Former TelexFree members cry foul after bankruptcy petition

  • By Eric Kabeera
  • April 16, 2014
A client searches for TelexFree services on the internet. Net photo.

Rwandans who invested in the former TelexFree Rwanda Ltd company have appealed for government’s intervention to help them recover their lost finances from the US based company.

This comes a day after the company filed for bankruptcy in US Bankruptcy Court for the District of Nevada.

The international telecommunications and multi-level marketing company announced it had filed for relief under the US bankruptcy code to address certain operational challenges.

The Bankruptcy Code prohibits creditors from taking certain actions related to debts that may have owed prior to the commencement of the Bankruptcy Cases.

“If you believe that you might be a creditor of the Debtor based upon debts arising prior to April 13, 2014, and you are considering taking action based upon your status as a creditor, you may wish to seek legal advice,” a statement from the company said.

 The company’s operations in Rwanda were banned last month after investigations revealed that it was performing a pyramid scheme that benefitted only the owners, leaving most clients counting losses.

“We want our government to engage the US (embassy) Commercial Attaché. It was a registered company in Rwanda and government should defend us,” James Gihana, one of the Rwandan investors said in an interview yesterday.

He said they had petitioned the Ministry of Trade and Industry, Rwanda Development Board and the Auditor General’s Office to intervene but they are yet to get feedback. Gihana declined to disclose the amount he had invested, saying it was personal matter.

But a source said individal Rwandans could lose as much as  Rwf44 billion.

 According to a report released last month, the company had channelled over $11.3 million (over Rwf7.6bn) to foreign countries, especially US and Germany without paying taxes.

The company was also supposed to have sent $6 million (Rwf4bn) to Rwanda in taxes.

Fred Murangira, who operated a TelexFree subsidiary company in Kigali, described the firm’s move to file for bankruptcy as disappointing.  

When contacted, Emmanuel Hategeka, the Permanent Secretary in the Ministry of Trade and Industry, said it was difficult for government to intervene.

“If the company had assets in the country it would be easy for us to seize the assets and compensate the members but now I don’t think they had assets here. What we can do is only to look into the contractual framework between the company and members and advise accordingly,” he said.

He urged Rwandans to be cautious before venturing into suspicious businesses.

“It should serve as a lesson to Rwandans. They should invest with caution,” he said.

How the company worked

To join TelexFree,  a member needed to invest $400, $1,525 or $16,225 a year.

The member was then obliged to post certain adverts daily obtained from the firm to a TelexFree website and the returns were ostensibly commensurate with one’s initial investment.

It is said that when a member invested $400 they got $20 weekly for 52 weeks, while the one who invested $1,525 earned $100 per week. A member who invested $16,225 was entitled to $1100 per week.

The company, that also operates in Uganda and Kenya, was suspended in Brazil, Peru and Tanzania over suspicion of involvement in money laundering.

Similar companies whose activities have been banned in Rwanda include Diamond Holiday Travels, Cooperative Abigize, Aguka development initiative, Twese development initiative, and Ingaru Company Ltd. 

Contact email: eric.kabeera[at]


This shouldn't be our government headache. Just because some citizens out of sheer greed thought they could gain profit out of doing nothing. I wish they have poured those 44 billions in Agaciro found instead of giving it away to some american hustlers!!

08:41:53 Wednesday 16th, April 2014 Kigali - Murangira

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Exactly my thoughts.

10:26:00 Wednesday 16th, April 2014 Brussel - Jean to Murangira

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some times we need to take our time and think other wise! you have not done any trans action and think your going to gain some thing out of nothing.why can't you people buy some shares on Rwandan stock exchange and get a profit in steady of give money to the person you do know .what kind of business is that?RDB also should be blamed for allowing the so called investors with out clear definition of what they are going to do.our law makers please!

10:33:28 Wednesday 16th, April 2014 kamugisha - william

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Why don't Rwandans take lessons from our beloved President who always call for co-operatives and come with strong local investors instead of investing with foreign vaultures.

11:39:17 Wednesday 16th, April 2014 Texas USA - Naswiru Semasaka to william

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Well, its absurd that the company is disappointingly filing for bankruptcy and has failed to honour its pledges to the repective governments. however, with he ever increasing levels of unemployment and subsequently poverty; i guess the civillians are not to blame to have taken part in the business.

Let the government advise if need be, whether there is still some hope. Sensitization is gonna be very key next time such or related companies come.

12:13:19 Wednesday 16th, April 2014 Kampala - Uganda - Smith Tukahirwa Gatabazi

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I pity grown-ups who think that they can earn much money without little investment and effortlessly. I was approached by somebody giving me a hint to earn money. I told the person that if he is earning little money now, it is a way of luring him to put in more and when the whole scheme collapses, he will lose a lot of money. He is now asking himself if the government would help him to recover the money.

How will the government help, while he did not seek its advice when he was 'investing'?

Remember from now on all the pyramid business are questionable. So think twice before you enter that door. This should be preached in churches because I know one church where the loss will be much, as this 'egret' was shared somehow among all this church members who had some money to invest .

14:58:13 Wednesday 16th, April 2014 Kacyiru - Greg Gatiba

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If the government received any of the $6 Million in taxes,(which means the business had a legitimate registration with the govt) then they should not only aportion the blame to those who joined the company but seek ways to hep those who invested the monies in this unfortunate scheme

16:23:23 Wednesday 16th, April 2014 Kigali - Micheal

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Before we blame the investors in these companies lets think twice; before a company is registered by RDB, you are required to state what your business operations are, so why is RDB going ahead to register these companies if they do not agree with their mode of operations? besides these pyramid based organizations, there are so many organizationscompanies that do register and claim they are operating.

This goes on for so many years but at the end of the day all they have done is raised funds and not done anything beneficial AT ALL, no one comes after them. The treatment given to pyramid companies should apply to even now pyramid companies.

10:48:51 Thursday 17th, April 2014 Kigali - Julienne

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