490 --> 00:03:06,069 He literally goes from one dishwashing job, like, you know, literally leaves 39 00:03:06,070 --> 00:03:07,120 and goes to another. 40 00:03:08,430 --> 00:03:13,529 When his family arrives in Boston a few years later, he finds a company called 41 00:03:13,530 --> 00:03:17,430 Cleaner Images in the Yellow Pages that will hire all of them. 42 00:03:17,910 --> 00:03:20,850 It is owned by a man named James Merrill. 43 00:03:21,580 --> 00:03:26,859 By all accounts, sort of an average family man living in central 44 00:03:26,860 --> 00:03:28,500 sort of a serial entrepreneur. 45 00:03:29,840 --> 00:03:32,040 Merrill and Wanzeller hit it off. 46 00:03:32,440 --> 00:03:36,360 Eventually, Merrill asked Wanzeller to become his partner in the business. 47 00:03:36,880 --> 00:03:42,660 I think Mr. Merrill would say that he trusted Carlos Wanzeller to the end. 48 00:03:44,640 --> 00:03:48,220 And that trust takes Merrill down a dangerous path. 49 00:03:49,040 --> 00:03:53,779 when he and Wanzeller launch a company that sells a software package that 50 00:03:53,780 --> 00:03:57,040 people to make international calls over the Internet. 51 00:03:58,080 --> 00:04:00,420 It is called TelexFree. 52 00:04:01,820 --> 00:04:06,080 It was a voice -over Internet phone service, sort of like Skype. 53 00:04:06,620 --> 00:04:11,699 So you would pay a flat fee each month, and you would get unlimited calls to 54 00:04:11,700 --> 00:04:13,990 Central and South America over the Internet. 55 00:04:15,240 --> 00:04:19,719 From its marketing, it seems tailor -made for immigrants who want to call 56 00:04:19,720 --> 00:04:20,770 cheaply. 57 00:04:21,360 --> 00:04:27,899 But Telex Free actually offers much more, as Juan Zeller explains in this 58 00:04:27,900 --> 00:04:28,950 video. 59 00:04:30,420 --> 00:04:33,480 Telex Free is about changing people's lives. 60 00:04:35,660 --> 00:04:42,619 That's right. As these ads show, Telex Free promises to transform lives, to 61 00:04:42,620 --> 00:04:43,940 dreams come true. 62 00:04:45,360 --> 00:04:52,359 If I sell my company to Facebook or somebody else, I know they're going to 63 00:04:52,360 --> 00:04:53,940 my dream. 64 00:04:55,100 --> 00:04:56,440 Your dream. 65 00:04:58,040 --> 00:05:03,820 It's a message that is repeated in dozens of online videos selling Telex 66 00:05:05,680 --> 00:05:08,340 Every so often, something big happens. 67 00:05:08,940 --> 00:05:12,200 Telex Free is not about phone calls. 68 00:05:12,201 --> 00:05:15,839 Something is coming that will put a whole new meaning to money at your 69 00:05:15,840 --> 00:05:16,890 fingertips. 70 00:05:17,500 --> 00:05:22,100 It is about making millions of dollars working from home. 71 00:05:23,140 --> 00:05:25,240 Making money has never been easier. 72 00:05:25,820 --> 00:05:28,640 And how can Telex Free make such an offer? 73 00:05:29,920 --> 00:05:36,240 Because Telex Free is structured as a multi -level marketing company, an MLM. 74 00:05:36,620 --> 00:05:40,060 That means its sales force is made up of people who get bonuses. 75 00:05:40,700 --> 00:05:42,700 for recruiting other salespeople. 76 00:05:44,360 --> 00:05:45,900 But here's the catch. 77 00:05:46,780 --> 00:05:49,940 Telex Free is not a legitimate MLM. 78 00:05:50,720 --> 00:05:52,540 It is a pyramid scheme. 79 00:05:53,780 --> 00:05:58,459 There are legitimate multi -level marketing companies, like Amway, for 80 00:05:58,460 --> 00:06:03,199 which has been around for a long time. The difference is that a legitimate 81 00:06:03,200 --> 00:06:06,980 company makes its revenue from the actual sale of a product. 82 00:06:07,740 --> 00:06:09,760 A pyramid scheme does not. 83 00:06:11,380 --> 00:06:16,080 Telex Free does have a product, but no one is required to sell it. 84 00:06:17,100 --> 00:06:22,359 Instead, members can make money by recruiting others to join or by simply 85 00:06:22,360 --> 00:06:27,380 cutting and pasting ads for Telex Free in online classifieds. 86 00:06:27,880 --> 00:06:31,779 Telex Free looked like they were selling a product, but if you looked at the 87 00:06:31,780 --> 00:06:37,439 program itself, it was much easier to make money from putting those ads in and 88 00:06:37,440 --> 00:06:38,490 from recruitment. 89 00:06:39,340 --> 00:06:45,959 And so the product just sits there rarely sold, rarely used, while people 90 00:06:45,960 --> 00:06:48,660 Telex Free to make money posting ads. 91 00:06:49,340 --> 00:06:51,100 So it was just busy work. 92 00:06:51,420 --> 00:06:55,679 And no one ever responded to the ads, and no one ever bought these phone 93 00:06:55,680 --> 00:06:57,080 packages through the ads. 94 00:06:58,160 --> 00:07:01,080 But there is big money in this busy work. 95 00:07:02,460 --> 00:07:05,200 For $1 ,425... 96 00:07:05,690 --> 00:07:10,329 people can join Telex Free and have the chance to be paid for placing five ads 97 00:07:10,330 --> 00:07:12,050 every day of the week. 98 00:07:12,690 --> 00:07:15,100 At the end of that week, Telex Free gave you $100. 99 00:07:15,530 --> 00:07:17,190 So at the end of a month, $400. 100 00:07:17,410 --> 00:07:19,230 At the end of a year, it's $5 ,200. 101 00:07:20,610 --> 00:07:27,529 That's a return of more than 200%. And that enticing offer is at first being 102 00:07:27,530 --> 00:07:31,410 sold to people who left their home countries to find a better life in 103 00:07:32,650 --> 00:07:35,370 They are people for whom life is not easy. 104 00:07:36,430 --> 00:07:41,869 It's very hard to be, at times, an immigrant, working two or three jobs in 105 00:07:41,870 --> 00:07:46,129 for you to save that little money, in order for you to sort of like pay food 106 00:07:46,130 --> 00:07:47,750 families that are living abroad. 107 00:07:49,590 --> 00:07:55,209 Gladys Vega runs a community organization, the Chelsea Collaborative, 108 00:07:55,210 --> 00:07:59,070 Chelsea, Massachusetts, a city largely comprised of immigrants. 109 00:07:59,870 --> 00:08:05,349 We are very easy targets sometimes because we trust people sometimes 110 00:08:05,350 --> 00:08:08,809 think that when we come to this country, we come to the country of opportunity. 111 00:08:08,810 --> 00:08:11,820 And people really think that opportunities come that easy. 112 00:08:13,150 --> 00:08:18,089 And as prospective customers explore the Telex Free website, they see these 113 00:08:18,090 --> 00:08:23,069 photographs of the founders, James Merrill and Carlos Wanzeller, addressing 114 00:08:23,070 --> 00:08:26,010 audience. The images help sell the scheme. 115 00:08:27,570 --> 00:08:32,309 Merrill is described as an American businessman, a man of great vision. 116 00:08:33,429 --> 00:08:38,689 And Wanzeller, an immigrant himself, is presented in online videos like this one 117 00:08:38,690 --> 00:08:40,890 as a successful, confident businessman. 118 00:08:42,169 --> 00:08:47,729 He basically said, look, I was an immigrant. I was a dishwasher. I did 119 00:08:47,730 --> 00:08:50,450 was in your shoes. And look how big I am. 120 00:08:50,760 --> 00:08:56,359 And through videos posted online, he can reach thousands of targets in their own 121 00:08:56,360 --> 00:08:57,410 language. 122 00:08:58,860 --> 00:09:03,380 He was able to explain the whole scheme in Portuguese. 123 00:09:04,200 --> 00:09:10,980 If it was an American doing it, not as many Brazilians would get involved. 124 00:09:15,460 --> 00:09:20,499 Tisa Hartman's mother, Maria Murdoch, left Brazil 20 years ago looking for a 125 00:09:20,500 --> 00:09:21,740 chance of a better life. 126 00:09:22,840 --> 00:09:27,639 And, as a video like this shows, Telex Free is sold as the opportunity 127 00:09:27,640 --> 00:09:30,540 Brazilians like Murdoch have been waiting for. 128 00:09:32,220 --> 00:09:35,440 A godsend. An answer to prayers. 129 00:09:36,060 --> 00:09:38,860 It was like a religion. That's all they talked about. 130 00:09:39,140 --> 00:09:43,960 That's all they wanted to know. And it kind of became like a cult, you know. 131 00:09:44,520 --> 00:09:47,480 People wanted to invest every single penny they had. 132 00:09:48,740 --> 00:09:51,060 And that's what Maria Murdoch does. 133 00:09:51,540 --> 00:09:55,400 She puts in $30 ,000, all of her savings. 134 00:09:57,700 --> 00:10:02,880 And soon, Telex Free is spreading out of the Brazilian community like a virus, 135 00:10:02,980 --> 00:10:05,740 from one immigrant group to another. 136 00:10:07,980 --> 00:10:12,339 That was the talk of the town. That was sort of like the quiet news of making 137 00:10:12,340 --> 00:10:15,780 money on the side and getting your family members to join. 138 00:10:17,400 --> 00:10:22,519 Mario Caralan, originally from Guatemala, is a construction worker for 139 00:10:22,520 --> 00:10:23,570 of Cambridge. 140 00:10:23,700 --> 00:10:29,459 I find out with my brother's friends, and they explain to me how everything 141 00:10:29,460 --> 00:10:30,510 works. 142 00:10:31,100 --> 00:10:33,700 He is a perfect target for Telex Free. 143 00:10:34,960 --> 00:10:39,579 Eager to secure a better life for his wife and daughter, he takes out a loan 144 00:10:39,580 --> 00:10:40,630 $10 ,000. 145 00:10:41,920 --> 00:10:47,039 I received the money for the bank, and I went and gave it to my brother's friend 146 00:10:47,040 --> 00:10:49,300 in the hand, the whole cash. 147 00:10:52,420 --> 00:10:59,399 In a town west of Boston, Rosemary Tirico is a dental hygienist, originally 148 00:10:59,400 --> 00:11:02,960 Bolivia, who says she is careful with her money. 149 00:11:03,760 --> 00:11:07,900 I was always thinking about saving for the future of my son. 150 00:11:08,680 --> 00:11:14,719 I can go out and enjoy a good meal or a dinner with my friends, or I can save 151 00:11:14,720 --> 00:11:15,770 them money. 152 00:11:17,100 --> 00:11:20,100 And then she's invited to a dinner party. 153 00:11:20,820 --> 00:11:25,100 People were talking about Telex Free, and I'm always being curious. 154 00:11:25,400 --> 00:11:28,960 And I asked them, what are you guys talking about? What is Telex Free? 155 00:11:30,600 --> 00:11:34,100 She is told that it is an amazing opportunity. 156 00:11:35,380 --> 00:11:42,159 They said three months later they got money back without doing anything other 157 00:11:42,160 --> 00:11:46,480 than just posting for 20 minutes in the computer, and that was that. 158 00:11:48,100 --> 00:11:52,380 Tirico is convinced and invests $4 ,500. 159 00:11:53,240 --> 00:11:58,880 And then every day she dutifully posts her ads online, just as hundreds... 160 00:11:58,881 --> 00:12:03,159 And then thousands of people are doing in houses and apartments in communities 161 00:12:03,160 --> 00:12:04,560 throughout Massachusetts. 162 00:12:05,820 --> 00:12:08,480 They thought that they were working for the company. 163 00:12:08,760 --> 00:12:10,620 They were Telex Free employees. 164 00:12:11,180 --> 00:12:15,579 That's how they thought themselves, that they had a job where they changed a few 165 00:12:15,580 --> 00:12:19,080 apps in this computer and they will receive money in the bank. 166 00:12:20,860 --> 00:12:27,079 And Tirico says it's not hard to find people claiming to get rich from Telex 167 00:12:27,080 --> 00:12:28,130 Free. 168 00:12:28,270 --> 00:12:32,789 Well, someone said, my God, they're loaded now because they have the money 169 00:12:32,790 --> 00:12:33,609 Telex Free. 170 00:12:33,610 --> 00:12:36,390 They bought a house in New Hampshire. 171 00:12:36,850 --> 00:12:41,909 I said, oh, my God. And everyone were thinking, if they can do it, why can we 172 00:12:41,910 --> 00:12:42,960 not? 173 00:12:43,670 --> 00:12:48,889 But she is falling for an old trick because the money people are making is 174 00:12:48,890 --> 00:12:50,550 coming from new people joining. 175 00:12:51,970 --> 00:12:55,950 And that makes Telex Free not just a pyramid scheme. 176 00:12:57,320 --> 00:13:01,979 There's no actual product being sold. There's no real revenue coming in. It's 177 00:13:01,980 --> 00:13:05,530 just money going around in circles, which is basically a Ponzi scheme. 178 00:13:06,460 --> 00:13:13,219 As TelexFree gains traction, James Merrill and Carlos Wanzeller move into 179 00:13:13,220 --> 00:13:15,380 view through videos posted online. 180 00:13:15,900 --> 00:13:20,859 And to federal prosecutors, the videos reveal how different these two partners 181 00:13:20,860 --> 00:13:25,860 are. Wanzeller, a real extrovert, handsome guy, kind of charming. 182 00:13:26,510 --> 00:13:30,090 comfortable in front of crowds, very effusive and emotional. 183 00:13:31,010 --> 00:13:37,589 James Merrill, much quieter, appeared to dislike crowds, wanted to be more 184 00:13:37,590 --> 00:13:41,200 focused on the business side of his ventures and less on the social side. 185 00:13:42,430 --> 00:13:47,190 But their biggest difference may be in how they perceive their business. 186 00:13:47,930 --> 00:13:51,450 It appears to us that as to Carlos Wanzeller, yes. 187 00:13:51,890 --> 00:13:54,780 I think he knew from the beginning that it was one big scam. 188 00:13:55,980 --> 00:13:57,720 But for James Merrill? 189 00:13:58,860 --> 00:14:04,279 There is this belief, this delusional optimism that things would be okay, that 190 00:14:04,280 --> 00:14:08,099 they'd just grow more and more. And the more they grew, the more money would 191 00:14:08,100 --> 00:14:09,720 come in to pay their obligations. 192 00:14:12,000 --> 00:14:15,400 But neither could know what a monster they've created. 193 00:14:17,540 --> 00:14:21,940 Next on American Greed, the scam explodes. 194 00:14:23,740 --> 00:14:28,379 These storefronts would pop up in towns with large immigrant communities where 195 00:14:28,380 --> 00:14:31,320 people would come in with bags of cash. 196 00:14:44,820 --> 00:14:49,400 In early 2013, just a few months after she joins Telex Free. 197 00:14:50,080 --> 00:14:54,860 Rosemary Tirico has every reason to believe she is making big money. 198 00:14:56,060 --> 00:15:01,580 Every day, she signs into the TelexFree website and checks her balance. And, 199 00:15:01,700 --> 00:15:06,500 just as promised, her bottom line, her credits, continue to grow. 200 00:15:07,500 --> 00:15:11,120 That is how TelexFree pays its members, in credits. 201 00:15:11,460 --> 00:15:14,000 They are like reward points programs. 202 00:15:14,500 --> 00:15:18,260 With TelexFree, 100 credits equals $100. 203 00:15:19,280 --> 00:15:23,759 You could cash out these credits for dollars. You'd ask Telex Free, and they 204 00:15:23,760 --> 00:15:24,840 would send you a check. 205 00:15:25,140 --> 00:15:30,699 But Telex Free strongly encouraged people to leave the money in the system 206 00:15:30,700 --> 00:15:31,750 the form of credits. 207 00:15:32,840 --> 00:15:34,660 And that's what Tirico does. 208 00:15:35,180 --> 00:15:40,160 She not only leaves her money in Telex Free, she adds more and more. 209 00:15:40,980 --> 00:15:44,540 We put another $4 ,500, and... 210 00:15:45,610 --> 00:15:49,100 Then a couple months later, we said, oh, gee, the money's coming back. 211 00:15:49,330 --> 00:15:51,450 So we put another $15 ,000. 212 00:15:53,070 --> 00:15:58,070 Eventually, she turns over $60 ,000 to Telex Free, all of her savings. 213 00:15:58,310 --> 00:16:04,130 And each time she makes a deposit, she takes cash to a couple in a nearby town. 214 00:16:04,910 --> 00:16:10,509 The amount of money they were getting in cash every day, it was crazy 215 00:16:10,510 --> 00:16:11,560 ridiculous. 216 00:16:13,040 --> 00:16:15,860 They are TelexFree recruiters. 217 00:16:16,480 --> 00:16:21,659 And recruiting is where the real money is in TelexFree. Because recruiters get 218 00:16:21,660 --> 00:16:26,139 paid a bonus for every person they recruit and a bonus for every person 219 00:16:26,140 --> 00:16:30,300 person recruits. And that continues down six levels. 220 00:16:31,360 --> 00:16:36,799 It's a way that you can exponentially increase the money that is coming in for 221 00:16:36,800 --> 00:16:40,519 virtually no effort on your part other than your initial recruiting of the 222 00:16:40,520 --> 00:16:42,220 people directly below you. 223 00:16:44,440 --> 00:16:47,340 And recruiters all have one requirement. 224 00:16:47,860 --> 00:16:51,280 You cannot write a check. You cannot use a credit card. 225 00:16:51,820 --> 00:16:53,020 It had to be cash. 226 00:16:55,220 --> 00:16:57,180 And why cash only? 227 00:16:57,780 --> 00:17:01,940 Because recruiters have figured out how to game telex free. 228 00:17:03,120 --> 00:17:07,338 When a new member comes to a recruiter, they often pay thousands of dollars to 229 00:17:07,339 --> 00:17:08,579 open multiple accounts. 230 00:17:09,920 --> 00:17:14,399 Once the accounts are open, the membership fee for those accounts needs 231 00:17:14,400 --> 00:17:15,819 paid to TelexFree. 232 00:17:16,420 --> 00:17:20,079 But the recruiters do not pay TelexFree with the new members' cash. 233 00:17:20,700 --> 00:17:26,040 Instead, they pay using credit that they accumulate by recruiting new members. 234 00:17:26,800 --> 00:17:28,600 And they pocket the cash. 235 00:17:30,560 --> 00:17:35,099 Ultimately, a lot of the money didn't actually go to TelexFree. It was going 236 00:17:35,100 --> 00:17:36,150 the high promoters. 237 00:17:36,151 --> 00:17:40,529 There were promoters at the very top of the pyramid who were making a lot of 238 00:17:40,530 --> 00:17:41,670 money out of the scheme. 239 00:17:43,170 --> 00:17:48,729 And with so much money to be made signing up people for Telex Free, 240 00:17:48,730 --> 00:17:54,350 begin to open their own offices in storefronts, welcoming people off the 241 00:17:54,790 --> 00:17:59,429 It was truly a secondary market in which these storefronts would pop up in towns 242 00:17:59,430 --> 00:18:04,370 with large immigrant communities where people would come in with bags of cash. 243 00:18:07,240 --> 00:18:11,820 and just pay these pre -existing members of TelexFree to sign them up. 244 00:18:12,920 --> 00:18:17,920 But to make these transactions work, recruiters need lots of credits. 245 00:18:18,340 --> 00:18:21,260 And suddenly, credits are in high demand. 246 00:18:22,100 --> 00:18:25,020 They become a form of underground currency. 247 00:18:26,000 --> 00:18:30,979 People were paying lots of cash for these credits because those credits were 248 00:18:30,980 --> 00:18:32,520 key to future compensation. 249 00:18:34,420 --> 00:18:39,299 Rosemary Tirico is shocked when a recruiter shows up at her door and wants 250 00:18:39,300 --> 00:18:40,700 buy her credits. 251 00:18:41,020 --> 00:18:45,460 He brought to my house $60 ,000 in cash. 252 00:18:46,260 --> 00:18:51,179 I said, I don't have that amount, you know. I said, I wish I would have that 253 00:18:51,180 --> 00:18:52,230 amount. 254 00:18:52,640 --> 00:18:56,739 And while there are thousands of people capitalizing on the Telex free credit 255 00:18:56,740 --> 00:19:02,360 boom, there is one person with a particular advantage, Carlos Wanzeller. 256 00:19:03,620 --> 00:19:09,259 According to federal prosecutors, he is running a kind of insider's club where 257 00:19:09,260 --> 00:19:11,960 he manually adds credits to friends' accounts. 258 00:19:12,200 --> 00:19:16,420 They collect cash from new members and deliver it to him. 259 00:19:17,640 --> 00:19:21,380 It was almost a way to embezzle money out of the company. 260 00:19:21,381 --> 00:19:25,459 And we have stories of people showing up at Telex Free literally with duffel 261 00:19:25,460 --> 00:19:27,100 bags of cash. 262 00:19:27,360 --> 00:19:31,640 And it appears that Juan Zeller was able to extract from Telex Free. 263 00:19:32,280 --> 00:19:34,540 millions upon millions of dollars. 264 00:19:37,560 --> 00:19:43,579 Up next, like rock stars on a world tour, Merrill and Wanzeller showcase 265 00:19:43,580 --> 00:19:45,660 popularity around the globe. 266 00:20:01,640 --> 00:20:07,559 In the old days, before the Internet, predatory frauds like Telex Free relied 267 00:20:07,560 --> 00:20:11,380 personal relationships to spread the word of the scheme. 268 00:20:12,800 --> 00:20:15,800 But that was then, and this is now. 269 00:20:16,720 --> 00:20:21,679 Right from the start, James Merrill and Carlos Wanzeller turned to social media 270 00:20:21,680 --> 00:20:24,100 to promote their amazing opportunity. 271 00:20:25,040 --> 00:20:28,460 This is truly a 21st century fraud. 272 00:20:29,040 --> 00:20:34,329 When we first started, Looking at this scheme, we went online and looked, typed 273 00:20:34,330 --> 00:20:37,640 Telex Free into YouTube, and there were just thousands of videos. 274 00:20:37,870 --> 00:20:44,009 So YouTube, Facebook, Twitter had the ability to just exponentially increase 275 00:20:44,010 --> 00:20:46,490 awareness of this scheme overnight almost. 276 00:20:47,950 --> 00:20:53,649 Some of the videos are made by Telex Free, designed to explain how the 277 00:20:53,650 --> 00:20:54,700 works. 278 00:21:00,410 --> 00:21:03,870 Others keep members updated on changes in the company. 279 00:21:05,310 --> 00:21:10,529 But it is not long before people watching the videos realize they can 280 00:21:10,530 --> 00:21:11,580 the company, too. 281 00:21:11,930 --> 00:21:17,430 All they have to do is set up their own telex -free website, like this one. 282 00:21:17,650 --> 00:21:22,109 They would walk through what the compensation plan was, walk through how 283 00:21:22,110 --> 00:21:26,950 was to post the ads, and then try to get other people to sign up for them. 284 00:21:28,270 --> 00:21:32,149 Their sites are the online version of the storefronts in immigrant 285 00:21:32,150 --> 00:21:37,109 neighborhoods, set up by people who see a chance to make easy money with 286 00:21:37,110 --> 00:21:38,160 TelexFree. 287 00:21:38,830 --> 00:21:43,970 And through these sites, the TelexFree message takes on a life of its own. 288 00:21:44,870 --> 00:21:49,489 YouTube will make you famous overnight, but now we can see that YouTube can also 289 00:21:49,490 --> 00:21:51,490 make fraudsters rich overnight as well. 290 00:21:53,840 --> 00:21:59,199 Just months after its launch, Telex Free promoters show potential members in 291 00:21:59,200 --> 00:22:02,500 Internet videos that it has a staggering following. 292 00:22:03,340 --> 00:22:08,419 Designed to attract new members, the videos document popular Telex Free 293 00:22:08,420 --> 00:22:10,840 called extravaganzas. 294 00:22:12,080 --> 00:22:18,819 This video shows an event held in Brazil in 2012, but they are all strikingly 295 00:22:18,820 --> 00:22:19,870 similar. 296 00:22:20,750 --> 00:22:24,510 interviews with big winners offer evidence of money being made. 297 00:22:24,810 --> 00:22:30,550 And Merrill and Wanzeller are portrayed as hugely admired celebrity businessmen. 298 00:22:30,990 --> 00:22:36,629 Can you people do me a favor? You did the wave earlier today. Can we do one 299 00:22:36,630 --> 00:22:38,920 of those waves? Can you people get up and die? 300 00:22:39,810 --> 00:22:46,709 And when you watch the video, it really strikes you how pulled in to Telex 301 00:22:46,710 --> 00:22:48,090 3 all of these people are. 302 00:22:48,560 --> 00:22:54,339 They view Marilyn Wanzler as their champion, who are going to help them 303 00:22:54,340 --> 00:22:57,170 their lives, and everyone's going to make a lot of money. 304 00:22:57,740 --> 00:23:03,799 In almost no time, the videos posted online fuel Telex Free's expansion 305 00:23:03,800 --> 00:23:04,960 the entire globe. 306 00:23:05,880 --> 00:23:07,020 To Russia. 307 00:23:07,480 --> 00:23:08,540 To China. 308 00:23:09,200 --> 00:23:10,260 To Malaysia. 309 00:23:10,880 --> 00:23:13,680 To 248 countries. 310 00:23:14,920 --> 00:23:18,470 And it got out of control because it wasn't just them talking about tax 311 00:23:18,600 --> 00:23:19,920 It was entire communities. 312 00:23:20,740 --> 00:23:26,839 While some online recruiters are generating big bucks for themselves, at 313 00:23:26,840 --> 00:23:30,439 of the day, according to federal investigators, there is no one who is 314 00:23:30,440 --> 00:23:36,859 more money than Carlos Wanzeller, who was shown in online videos as the 315 00:23:36,860 --> 00:23:37,910 of success. 316 00:23:38,120 --> 00:23:41,740 By all appearances, his dreams are coming true. 317 00:23:42,620 --> 00:23:47,499 In addition to the duffel bags of cash being delivered to him, court records 318 00:23:47,500 --> 00:23:50,120 show he is sending millions of dollars overseas. 319 00:23:52,140 --> 00:23:59,019 And he and his wife are creating a small real estate empire with 30 320 00:23:59,020 --> 00:24:03,679 different properties, including his million -dollar house in Massachusetts 321 00:24:03,680 --> 00:24:05,580 several houses in Florida. 322 00:24:05,581 --> 00:24:10,219 Wanzeller, of course, was, in addition to buying real estate, he was buying... 323 00:24:10,220 --> 00:24:11,980 Cars and boats, including a yacht. 324 00:24:12,560 --> 00:24:16,220 He bought Ferraris. He bought three BMWs. He bought a Porsche. 325 00:24:17,080 --> 00:24:18,400 A lot of money to burn. 326 00:24:21,220 --> 00:24:26,740 Up next, Carlos Wanzeller shows his compassion for his victims. 327 00:24:27,360 --> 00:24:28,500 They started to cry. 328 00:24:29,300 --> 00:24:33,090 Derrick and Merrill, knowing that he was stealing money from these people. 329 00:24:47,790 --> 00:24:50,150 Telex Free begins in Brazil. 330 00:24:50,570 --> 00:24:53,570 At its peak, it has one million members there. 331 00:24:55,450 --> 00:25:01,849 And as the YouTube videos show, those members are as enthusiastic as any can 332 00:25:01,850 --> 00:25:02,900 possibly be. 333 00:25:05,750 --> 00:25:12,330 That is, until June 2013, when a court's decision makes the news. 334 00:25:13,030 --> 00:25:16,710 A Brazilian court. 335 00:25:17,240 --> 00:25:22,139 issues an injunction freezing telex free's assets and shutting it down in 336 00:25:22,140 --> 00:25:27,019 country because the brazilian court has concluded that telex free is probably a 337 00:25:27,020 --> 00:25:33,320 pyramid scheme immediately merrill posts a reassuring message online 338 00:25:49,870 --> 00:25:54,629 At an event in July, later turned into this online marketing, it is Juan 339 00:25:54,630 --> 00:25:55,680 Zeller's turn. 340 00:25:55,810 --> 00:26:01,390 And so far, they can't find anything wrong with us. 341 00:26:03,510 --> 00:26:08,690 Trust in God and trust the law. 342 00:26:10,950 --> 00:26:15,110 We're very close to this get -fixed. 343 00:26:16,230 --> 00:26:19,150 And then he does something his audience loves. 344 00:26:19,660 --> 00:26:22,920 A demonstration of his compassion for the members in Brazil. 345 00:26:23,760 --> 00:26:24,940 He breaks down. 346 00:26:25,620 --> 00:26:29,639 If you guys don't mind, I want to give a message in Portuguese for all those 347 00:26:29,640 --> 00:26:30,720 people. Yes. 348 00:26:31,240 --> 00:26:32,290 Okay. 349 00:26:33,060 --> 00:26:34,280 They started to cry. 350 00:26:34,281 --> 00:26:38,479 They're at Jim Merrill, knowing that he was stealing money from these people, 351 00:26:38,480 --> 00:26:41,819 and this is going to fail, and it's going to be in the back of people from 352 00:26:41,820 --> 00:26:42,870 own community. 353 00:26:44,300 --> 00:26:48,720 And also knowing that Telex Free's own lawyer is so concerned. 354 00:26:49,440 --> 00:26:52,400 He has asked that his name be taken off the website. 355 00:26:52,800 --> 00:26:56,940 And a new lawyer is definitely not more encouraging. 356 00:26:57,820 --> 00:27:02,219 New lawyer comes back within a matter of weeks and says, you're running a 357 00:27:02,220 --> 00:27:03,259 pyramid scheme. 358 00:27:03,260 --> 00:27:06,799 He doesn't mince words. He says, your company is illegal. You are exposed to 359 00:27:06,800 --> 00:27:08,300 civil and criminal liability. 360 00:27:08,920 --> 00:27:09,970 Needs changes. 361 00:27:10,880 --> 00:27:12,500 But they make no changes. 362 00:27:13,060 --> 00:27:18,019 Instead, as this online video shows, They continue to stand before members 363 00:27:18,020 --> 00:27:20,600 convince them to bring in more people. 364 00:27:21,220 --> 00:27:27,560 So Telex Free will be here today, tomorrow, many, many years from now. 365 00:27:30,500 --> 00:27:35,260 And thousands of people like Elirides Arikas believe that message. 366 00:27:36,000 --> 00:27:41,340 She thinks Telex Free will not just change her life, it could save her life. 367 00:27:41,540 --> 00:27:43,710 She has learned that she has heart trouble. 368 00:27:45,070 --> 00:27:51,310 I have coronary artery disease, 90 % clot, 369 00:27:51,670 --> 00:27:58,489 160 % and another 140%. She has 370 00:27:58,490 --> 00:28:03,629 no health insurance, but she does have savings that could pay part of needed 371 00:28:03,630 --> 00:28:04,680 surgery. 372 00:28:04,950 --> 00:28:07,570 And then she hears about Telex Free. 373 00:28:08,690 --> 00:28:12,530 And I think, oh, this is going to help me. 374 00:28:13,040 --> 00:28:19,220 I can work at home to make money enough to make my surgery. 375 00:28:20,960 --> 00:28:27,639 In three days, she empties her savings account and puts $20 ,400 into 376 00:28:27,640 --> 00:28:28,690 Telex Free. 377 00:28:29,720 --> 00:28:36,540 And they count the money, and then they say, yo, everything's okay. 378 00:28:37,180 --> 00:28:39,260 You're great. You did great. 379 00:28:39,700 --> 00:28:42,140 I trust them very much. 380 00:28:43,440 --> 00:28:44,500 And I'm happy. 381 00:28:46,240 --> 00:28:52,299 At the end of 2013, as people like Eloita's Eriques turn over their life 382 00:28:52,300 --> 00:28:58,160 to Telexfree, Meryl and Wanzeller decide to give themselves a Christmas bonus. 383 00:28:58,920 --> 00:29:01,200 Three million dollars each. 384 00:29:02,980 --> 00:29:06,620 Up next, when the going gets tough. 385 00:29:07,260 --> 00:29:12,200 The very day that the agents search Telexfree's office, 386 00:29:13,160 --> 00:29:18,300 Carlos Wondella hops in a car, gets on a plane to Rio, and he's gone. 387 00:29:19,880 --> 00:29:24,979 See how a million -dollar lottery winner gets taken by Telex Free at 388 00:29:24,980 --> 00:29:27,720 AmericanGreed .CNBC .com. 389 00:29:28,580 --> 00:29:30,740 Want inside information from the show? 390 00:29:31,100 --> 00:29:33,080 Join the Greed social network. 391 00:29:33,600 --> 00:29:36,260 Like us on American Greed's Facebook page. 392 00:29:36,700 --> 00:29:37,940 We'll be right back. 393 00:29:48,170 --> 00:29:54,249 In December 2013, six months after Telex Free Brazil is shut down, video 394 00:29:54,250 --> 00:30:00,089 captures a Telex Free extravaganza to beat all extravaganzas. This one is on a 395 00:30:00,090 --> 00:30:01,310 cruise ship in Brazil. 396 00:30:03,510 --> 00:30:09,089 The video appears to offer evidence that Telex Free is thriving. And despite 397 00:30:09,090 --> 00:30:13,470 serious red flags, the message from its founders is consistent. 398 00:30:14,070 --> 00:30:16,550 This company is just beginning. 399 00:30:18,830 --> 00:30:24,829 Through events like this promoted online, even a skeptic like Edivaldo 400 00:30:24,830 --> 00:30:26,230 starting to change his mind. 401 00:30:27,030 --> 00:30:32,909 When Ruiz came to the U .S. from Brazil, he was hired by Whole Foods to clean a 402 00:30:32,910 --> 00:30:34,190 store outside of Boston. 403 00:30:35,270 --> 00:30:41,810 I was young at the time, and I started to work hard. 404 00:30:42,510 --> 00:30:45,490 And now that cleaning job has grown. 405 00:30:46,300 --> 00:30:53,060 Reese owns USG, a concrete polishing company. His biggest client is Whole 406 00:30:53,620 --> 00:31:00,299 For more 407 00:31:00,300 --> 00:31:06,559 than a year, he has listened to the stories of people making money in Telex 408 00:31:06,560 --> 00:31:07,610 Free. 409 00:31:08,080 --> 00:31:12,400 And at the start of 2014, he is finally convinced. 410 00:31:13,550 --> 00:31:15,930 I didn't want to go and do it. 411 00:31:16,430 --> 00:31:23,050 But the way they promote it, and a lot of people was making money. 412 00:31:24,030 --> 00:31:25,350 I said, why not? 413 00:31:27,390 --> 00:31:31,910 And that is how effective the TelexFree video messaging has become. 414 00:31:32,470 --> 00:31:38,969 That a cautious businessman decides to refinance a house and put $400 ,000 415 00:31:38,970 --> 00:31:40,310 into TelexFree. 416 00:31:41,729 --> 00:31:45,190 Unfortunately for Reese, his timing could not be worse. 417 00:31:47,130 --> 00:31:51,569 At Telex Free headquarters, James Merrill and Carlos Wanzeller have just 418 00:31:51,570 --> 00:31:56,629 received news that the Massachusetts Secretary of State is preparing to file 419 00:31:56,630 --> 00:31:58,350 complaint against Telex Free. 420 00:31:59,650 --> 00:32:02,890 And at that point, they decide to make some changes. 421 00:32:03,870 --> 00:32:07,890 As Merrill shares with the public in a video posted online. 422 00:32:09,550 --> 00:32:14,770 We're working with our attorneys and marketing people to create a brand new, 423 00:32:14,910 --> 00:32:21,689 more compliant program, and we're going to knock this to the moon. In 424 00:32:21,690 --> 00:32:26,889 March, Telex Free announces a new program, and now the members are 425 00:32:26,890 --> 00:32:28,830 actually sell the product. 426 00:32:29,390 --> 00:32:33,050 A lot of Telex Free's members are extremely angry about this. 427 00:32:33,290 --> 00:32:34,630 They want their money back. 428 00:32:34,930 --> 00:32:36,550 They think it's a bait and switch. 429 00:32:37,770 --> 00:32:40,770 They descend on the Telex Free headquarters office. 430 00:32:43,590 --> 00:32:45,150 The police are called. 431 00:32:45,470 --> 00:32:50,729 This and other videos of the meeting are posted online to draw attention to 432 00:32:50,730 --> 00:32:51,780 their complaints. 433 00:32:53,250 --> 00:33:00,169 At this point, the company owes $5 billion to 1 million people, and it 434 00:33:00,170 --> 00:33:02,710 only has $105 million in the bank. 435 00:33:04,690 --> 00:33:06,470 They take an obvious option. 436 00:33:07,500 --> 00:33:08,720 declaring bankruptcy. 437 00:33:09,080 --> 00:33:14,079 When most pyramid schemes collapse, they collapse and the people running it run 438 00:33:14,080 --> 00:33:18,560 away. This pyramid scheme collapsed in plain sight. It declared bankruptcy, 439 00:33:18,700 --> 00:33:22,020 which lent this veneer of legitimacy to the company. 440 00:33:23,460 --> 00:33:28,900 But it means that members around the world log into a system that is shut 441 00:33:31,480 --> 00:33:35,940 I remember I came back from a trip and I got a phone call. 442 00:33:37,450 --> 00:33:42,689 And she asked me, she said, hey, have you heard about what's going on with 443 00:33:42,690 --> 00:33:43,740 Deluxe Free? 444 00:33:44,150 --> 00:33:45,430 The accounts are frozen. 445 00:33:46,750 --> 00:33:51,790 And as the news gradually becomes real, the truth sinks in. 446 00:33:52,290 --> 00:33:55,290 It was weeks and months I couldn't sleep. 447 00:33:56,110 --> 00:33:58,280 And I'm thinking, what the heck did you do? 448 00:33:58,490 --> 00:34:02,290 How could you be so stupid? I mean, how could you be so naive? 449 00:34:03,360 --> 00:34:08,139 to think this is great, this is the opportunity of your life. 450 00:34:08,480 --> 00:34:13,679 One friend called me and say, you know, Eloise, what happened with Telex Free? 451 00:34:13,960 --> 00:34:15,800 I say, no, what happened? 452 00:34:16,139 --> 00:34:20,400 And they say, they stolen everybody money. 453 00:34:20,620 --> 00:34:21,840 I say, what? 454 00:34:23,280 --> 00:34:29,400 That's the only money I have to fix my problems. 455 00:34:30,020 --> 00:34:31,500 It's a big problem. 456 00:34:32,400 --> 00:34:33,659 That's my life. 457 00:34:35,260 --> 00:34:40,939 Within 24 hours of the bankruptcy filing, agents from Homeland Security 458 00:34:40,940 --> 00:34:42,200 Telex Free headquarters. 459 00:34:42,360 --> 00:34:47,738 They seize hard drives that contain every transaction made in the two years 460 00:34:47,739 --> 00:34:48,999 the company's short life. 461 00:34:50,739 --> 00:34:54,760 It is clear that the deception will soon be discovered. 462 00:34:55,780 --> 00:34:58,920 And then Carlos Wanzeller makes a move. 463 00:35:00,560 --> 00:35:07,339 The very day that the agents search Telex Free's offices, Carlos Wanzeller 464 00:35:07,340 --> 00:35:11,600 meets his daughter, who's an adult, at a local mall. 465 00:35:12,700 --> 00:35:19,119 He packs a bag, hops in a car, and has her drive him over the Canadian border 466 00:35:19,120 --> 00:35:24,679 Montreal, where the next day he gets on a plane to Rio, and he has not left 467 00:35:24,680 --> 00:35:25,730 Brazil yet. 468 00:35:29,420 --> 00:35:34,860 Next on American Greed, a stunning secret inside a mattress. 469 00:35:35,460 --> 00:35:36,510 That was staggering. 470 00:35:36,740 --> 00:35:38,760 That much cash out there. 471 00:35:51,320 --> 00:35:57,960 In a little more than two years, 170 ,000 people in the U .S. joined Telex 472 00:35:59,080 --> 00:36:03,220 And additional victims can be found in every corner of the globe. 473 00:36:04,580 --> 00:36:11,079 There are 17 ,000 in Uganda, close to 3 ,000 in Afghanistan, 26 474 00:36:11,080 --> 00:36:15,240 ,000 in Russia, China, more than 90 ,000. 475 00:36:16,180 --> 00:36:22,599 We had a number of farmers in the Dominican Republic who not only 476 00:36:22,600 --> 00:36:26,720 their farms to participate, but they pledged their future cops. 477 00:36:27,130 --> 00:36:29,110 to participate in this scheme. 478 00:36:30,730 --> 00:36:35,589 And the only person in the U .S. facing criminal charges for all this damage is 479 00:36:35,590 --> 00:36:36,710 James Merrill. 480 00:36:37,630 --> 00:36:38,680 His defense? 481 00:36:38,930 --> 00:36:41,230 He actually wanted the company to succeed. 482 00:36:41,650 --> 00:36:43,270 He tried to fix it. 483 00:36:43,650 --> 00:36:47,489 But that doesn't fly with the prosecutors, who point to Merrill's 484 00:36:47,490 --> 00:36:50,710 appearances like these as evidence against him. 485 00:36:51,170 --> 00:36:54,670 What James Merrill needed to do was walk out the door. 486 00:36:55,500 --> 00:37:01,939 And he chose not to do that. And at that moment is when he decided that he'd 487 00:37:01,940 --> 00:37:04,859 rather run a criminal enterprise and not tell anybody it's a criminal enterprise 488 00:37:04,860 --> 00:37:07,200 instead of simply leaving. 489 00:37:07,940 --> 00:37:13,839 And so he pleads guilty to charges of wire fraud and is sentenced to six years 490 00:37:13,840 --> 00:37:14,890 in prison. 491 00:37:18,080 --> 00:37:23,060 He finally acknowledges that Telex Free is a pyramid scheme. 492 00:37:23,540 --> 00:37:29,250 In this case, Mr. Merrill acknowledged that he was willfully blind and 493 00:37:29,490 --> 00:37:33,590 that in the face of obvious facts, he wasn't paying attention to them. 494 00:37:33,950 --> 00:37:39,029 And his friend, Carlos Wanzeller, had a different idea about where this was 495 00:37:39,030 --> 00:37:43,949 going. And to a large degree, Carlos Wanzeller used Jim Merrill to accomplish 496 00:37:43,950 --> 00:37:45,000 his goals. 497 00:37:46,850 --> 00:37:51,370 Through their attorneys, both James Merrill and Carlos Wanzeller... 498 00:37:51,640 --> 00:37:54,560 decline interview requests from American Greed. 499 00:37:56,020 --> 00:37:59,240 At this point, Wanzeller is still in Brazil. 500 00:38:00,300 --> 00:38:03,220 Well, he seems to be doing just fine. He's not in custody. 501 00:38:03,640 --> 00:38:08,379 It appears that he is under indictment in Brazil for running the telex -free 502 00:38:08,380 --> 00:38:10,790 pyramid scheme, so he will be prosecuted there. 503 00:38:11,100 --> 00:38:16,039 But he appears to live in a high -rise in Vitoria, Brazil, and just go about 504 00:38:16,040 --> 00:38:17,120 business day -to -day. 505 00:38:18,320 --> 00:38:23,159 But what Wanzeller does not know is that federal agents in Brazil are listening 506 00:38:23,160 --> 00:38:24,320 to his phone call. 507 00:38:26,380 --> 00:38:31,059 From his conversations, U .S. authorities learn that Wanzeller is 508 00:38:31,060 --> 00:38:35,200 courier to pick up money he has left in the U .S. 509 00:38:35,940 --> 00:38:39,900 And so Homeland Security Investigation sets up a sting. 510 00:38:42,140 --> 00:38:46,460 The handoff of the cash is to take place in a parking lot. 511 00:38:47,850 --> 00:38:53,609 And so it was on that night, January 4th, 2017, that they set up surveillance 512 00:38:53,610 --> 00:38:57,310 and they waited for a person to show up. 513 00:38:57,830 --> 00:39:04,549 And lo and behold, the person showed up in a red SUV and delivered a bag 514 00:39:04,550 --> 00:39:09,830 put in the trunk of the car along with an undercover agent of $2 .2 million. 515 00:39:14,960 --> 00:39:18,600 Shortly after, the person delivering the cash is arrested. 516 00:39:18,860 --> 00:39:23,460 He is Kleber Rocha, who was once a promoter for Telex Free in Brazil. 517 00:39:23,740 --> 00:39:26,980 And now he is doing Wanzeller's dirty work. 518 00:39:28,260 --> 00:39:35,019 It turns out that Rocha has been here twice before, helping Wanzeller collect 519 00:39:35,020 --> 00:39:36,070 his cash. 520 00:39:44,440 --> 00:39:50,499 Now, with the potential of criminal charges, Rocha decides to stop helping 521 00:39:50,500 --> 00:39:51,840 Carlos Wanzeller. 522 00:39:54,100 --> 00:40:00,059 He provides the address of the apartment where he says there is some cash, but 523 00:40:00,060 --> 00:40:02,340 no one could imagine just how much. 524 00:40:03,360 --> 00:40:08,209 When the agent searched the apartment, They find a box spring mattress stuffed 525 00:40:08,210 --> 00:40:09,260 with money. 526 00:40:09,930 --> 00:40:12,790 Approximately $20 million in cash. 527 00:40:13,450 --> 00:40:16,940 And we thought that there might be a couple million dollars out there. 528 00:40:18,530 --> 00:40:20,530 But that was staggering. 529 00:40:20,770 --> 00:40:22,850 That much cash out there. 530 00:40:23,890 --> 00:40:27,990 But those millions of dollars do not belong to Carlos Wanzeller. 531 00:40:31,110 --> 00:40:33,510 That money belongs to these people. 532 00:40:35,080 --> 00:40:39,719 Every few months, the Chelsea Collaborative holds a meeting to update 533 00:40:39,720 --> 00:40:40,770 -free victims. 534 00:40:40,840 --> 00:40:44,600 I'm Stephen Darr. I'm the court -appointed trustee. 535 00:40:44,960 --> 00:40:50,279 The bankruptcy trustee informs them that so far he has recovered $168 million 536 00:40:50,280 --> 00:40:56,119 and that he is also going after the top recruiters who made off with the bulk of 537 00:40:56,120 --> 00:40:57,170 the money. 538 00:40:57,240 --> 00:41:01,919 We're trying to recover money from the winners, the people who took more money 539 00:41:01,920 --> 00:41:03,640 out than they put in. 540 00:41:04,780 --> 00:41:10,639 But what concerns many in this room is not just the money they lost, but also 541 00:41:10,640 --> 00:41:12,680 the people they brought into the scheme. 542 00:41:13,120 --> 00:41:16,260 And for that, they place blame on themselves. 543 00:41:17,900 --> 00:41:24,179 It's hard for me because, you know, I'm a man of the family, and it's hard to 544 00:41:24,180 --> 00:41:28,820 look at my wife and daughter and see. 545 00:41:29,760 --> 00:41:34,180 And all the investment, all the hard work we did, it goes to the drain. 546 00:41:34,780 --> 00:41:38,440 And it was so sad. 547 00:41:40,880 --> 00:41:45,899 On the day that James Merrill is sentenced, Gladys Vega represents his 548 00:41:45,900 --> 00:41:49,260 and gets a chance to speak to him directly. 549 00:41:49,980 --> 00:41:56,959 And I basically looked at his face and I said, you stole the dreams and 550 00:41:56,960 --> 00:41:58,220 the hopes of these people. 551 00:41:59,150 --> 00:42:05,229 You don't deserve six years or whatever they're negotiating. You deserve to be 552 00:42:05,230 --> 00:42:10,429 in jail for life. For me, it was one of those emotional moments 553 00:42:10,430 --> 00:42:17,249 because these people really, really care about this company, and they 554 00:42:17,250 --> 00:42:19,590 literally gave all they had. 555 00:42:20,630 --> 00:42:26,070 And for the prosecutors, the telex -free fraud is one for the record books. 556 00:42:26,650 --> 00:42:28,130 The success... 557 00:42:28,830 --> 00:42:33,769 Of the pyramid scheme and the speed with which it grew and took over the world 558 00:42:33,770 --> 00:42:39,129 is unlike any other broad case I've done in about 15 years as a fraud 559 00:42:39,130 --> 00:42:45,969 prosecutor. To do that much damage in that short a period was really amazing 560 00:42:45,970 --> 00:42:49,170 and just showed you how dangerous these kinds of scams are. 561 00:42:49,220 --> 00:42:53,770 Repair and Synchronization by Easy Subtitles Synchronizer 1.0.0.0 51452

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