telexfree-logoHot on the heels being granted permission to subpoena several individuals and companies in relation to their involvement with TelexFree, Stephen Darr has dropped a second motherload of subpoena requests.

No less than eight parties are named in this second round, with Darr requesting permission to “obtain documents” and conduct “oral examinations” for the purpose of aiding ‘the Trustee in his continuing investigation into the Debtors’ financial affairs‘.

In no particular order, the eight parties Darr has issued fresh subpoena requests to are

  • Telecom Logic and Opt3 Solutions – these two companies are (IT) service providers, who provided computer/network support services to the Debtors and are in possession of documents relevant to TelexFree
  • Lane Powell Prof. Corp – provided prepetition legal advice to TelexFree respecting their business operation
  • Garvey Schubert Barer – acted as prepetition counsel to TelexFree and/or advised the company, and likely has relevant information with respect to the
    TelexFree’s businesses
  • The Sheffield Group – provided multi-level marketing consulting advice to TelexFree prior to the petition date
  • Global Payroll Gateway (GPG), International Payout Systems (i-Payout), ProPay, Argus Payments & Allied Wallet – the services of the Payment
    Processors were used, on information and belief, to remit entrance fees by participating individuals to TelexFree and/or for TelexFree to remit commissions and other compensation to individuals participating in their businesses
  • Gerald Nehra and the law offices of Nehra & Waak – Nehra acted as prepetition counsel to TelexFree with respect to their multi-level marketing program, and likely has relevant information with respect to TelexFree’s businesses and business model
  • Babener and Associates – Babener acted as counsel to TelexFree in the conduct of their multi-level marketing program, and likely has relevant information with respect to the TelexFree’s businesses and business model
  • Joele Frank, Wilkinson, Brimmer, Katcher – Joele Frank provided public relations and investor relations services to TelexFree both prepetition and postpetition.

Note that the reasoning above is taken from each of the respective subpoena requests filed by Darr (in the interests of readability I didn’t format them). “Prepetition” and “postpetition” refer to TelexFree’s Chapter 11 bankruptcy petition.

Of particular relevance is the subpoena request on TelexFree’s payment processors. i-Payout in particular vowed that TelexFree was not a Ponzi scheme, as did Gerry Nehra. What will be interesting is whether the information they provide confirms that they were grossly negligent in their assertions.

i-Payout especially, given that they were handling all of TelexFree’s money right up until the point they were shut down. Once the regulators moved in, only then did i-Payout terminate TelexFree’s account citing money laundering concerns.

All of Darr’s recent subpoena requests have been marked with a request for “expedited determination”, meaning Darr’s looking for a speedy decision. Darr’s previous requests were ruled within a fortnight, and I imagine the same will happen with this second round.

What, if any, incriminating evidence is uncovered as a result of Darr’s subpoena requests remains to be seen.

In any event, I look forward to payment processors trying to explain away millions of dollars in transfers between TelexFree’s affiliates as anything but a Ponzi scheme. Ditto Gerry Nehra’s assertions that TelexFree in the US was absolutely not a Ponzi scheme.

Should be a hoot.


Update 4th Jule 2014 – Well that was quick, Judge Hoffman has already granted the TelexFree Trustee’s latest round of subpoenas. An objection deadline has been set for July 10th, after which Stephen Darr will be free to request information be handed over.