Galvin: TelexFREE victims receive first Fidelity Bank settlement checks
More than 14,000 Massachusetts residents have received checks for $205.52 each from Fidelity Bank of Fitchburg as part of a relief fund settlement reached last year with the state, Secretary of the Commonwealth William F. Galvin announced Friday.
The bank had been faulted by state officials for inadequate oversight of accounts involving TelexFREE, which Galvin said ran an illegal pyramid scheme that targeted the Brazilian community. TelexFREE had been headquartered in Marlborough and had offices in Brazil.
Last September, Fidelity agreed to pay $3.5 million toward the relief fund for Massachusetts investors who were defrauded by the alleged pyramid scheme. Karen Schwartzman, a spokeswoman for Fidelity, said at the time that as part of the agreement with the state, the bank neither admitted to nor denied allegations surrounding its supervision of the TelexFREE accounts.
In July 2014, TelexFREE principals James Merrill — brother of Fidelity Bank President John F. Merrill — and Carlos Wanzeler were indicted on federal charges of wire fraud and conspiracy.
Galvin's office alleged last year that TelexFREE operated a $1 billion scheme that preyed on Brazilian immigrants, promising them a 200-percent return on investments of $289 or $1,375 by recruiting new members and placing advertisements on free Internet ad sites.
“While this money does not make the TelexFREE victims whole, the distribution does provide the first real monetary relief received by Massachusetts victims of this international pyramid scheme,” Galvin said in Friday’s statement.
The statement said the Massachusetts Securities Division entered into a consent order with Fidelity Cooperative Bank of Fitchburg in September 2014, after the Division “alleged that the bank failed to detect in a reasonable time period suspicious activity in the TelexFREE accounts.” Friday’s statement continues: “The bank’s president John Merrill is the brother of James Merrill one of two TelexFREE principals. The Division stated at the time of the settlement that the bank cooperated with the Securities Division’s investigation. …”
The statement said that this first group of claimants to receive money from the $3.5 million were derived from records subpoenaed from TelexFREE by the Massachusetts Securities Division as well as victims who contacted the Division. The statement said a second group eligible for distribution will be those claimants who submitted claims to the Division but for whom additional information is needed to validate their claim. Victims filing a valid claim to the independent claims administrator after July 3, the date the distribution plan was submitted, will make up a third group of claimants.
WBJ Web Partners
Most Recent
Most Recent
0 Comments