Merrill Sentenced to Wire Fraud Conspiracy and Wire Fraud, MA, 2023

BOSSONNEAU – The President of Telexfree, Inc., a fraudulent pyramid scheme disguised as an internet telecom company, pleaded guilty in U.S. District Court in Worcester today.

Merrill, 55, of Ashland, pleaded guilty to one count of wire fraud conspiracy and eight counts of wire fraud. U.S. District Court Judge Timothy S. Hillman scheduled sentencing for Feb. 2, 2017.

‘The pyramid scheme Mr. Merrill operated defrauded thousands of victims throughout Massachusetts, and in fact, around the world,’ said United States Attorney Carmen M. Ortiz. ‘Mr. Merrill lined his pockets on the backs of hard working individuals who, in some cases, invested their entire savings. We hope today’s guilty plea brings some degree of justice to the many victims in this case.’

‘The significance of a guilty plea in a case of this magnitude cannot be overstated,’ said Special Agent in Charge Matthew Etre of Homeland Security Investigations Boston. ‘James Merrill is finally facing justice for his role in bilking more than $3 billion from innocent investors, in more than 240 countries around the world, for what amounted to little more than greed. HSI special agents will continue to aggressively investigate those who seek to profit by taking advantage of others.’

Between February 2012 and April 2014, Merrill was the President of TelexFree, Inc., which sold a ‘voice-over-internet-protocol’ (VOIP) telephone service. However, TelexFree was a pyramid scheme where all money paid out came from new participants signing up as ‘promoters.’

TelexFree’s website prominently featured Merrill as the leader of the company and an experienced businessman in the telecom field. Participants were promised high returns for posting classified ads on the internet, which were not real sales but part of the scheme to recruit more members. The nearly 2 million participants made most of their compensation from ad-posting and recruiting others.

TelexFree derived only a fraction of its revenue from actual VOIP service sales – approximately 2% – with the remaining 98% coming from new people buying into the scheme. TelexFree could pay promised returns only by bringing in money from newly-recruited promoters.