TelexFree Inc.’s American accountant said in a court filing that he did not know the Marlborough company was engaged in an alleged Ponzi scheme “until approximately March,’’ a month before regulators filed fraud charges against it and eight individuals.
Joseph H. Craft, an Indiana accountant, was stopped from carrying a bag of $38 million in cashier’s checks out of TelexFree’s offices in mid-April, when federal agents raided the Internet phone-service company. He was among those charged with civil fraud by the Securities and Exchange Commission that month.
But in a response filed this week in federal court in Boston, Craft denied that he assisted in any wrongful activity and sought to have the civil charge against him dismissed.
“He was kept in the dark about the true nature of the enterprise’s activities and was a victim of misrepresentations for most of the time that he served as TelexFree’s accountant,’’ Craft’s lawyer said in the response. “He was not an insider, employee, owner, principal, or promoter.”
Craft performed “honest and legitimate accounting services” for TelexFree and related entities from October 2012 until April 2014, according to the court filing. But he admitted that “various individual defendants” charged in the matter “appear to have been engaged in a multi-level marketing enterprise, which purported to be in the business of selling telephone service plans.’’
The company’s co-owners, James Merrill and Carlos Wanzeler, are defendants in the SEC case and also have been charged with criminal fraud by the US attorney. Merrill is home on $900,000 bail wearing a GPS ankle bracelet. Wanzeler has fled to Vitoria, Brazil, where he grew up, and is considered a fugitive by US authorities.
Both men have denied wrongdoing. Each faces up to 20 years in prison if found guilty of any of the criminal charges against them.
While Merrill and Wanzeler allegedly took millions out of the company in the year before TelexFree filed for bankruptcy protection, Craft said his accounting firm received only $150,000 for services provided to TelexFree.
He said he served as interim chief financial officer for a “few days” in April, “at the behest of TelexFree’s reorganization team,” but denied he was ever the company’s “actual CFO.”
Craft also denied that phone-service revenues amounted to less than 1 percent of the $1 billion TelexFree allegedly led participants to believe it would pay them for playing internet ads promoting the company.
Craft’s lawyer argued that the SEC “fails to state a claim for which Joseph Craft is liable,’’ stating that he never pushed TelexFree’s phone service, did not direct anyone to the website and never signed financial statements for the company or performed an audit.