SEC Obtains Final Judgment Against Promoter of Pyramid Scheme Targeting Latino Community
Litigation Release No. 24124 / April 30, 2018
Securities and Exchange Commission v. TelexFree, Inc. et al., No. 14-cv-11858 (D. Mass. filed Apr. 17, 2014)
The Securities and Exchange Commission announced that it has obtained a final judgment in a fraud case against a promoter of a pyramid scheme targeting Latino communities.
The final judgment, entered on April 27, 2018 by a federal district court in Boston, Massachusetts, permanently enjoins Randy Crosby from violating Section 5 of the Securities Act of 1933 and imposes a conduct-based injunction. The judgment orders Crosby to pay $294,014 in disgorgement, but that is deemed satisfied by an order requiring Crosby to transfer certain assets to settle an adversary action against Crosby filed by Stephen Darr, the Chapter 11 Trustee of TelexFree LLC, TelexFree, Inc., and TelexFree Financial, Inc. in the bankruptcy case and through a payment plan. In settling the SEC's charges, Crosby admitted that he was a promoter of TelexFree, appearing in promotional videos that were posted on YouTube and making daily marketing presentations.
The SEC has previously obtained final judgments by consent against TelexFree's co-owner and president and its CFO, its international sales director and another promoter of TelexFree, who also was ordered to jail for civil contempt arising from his repeated violations of court orders.
The SEC's litigation continues against TelexFree, its other co-owner, and the remaining promoters of the alleged TelexFree pyramid scheme.