Although it has likely been eclipsed by some of the scams currently doing the rounds, the SEC’s 2014 bust of TelexFree was at the time easily the biggest ever seen.

With three billion dollars purportedly pumped into the scheme by over a million affiliates, the size of TelexFree alone meant piecing together the fraud from a forensic standpoint post significant challenges.

Not helping was the fact that 80% of TelexFree investors were based outside of the US, and that many of them didn’t speak English.

Also not helping was a popular “scam within a scam” ruse run by top investors, wherein they’d directly solicit new investment on behalf of the company in exchange for backoffice credits (pins) they’d amassed.

Despite these significant challenges, as of September 28th the TelexFree Trustee’s team has processed 132,001 affiliate claims.

With the deadline for victim claims long passed, the Trustee is now looking to resolve disallowed claims and close the victim claim portal.

Of the 132,001 processed claims, 112,471 were filed on time and synced with the Trustee’s forensic data.

The claims asserted wildly diverging amounts, often asserting claims for accumulated credits, punitive damages, and other claims not allowable.

The claims were largely handwritten, and often did not clearly identify the User Accounts claimed by the participant or provide sufficient information to identify the participant’s User Accounts.

Of the 19,530 remaining claims, 18,835 did not match the Trustee’s data and 695 were filed after the March 15th claim deadline.

In a motion seeking approval of procedures that will ultimately deal with these claims, the Trustee has asked the court for permission to send affiliates a proposed claim allowance.

These proposed claim allowances will disallow some or all of the individual claims, explains why and provide claimants an opportunity to respond. These responses will ideally be in English or if not, accompanied with a certified English translation.

Many of the thousands of rejected claims have similar issues. The Trustee is also seeking permission to file an omnibus objection, which can be used to address common reasons for claim rejections.

TelexFree affiliates who incorrectly filed claims using the “standard form” instead of the “participant form”, will be given a limited time to rectify their error.

If all of this is approved, the Trustee has asked for permission to formally close the TelexFree victim claim portal within 45 days of the motion being granted.

The Trustee estimates he has over $100 million assets and $20.7 million in recovered funds on hand. Judgments and class-actions against TelexFree net-winners will add to these amounts.

The Receiver’s motion was filed on October 16th and is awaiting judicial approval.

If approved, the Trustee will attempt to reach out to claimants with disallowed claims via email.


Update 20th December 2017 – Despite objections from TelexFree’s net-winners, the Receiver’s motion has been granted.

After consultation with net-winner counsel, a few amendments were added to the original motion. From what I saw these mostly related to giving net-winners an opportunity to dispute instances where multiple TelexFree affiliates claimed the same accounts.

An order for the Judge to sign is due by December 22nd, after which I’ll likely pen a separate article detailing specifics.