TelexFree Trustee hunting down insider funds?
Prior to TelexFree filing their bankruptcy petition, James Merrill, Carlos Wanzeler and other TelexFree insiders collectively sought to make off with almost $40 million in stolen investor funds.
When the FBI, Department of Homeland Security and Immigration and Customs Enforcement raided TelexFree headquarters, accountant Joe Craft was caught red-handed trying to make off $37.9 million dollars in cashiers checks.
These checks were made out to James Merrill, Carlos Wanzeler, his wife Katia Wanzeler, TelexFree LLC (owned by Wanzeler) and TelexFree Dominicana SRL, a murky entity registered in the Dominican Republic.
Thankfully Craft was made to surrender the checks and the funds were promptly seized.
Tasked with recovering TelexFree assets and putting together an accurate picture of company operations and structure, TelexFree Trustee Stephen Darr is now asking for permission to subpoena the banks and institutions who issued these checks.
To what end? At this stage we’re not entirely sure, with Darr only revealing that
several of the financial institutions maintained banking relationships with (TelexFree0 prior to the bankruptcy filings.
What is clear though is that Darr’s subpoena request will focus on the cashier checks Craft was caught with;
Certain cashier’s checks, made payable to the Debtors (TelexFree and management), were drawn on the financial institutions prior to the filings, and the Trustee requires additional information respecting these checks.
Named in the subpoena request are Bank of America, J.P. Morgan Chase, Citizens Bank, Digital Federation Credit Union, Oriental Bank, Santander, TD Bank and Wells Fargo.
Darr makes his latest request after trying to obtain information “informally”, unfortunately though with only “limited success”.
After his appointment, the Trustee was provided with cashier’s checks payable to the Debtors and drawn on each of the financial institutions.
Certain of the (sic) cashier’s checks were subsequently dishonored by the financial institutions.
Over the past few weeks, the Trustee has attempted to obtain information informally from the financial institutions respecting the dishonored checks, with partial success.
If his request is granted, Darr will be able to subpoena for
- communications between TelexFree, their principals and the financial institutions
- bank statements
- cancelled checks and other evidence of receipts and disbursements
- communications between the financial institutions and federal and state regulatory authorities and
- information respecting the remitters of the cashier’s checks and the reasons for the dishonor of such checks
Whether these latest subpoenas will result in the further seizing of funds James Merrill and Carlos Wanzeler might have stashed away remains to be seen.
One would imagine though that whatever the Trustee finds, the information will be shared at some point with US regulators.
In related news, last Friday the Court of Acre denied TelexFree’s appeal against being previously ordered to pay for expertise.
Originally it had been ruled that TelexFree should foot the bill. TelexFree appealed the decision, arguing that Public Prosecutors (ie. taxpayers) should foot the bill instead.
The appeal was granted but the Public Prosecutors filed their own appeal, which was granted last Friday.
TelexFree is now required to pay the R$500,000 ($199,640 USD) cost of expertise in the case against them.
The decision is currently preliminary but is expected to be made final at a later date.
Carlos Costa, head of TelexFree in Brazil, has not been seen or heard from in public since his crushing electoral defeat last month.