TelexFree Trustee grants regulators full access to evidence
As Carlos Wanzeler fled the US and his partner James Merrill prepared for another day of denying TelexFree was a Ponzi scheme, the FBI, Department of Justice and Homeland Security raided TelexFree’s offices and ‘a local business that maintained TelexFree’s servers‘.
Federal law enforcement seized various assets of TelexFree, including servers used by TelexFree, about 38 boxes of documents, and about two dozen computer drives.
The electronic data alone is believed to be over 400 terabytes of material.
Before regulators can analyze the seized evidence though, standard procedure would see
all of the information seized from TelexFree first reviewed by a team of lawyers and paraprofessionals, whose duty would be to examine all of the documents and remove any materials that appear to be attorney-client privileged before the documents would be made available to the Governmental Authorities for use in Governmental Proceedings.
Under this scenario, firstly who knows what dirty little secrets might be lost. And secondly, the time required to perform such an audit would greatly delay the various regulatory actions against TeleFree being heard.
The trickle down effect of this would then also be a delay in the returning of money to TelexFree’s victim.
A non-desirable outcome for all except TelexFree management.
Thankfully the court-appointed Trustee Stephen Darr has a solution. In a court-filing made yesterday, Darr has requested permission to waive TelexFree’s attorney-client privilege.
If Darr’s request is granted (and I can’t see why it wouldn’t be), US regulators will have unrestricted access to the data.
What kind of sensitive information are we talking about?
The data on the computer drives and seized paper materials includes communications between TelexFree and various attorneys who were retained by TelexFree and communications between TelexFree and consultants that were retained by TelexFree at the behest of attorneys.
Nice.
I’d be willing to be there’s more than a few incriminating conversations full of juice nuggets buried in those communications.
Carlos Wanzeler is currently hiding out in Brazil as a fugitive, living off money he stole from TelexFree victims and stashed away.
Darr believes clues to Wanzeler’s (among others) finances are likely to be present in the seized data:
The Trustee has been in contact with the Governmental Authorities since his appointment to, among other things, recover (TelexFree’s) records to facilitate the Trustee’s investigation of (TelexFree’s) financial affairs and administration of Estate assets and exchange information that may ultimately aid in the recovery of funds for claimants (affiliates) harmed by the operation of the TelexFree enterprise.
Carlos Costa is another TelexFree figure who might be looking at having whatever he managed to stash away who knows where seized.
In addition to the documents regulators have already seized, Darr is also offering up data he has collected in his capacity as Trustee:
The Trustee is in possession of voluminous documents he has obtained pursuant to various Orders issued.
The Trustee has agreed to make these documents available to the Governmental Authorities and to waive the privilege in connection with any review of these documents by the Governmental Authorities.
Something tells me we’re going to see more than a few “insider” lawsuits filed by the time this is all done and dusted.
Darr has requested his request be heard next Tuesday on the 23rd, along with the hearing for the various fee claims that have been filed.
Stay tuned…
Footnote: Trustee Stephen Darr’s motion to “Waive The Attorney-Client Privilege With Respect To Certain Governmental Proceedings” can be read over at Kurtzman Carson Consultants.
Costa tried to get all that money back by all means but since it’s impossible so far he is starting a new ponzi. You guys gonna hear about it in the next few days.
Meanwhile..
Have a look in this new garbage.
It’s an oficial association that use ponzi to affiliate people:
facebook.com/tadeu.ilenich/posts/551777111616555
This new scheme have a registered documentation with the government, and I’m afraid the authorities will do nothing against these scammers, again..
Right now there is over 100 ponzi companies working in Brazil. I know that because i have asked im my network for a new company and in like 30 minutes i got about 60 companies invites.
Really giving a heads ABRAEP searched on the Google to see what this group is
Johnni Andrade = Telexfree, Click Dreams (collapse)
Diego Gomes = Click Dreams (collapse), Unos (did not work)
Adriano Thrun = GrupoSMD (extinct), Empower Network
Tadeu Ilenich = Telexfree, Unos (did not work), Bbom (dead), WCM777 (dead), Atlântida Networks (dead), Click Dreams (collapse)
Well that’s somewhat odd.
Merrill filed a motion today requesting he be permitted to
Regulators have assented to the motion so it’s likely to be granted (if signed off on before tomorrow).
My question is who hires an individual indicted for wire fraud in connection with the operation of a billion dollar Ponzi scheme?
Either Merrill’s been wheeling and dealing his ass off and Wanzeler and Costa are going down hard for TelexFree, or this makes no sense.
Perhaps he’s going back to running his cleaning business?
He does have all those friends and neighbors who can’t beleive Jimmy the coach would head up a Ponzie scheme. Maybe they’re willing to hire him to clean their houses?
Next he’ll be asking to coach a little league team.
Hmmmm….Don’t think the Johnny nice guy act is going to get em off though. Just a guess.
Even working his cleaning business means leaving his house.
I can’t see regulators assenting to this unless some concessions/progress have/has been made in the case (ie. Merril is singing).
A few months or so ago they were vehemently opposed to Merrill being granted bail, a backflip for no conceivable reason is out of character.
It’s a “foot-in-the-door-technique” (a.k.a. “Camel’s nose”). Ask for a small commitment first, something people most likely will accept. Then follow up with “Can I visit my friend Carlos Wanzeler this weekend?”. 🙂
My thought has been that they let him out of jail and put him under house arrest because he hasn’t been proven guilty of anything as of yet. He also had to come up with a pretty substancial bail to win the priviledge.
I agree with you Oz that he’s probably singing to keep his ass out of jail or at the least a less harsh sentence. I don’t beleive he won’t go to jail for some period of time. This is to big.
Update: Judge Hoffman granted the Trustees’ Motion. The hearing has been whacked onto the other September 23rd hearings.
Wow that’s a lot hearings in one day. Are we gearing up for another live courtroom blog?
I would love to hear the courtroom action that day, or at the very least, read a transcript.
@Naz
Not worth it IMO. Either the fees will get paid or they won’t. Ditto the decision to waive client-attorney.
In the first instance knowing whether or not they are approved judgement wise is enough (we already know the arguments). In the second what comes of the decision being granted later is far more interesting than the granting of the waiver :).
is a step closer to Chapter 7, and a step further in chapter 11? Is it …? ie, it’s a movement that confirms the intention of the Trustee not to continue with chapter 11, the recovery? The zombies still speaks in turn, recovery, chapter 11 …
this would not be the burial of what is already dead? that statement awaited by all, the Trustee, following recovery or part for Chapter 7 would not this? this movement there?
@Lincoln
Darr stating he has no intention of restarting or recovering TelexFree indicates at some point Chapter 7 is incoming.
Chapter 11 is for reorganizing debt to continue business. Darr has made it clear he has no interest in that (because TelexFree was a massive fraud).
Update: Hoffman granted Merrill’s motion.
Guess he’s heading to work on Friday.
Minor Update: That property Sloan transferred to her mum’s name in an attempt to remove it from the TRO?
Ruhroh, Judge Gorton just signed an order acknowledging it ‘may be subject to the Court’s freeze order’.
M’awww. Queen Sloan might have to find somewhere else to stay when this is all over.
A company can be liquidated under Chapter 11 rules too. They don’t need to convert the case first. But that’s about DETAILS.
The bankruptcy case is still in its “initial phases”, i.e. they haven’t really made any final decisions yet about how to proceed with the case.
The RESULT of the “initial phases” will be a REPORT to the court and creditors.
I thought that there were more items to be discussed than the that. I wonder if there is a case docket for Sep 23 that can be accessed online.
Also, as far as Judges, is Hoffman presiding over the criminal case and Gorton over the SEC’s civil case? Is there another judge presiding over the Bankruptcy case? Lol I’m having a difficult time keeping everything straight…
Unless I’ve forgotten something, the client-attorney waiving and settlement of claims are the two items on the agenda. The claims was shaping up to be a big one but with two of the parties negotiation mostly unopposed reductions, it’ll probably won’t take too long to sort out the remaining two unresolved claims.
IIRC Hoffman has the criminal case and Gorton has the bankruptcy and civil cases.
Whole bunch of useless docs appeared today on KCC. For every matter heard they state:
This indicates all matters heard were resolved, but we’ll have to wait for actual orders to be published.
Approved:
https://www.kccllc.net/telexfree/document/1440987140925000000000068
carlos costa. (with subtitle english) use translator youtube subtitle
he says he’ll settle what is now crime.
If he’s running on the platform of legalizing Ponzi schemes like TelexFree, the obvious admission is that Ponzi schemes like TelexFree are currently illegal.
There’s nothing illegal about MLM in Brazil, despite what Costa claims.
Acre PP’s Office, you’re welcome.
Before US regulators shut down Telexfree, Costa and his zombies used to say that the scam was closed by Brazilian justice because there was no MLM regulation in Brazil (meaning: the justice “thinks” all MLM business are illegal) and TF kept open in the USA because MLM operations are regulated there.
Costa even said, in one of his sweaty videos, that Brazilian justice should learn from US justice how to work.
After SEC, FBI, and HSI investigations came public, the American justice is as corrupt as the Brazilian one, in the eyes of Costa and his gang.
One can only guess which justice is the “nice one” now. Chinese? Spanish? Portuguese?
When a company turns over upward of a billion dollars and less than 1% of it was from sales of the “product” then we aren’t talking about the legality or otherwise of multi level marketing, we are talking about deliberate fraud DISGUISED as multi level marketing.
Best way to pierce his lies is to make a Youtube video comparing Costas words, before and after.
Narrator: Can we trust Costas? let us listen to his words:
Insert Costas footage, dated BLAH BLAH BLAH BLAH
But only X days later, he changed his mind.
Insert Costas footage, dated BLAH BLAH BLAH BLAH
Narrator: what will he say next?
Narrator: Costas: The flip-flop man.