Q:

What is the TelexFree compensation plan?

A:

Quick Answer

TelexFree compensation plan is a plan proposed by TelexFree to compensate its promoters and associates, but all operations of the company are suspended. As of July 2015, there is no update on its future. TelexFree claimed to offer Internet telephone services but is alleged to have run a ponzi scheme.

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Full Answer

The principals of TelexFree, Carlos N. Wanzeler and James M. Merril, and related entities are charged as per federal law for conspiring to commit wire fraud. It is alleged that the business model of TelexFree is a pyramid scheme.

TelexFree recruited promoters by thousands to market its VoIP services. To become a promoter, individuals invested a certain amount into the company. The promoters then posted online ads about the service and were paid for it under different plans. The promoters were paid on a weekly basis under complex compensation plan.

Posting ads is a meaningless exercise and added no value to the company or the promoters. As per the complaint, sales of VoIP services only accounted for less than 1 percent of the revenue. It is people’s investment into the company to become promoters that accounted for more than 99 percent of the company’s revenue. The company is said to have made hundreds of millions of dollars since its inception in 2012.

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