Billion Dollar Fraud Goes Viral

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Stacy Keach (0:59)

This is the American Greed Podcast, presented by CNBC. I'm Stacy Keach.

In this episode of American Greed, Carlos Wanzeller and James Merrill become internet hotshots through videos like these as they pedal a dream come true work-from-home opportunity to people who are desperate to succeed.

Gladys Vega (1:21)

Very poor people, people that had two or three jobs.

Stacy Keach (1:24)

As these kinds of videos go viral, so does the scheme.

Tisza Hartman (1:28)

And it was like a religion. People wanted to invest every single last penny they had.

Stacy Keach (1:36)

Spreading their message to almost every country in the world, they conned 1.8 million believers to shell out 3 billion dollars on their bogus business.

Rosemary Torrico (1:46)

We put another 4,500, and then a couple months later, we said, oh, the money is coming back. So we put another 15,000.

Stacy Keach (1:56)

And back at fraud headquarters, their victim's money is piling up.

SPEAKER_7 (2:00)

We have stories of people showing up literally with duffel bags of cash.

Stacy Keach (2:04)

And where do investigators find the stolen millions? Where else? In a mattress.

In January 2017, in downtown Boston, at the Office for Homeland Security, a 28-year-old man from Brazil named Cliba Rocha is under arrest. Earlier, Rocha handed $2 million in cash to a man he doesn't know is an undercover federal agent.

SPEAKER_1 (2:43)

You just said that he's not a bad guy.

Stacy Keach (2:47)

His interrogators believe the money was stolen in a $3 billion fraud, and the agents want Rocha to tell them who he is working for. Carlos Wanzeler.

SPEAKER_1 (2:58)

Carlos Wanzeler?

Stacy Keach (2:59)

Yeah. That's the name they are looking for. Carlos Wanzeler, a man who uses videos like these to attract victims in what is reportedly the largest pyramid scheme ever prosecuted in the US. And at this moment, as Rocha sits facing potential criminal charges, Wanzeler is more than 4,000 miles away in Vitoria, on the southeast coast of Brazil. It's a sort of homecoming for Wanzeler.

He grew up in Vitoria, but left in the late 80s, looking for a better life in America. Dina Bernstein is Senior Trial Counsel for the SEC Boston.

Dina Bernstein (3:39)

His father had died. He felt like he had to support his mother and his family. He literally goes from one dish washing job, like, you know, literally leaves one and goes to another.

Stacy Keach (3:50)

When his family arrives in Boston a few years later, then he finds a company called Cleaner Images in the Yellow Pages that will hire all of them. It is owned by a man named James Merrill, Massachusetts US. Attorney Andrew Lelling.

SPEAKER_7 (4:06)

By all accounts, sort of a average family man living in Central Massachusetts, sort of a serial entrepreneur.

Stacy Keach (4:13)

Merrill and Wanzeller hit it off. Eventually, Merrill asked Wanzeller to become his partner in the business.

SPEAKER_11 (4:20)

I think Mr. Merrill would say that he trusted Carlos Wanzeller to the end.

Stacy Keach (4:27)

And that trust takes Merrill down a dangerous path when he and Wanzeller launch a company that sells a software package that allows people to make international calls over the Internet. It is called TelexFree.

SPEAKER_7 (4:43)

It was a voice-over Internet phone service, sort of like Skype. So, you would pay a flat fee each month and you would get unlimited calls to Central and South America over the Internet.

Stacy Keach (4:55)

From its marketing, it seems tailor-made for immigrants who want to call home cheaply. But TelexFree actually offers much more, as Wanzeller explains in this online video.

Carlos Wanzeler (5:08)

TelexFree is about changing people's lives.

Stacy Keach (5:13)

That's right. As these ads show, TelexFree promises to transform lives, to make dreams come true.

Carlos Wanzeler (5:23)

If I sell my company to Facebook or somebody else, I know they're going to start my dream, your dream.