Massachusetts man gets six years in prison for $3 billion fraud
BOSTON, March 22 (Reuters) - A Massachusetts man was sentenced to six years in prison on Wednesday after pleading guilty to helping to run what prosecutors called a global pyramid scheme that bilked its victims out of more than $3 billion.
James Merrill, the former president of TelexFree Inc, was sentenced by U.S. District Judge Timothy Hillman in Worcester, Massachusetts, after pleading guilty to conspiracy and fraud charges on the eve of trial in October.
Prosecutors had sought up to 10 years in prison for Merrill, 55, while his lawyer sought a term of no more than one year.
The sentence was confirmed by a spokeswoman for the U.S. Attorney's Office in Massachusetts.
A lawyer for Merrill, a resident of Ashland, Massachusetts, did not immediately respond to a request for comment.
The sentencing stemmed from Merrill's role as president from 2012 to 2014 of TelexFree, which prosecutors described in court papers as the largest pyramid scheme to ever result in U.S. criminal charges.
Prior to its collapse in April 2014, TelexFree promoted itself as a Marlborough, Massachusetts-based company that sold voice-over-internet telephone service, prosecutors said.
But from its beginning, it was a pyramid scheme, making little to no money selling its service while taking in millions of dollars from thousands of people who paid to sign up to be "promoters" and post ads online for it.
Merrill, who was TelexFree's public face, never intended it to become a fraudulent business, his attorney, Robert Goldstein, said in court papers.
But prosecutors said he had received increasingly frequent warnings the company was bogus and never alerted the public.
The scheme caused nearly 1.89 million people from over 100 countries, including the United States and Brazil, to lose nearly $3.05 billion, prosecutors said.
Carlos Wanzeler, one of TelexFree's co-founders who prosecutors said played a greater role in the fraud, fled the United States in 2014 to Brazil and could not be extradited.
In February, federal prosecutors in the Brazilian state of Espirito Santo filed charges against 22 people for their involvement with TelexFree, including Wanzeler.
U.S. prosecutors earlier this year brought charges against two Brazilians for conspiring to launder money linked to the fraud, leading to the discovery of at least $17 million under a mattress in a Massachusetts apartment. (Reporting by Nate Raymond; Editing by Scott Malone and Tom Brown)
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