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TelexFree, a marketing and telecommunications firm, filed Chapter 11 bankruptcy last year in a desperate attempt to reorganize some of its outstanding debt. While the company may have expected to be relieved of some of its debt through Chapter 11, what they likely did not expect was a federal raid and seizer of its assets soon after.

After looking into the company’s financials and operations, the bankruptcy trustee responsible for overseeing TelexFree’s Chapter 11 bankruptcy noticed something off about the company and their operations. The company, which claimed to provide telephone service and voice over Internet protocol to customers, appeared to be managed more like a pyramid scheme. Investors were called promoters and were promised huge returns if they got more people to invest in the company.

During an investigation into the company as part of a Securities and Exchange Commission complaint, it was discovered that the company actually took in about $360 million from investors but only provided about $6 million in actual service sales. With this and other information, the federal judge presiding over the bankruptcy ruled that TelexFree was a fraudulent company and, therefore, can be held responsible for the losses of their 1 million investors.

To help investors recoup some of their money, federal agents were ordered to raid the company’s headquarters in Massachusetts and seize any and all assets. The company’s owners have been indicted on criminal charges of fraud. One owner is under house arrest, and the other has fled the country. While it is not known just how much was seized during the raid on TelexFree, it may be difficult to pay back the millions in lost assets by investors worldwide.

Just as with so many other schemes promising huge returns, individuals looking to improve their family’s financial situation may have invested their entire life savings in this or other companies. Hopefully, the raid on TelexFree will help return a portion of some individuals’ investments. However, many people that fall victim to this type of fraud never recover. If you are now struggling because of an investment gone bad, it may be time to speak to a skilled attorney. With their help, you may be able to wipe the slate clean through bankruptcy.

Source: The Wall Street Journal, “Bankruptcy Judge Finds TelexFree Operated a Fraudulent Scheme,” Tom Corrigan, Nov. 27, 2015