2 June 2014

Telexfree Trustee Manager Appointed, As FBI Set Up Site for Victims


Telexfree, the Marlboro-based company, which sold VOIP technology that allowed people make unlimited international phone calls, and whose assets were frozen as part of the U.S. SEC's civil and criminal investigations is now to be overseen by an independent manager.

Telexfree LLC

The cases brought against the company and its principal owners, James M. Merrill of Ashland and Carlos Wanzeler of Northboro, is currently being pursued in two tracks - in the bankruptcy court, and in a separate U.S. federal court proceeding.

U.S. Judge Appoints Trustee To Oversee Telexfree

U.S. Bankruptcy Judge Melvin S. Hoffman of the Court of Bankruptcy of U.S. in Worcester, Massachusetts, after announcing last Tuesday in court that he would assign a trustee for the company's bankruptcy case within days, dealt a blow at the company, when he finally appointed a chapter 11 trustee three days later, on Friday, to take over the control of TelexFREE LLC.

The aim of appointment of the trustee in Chapter 11 is to take over control and management of TelexFREE LLC. The trustee, a Manager, will be an objective outsider and independent, who will replace the current management of the company.
"I want to get a trustee appointed as soon as possible," Judge Hoffman said at Tuesday's hearing, the first since TelexFree's bankruptcy case was transferred to Massachusetts from Nevada.

The judge's remarks followed discussions in which a federal bankruptcy watchdog, the Securities and Exchange Commission and the U.S. attorney's office for the District of Massachusetts agreed that the facts of the case warranted the appointment.

A lawyer for TelexFree said at the hearing that the company wouldn't object to the trustee's appointment.

"We agree that it makes sense to put in place a Chapter 11 trustee," said Joseph Davis, a lawyer for TelexFree. "I understand why control of the company should not remain in the hands of management that preceded the bankruptcy."
Mr. Merrill, one of Telexfree's two principal owners, is currently being held by U.S. federal authorities; while Mr Wanzeler, the other co-owner, is alleged to be on the run with an arrest warrant currently issued against him.

The Telexfree Story So Far

On April 13, TelexFree had filed for Chapter 11 bankruptcy protection aimed at restructuring its business. Days later, the Massachusetts Securities Division, and the Securities and Exchange Commission filed civil charges against the company, its owners and several of its most senior promoters, accusing them of operating a massive pyramid scheme. The company disputed those allegations.

Homeland Security investigators raided TelexFree’s Marlborough offices on April 15
In early May, following on the heel of these intrigues, the U.S. attorney's office in Massachusetts charged TelexFree co-owners James Merrill and Carlos Wanzeler with conspiracy to commit wire fraud related to the alleged pyramid scheme. If convicted, they could each face up to 20 years in prison; although, their lawyers have maintained their clients' innocence.

Later same month, in May, TelexFree's bankruptcy case was transferred from Nevada after Judge August Landis of the U.S. Bankruptcy Court in Las Vegas ruled that the location of TelexFree's offices, assets and creditors, as well as the convenience of access to the company's books and records, all justified the move.

The SEC had argued that TelexFree's decision to file for bankruptcy protection in Nevada was a deliderate attempt to evade further investigation and prosecution in Massachusetts, and not to restructure its business.

Victims were advised to contact the Department of Justice via email (see below); and the Massachusetts Secretary of State's office, which also lodged a complaint against TelexFREE, has complaint forms available on its website in English, Spanish and Portugese.

FBI Set Up Website for TelexFree Victims

Meanwhile, the Federal Bureau of Investigation, FBI, following in the footsteps of its sister federal agencies, has set up a website for Telexfree victims to log their complaints.

The FBI-owned website for victims feature a link to a questionnaire, which people who believe they were deceived into loosing money in TelexFree are urged to fill out. Read excerpts below:
The Federal Bureau of Investigation and Homeland Security Investigations are seeking customer assistance relating to TelexFree, Inc. If you are a customer of TelexFree and you believe you have been defrauded, you are encouraged to complete the secure questionnaire below, which will be reviewed and responded to appropriately.

The details contained in the complaint affidavit are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Further questions or concerns regarding the allegations detailed in the complaint should be directed to the U.S. Attorney’s Office, District of Massachusetts, via e-mail: USAMA.VictimAssistance@usdoj.gov.

The large number of possible victims necessitates that we ask for your assistance by completing the secure questionnaire online. Your responses are voluntary, but would be useful in the federal investigation and to identify you as a victim.

Please complete the questionnaire.
To access the FBI Victim Assistance website, click here.

To directly access the FBI Telexfree Customer questionnaire, click here.

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