U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19715 / June 1, 2006

SEC v. Universo Foneclub Corporation, Sanderley R. De Vasconcelos, a/k/a Sann Rodrigues, a/k/a Sanderley Vasconcelos, Rev. Victor Sales, a/k/a Victor William, a/k/a Victor Sales DeBrito, a/k/a Victor Sales Brito (United States District Court for the District of Massachusetts, Civil Action No.06-10940-GAO)

SEC Halts Fraudulent Pyramid Scheme Targeting Brazilian Community and Obtains Emergency Restraining Orders and Asset Freezes

The Securities and Exchange Commission announced that, on May 30, 2006, it sought and obtained an emergency order to halt an active pyramid scheme that was targeting the Brazilian community in the Boston area. The Commission filed an emergency enforcement action in federal district court in Massachusetts and obtained a temporary restraining order, asset freezes, and other relief against two individuals and one corporate entity in connection with the affinity fraud. "Affinity fraud" refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups.

The Commission's papers charge Sanderley R. De Vasconcelos and Victor Sales with promoting a pyramid scheme known as "FoneClub" that targets Brazilians and Brazilian-Americans living in the area of Framingham, Massachusetts. The Commission alleged in its complaint that the defendants falsely promised members of the Brazilian community that they would earn substantial sums of money by paying approximately $2,000 to $5,000 to become members of a company referred to as the FoneClub that purportedly sells prepaid telephone calling cards through a multi-level marketing structure. However, the complaint alleged that the defendants, who have emphasized to potential investors that neither they nor the company will earn profits from the sale of phone cards, are in reality luring victims into a pyramid scheme in which its members only make money through the recruitment of new members. The complaint alleged that the defendants emphasized in their sales pitch, which was given in Portuguese, that God wanted the Brazilian community to prosper financially and that the FoneClub would provide the opportunity for it to do so.

According to the Commission's complaint, the defendants claim to have signed up about 2,000 members for their organization. De Vasconcelos is a resident of Nashua, New Hampshire. Sales lives in Framingham, Massachusetts. Universo Foneclub Corporation, which until May 1, 2006, was known as FoneClub, Inc., is located in Charlestown, Massachusetts. The Commission's complaint alleged that the defendants claim that, by paying a $1,990 membership fee to become a "manager" with the company or by paying $4,990 to become an "executive," investors will earn the right to receive 30% of the membership fee paid by their recruits as well as a share of the company's profits. The complaint asserted that the company's website, which is in Portuguese, boasts how a member could, after twelve months with the company, earn $17,000 per month from the program.

The Commission alleged in its complaint that the defendants violated anti-fraud provisions of the federal securities laws, specifically Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also alleged that the defendants violated the registration provisions of the securities laws, namely Sections 5(a) and 5(c) of the Securities Act of 1933. In response to the Commission's request for emergency relief, the Honorable George A. O'Toole, Jr., United States District Judge for the District of Massachusetts, issued a temporary restraining order prohibiting the defendants from directly or indirectly continuing to violate the federal securities laws and froze the defendants' assets. The Court has scheduled a hearing on the matter for June 8, 2006.

More information about affinity fraud is available at http://www.sec.gov/investor/pubs/affinity.htm.

SEC Complaint in this matter

http://www.sec.gov/litigation/litreleases/2006/lr19715.htm