The TelexFree Trustee has filed a response to the net-winner class’ objections to the claim resolution process.

Filed on November 14th, TelexFree’s net-winner class objected to

  • not being given a chance to review or object to claims
  • not having a chance to respond to claim objections in individual proceedings
  • not having their claims decided through individual damages proceedings

The class also argued that their claims were “not suitable” for determination through the electronic claims process.

In his November 27th response, the Trustee argues that

by definition, Net Winners have no claims against the Estates and therefore have no standing to be heard with respect to the claims of Participants who are not Net Winners.

The Net Winners do not have an economic interest in the outcome of the claims litigation and therefore are not parties in interest.

That pretty much kills most of the net-winner class’ objections, as they can’t throw their weight around in proceedings they are not a party to.

With respect to the second paragraph, initially I thought this was incorrect due to net-winners having to fund accepted victim claims.

After thinking about it for a bit I realized how much is claimed by victims has no bearing on how much a net-winner has to return.

That’s handled on an individual basis, irrespective of how much is ultimately claimed by TelexFree victims.

Furthermore, in the event net-winners who held multiple accounts file victim claims, the Trustee asserts

the Net Winners are not entitled to participate in any distributions by the Trustee until all net winnings are disgorged.

That’s not to say claims from accounts that lost money won’t be considered, even if held by net-winners, just that such claims won’t be processed until net-winnings are paid back.

The distinction here is that, for an individual TelexFree investors, this is not a zero sum.

First illegally obtained winnings must be paid back, then and only then are claims attached to accounts that lost money processed.

With respect to net-winners intervening willy-nilly in approved victim claims;

The claims objection process is expected to be complicated and time consuming.

At a minimum, approximately 20,000 claims will need to be resolved.

These claims involve hundreds of thousands of User Accounts and millions of transactions.

If the Net Winners were afforded an opportunity to intervene in this already protracted process, the resolution of claims would devolve into a process that is chaotic, inordinately expensive to the Estates, and inconvenient to the Court.

And that’s only if TelexFree net-winners (many of whom are serial Ponzi scammers) play nice.

The more ruthless could easily object to a large number of claims out of spite, with the aim of delaying a final determination of how much they must pay back.

As for the rest of the net-winner’s objections, the Trustee alleges

each of the class claims is based upon theories of recovery that directly conflict with the Net Equity Order.


  1. net-winners claiming accumulated credits (winnings) is explicitly barred by the granted Net Equity Order (which defines the claims process) and
  2. TelexFree investors were not employees, and therefore can’t file claims using under the Massachusetts Wage Act

I believe the net-winner class is now given a chance to reply to the Receiver’s response, after which a decision on the matter will be made.

Stay tuned…


Update 29th November 2017 – The Class Representative’s objection was in response to the Trustee’s motion related to claim resolution.

The Trustee’s response is the last filing, with a hearing now scheduled for December 19th.