Brazilian authorities searched TelexFree Inc.’s former headquarters office in Vitoria on Thursday as well as the homes of executives Carlos Wanzeler and Carlos Costa, two people briefed on the matter confirmed.
The searches were first reported by the A Gazeta newspaper and were confirmed by Wanzeler’s American attorney, Paul Kelly.
The searches came a day after a US grand jury charged Wanzeler and his American co-owner, James Merrill, with nine counts of fraud and conspiracy in the alleged $1 billion global pyramid scheme run by TelexFree.
The company, with Marlborough headquarters in the United States, sold cheap Internet phone service for people with relatives abroad. But the vast majority of the money it brought in came from recruiting participants to open investment accounts, according to the indictment and the civil charges filed previously against the owners.
Wanzeler fled his home in Northborough in April after TelexFree filed for bankruptcy protection and regulators raided the local office. He has been living in his hometown of Vitoria, where TelexFree started but has been shut down since 2013.
The searches by Brazilian authorities follow a six-month criminal inquiry there and might raise the stakes for Wanzeler, who so far has been told he would face only two years in prison in Brazil if found guilty of fraud. In the United States, he and Merrill could face up to 20 years each.
Kelly, the lawyer, said he is in Brazil “to meet with my client to discuss his various pending legal matters in the US.”
Wanzeler’s wife and son still live in the United States. His wife is considered a material witness and had to give up her passport after trying to leave the country in May, when she was briefly held in jail.
Merrill was arrested in May and held for several weeks in a Rhode Island jail. He has since posted $900,000 bail and is home with a GPS tracking bracelet.
Brazil does not extradite its citizens to the United States. But the A Gazeta newspaper reported that there will be cooperation between US and Brazilian authorities on this case.
Christina Sterling, a spokeswoman for the US Attorney’s office in Massachusetts, which is conducting the US criminal investigation, said, “There has been some mutual assistance.”