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.
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.
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.