U.S. arrests Brazilian in fraud probe, seizes $20 million under mattress

[January 06, 2017]  By Nate Raymond

BOSTON (Reuters) - U.S. prosecutors on Thursday announced that about $20 million found under a mattress in a Massachusetts apartment had been seized after a Brazilian man was arrested for laundering money linked to a multi-billion-dollar global fraud.

Federal prosecutors in Boston charged Cleber Rene Rizerio Rocha, 28, with conspiring to commit money laundering in a case connected to the investigation of TelexFree Inc, which promoted itself as an internet telecom company but prosecutors say was actually a pyramid scheme.

Rocha was detained following a court hearing, prosecutors said. His lawyer did not immediately respond to a request for comment.

The arrest stemmed from an investigation into TelexFree, a Marlborough, Massachusetts-based company that sold voice-over-internet telephone service and was founded by James Merrill, a U.S. citizen, and Carlos Wanzeler, a Brazilian.

Prosecutors said TelexFree was a massive pyramid scheme, making little to no money selling its service while taking in millions of dollars from thousands of people who paid to sign up to be "promoters" and post ads online for it.

TelexFree filed for bankruptcy in April 2014 owing $5 billion to its participants, prosecutors said. In total, 965,225 victims in the United States, Brazil and various other countries lost $1.76 billion when it collapsed, they said.

Merrill was arrested in May 2014 and pleaded guilty to conspiracy and wire fraud charges in October. Wanzeler in 2014 fled to Brazil and could not be extradited.

According to Thursday's criminal complaint, in 2015, an individual working on Wanzeler's nephew's behalf approached a cooperating witness about laundering money still in the United States through Hong Kong accounts and moving the funds to Brazil.

The intermediary told the witness that she wanted $40 million transferred out of the country because Wanzeler's wife, still in the United States, was filing for divorce and knew where it was located, the complaint said.

On Dec. 31, Rocha, acting as a courier for Wanzeler's nephew, flew to the United States and subsequently met on Wednesday with the cooperating witness, whom he gave $2.2 million in a suitcase, according to authorities.

After the meeting, federal agents followed Rocha to an apartment complex in Westborough, Massachusetts.

They returned to it after arresting Rocha to find a "substantial amount of cash" hidden under a mattress, the complaint said. Rocha said the money totaled $20 million, the complaint said.

Wanzeler's lawyer did not immediately respond to a request for comment.

The case is U.S. v. Rocha, U.S. District Court, District of Massachusetts, No. 17-mj-05007.

(Reporting by Nate Raymond in Boston; Editing by Leslie Adler)

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