Related:
Boston Globe Telex
Telex Story Keeps on Ticking
"TelexFree sends alleged victims parting shot" by Beth Healy and Maria Sacchetti | Globe Staff April 26, 2014
The Marlborough phone-service company that regulators allege ran a global Ponzi scheme delivered a parting shot to many of its investors — sending out tax forms claiming to have paid them money they say they never received.
And the poor IRS is already overwhelmed and can't answer calls.
Alcina Araujo of Peabody is among many who fear they have lost everything they invested in the company, called TelexFree Inc. Araujo said she put $15,000 into TelexFree last October, and watched as her accounts quickly swelled.
Like many people, Araujo did not cash out. Instead, she kept rolling her profits back into the company, hoping to earn even more.
But a week ago, she received a federal 1099 tax form from TelexFree that said the company had paid her $35,072 in compensation last year. Not only has Araujo received none of that money, she said, but the sum on the tax form seems to include the $15,000 she put into the company from her own pocket.
“I’m not going to pay that,” said Araujo, who has already paid her taxes this year. “I don’t have any money.’’
The Securities and Exchange Commission last week froze the assets of TelexFree and eight key people involved in the company. The SEC charged that the company lured people from 21 states into TelexFree’s long-distance calling service, with promises of fast profits for promoting the business to friends and family.
US residents may have poured as much as $300 million into the alleged scheme, regulators said. That figure includes $90 million from Massachusetts, where Brazilian and Dominican communities were primarily targeted.
In a statement, TelexFree spokeswoman Alyssa Cass said the tax forms indicate people were compensated for work, rather than for investment returns.
“TelexFree believes that the characterization of these amounts as investments is incorrect,” she said. “The company is required to provide 1099s and believes that the 1099s were prepared in accordance with the applicable tax laws.”
The company declined to say why the forms were late, or whether the sums reflected on them were accurate.
The form that Araujo and others received was a 1099-Misc, a type of tax form companies send to independent contractors and free-lancers to report “non-employee compensation.’’ Since TelexFree also filed the information with the Internal Revenue Service and state tax officials, Araujo and others could be held responsible for taxes on money they say they never received — part of which may have been their own original investments.
Robert Bonsignore, a Belmont, N.H., lawyer who represents three TelexFree victims, said the tax forms only compound the suffering of the alleged victims.
“They made so much money on so many hard-working people,’’ Bonsignore said of the company. “My blood is boiling.’’
It is unclear how many people were sent tax forms. But at a gathering of about 50 alleged victims at the Missionary Assembly of God Church in Chelsea last Saturday, at least a half dozen said they had received the documents. Some said they knew of family members and friends who got them as well.
In addition to questions about the accuracy of the tax forms, TelexFree sent the documents late, months past the legal deadline of Jan. 31. Many people reported receiving two or three of the forms in April, instead of one, which is typical.
**************
IRS spokeswoman Peggy Riley declined to comment on whether the agency is investigating TelexFree. She said there are significant penalties on companies that file 1099s late, and more penalties if the forms are inaccurate or fraudulent....
TelexFree had been under a cloud since last June, when a Brazilian judge called the company’s operation a pyramid scheme and shut it down in that country. Yet the US arm of the company continued to attract vast sums of money, with promoters reeling in new investors as recently as February and March, according to alleged victims from around the world.
Yeah, the $EC was once again slow!
Some TelexFree participants say they ended up with profits by periodically cashing out their TelexFree payments. Many others were less fortunate....
Nothing but a bu$y signal.
--more--"
Good luck filing them in Massachusetts.
