The fugitive cofounder of TelexFree Inc., a multibillion-dollar pyramid scheme based in Massachusetts, has had his Brazilian citizenship revoked — a move that may open the door for his extradition to the United States.
Carlos Wanzeler, who fled to his native Brazil in 2014, was stripped of his citizenship last week by the Brazilian Ministry of Justice, according to a report published in Diário Oficial da União, the official journal of the Brazilian federal government.
Wanzeler, 49, left for Brazil — via Canada — the same day federal authorities raided TelexFree’s headquarters in Marlborough.
US officials had been negotiating for Wanzeler’s return, but Brazil does not extradite its own citizens. By stripping Wanzeler of his citizenship, however, Brazilian authorities may be taking a step toward his extradition — a move that was employed recently with a fugitive Brazilian woman wanted in Ohio in connection with the 2007 killing of her husband.
The Ministry of Justice cited that Wanzeler was being stripped of this citizenship because he became a naturalized American citizen in 2009, according to the official government publication. Brazil’s constitution allows for citizenship to be revoked under certain circumstances, but it is rarely done.
Wanzeler’s attorneys in Brazil have appealed the ruling. Meanwhile, authorities there are separately prosecuting TelexFree and its owners.
Paul V. Kelly, a Boston attorney who represented Wanzeler and now represents his wife, who still lives in Massachusetts, wrote in an e-mail to the Globe that he was surprised by the revocation of citizenship.
“It seems somewhat radical to me that Brazil can pass a new law, and then apply it in a legal proceeding that has been pending for several years, and against a person who was born and raised in that country,’’ Kelly said. “In obtaining dual US citizenship several years ago, for specific and lawful reasons, Mr. Wanzeler never intended to relinquish citizenship in his home country. Mr. Wanzeler has always maintained a home in Brazil, and it is where most of his family members reside.’’
The Boston office of US Attorney Andrew E. Lelling declined to comment.
The action by the Brazilian government mirrors its decision in 2013 to revoke the citizenship of Claudia Hoerig, charged with the execution-style murder of her husband in Ohio in 2007.
Hoerig, who had become an American citizen in 1999, fled to her native Brazil prior to being charged with her husband’s murder.
The case went all the way to Brazil’s Supreme Court, which in 2016 ruled against Hoerig, paving the way for extradition. She was brought to Ohio in January to stand trial.
Wanzeler and TelexFree chief executive James Merrill were indicted in 2014. The company, which ostensibly sold low-cost Internet phone services, declared bankruptcy in April 2014 and was raided by federal authorities.
Wanzeler faces multiple fraud charges for his role in the $3 billion Ponzi scheme that affected nearly 2 million investors worldwide, many of them housekeepers and other low-paid workers. Federal prosecutors have said that Massachusetts victims alone lost $120 million and that it was the largest fraud of all time in terms of the number of people affected.
Merrill, of Ashland, pleaded guilty to multiple counts of fraud and was sentenced last year to six years in federal prison.
But prosecutors said Wanzeler was the “prime mover’’ in the scheme. A Brazilian court ordered Wanzeler, Merrill, and a third cofounder, Carlos Costa of Brazil, to pay $130 million in taxes. Costa is not charged in Massachusetts.
Stephen B. Darr, the trustee in the TelexFree Inc. bankruptcy case, said 132,000 victims filed electronic claims for restitution between May 2016 and March 2017.
The claims review process is expected to continue for the next six months, after which victims will begin receiving payments.
About $105 million in cashiers checks and bank deposits were seized by federal authorities, as well as $8 million in personal property that included cars, boats, and homes, Darr said. Prosecutors said that in his haste to leave the country in 2014, Wanzeler left millions of dollars hidden in Greater Boston.
Last year, federal authorities also seized about $20 million in cash hidden inside a mattress box spring in a Westborough apartment used by Brazilian national Cleber Rene Rizerio Rocha, who was charged with conspiracy to commit money laundering.
Authorities said he was part of a scheme to transfer the cash to Wanzeler in Brazil. Rocha pleaded guilty and was sentenced Feb. 8 to 33 months in federal prison, followed by one year of supervised release.
In all, less than $170 million is expected to be distributed to victims, a fraction of the total losses.
Katheleen Conti can be reached at kconti@globe.com. Follow her on Twitter @GlobeKConti. Beth Healy of the Globe staff contributed to this report.
