State subpoenas second firm in pyramid scheme probe

The offices of Wings Network in Framingham.

Secretary of State William F. Galvin’s office has issued subpoenas to another multilevel marketing firm doing business in Massachusetts, following his office’s recent lawsuit charging TelexFree Inc. with running a pyramid scheme.

The second company, Wings Network , appears to be based in Portugal and says it sells cloud-based Internet storage plans, according to its website and Facebook pages. Wings Network came to the attention of Galvin’s Securities Division because its sales strategy appears to be similar to TelexFree’s.

In Facebook posts, both companies tout the chance to earn riches by recruiting others to join. And they hold large sales conferences — which are more like rallies — to encourage participants.

D.J. Poyfair, an attorney for Wings Network in Denver, confirmed the company had received subpoenas from Galvin and that lawyers for the company met last week with the Securities Division. The regulators want to meet with company executives next week.“We attended one of their events,’’ Galvin said. “We had heard from some investors who, in light of TelexFree, had become concerned — and we’re concerned.’’ No charges have been brought against Wings Network.

“Wings Network is committed to operating legally and ethically in all the countries in which it does business, including the United States,’’ Poyfair said. He said Wings is cooperating with the state’s investigation and is “conducting its own internal investigation and it intends to address quickly any problems that it discovers.’’

Poyfair said the company is looking into whether the local sales meetings were authorized by executives. If not, they may have been set up by opportunistic promoters as TelexFree appeared to be falling on hard times in March. The company filed for bankruptcy protection last month.

TelexFree and eight of its principals and promoters have been charged by the federal Securities and Exchange Commission with running an illegal pyramid scheme. The company allegedly recruited thousands of people to buy its Internet long-distance phone service and to open accounts that would pay them returns for helping post online ads for TelexFree. The apparent scheme may have cost Massachusetts investors $90 million.“If Wings Network discovers that significant issues exist, it would even be willing to suspend operations until the problems are properly addressed,’’ Poyfair said.

The SEC froze the assets of TelexFree and the eight individuals last month, days after the bankruptcy filing. Through press releases and in court, the company has denied wrongdoing.

A TelexFree promoter’s office in downtown Framingham was dark on two recent weekday visits.

On the same block, a Wings Network office also was empty on those visits, and no one responded to the phone number posted in large print on the windows.

The Wings Network’s website lists Carlos Barbosa as chief executive.

In a statement there, Barbosa says, “Information technology applicable to mobile solutions is today a fast growing market. A reality that moves millions of dollars daily with downloads of every sorts of apps.”

Dozens of people have e-mailed The Boston Globe, saying some people who participated in TelexFree are now shifting to Wings Network. Like TelexFree, it appears to be popular with Portuguese-speaking Brazilian immigrants.

Other companies involved in multilevel marketing — which entails recruiting large numbers of people to pitch products or services — have come under scrutiny recently.

The SEC in March froze the assets of World Capital Market Inc., or WCM777 Inc., in California, charging the group with raising $65 million from investors in a Ponzi scheme.

The group targeted Asian-Americans and Hispanic-Americans, according to the complaint, which was filed in federal court in Los Angeles.

Galvin signed a consent order with WCM777 back in November 2013, requiring the company to reimburse Massachusetts residents.

In the order, Galvin’s office said that 160 Massachusetts investors, primarily residents of the Brazilian community, had paid more than $300,000 for WCM777 packages.

The company agreed to the order but neither admitted nor denied the allegations.

The company could not be reached for comment.

Beth Healy can be reached at beth.healy@globe.com. Follow her on Twitter @HealyBeth.
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Swiss to vote on $25 an hour minimum wage

USA TODAY

GENEVA, Switzerland – A vote on Sunday to establish a minimum wage of $25 an hour would make mostly immigrants here in agriculture, housekeeping, and catering among the world's highest paid unskilled workforce. 

The vote comes after hundreds of fast-food workers walked off their jobs in many U.S. cities and in more than 30 countries on Thursday in a protest for higher wages. If the Swiss proposal passes, the country would have the highest minimum wage in the world.

But some who would be eligible for the higher wage worry that it may do more harm than good.

Luisa Almeida is an immigrant from Portugal who works in Switzerland as a housekeeper and nanny. Almeida's earnings of $3,250 a month are below the proposed minimum wage but still much more than she'd make in Portugal.

Since she is not a Swiss citizen, she cannot vote but if she could, "I would vote 'no'," she says.

"If my employer had to pay me more money, he wouldn't be able to keep me on and I'd lose the job."

Almeida's concern illustrates the dilemma that faces the movement to have governments and not the market decide how much people should be paid at a minimum.

Forcing employers to hike wages means they must cut expenses to accommodate the higher labor costs. That often means less hiring, or some firing.

But Patrick Belser, Senior Economist in the Wage Group of the International Labor Office in Geneva says the initiative could work.

"International experience has shown that minimum wages can prevent labor exploitation without any negative effect on the economy," he said.

Yet, Besler worries that a minimum wage of $4,500 a month "is probably a little too high.

"If it is accepted, the effects on employment would have to be carefully monitored, and a mechanism for social dialogue should be created to discuss its effects and possible future adjustments of the rate," he said.

Currently, Switzerland does not have a minimum wage law. Industry-specific pay scales are determined by employment contracts or collective bargaining agreements between employers and trade unions. However, 90% of Swiss workers earn well above the proposed minimum and are already among the highest paid in the world.

According to government statistics, the average household income in Switzerland is about $6,800 a month; in the USA, where the minimum wage is currently $7.25 an hour, the average household monthly income is roughly $4,300, Census Bureau figures indicate.

Referendums are a unique feature of Switzerland's unique brand of social democracy, which gives citizens the power to shape policy over the government. Any individual or group can challenge existing legislation or force a vote on a new issue by collecting 100,000 signatures on a petition.

As in America, the issue of minimum income is controversial in Switzerland, too, pitting employers against trade unions and left-wing parties, which sponsored the proposal. And many of the "pro" and "con" arguments are similar as well.

Opponents of the initiative say a law regulating minimum wages would be detrimental to Switzerland's thriving economy because businesses might cut existing jobs or not hire new employees. At 3.2%, Switzerland's unemployment rate is among the lowest globally.

"This measure would eliminate a big number of low-skill jobs performed by the very workers the legislation is supposed to help," former trade union economist Beat Kappeler says. "It would be damaging in quantitative and qualitative ways."

"A minimum wage of 4,000 francs could lead to job cuts and even threaten the existence of smaller companies, notably in retail, catering, agriculture and housekeeping." Swiss Economics Minister Johann Schneider-Ammann told the local media recently. "If jobs are being cut, the weakest suffer most."

A recent poll by gfs.bern research institute shows that 64% of those surveyed are against the proposal. In past referendums on proposals from the left, the Swiss have been of two minds.

Last year Switzerland passed a measure to curb "excessive" bonuses for executive, but months later in another referendum the country voted down a proposal to reduce the income gap between lowest and highest salaries even though polls predicted the measure would pass.

Wife of TelexFree co-owner arrested at JFK Airport

AP/METROWEST DAILY NEWS, ALLAN JUNG/FILE

Authorities raided the headquarters of Marlborough-based TelexFree last month.

The wife of TelexFree Inc. co-owner Carlos Wanzeler was arrested at JFK International Airport on Wednesday night as she tried to board a flight to leave the country and join her husband in Brazil, according to the US attorney’s office.

Katia B. Wanzeler was arrested on a material witness warrant, said Christina Sterling, the US Attorney’s spokeswoman. She was scheduled to appear in federal court in Brooklyn, N.Y., Thursday afternoon. Her husband has already fled to Brazil and is considered a fugitive by federal authorities.

An affidavit filed in court Thursday detailed a multi-day odyssey in which Carlos Wanzeler managed to leave the United States. On April 15, the day his Marlborough-based company’s office was raided by federal agents investigating an alleged $1 billion global fraud, Wanzeler and his daughter Lyvia drove to Canada in the family’s BMW. They crossed the border at 11 p.m. at Lacolle, Quebec.

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$38 million in cashier’s checks tied to TelexFree case

• Affidavit in case (pdf)
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• Read affidavit in support of arrest warrant (PDF)

Wanzeler’s business partner, James Merrill, was arrested last week and is in custody, pending a detention hearing in Worcester on Friday.Two days later, the father and daughter boarded an Air Canada flight from Toronto to Sao Paulo, Brazil. Wanzeler entered the country of his birth using a Brazilian passport. That same day, as federal agents executed a warrant to search Wanzeler’s Northborough home, Katia told them her husband was staying at a hotel on the advice his lawyer.

Katia Wanzeler’s name surfaced in the TelexFree fraud investigation after a check made out to her was seized by federal agents at the company’s local office. According to the affidavit, “significant sums of money were moved” from TelexFree bank accounts into a Wells Fargo account in the name of Katia Wanzeler.

On Feb. 28, two transfers to her account totaled $3.5 million, according to the affidavit. Subsequently, $1.5 million of that was moved into a Wells Fargo brokerage account bearing her name.

The Wanzelers’ daughter actually returned to the U.S. recently, before leaving again. On April 26, Lyvia Wanzeler flew to Boston on a round-trip ticket, using her father’s frequent flyer miles. She was scheduled to return to Brazil on June 4, but instead left on May 1 for Italy.In April, just days before TelexFree would file for federal bankruptcy protection, Katia Wanzeler allegedly traveled with her husband’s business partner, Merrill, to fetch more than $27 million in cashier’s checks from a Wells Fargo bank in Connecticut. Most of those checks were made payable to TelexFree entitities, but one of them -- for over $2 million -- was made out to Katia B. Wanzeler.

On May 13, investigators said in their affidavit, “someone in Brazil” bought Katia a one-way ticket there, paying in cash.

The BMW Carlos Wanzeler and his daughter drove to Canada had a license plate registered to Acceris Realty Estate, where Katia is the registered agent, according to the affidavit.

The Wanzelers’ lawyer, Paul V. Kelly, said in a statement, “Ms. Wanzeler has not been charged with any crime and there was no legal impediment to her traveling to Brazil, or anywhere else.’’ He said arresting her was “really unnecessary,’’ noting, “Had the government informed us that they considered Ms. Wanzeler a material witness, I am sure we could have worked something out to arrange her appearance.’’

TelexFree grew into a global concern with thousands of participants by touting its Internet phone service plans, according to regulators and prosecutors. But it allegedly generated nearly all of its money through a pyramid scheme, recruiting people around the world to invest, and promising them quick returns for helping the company post online internet ads, prosecutors allege.

The online ads, however, were a meaningless exercise, prosecutors allege, to hide the true activities of the company. State and federal securities regulators have filed civil fraud charges against the company and its principals. Both Carlos Wanzeler and Merrill also face a criminal charge of conspiracy to commit wire fraud. Each faces 20 years in prison if found guilty.

Beth Healy can be reached at beth.healy@globe.com. Follow her on Twitter @HealyBeth.

Elvis Presley interview - 31 March 1972

The King Forever...

Google Testing Huge Gmail Redesign

• BY DAVID MURPHY

Google is allegedly testing out some big UI changes for Gmail — the desktop browser-based version — and there's nothing subtle or slight about Google's modifications.

The goal, we presume, is twofold: To more closely unify Gmail (desktop) with proposed UI changes to Google's mobile version of Gmail, and to make Gmail work friendlier with an expanded array of desktop sizes and resolutions without losing any functionality in the process.

Easy enough, right?

According to the report from Geek.com, which we can only presume has fancy access to Google's Gmail test, a brand-new menu system that flies in and out of the browser window replaces Google's otherwise static sidebar of links — Inbox, Starred, Sent Mail, and all those.

Also gone: Google's tabbed email system, which has now been transformed into a "grouped in the inbox" section that automatically sorts your email by topic: Travel, Purchases, Finance, Social, Updates, Forums, and Promos. It's unclear if you can add to or modify these categories; we assumed they are locked.

Google Hangouts is integrated into the new Gmail interface; we believe that you need merely hit the chat-bubble-like icon in the design refresh's upper-right corner in order to pop out a sidebar, similar to the aforementioned fly-out menu, that allows one to chit-chat and make video calls. A big "+" icon in Gmail's lower-right corner presents a new pop-up menu for composing new messages and adding new reminders into Gmail.

A new "pinning" system, replacing Gmail's older "Stars" system, will allow users to select important messages that they'd like to otherwise stick to the top of their Gmail inbox. A sorting button at the top of the Inbox will allow users to sort their messages and pull these pinned items to the top or, if they prefer, they can revert back to the more traditional chronological style of message display.

"There's no expected release date for any of these features, or even a guarantee that Google will implement them in the way we see them in these images, but after spending a few minutes in this interface it is clear that Google is eager to shake things up in Gmail. With any luck most of these features will make the cut and we'll see an all new Gmail any day now," writes Geek's Russell Holly.

How to Make Your Android 4.2 Phone a Wi-Fi Hotspot

Locate the menu button. They look different depending on the phone. Some are little squares in a vertical line; others are a circle with little squares inside. Some are physical buttons on the phone, and some are part of the screen. It’s the main button that takes you to a list of applications.

1. Once you push the menu button, search through the buttons until you find the “Settings” button.
2. After you push the “Settings” button, click the button under the first section, “Wireless & Networks”, that says “More…”
3. You should then see 4 options: “Airplane Mode”, “VPN”, “Tethering & Portable Hotspot” and “Mobile Networks”. Click “Tethering & Portable Hotspot”
4. Your device is now a Wi-Fi hotspot, and all you need to do is take your 2nd device that you are trying to tether and do the following:
   • a. Open up the settings.
   • b. Find and select the “Wi-Fi” button.
   • c. Inside the Wi-Fi menu find the network name for your phone.
     • i. Note: If you cannot recognize your phone’s Wi-Fi network name, try looking at the “Tethering & Portable Hotspot” settings. The 2nd button from the top should say “Set up Wi-Fi hotspot”. Click that, and at the top it will display your phone’s network name and password.
     • ii. If you cannot see the password, click “show password” and it should appear. Note that you can change the password and network name at your discretion.