Secretary of State William F. Galvin has subpoenaed a Worcester banker who is the brother of TelexFree Inc. co-owner James M. Merrill as part of an investigation of the firm’s alleged billion-dollar pyramid scheme.
Galvin said Wednesday his office is seeking to interview John F. Merrill, president of Fidelity Bank , a community institution based in Leominster that reportedly handled millions of dollars for TelexFree. His brother, James, is being held pending trial as he faces a criminal fraud charge.
“Over a period of months, a remarkable amount of money flowed through there,’’ Galvin said of Fidelity Bank.
Marlborough-based TelexFree and its principals are facing civil and criminal fraud charges, filed by securities regulators and federal prosecutors. According to the criminal complaint filed in Boston, “TelexFree used so many accounts in a roughly two-year period because US banks, following their protocols for deterring money laundering or other financial misconduct, repeatedly shut them down,’’ forcing the company to go elsewhere.
After initially operating out of Bank of America around February 2012, the complaint said, Merrill and his co-owner, Carlos Wanzeler, opened accounts at TD Bank, Citizens Bank, Fidelity Bank, and Middlesex Savings Bank. Each of those “ultimately terminated their banking relationships with TelexFree,’’ according to the complaint.
John Merrill, the banker, did not return a call seeking comment. A spokeswoman for the bank, Karen Schwartzman, acknowledged that TelexFree was a customer but said Fidelity closed the accounts within months after they were opened.
“Fidelity Bank is fully cooperating with law enforcement and has been since the beginning of this matter,’’ Schwartzman said. “We have no reason to believe that the bank did anything wrong.’’
She said the bank’s audit committee is conducting an independent review “to ensure that there was no inappropriate handling of the accounts.” She also said the bank has been “fully transparent” with its regulators.
Thomas Lavelle, a spokesman for the Federal Reserve Bank of Boston, declined to say whether the other banks mentioned in the complaint were under scrutiny. But, he said, “It is routine for banking regulators to coordinate with investigative authorities in cases such as this.”
The case has trained a spotlight on a prominent family in the Worcester area. James Merrill lives in Ashland and is well known in the community. In addition to running a seven-branch bank, John Merrill serves as treasurer of the Worcester Regional Chamber of Commerce and as a board member on several area nonprofit organizations.
TelexFree sold Internet phone service plans, but it made the vast majority of its money by recruiting thousands of participants around the world to invest with the company. Galvin said that after the company was shut down in Brazil last year, it became difficult for the company to secure bankers.
The company filed for federal bankruptcy protection last month, just days before its principals were hit with fraud charges.
A federal judge in Worcester ruled Tuesday that James Merrill be held because he is a flight risk. His business partner, Wanzeler, fled the country last month for his native Brazil — the same day TelexFree’s Marlborough office was raided by federal agents. Wanzeler’s wife, Katia, tried to leave the country last week but was arrested at a New York airport.