TelexFree Trustee’s privilege waiver approved
Following a request that a proposed order be drafted up and sent a court email address, an actual order on the Trustee’s motion for privilege waiver was posted yesterday.
The short of it is the order was approved, with any client-attorney privilege TelexFree might have otherwise enjoyed waived in connection
with the prosecution by the United States Department of Justice of criminal indictments issued against Carlos Wanzeler and James Merrill, and in connection with the civil action commenced by the Securities and Exchange Commission against the Debtors and other parties.
Objections filed by TelexFree owners Carlos Wanzeler and James Merrill were acknowledged, but overruled.
Since the order was passed two additional interesting documents have appeared on KCC’s log of documents related to the case.
Both of the documents in question have been filed are from Joseph Davis, an attorney an shareholder of Greenberg Truarig.
The documents in question are supplement declarations, which appear to be in support of assertions the Trustee made relating to the seized data, concerning any possible breach of attorney-privilege between Merrill, Wanzeler and their personal lawyers.
To that end, Davis in both declarations distances himself and Greenberg Traurig from having personally represented Wanzeler or Merrill in any extended capacity.
At the hearing on September 23, the Court directed Greenberg Traurig to supplement paragraph 6 of the Declaration of Joseph P. Davis III in Support of the Greenberg Traurig Retention Application to further clarify Greenberg Traurig’s role in connection with the interviews on the record of Carlos Wanzeler and James Merrill by the Massachusetts Securities Division.
Greenberg Traurig was retained by Debtor TelexFree, Inc. (“TelexFree”) in February 2014 as co-counsel with the firm of Garvey Schubert Barer in connection with the investigation initiated by the MSD and in responding to information requests from the MSD (the “Investigation”).
Jeffrey Babener of the firm of Babener & Associates also provided legal counsel to TelexFree related to the Investigation.
On February 12, 2014, attorneys Mark Berthiaume of Greenberg Traurig and Robert Weaver of Garvey Schubert Barer attended a meeting with representatives of TelexFree, including Mr. Wanzeler and Mr. Merrill, at the offices of TelexFree in Marlborough.
At the meeting, Mr. Berthiaume and Mr. Weaver instructed Mr. Wanzeler and Mr. Merrill that Greenberg Traurig and Garvey Schubert Barer had been retained by, and would be acting on behalf of, TelexFree and not Mr. Wanzeler and Mr. Merrill individually.
On March 3, 2014, Mr. Weaver, on behalf of Garvey Schubert Barer and Greenberg Traurig, emailed letters to Mr. Wanzeler and Mr. Merrill regarding the subpoenas for the sworn testimony of Messrs. Wanzeler and Merrill scheduled for March 25, 2014 and March 26, 2014.
In the Representation Notice Letter, Mr. Weaver stated that he was writing “to memorialize a discussion Mark Berthiaume and I had with you when we met at your offices in Marlborough on February 12, 2014.”
Mr. Weaver further wrote:
“It is necessary to emphasize that all of our activities to date and in the future regarding this matter have been, and will continue to be, on behalf of the Company. Our client is TelexFREE, not you.”
In preparation for the MSD interviews, Mr. Berthiaume met with Mr. Wanzeler and Mr. Merrill. During those meetings, he again explained that Greenberg Traurig represented TelexFree and not Mr. Wanzeler and Mr. Merrill in their individual capacity.
In a limited capacity, Mark Bethiaume of Greenberg and Traurig did wind up representing Merrill and Weaver, but only during the Securities Division interview.
In response to the question of whether Mr. Merrill was represented by counsel at the interview, Mr. Merrill responded that he was.
Counsel for the MSD then asked the lawyers if they represented “Mr. Merrill in his individual capacity today?”
In response, Mr. Berthiaume said, “I am representing the corporation, but for the purposes of today’s testimony, I am here representing Mr. Merrill.”
Mr. Wanzeler was asked the same questions at his interview on the record on March 26, 2014.
I’m not sure exactly how that panned out, given the repeated assertion that TelexFree would be the only party represented by Berthiaume – but I think it has to do with Merrill and Wanzeler being represented only in their capacity as the owners of TelexFree – not individually.
Had the representation been individual, Wanzeler and Merrill would have been able to assert personal client-attorney priviledge.
Davis’ third declaration (the quoted text is taken from the second, with the first not appearing on KCC’s log), is made in relation to James Merrill’s detention by federal authorities.
Following the detention by federal authorities of James Merrill on May 9, 2014, Mr. Berthiaume, with the assistance of an associate, provided information to
Mr. Merrill’s criminal defense counsel related to the Debtors’ operations, court filings and evidentiary submissions and the legal standards for detention pending trial.Mr. Berthiaume also discussed his personal view of Mr. Merrill’s detention with the United States Attorneys’ Office.
Mr. Berthiaume did not appear or otherwise act as counsel for Mr. Merrill, and no time related to this activity was billed to the Debtors’ estate.
To that extent, Davis’ declarations are clarifying that at no point in time did Greenberg Traurig represent Merrill or Wanzeler in a personal capacity.
Pending further declaration by lawyers with other firms representing TelexFree, one can safely assume the question of whether they represented Merrill and Wanzeler in a personal capacity at any given time wasn’t contestable.
In summary, regulators are now wholly free to trawl the entirety of the 400 terabytes of information seized from TelexFree offices, in addition to the physical data recovered, and build their respective cases around them.
This includes the criminal charges filed against James Merrill and Carlos Wanzeler, as well as the SEC and Massachusetts Securities Division’s civil cases against TelexFree, Wanzeler and Merrill and several of the scam’s top investors.
Due to the amount of data seized, it’s probably going to take some time for authorities to sift through it all and pluck out the juicy incriminating bits. Should make for some extremely interesting filings when they’re done though!
Just so you know, the usual Brazilian scammers are spreading the word that this was another “victory” to Telexfree, since Darr wanted to waive Merrill’s and Wanzeler’s personal client-attorney privilegie and the judge accepted their motion oposing to that and said a big “no no” to Darr’s motion.
I really want to know what the f*** do those people smoke.
Was that another Carlos Castilho update? These guys really shouldn’t be commenting publicly on the proceedings if they’re lacking a grasp of the English language.
Darr obviously wasn’t trying to waive Merrill and Wanzeler’s personal privilege – he couldn’t.
He’s in charge of TelexFree, and anything he waived can’t extend beyond that.
Merrill and Wanzeler appear to have tried to claim they were being represented by TelexFree’s lawyers, which said lawyers themselves shot down in court.
They’re there just to cause confusion via “foot in door technique”.
Once you’ve been exposed to the wrong info, it’d be very hard for you to “wash” your mind of the bad info and accept the good info.
Ding, ding ding…
Hello to all,
What, where, when if available is the official bankruptcy form for victims to start filing? We as victims need to start taking care of this as well.
Why are these thieves ( Merrill and Wanzeler) have a right to any defense after scamming so many people around the globe.
How about you (KCC) officially contacting those up lines who made their thousands snd thousands as well snd start giving back The Peoples money back???
Thanx
C A
@Carme
Not much you can do at this point except wait it out. As participants in a Ponzi scheme you don’t get to call the shots unfortunately.
I am confused. Telexfree’s Policy and Procedures clearly states that an individual can only have one position per person or household. I believe the registration fee was approximately 1300.00.
Apparently people were paid 100.00 per week. So; if you had JUST invested you would be out 1300.00. If you had been in the business for 13 weeks you had received your initial investment back. How could anyone be out their life savings ? Unless their life savings was 1300.00.
It seems to me that the people claiming to be victims were the ones trying to scam the system. Just sayin.
@James
People signed up their relatives, pets and themselves with BS addresses (Brazilian affiliates bypassing the injunction).
The usual Ponzi BS.
Also one affiliate account was able to invest in multiple Ad-Central positions. $1300 was the Family Pack (5 positions) or you could invest in individual positions for $299. No cap on positions AFAIK.
My guess is that the people who are owed the most are the biggest scammers, The 5 positions you are speaking of were 5 VOIP accounts. not 5 positions.
Each account was tied to a position and the P and P said one position per household.
No, they were 5 investment positions each paying $20 a week.
You could buy infinity positions under one account.
The VOIP crap was Gerry Nehra pseudo-compliance BS.
you may want to verify your information.
Done.
If you’re ignorant to the intricacies of Ponzi schemes at the high-end levels of investment, that’s fair enough. Start reading.
So, you’re saying the guys behind it were running a billion dollar international fraud and money laundering scheme while at the same time were ensuring the policies and procedures were strictly enforced when it came to the number of accounts per person.
R—I—G—H—T, sure they were.
@ James Charles
As far as I remember, people were encouraged to hold multiple accounts, positions, or whatever you want to call them. There were even YouTube videos that explained how people could benefit from having 2 Family pack accounts under the main one to make even more money. Or better yet a total of 7 accounts situated in a way that could maximize income for the main account.
My sister-in-law had multiple accounts under the main account and, as far as I know, she did nothing special to hide the fact that many of the accounts were under her or her husband’s name. The accounts just had different user names. My wife only had one account, but we were encouraged to get more accounts under the first to make even more money. I’m glad we didn’t.
The point is that the majority of people knew that there was something fishy going on with the company and just went in trying to make money without giving much consideration for business ethics.
The whole of TF was a scam so “scamming the system” as you say was just par for the course.
The question is should these “victims” who were clearly trying to maximize their earnings get some kind of compensation for their losses in their end?
IMO it’s not even worth trying to figure out who lost money because they were truly misled and duped (the minority I think) vs those who joined despite an intuition something is not right (the majority) vs those who knew this is a scam and lets try to make as much money as possible.
Its much easier from a legal and enforcement standpoint to go with the math of money in vs money out and try to make the net losers as whole as possible.
With respect to the waiver of TF’s attorney client privilege for the Trustee…
Is the main purpose of this to speed up the Trustee’s ability to sift through the documents and databases of TF?
Also, if the attorney client privilege is only waived for TF, then what if the Trustee runs into attorney-client privileged info for Merrill, Wanzeler, Craft, or Labriola. Isn’t this going to slow down the Trustee’s ability to search through the TF documents anyway?
Without a court waiver, is the Trustee allowed to even read attorney-client privilege information if he runs into it?
I’m thinking that the waiver of attorney-client privilege with respect to TelexFree was a step in the right direction, but there were still restrictions in the court order that would keep the Trustee from sifting through documents with the freedom that is necessary.
@Naz
It’s not for the Trustee, it’s for the regulators (SEC and DOJ) to freely sift through the data they seized.
The Trustee doesn’t need privilege when dealing with TF’s communications, he’s been put in charge of them.
Merrill and Wanzeler tried to argue they were represented by the law firms in question, but that was shot down in court – with TelexFree’s lawyers denying they ever personally represented Wanzeler and Merrill in any meaningful capacity.
As such the SEC and DOJ are free to trawl through the terabytes of information they seized and use any of it as they see fit.