TelexFree Trustee investigation begins, subpoenas incoming
Fantasies about a restructuring and return to business by TelexFree grow dimmer by the day, with news now that the TelexFree Trustee is investigating the company in earnest.
Filed on June 12th, Stephen Darr has asked Massachusetts Bankruptcy Court for permission to issue subpoenas on
- PriceWaterhouseCoopers, LLP (former advisors to TelexFree)
- William H. Runge (TelexFree’s Chief Restructuring Advisor) and his company Alvarez & Marsal (sic) North America, LLC (financial advisors to TelexFree)
- Kurtzman Carson Consultants, LLC (TelexFree’s claims and noticing agent)
- the law firm Gordon Silver (co-counsel to TelexFree)
- the law firm Greenberg Traurig, LLP (co-counsel to TelexFree)
In addition to the issuing of subpoenas, Darr seeks to “obtain”
- all documents, including but not limited to emails, correspondence, phone records and cellular phone records, relating to TelexFree, their affiliates or subsidiaries
- all documents concerning all accounts of any kind including without limitation any and all statements for all savings, checking, investment and 401(k) accounts, including copies of cancelled checks, debit memoranda, wire reports and deposit slips for all such bank, investment and pension/retirement plan accounts
- all documents concerning all disbursement registers for each and every bank, investment and pension/retirement plan account, which disbursement registers should include: a) checks, debit memoranda, wire transfers, intercompany transfers; b) the recipient of the disbursement; c) the date of the disbursement; d) the amount of the disbursement; e) the invoice(s), loan number(s) or purchase order(s) to which they pertain and f) the nature of the disbursement
- all documents that contain financial information including, but not limited to: vendor invoices, journals, books, records, work papers or ledgers wherein there are statements or recordings, including, but not limited to: debt information, cash receipts information, cash disbursement information, asset information and liability information
- all documents and communications with or respecting Global Payroll Gateway, Inc., International Payout Systems, Inc., Propay, Inc. and Propay.com
- all documents concerning trial balances and detailed electronic general ledgers
- all federal and state tax returns – payroll, income, excise, property or otherwise
- all audited, reviewed, compiled or internal financial statements
- all documents concerning year-end W-2s issued to employees and the associated W-3’s
- all documents concerning 1099 statement issued to TelexFree, their affiliates and subsidiaries
- all documents concerning intercompany reconciliations, whether monthly, quarterly, or annual
- all documents concerning loan documents that were in existence two years prior to the petition date, to which TelexFree, their affiliates or subsidiaries were a party
- all documents concerning pension/retirement plan documents, including any agreements, plan documents, annual summaries, and year end participant account balances
- all documents concerning leases and contracts to which TelexFree, their affiliates or subsidiaries are or were a party
- all documents relating to any and all intellectual property owned, including but not limited to patents, trademarks, and registrations, whether domestic or international, and any cell phone or smart phone applications, whether of TelexFree, their affiliates or subsidiaries.
- appraisals for all real or personal property
- all communications with and documents concerning TelexFree, their affiliates or subsidiaries
- all documents concerning engagement letters between Greenberg and TelexFree, documents concerning legal services and payment for legal services including
retainers, invoices, billing records, and time records reflecting time for services not yet billed
- all documents concerning legal memorandum, opinion letters or other documents produced by Greenberg relating to TelexFree, their affiliates or subsidiaries.
- all documents relating to the preparation of TelexFree’s schedules, statement of financial affairs, and matrix of creditors
Darr also wants ‘all documents concerning communications with‘:
- Gordon Silver
- Alvares & Marsal North America, LLC,
- William H. Runge, III
- Kurtzman Carson Consultants, LLC
- Stuart Macmillan
- James M. Merrill
- Carlos W. Wanjeler (sic)
- Steven M. Gabriola (sic)
- Joseph H. Craft
- Sanderley Rodrigues de Vasconcelos
- Santiago De La Rosa
- Randy N. Crosby
- Faith R. Solan (sic)
- Global Business, Inc.
- Gerald P. Nehre (sic)
- Richard W. Waak
- T.D. Bank
- N.A., Bank of America Corporation
- Citizens Financial Corp., Inc.
- Citizens Bank of Massachusetts
- Fidelity Co-Operative Bank
- Middlesex Savings Bank
- Wells Fargo and Company
- Fidelity Investments
- Laddell & Reed Financial, Inc.
- Global Payroll Gateway, Inc.
- International Payout Systems (i-Payout)
- Pro Pay, Inc.
- Argus Payments
- Base Commerce LLC or
- Vantage Payments, LLC
And incase he’s not happy with the information provided, or wants to question where it came from and/or how it was collected (including any information that might be withheld), Darr also requests permission to compel the above parties to
attend an oral examination relating to the procedures followed by (the parties) in locating and producing documents and the basis upon which any
documents were withheld.
Darr claims his requests are justified, because
the books and records that were located at TelexFree’s principal place of business have been seized by governmental authorities based upon allegations that (TelexFree was) engaged in an illegal pyramid scheme.
The Trustee does not have ready access to these records. TelexFree’s principals are unavailable. No schedules, statements, or list of creditors have been filed.
TelexFree principal James Merrill is currently in jail, and Carlos Wanzeler (collectively co-owners of TelexFree) has fled to Brazil. Wanzeler is wanted by US authorities and a warrant has been issued for his arrest.
How long the Trustee will take to sift through the mountain of information requested is unclear. What’s the bet though that, when all’s said and done, Darr doesn’t find a viable operation that stands poised to generate $50 million a year in VOIP sales?
Darr has requested “expedited determinations” on the five subpoena requests, with a decision expected early next week.
Update 17th June 2014 – All five of Darr’s motions have received endorsed orders. Any objections are to be filed before June 20th, with a hearing scheduled for June 24th. If no objections are filed, the order will be granted (presumably without a hearing).