HELENA – Montana Securities Commissioner Monica J. Lindeen has filed a temporary cease and desist order on Wednesday against TelexFREE, a Voice over Internet Protocol (VoIP) sales program that Lindeen’s office suspects may be a pyramid scheme that has already cost Montanans $70,000.
The order prevents TelexFREE, which filed for bankruptcy protection in Nevada on April 14, from conducting further business or accessing investors’ money. TelexFREE, a multi-level marketing company, sold phone service calling software for a personal computer.
or smartphone. The software could be used for unlimited calls to landlines and mobile phones to about 70
countries for a fixed monthly price of $49.90. A VOiP competitor, Vonage, sells a similar product for $12.99
While it was possible to simply buy the VOiP software, TelexFREE heavily marketed a related program that
the company advertised as a way of earning money for TelexFREE “members.” In that program, individuals
had to pay $289 a year for an AdCentral membership. This membership required users to sell one
TelexFREE calling software a month for a full year. On the sale of the software, the member would keep
90% of the commission. TelexFREE would also pay members $20 a week for posting template
advertisements on approved websites daily.
Lindeen’s office has identified 34 Montanans who had participated in TelexFREE and collectively paid more
than $70,000 into the program.
On April 15, the U.S. Securities and Exchange Commission filed civil fraud charges against TelexFREE,
Inc., which stands accused of operating a $1 billion pyramid scheme. TelexFREE, Inc. is a Massachusetts
corporation that has raised more than $90 million in the state alone. The state of Massachusetts has also
filed a cease and desist order against the company.
Lindeen filed the temporary cease and desist order to stop TelexFREE from doing business in Montana as
a multi-level distribution company because it failed to register as such in the state and it appears to have
engaged in practices that violate the Securities Act of Montana. TelexFREE has 15 days from when they
receive the order to respond for a request for hearing.
For more information about the Commissioner’s office and smart investing, visit csi.mt.gov or call the
Commissioner’s consumer hotline at 800-332-6148.