5 Famous Pyramid Scheme Companies in US History

3. Telexfree

Ceased Operations: 2014

Telexfree was a multi–level marketing company based in Marlborough, Massachusetts, United States, that sold VoIP telephone services and other products. The company was founded in 2012 by James Merrill and Carlos Wanzeler and was declared a pyramid scheme in April 2014 by the Massachusetts Securities Division and the U.S. Securities and Exchange Commission. Telexfree marketed its services through a multi–level marketing (MLM) system, which allowed users to recruit other participants to sell Telexfree services in exchange for commissions. Participants were encouraged to invest in Telexfree in order to qualify for commissions, and were promised returns of up to 200%. Participants were also promised bonuses for recruiting new members, which was the main focus of the company’s marketing. The company’s MLM scheme was a classic pyramid scheme, in which money from new recruits is used to pay existing participants, and was declared a fraud by the Massachusetts Securities Division and the SEC in April 2014 and the company was forced to declare bankruptcy. Telexfree is one of the most famous pyramid scheme companies in US history.