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NY judge jails wife in Massachusetts fraud scheme

May 15, 2014

NEW YORK (AP) — The wife of a fugitive wanted in Massachusetts in a billion-dollar pyramid scheme was denied bail Thursday after prosecutors told a judge she was caught at John F. Kennedy International airport with a one-way ticket to Brazil, $3,000 in cash and four suitcases weighing 70 pounds.

A lawyer representing Katia Wanzeler failed to convince U.S. Magistrate Joan Azrack that his client had no reason to flee because she’s only a witness in the case and was planning to return by the end of the month. He claimed the heavy luggage contained clothes she had bought for her relatives.

“Seventy pounds of luggage? Four suit cases? ... There is no way I’m releasing her,” Azrack said in federal court in Brooklyn.

Wanzeler, 49, wearing blue jeans and a hoodie, wiped away tears with her sleeves as she was led out of court. She was to be taken to Massachusetts, where she’s been subpoenaed by a grand jury in Worcester.

Carlos Wanzeler and another man were charged earlier this month with cheating investors in TelexFree, an Internet phone company. Court papers allege that rather than generate legitimate revenue, the company recruited new investors to pay returns to the existing ones.

When the scheme collapsed and the company declared bankruptcy last month, federal agents raided its headquarters in Marlborough, Massachusetts. They recovered 10 cashiers checks totaling nearly $38 million, including one made out to Katia Wanzeler for $2 million, prosecutors said.

The day of the raid, Katia Wanzeler told agents who went to the couple’s Northborough home that her husband was staying at a hotel on the advice of his attorney, court papers say. In reality, he and his daughter had crossed by car into Canada, where they caught a flight to Sao Paulo, Brazil, the papers say.

After learning Wanzeler had bought a one-way ticket with cash, authorities obtained a material witness warrant and intercepted her at 9 p.m. Wednesday as she was boarding an American Airlines flight to Rio de Janeiro. They also served her with the subpoena.

Defense attorney Robert Peabody argued Wanzeler, a Brazilian-born U.S. citizen, had no incentive to flee because she didn’t know she was being called before the grand jury and had left a teenage son with a caretaker at her home in Massachusetts.

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