The U.S Securities and Exchange Commission alleged that Telexfree, Inc. and Telexfree, LLC that sells telephone service based on “voice over internet” technology are operating an pyramid scheme against their customers. The dependents in this case sold their membership by promising the annual returns of 200 percent or more for those who recruit new members in to the telexfree advertisements. However, Telexfree only made $1.3 million profits with VoIP sales from 2012, which is one percent more $1.1billion needed to cover its promised payment to the members who helped recruit new members for this advertisement. Because they could not pay back to its members, Telexfree started to pay the earlier investors or members with its money received from
