State subpoenas second firm in pyramid scheme probe
Secretary of State William F. Galvin’s office has issued subpoenas to another multi-level-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.
“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.
D.J. Poyfair, an attorney for Wings Network in Denver, confirmed the company had received subpoenas from Galvin and that lawyers for Wings Network met last week with the Securities Division. The regulators want to meet with company executives next week.
“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.
“If Wings Network discovers that significant issues exist, it would even be willing to suspend operations until the problems are properly addressed,’’