Hundreds of disgruntled former investors in the TelexFree scam from Chelsea packed into the Burke School Complex last Wednesday, Oct. 7, and heard some rather disappointing news.
The disappointing news came in that no one should plan to get all their money back that was invested, and recovering what they do get will take a long time.
A representative from the Secretary of State’s office was at the meeting, coordinated by the Chelsea Collaborative.
The meeting came to explain a recent payment made to some victims of the scam, which was uncovered in 2014 and number more than 500 victims in Chelsea. Many victims lost thousands of dollars and were recruited into a phone service that had a legitimate bank from Massachusetts backing it. It spread like wildfire in the Latino and Brazilian communities, with the company recruiting influential community leaders and religious leaders to promote the program.
It resulted in lots of money quickly for the founders and an exponential growth in members.
In the end, though, it was all a scam.
The most recent payment came due to a settlement reached by the Secretary of State’s office for $3.5 million. Victims who are on the official list will get $300, though some have already gotten checks for $205.
The information everyone was piling into the school cafetorium to hear was what was going to happen with the larger bankruptcy court proceeding, where $200 to $300 million is at stake.
Collaborative Director Gladys Vega said that case could go on until 2016 or 2017, and the proceeds will not equal what people have put in and lost.
“What it comes down to is that Chelsea has so, so many victims,” she said. “We still don’t have an exact figure for the bankruptcy court due to the many properties and valuables that have not been released from the federal government yet. When they release that, they will sell those things and that will go towards the final monetary amount. That won’t happen until 2016 or 2017.”
Vega said the bad news is that no one will get fully reimbursed.
“The one bad thing is that nobody’s going to get all the money back that they invested,” she said. “If anything, they believe the victims will get 20 to 30 percent of what they invested. I personally think it will be less. Everyone else – the bankruptcy lawyers and the federal government – will have to get paid first. A lot of money will go to the institutions before anyone gets their money.
“I’m preparing my community and the members of the Latino community,” she continued. “Some get upset when they hear that. I’m telling them that part of it is their fault for not doing their research.”
She said that she was even recruited by TelexFree at one point, but declined to join.
“They’re smart; they went to community leaders,” she said. “A promoter who is my good friend wanted to sign me up. I did my research and found out it didn’t all add up. It was just too good to be true and seemed like a scheme.”
All documents and account information from the TelexFree scam must be turned in to by Nov. 4 in order to get on the official bankruptcy victim list.
The Collaborative will be having a walk-in help center day for victims on Oct. 20 at its Broadway headquarters. Anyone needing assistance can call on the center that day.