Court Grants Final Judgment Against Promoter of Pyramid Scheme
Litigation Release No. 24488 / June 4, 2019
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 against a promoter of the fraudulent TelexFree pyramid scheme targeting Latino communities.
The final judgment, entered on June 3, 2019, by a federal district court in Boston, Massachusetts, permanently enjoins Faith Sloan, an Illinois resident, from violating the registration provisions of Section 5 of the Securities Act of 1933 and imposes a conduct-based injunction. The judgment also orders Sloan to pay $1,271,215 in disgorgement and prejudgment interest and a civil penalty of $7,500. The monetary portion of the judgment is deemed partially offset by an order requiring Sloan to transfer certain assets to settle an adversary action in a related bankruptcy case. In settling the SEC's charges, Sloan admitted that she was a prominent promoter of TelexFree.
Previously, on March 27, 2019, the parties stipulated to the dismissal of antifraud claims pursuant to Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against Sloan.
The SEC has previously obtained final judgments by consent against TelexFree, TelexFree's co-owner and president and its CFO, its international sales director, a promoter of the pyramid scheme, another promoter of the pyramid scheme, and a third promoter, who also was ordered to serve prison time for civil contempt arising from his repeated violations of court orders.
The SEC has issued an investor alert warning investors about the dangers of potential investment scams involving pyramid schemes posing as multi-level marketing programs.