Search tied to TelexFree case turns up $20m hidden in bed
Federal authorities seized roughly $20 million in cash hidden inside a mattress in a Westborough apartment this week and arrested a Brazilian national in connection with the sprawling TelexFree fraud case, US Attorney Carmen M. Ortiz’s office said Thursday.
In a statement, prosecutors announced the seizure and arrest of Cleber Rene Rizerio Rocha, 28, on a charge of conspiring to commit money laundering. Rocha was ordered held during his initial appearance Thursday in federal court in Boston. He did not enter a plea.
The case against Rocha stems from the 2014 raid of TelexFree Inc. headquarters in Marlborough, and the subsequent indictments of cofounders Carlos Wanzeler and James Merrill on charges that they ran the company as a massive pyramid scheme, the statement said.
Wanzeler fled to his native Brazil, where he remains a fugitive. Merrill pleaded guilty in October and is awaiting sentencing in Worcester.
According to prosecutors, someone working on Wanzeler’s behalf contacted an associate for help transferring millions of dollars still hidden in the Greater Boston area to Brazil, and the associate became cooperating witness in 2015.
The associate then allegedly arranged with Wanzeler’s nephew to move the funds through Hong Kong before the funds ultimately landed in Brazilian accounts, the statement said.
Rocha, acting as a courier for the nephew, flew a few days ago from Brazil to New York City and met the cooperating witness on Wednesday in Hudson, where he allegedly gave him $2.2 million in a suitcase, according to the statement.
Agents followed Rocha to Westborough and later arrested him in Natick.
“That night, federal agents searched an apartment at the Westborough complex and seized a massive stockpile of cash hidden in a box spring,’’ the statement said. “The cash appears to total approximately $20 million.”
TelexFree, formerly based in Marlborough and Brazil, is believed to be the largest Ponzi scheme ever, in terms of the number of people affected. The company, which nominally sold Internet phone service, grew into a vast global investment swindle, prosecutors have alleged, with investors believing they had $3 billion in their accounts.
Rocha is due back in court for a detention hearing on Wednesday. His lawyer could not be reached for comment late Thursday night.
According to an affidavit filed in Rocha’s case, he arrived at JFK Airport on Dec. 31 and told customs officials that he was visiting New York for one week for his honeymoon.
When he was arrested at a shopping plaza in Natick, he “admitted his role in the operation, telling the agents that he traveled to the United States to facilitate the money transfer on behalf of [Wanzeler’s] nephew and Wanzeler,” the court filing said.
The document said federal agents returned to the Westborough apartment and seized the cash.
Rocha faces substantial prison time if convicted of the conspiracy count.
“The charging statute provides for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater,” Ortiz’s office said in its statement. “Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based on the US Sentencing Guidelines and other statutory factors.”
Merrill pleaded guilty in October to spare himself a worst-case scenario: 180 years in prison if he had been found guilty at trial. In his deal with the government, he will serve no more than 10 years.
His sentencing hearing is scheduled for next month in federal court in Worcester before US District Judge Timothy S. Hillman.
Merrill was chief executive at TelexFree, running the company’s daily operations from Marlborough from February 2012 to April 2014, Assistant US Attorney Andrew Lelling said in court during the October hearing.
US prosecutors contend that TelexFree brought in the vast majority of its money by luring participants to bring in friends and family. Lelling said about half the participants, or nearly 1 million, lost close to $1.8 billion in the scheme, which started as an Internet phone service business.
Merrill admitted to “reckless disregard for the truth” in the case, his lawyer, Robert Goldstein, said in court, because he was aware of the growing fraud but did not take steps soon enough to stop the scheme or disclose it.
“Jim accepts responsibility for his role,” Goldstein said in an interview after the October hearing. “He’s sorry — extremely sorry — for the role he played.”
Goldstein said Merrill never intended for TelexFree to become a fraud. “Jim feels incredible sorrow that anyone would’ve lost even a penny,” he said.