TelexFree want MacMillan retained as bankruptcy mole
Two days ago saw the latest TelexFree bankruptcy hearing take place, with the outcome being the almost certainty that TelexFree’s management and owners would lose control of the company.
In their place a Chapter 11 Trustee would be appointed, which would effectively put TelexFree in the control of US regulators (specifically the Department of Justice).
Initially TelexFree, or at least their lawyer Joseph Davis, welcomed the decision:
A lawyer for TelexFree said at the hearing that the company wouldn’t object to the trustee’s appointment.
“We agree that it makes sense to put in place a Chapter 11 trustee,” said Joseph Davis, a lawyer for TelexFree. “I understand why control of the company should not remain in the hands of management that preceded the bankruptcy.”
At the time, I didn’t quite grasp the punchline behind that last statement. TelexFree do indeed not object to the appointment of a Trustee. But as with all things TelexFree, turns out there’s a catch.
One of the side-effects of a Chapter 11 Trustee being appointed is that Carlos Wanzeler and Stuart MacMillan lose control of the company. They are shut out completely and have no voice in any decisions made.
As evidenced by TelexFree’s latest filing in the bankruptcy court, this isn’t a prospect they’re too happy with.
In a Motion requesting the authorization to retain Stuart MacMillan as TelexFree’s CEO, the company writes
(TelexFree) request entry of an order authorizing the retention and employment of Stuart A. MacMillan as Interim CEO to the Debtors nunc pro tunc as of the (bankruptcy) Petition Date.
Mr. MacMillan will make decisions regarding the Debtors’ reorganization efforts and their Chapter 11 Cases, as further described below.
Mr. MacMillan is well qualified to act on the Debtors’ behalf given his knowledge and expertise with respect to multi-level marketing companies. In addition, Mr. MacMillan has taken steps to become familiar with the Debtors’ business and financial affairs.
Accordingly, the Debtors submit that the retention of Mr. MacMillan on the terms and conditions set forth herein is necessary and appropriate, is in the best interests of the Debtors’ estates, creditors, and all other parties in interest, and should be granted in all respects.
TelexFree go on to argue that MacMillan should be retained because
Pursuant to the terms of the Engagement Letter, Mr. MacMillan has the authority to make decisions regarding management and operations of the Debtors and the Debtors’ restructuring process and execute binding agreements on behalf of the Debtors, and has been performing such duties for the Debtors since his retention.
Further, pursuant to the Engagement Letter, Mr. MacMillan performs all services, acts, or things necessary or advisable to manage and conduct the business of the Debtors which are normally associated with the position of Chief Executive Officer.
If you’re like me, the question of impartiality has probably raised its head by now. I mean isn’t that one of the core reasons the bankruptcy Judge is going to appoint the US Trustee in the first place?
Here’s TelexFree’s answer:
To the best of the Debtors’ knowledge, information, and belief, Mr. MacMillan has no connection with, and holds no interest adverse to, the Debtors, their creditors, or any other party in interest, or their respective attorneys or accountants, or the Office of the United States Trustee or any person employed in the Office of the United States Trustee, in the matters for which the Interim CEO is proposed to be retained except as disclosed in the MacMillan Declaration.
The Debtors attach the MacMillan Declaration, which discloses, among other things, any relationship that Mr. MacMillan has with the Debtors, their significant creditors, or other significant parties in interest.
Based upon the MacMillan Declaration, the Debtors submit that Mr. MacMillan is a “disinterested person” as that term is defined by section 101(14) of the Bankruptcy Code.
The Debtors submit that the retention of Mr. MacMillan on the terms and conditions set forth herein is in the best interests of the Debtors, their creditors, and all parties-in-interest.
Putting aside the fact that Stuart MacMillan was brought in solely to try to negate $1 billion in Ponzi liabilities through Chapter 11 bankruptcy (that benefits affiliate creditors how?), there’s one glaring admission that blows TelexFree’s “disinterested” assertion out of the water:
(TelexFree) agreed to pay Mr. MacMillan a monthly, non-refundable fee of $50,000.
Prior to the Petition Date, the Debtors remitted to Mr. MacMillan a retainer in the amount of $180,000 (the “Retainer”).
If we backdate these “non-refundable” payments to March, that’s around $330,000 of stolen investor money TelexFree have paid MacMillan thus far.
And $50,000 “non-refundable” payments for as long as he holds the position of CEO? Sounds like a pretty heavy “adverse interest” in TelexFree to me.
Hell I’ll even go one step further: Disinterested my ass, Stuart MacMillan is being paid directly by TelexFree.
And do we really need to dig up MacMillan’s humiliating “I know nothing about TelexFree” testimony at the May 2nd Nevada bankruptcy hearing?
Let’s cut the crap and call this out for what it is: Carlos Wanzeler is looking to keep his inside man in place while regulators do their thing.
If you consider:
In the United States, criminal provisions relating to bankruptcy fraud and other bankruptcy crimes are found in sections 151 through 158 of Title 18 of the United States Code.
Bankruptcy fraud includes filing a bankruptcy petition or any other document in a bankruptcy case for the purpose of attempting to execute or conceal a scheme or artifice to defraud.
Bankruptcy fraud also includes making a false or fraudulent representation, claim or promise in connection with a bankruptcy case, either before or after the commencement of the case, for the purpose of attempting to execute or conceal a scheme or artifice to defraud.
Bankruptcy fraud is punishable by a fine, or by up to five years in prison, or both.
Knowingly and fraudulently concealing property of the estate from a custodian, trustee, marshal, or other court officer is a separate offense, and may also be punishable by a fine, or by up to five years in prison, or both.
The same penalty may be imposed for knowingly and fraudulently concealing, destroying, mutilating, falsifying, or making a false entry in any books, documents, records, papers, or other recorded information relating to the property or financial affairs of the debtor after a case has been filed.
Certain offenses regarding fraud in connection with a bankruptcy case may also be classified as “racketeering activity” for purposes of the Racketeer Influenced and Corrupt Organizations Act (RICO).
Any person who receives income directly or indirectly derived from a “pattern” of such racketeering activity (generally, two or more offensive acts within a ten-year period) and who uses or invests any part of that income in the acquisition, establishment, or operation of any enterprise engaged in (or affecting) interstate or foreign commerce may be punished by up to twenty years in prison.
Bankruptcy crimes are prosecuted by the United States Attorney, typically after a reference from the United States Trustee, the case trustee, or a bankruptcy judge. (Wikipedia)
The U.S. Trustee does not have prosecution powers, but is required by law to refer information regarding potential criminal violations of bankruptcy laws to the United States Attorney. (Wikipedia)
Specific responsibilities of the United States Trustees include:
- Taking legal action to enforce the requirements of the Bankruptcy Code and to prevent fraud and abuse
- Referring matters for investigation and criminal prosecution when appropriate
(They) also identify and help investigate bankruptcy fraud and abuse in coordination with United States Attorneys, the Federal Bureau of Investigation, and other law enforcement agencies. (The Department of Justice)
The appointment of a US Trustee (which TelexFree filed an objection to when it was first requested by the DoJ), has likely resulted in the soiling of more than a few undergarments.
And the prospect of having your $1 billion Ponzi scheme combed over by forensic accountants and DoJ investigators must be terrifying.
Whether a Judge grants Wanzeler permission to retain MacMillan so he can send reports down to Brazil (where Carlos Wanzeler is currently hiding from US authorities), and attempt to skew recovery efforts in favor of TelexFree’s owners, remains to be seen.
It is expected that a US Trustee will be formally appointed by week’s end (if not early next week). Meanwhile the criminal and civil regulatory cases against TelexFree and its management continue.
Footnote: You can read TelexFree’s latest “retention of Stuart MacMillan” filing over at Kurtzman Carson Consultants.
Really?!?
” – Sir, we will search your house for evidence.
– Sure, as long as I can walk around it too.”
Oh please… Those guys think they can outsmart everyone? Maybe the Brazilian “stars’ attorney in law” is now playing the cards and US TF lawyers are just mimicking him?
Judging by what they’ve been objecting to and by what they are accepting now, it seems a plausible possibility.
Mr McMillan may well indeed have “knowledge and expertise with respect to multi-level marketing companies” but what experience does he have with billion dollar ponzi / pyramid schemes disguised as multi-level marketing companies ??
When the SEC presents evidence to the court indicating:
It appears, to me at least, Telexfree by its’ own actions, long ago forfeited the right to be described as an MLM company
It is time to put a stop yo these schemes!
People have lost their lives because of these greedy scams!
It is time to pay the piper…
Everyone is talking about the loss of money…but what about loss of lives!
I don’t understand why the SEC agreed with the appointment of a trustee. To avoid these shenanigans, wouldn’t have been better to recommend that the whole thing be dismissed since it’s clear Telexfree is using the Bankruptcy court to conceal a fraudulent scheme anyways.
Pre meditated murder…
Pre meditated ponzie
Perhaps the laws need to change
@yo
To treat the symptom you have to cure the disease.
Why do you think people might be dying?
@Thomas
They didn’t, they filed a limited objection against it.
If you do not want to do the time….
Do not commit the crime!
@oz a desease indeed.
The fact that MacMillan has his own, MLM related shady past is enough for the regulators and judge to dismiss the idea of him being involved in ANY manner.
Allowing TelexFree to file and go through a Chapter 11 bankruptycy is the BIGGEST mistake in this case. As stated above by the wise article author, there IS SUCH a thing as Bankruptcy Fraud and why doesn’t TelexFree fall into the fraud category?
UNLESS, the authorities believe that it will be easier to manage the millions of dollars through a BK trustee than by themselves.
Furthermore, HOW do you know that Carlos Costa and Carlos Wanzeler are not planning on restarting TelexFree once the U.S. is done with it? With what money? They money that is probaby hidden elsewhere? The money with which Carlos Wanzeler can afford one of the most expensive lawyers in Brazil?
Also, what is the situation with the charges against the U.S. promoters?
Once Katia testifies in Court, will she be given her passport back so she can join her husband in Brazil?
By the way, Carlos Wanzeler is NOT in hiding. His attorney has made it known where he is.
Err, it hasn’t.
There’s a procedure to follow to ensure there are no comebacks later, based on legal maneuvering..
It’s being followed.
Not as fast as those with no experience in such matters would like, undoubtedly, but it is going exactly as it should.
Put aside all the misinformation you’re being fed from inside Telexfree and all the fictional TV programs you’ve seen, when TF gets nailed, it will “STAY” nailed.
As long as the company’s dissolved and assets returned to the investor/victim(s) SEC don’t really care whether it will do it or someone else do it.
Remember, SEC wasn’t involved in liquidating Madoff’s assets… including Madoff’s underwear and silverware (go look it up). It’s all trustee Irving Picard.
(And me being a bit cynical, SEC would rather NOT do it since it doesn’t have to pay for the proceedings. As long as US Trustees / DOJ / SEC are all on the same page, i.e. TelexFree must DIE, SEC and DOJ don’t care who wield the knife. SEC and DOJ have bigger fish to fry… the TelexFree 8)
Too early to make that prediction. Once US Trustee takes over he can cancel the bankruptcy if he wants to. There won’t be any one to oppose him.
However, the prudent course is convert the bankruptcy to a Chapter 7 liquidation… AND sue the net winners AND seize as much of TelexFree 8’s assets as s/he can AND liquidate them too (or reach some sort of settlement) and include that in the refund to pay the creditors.
“The TelexFree 8” sounds clunky, somebody needs to think up a better name!
(“The Craddock 12” just rolled off the tongue…)
Strictly a guess, of course, but I wouldn’t mind betting the Financial Fraud Enforcement Task Force (FFETF) is heavily involved with, if not organizing, the Telexfree prosecution/s, as it was with the AdSurf Daily and Zeek Rewards cases.
If my guess is correct and the FFETF IS pulling the strings, I think I would be running somewhere further than Brazil, rather than taking on that sort of opposition.
It’s probably also worth pointing out, both Brazil and the USA are members of the international Financial Action Task Force (FATF)
Throw in money laundering to the charges Wanzeler and his fellow Telexfree conspirators are facing, and both he and they are toast.
That’s Good to know. I’d hate to see the schemers slip through the legal cracks, if any.
Although I feel somewhat sorry for Merrill. I don’t think he’s the real bad guy. Just a deceived guy in all of this. The masterminds are all on the loose both in the U.S.A. and in Brazil, all while Merrill sits in jail.
@K CHANG…
Can you see that Carlos Costa wants to restart TelexFree in Brazil? Who’s behind his motivation? Who is paying him? Ympactus? How come he has not been charged in Brazil like San Rodrigues has in the U.S.? Do you think Costa is in cahoots with Wanzeler?
Wow. One wonders how Wanzeler is paying for his defense unless he laundered money from the U.S. to Brazil? It is surprising that Brazilian authorities have not arrested anyone yet.
At this rate, Wanzeler will have first class seating at the World Cup next month. Brazilians lost millions of dollars too yet not criminal charges? What are they waiting for?
Does someone know about that?
That’s a hidden bank account kept out of SEC control by SANDERLEY RODRIGUES:
Wells Fargo Bank
ZVX Investment Corporation
Routing Number/ABA: 121000248
Account Number/numero da conta: 6073140482
Swift Code: WFBIUS6S
Address: Hunkins Waterfront Plaza, suite 556, Main Street.
City: Charlestown
Country: Nevis
Telexfree has cash, customers, a sales force, international presence, infrastructure, a recognizable brand and a new business plan. Its certainly arguable that Telexfree could operate as a legitimate company under bankruptcy court oversight and protection and eventually emerge as a viable company.
Telexfree attorney’s have characterized McMillin as a “disinterested” party, qualified in every respect to run the company, which under the law, he may be. The Court must decide.
Here, a lack of experience running “a billion dollar ponzi / pyramid schemes disguised as multi-level marketing company” works in his favor, not against him.
Regardless, this has got to go to Chapter 7. Anything else would be an abomination.
Oh, please, Hoss.
Your propensity for arguing on what you consider to be “logical” grounds is well known.
But, P-U-H-L-E-A-S-E.
A billion dollar fraudulent company whose “legitimate” VOIP sales constitute .1% of its’ revenues can “arguably” can come back as a legitimate concern with bankruptcy court protection ???
It’s no bloody wonder victims of these things become confused.
Geez.
Arguably? Yes of course. Why not?
Greenburg Traurig is attempting to make that very argument….. and will.
“We agree that it makes sense to put in place a Chapter 11 trustee,” said Joseph Davis, a lawyer for TelexFree.
Chapter 11, as you probably know gives the debtor protection from creditors as it prepares and attempts to have a Plan of Reorganization confirmed.
I realize you are resistant to the idea that the company is an entity separate from its owners and the individuals who stand accused of malfeasance, but it is. As such Telexfree has assets that may be protected and debts that may be discharged even if the owners and certain promoters are in jail, sued into oblivion or living in spider holes somewhere in the Amazon.
Its a matter of due process if nothing else. The debtors, creditors, the class action plaintiffs, the SEC, Massachusetts will all have a say in the outcome.
All things considered I think it will be converted to a 7 but that’s arguable.
SEC and other Website say: telexfree can make us easy rich but they don’t know why? yes. we will rich by we promote other people< or we are invest a lot of money one time<> and we do not rich if we stay at home just get our money back every week in one year.
telexfree is the best business because they give us more time for make money. all jobs in the world need to work hard and truth on the company if we want rich. telexfree is same.
if want to close company should start from the first time when company is began. not during a lot people fall in,and close company. now i not sure i lose something not because this company but the risk from other thing.
i hope not from the law or SEC. because law use for help and protect all promoter that work in company.
Hoss, if you are seriously suggesting a company which has been run as a hybrid ponzi / pyramid fraud and, in doing so accrued liabilities in excess of a billion dollars can be “saved” by declaring bankruptcy and continue to operate, then there’s very little point in continuing any discussion because you obviously live in a different world than the rest of us mere humans.
Costas’ reputation is ruined. If he restarts he will get a TINY percentage of people that TelexFree had… if he doesn’t get jailed first.
Costas is one of those people who like to hear himself talk. Makes him feel important, and his talks are not based on reality (except whatever he thinks people will listen to).
He’s best compared to Baghdad Bob / Comical Ali back during Desert Storm, i.e. Iraqi information minister telling the world that Iraqi forces are beating the Imperialist invaders.
And SOME people in Brazil want to see TelexFree run again… even if they would have lost all they had put in. it can be blamed on the government or some sort of conspiracy or misunderstanding or whatever.
And maybe someone really do miss the long distance service… Hmmm… Probably not.
Do I think Carlos Wanzeler is now telling Costas what to do? Hmmm… insufficient information.
As for why is Brazilian justice so slow… Well, I don’t have an answer for that.
The problem here is you did not think the situation through to the end. What you described cannot be true because the company never made that much money off the VOIP subscriptions, and they know it. You’ve been defrauded by lies and false promises.
Furthermore, let’s assume for a moment that they *are* selling that much VOIP minutes to be that profitable. If that’s true, why would they pay you? They would be hiring cheap labor in Asia to post the ads for pennies and save themselves millions.
If you think it through, TelexFree do NOT need your ad posting. It just wants your money, and that makes it an INVESTMENT because it’s paying you back more than you put in… and because it’s using your money to pay others, and using other money to pay you, it is a PONZI SCHEME.
The law is used to protect ALL of you from this fraudulent company’s false promises. I hope you will open your eyes and see the truth, rather than only see the fake dollar signs the man who recruited you dangled in front of your nose like a carrot is used to lead a donkey.
The company could only operate as permitted by the Court so if you are implying that “saved” and may “continue to operate” means that Telexfree can continue its previous business practices that’s a misconception.
At the very least the court and the creditors would insist on a complete housecleaning and revamp of the business to move forward.
…
Back in Nevada the SEC claimed that it would become the largest creditor of the Telexfree estate. I take that at face value, with the understanding that its only true if they prevail in District Court in the SEC v Telexfree Complaint.
Under BK law any creditor (not just the SEC) may request a conversion to Chapter 7. The two conversion tests are whether or not there is a reasonable likelihood of rehabilitation and whether or not the estate is continuing to shrink due to losses or other causes.
The point of this explanation is to indicate that conversion has to be justified. Counterbalancing that is the Ch 11 debtor’s right to present and defend its reorganization plan. I daresay that many potential creditors are interested in hearing it.
Telexfree has a product that nobody would even buy outside of the ponzi. The voip can’t compete in the market and is inferior to the competitor’s in every way.
None of the “customers” they do have would keep paying for an overpriced, barely working voip when they realize they won’t be getting anymore investment rois.
If Telexfree was rebooted to go legit, it would be Telexfree in name only. It would need a new product, new customers, real advertising…not to mention it’s toxic reputation. They would need to actually sink money into the company before anything could be done with it. It would be like starting an entirely new company.
Telexfree just isn’t a real business and shouldn’t be treated like one.
The words Telex and FREE is the marketing work of amateurs. The company was screwed up to begin with, namely:
1. No toll-free number for customers service (this is a communication company)
2. Crappy back office and website full of errors
3. Shitty VoIP that could not be used by businesses
4. Only 3,000 minutes with no way to monitor usage
5. Ticketing system didn’t exist for months
6. Thousands of tickets not replied to
7. thousands of complaints from users/customers at reclameaqui.com.br
8. Shady management and owners
9. Drawer contracts (subject to proof) but known to exist
10. MLM software manipulations? Is the Pope Catholic
11. Old boy network in Brazil (among top leaders)
12. Carlos Costa, a typical self-agrandizing ass, IMO
I agree with everything you said except this:
At this time there are only allegations. Telexfree is operating subject to a preliminary injunction and they are complying with it. On that basis I think the Bankruptcy Court must treat them like any other business that files for bankruptcy protection.
After being busted by “Fantástico” (a Brazilian Globo TV show) with its office in Vitória, Espírito Santo state in Brazil, full of Telexfree workers, Carlos Costa said in one of his “news flash” video they were working on the “refund task force”.
Here’s how it works: people must access transparenciaympactus.com download and fill a form in and send it back to an e-mail box.
Today TF posted on their FB wall the following:
Hmmmm… So again, Mr. Costa, why have you been asking people to provide their personal information and how much money they had in their BO if the company is supposed to know that?
Why was the website “transparenciaympactus” down (in fact it was redirecting automatically to the “telexapp” website) just after the BK process being moved to Mass. and Wanzeler fleeing to Brazil and now, conveniently after “Fantástico” report, you put it back on (AFAIK, it went back just yesterday).
We all know they are just buying time and calming (or would it be confusing) telexzombies. They will not and can not refund any money unless justice says so. And even though, that would be done by some justice representative, not Telexfree.
It amazes me how people in Brazil know where Carlos Brothers are and simply do nothing, except posting nonsense comments and prayers on every ridiculous TF related blogs.
When you think things couldn’t get more ridiculous, there’s this:
Really?!? WTF is wrong with those guys?
Source (in Portuguese): economia.ig.com.br/2014-05-29/homenagem-a-lider-da-telexfree-no-senado-e-cancelada.html
I think Regino Barros was either quite obviously a TelexFree investor (under Rodrigues), or was paid large amounts of money by him. Barros wanting to appoint Rodrigues an advisor for his Multilevel Marketing Regulatory Agency of Brazil (Aromm) is the give away.
Trying to give a Ponzi scammer a “multilevel marketing person of the year” award, even if granted by an unofficial body, is just awkward.
Oh, Brazil.
You bet he was. He said to iG that “I must have over $ 1 million [blocked] in my virtual office. I’m working to set up an association of victims.”
At least it is funny to read telexzombies comments raging on iG for blowing Rodrigues’ party up.
In related news, Paymony has closed it’s US office and opened another in Madrid, Spain.
http://www.empresia.es/empresa/paymony
Looks like Spain is the next “see, here they have MLM laws and what’s-its-spanish-name-SEC backed us up saying we’re completely legal” place, since that BS can not be said of the US by scammmers anymore.
There’s already a history of Brazilian scams and scammers doing operations in Madrid, including Telexfree.
The Spanish-Portuguese-English trio is really taking the lead in the Ponzi stakes this year.
It’s kinda gotten to the point where if I see those three flags, I can safely assume I’m looking at scammers.
It seems to be your second bet, Oz. Just 3 days ago Regino Barros was confronted in a MMN web-radio talk show with rumors of Sanderley Rodrigues’ new company (not named) wanting a partnership with his company, UNOS Empreendedores, along with Wings and Luvre.
After denying those partnerships, but confirming that there are indeed people who plan to invest heavily in his company, though nothing is certain yet, he said:
http://webradiomultinivel.com.br/noticias.php?site_id=771&pagina_id=17161&tipo=post&post_id=167
It seems clear Sanderley Rodrigues was indeed one of these persons…
I don’t know if this is Brazilian in nature, though it’s certainly not unknown in Brazil, but Dollar Flow System (now defunct?) operated from a seedy hotel in Madrid, Hotel Catalonia Moratin, at Calle de Atocha, 23. It was registered to a certain Franklin P. Muller.
Incidentally, that (very obvious) scheme seems to have packed up and left today or yesterday, the website seems to have gone offline and people are in a buzz at their FB group.
It looked seedy in Google maps, but apparently it’s now a luxury 4 star hotel, named Catalonia Puerta del Sol. That’s where their website used to be registered to.
Meanwhile, in the real world……………………………………
One of the First Brazilian Scams to move to MADRID was WISHCLUB (formerly BLACKDEVER in Brazil). It’s one of the best TELEXFREE Clones out there, I think.
Document Name: Application of the Debtors for Entry of an Order Under 11 U.S.C. §§ 105(a) and 363(b) Authorizing Retention and Employment of Stuart A. MacMillan as Interim Chief Executive Officer for the Debtors Nunc Pro Tunc to the Petition Date
Document Name: Application of the Debtors to Employ and Retain Alvarez & Marsal North America, LLC as Financial Advisors to Debtors and Debtors In Possession Pursuant to Sections 327(a) and 328 of the Bankruptcy Code Nunc Pro Tunc to the Petition Date
Hoss,
if you want to continue to believe that Telexfree will be able to play the US bankruptcy system this way, then be my guest.
What you’re posting are APPLICATIONS by Telexfree and/or its’ nominees.
In the real world, such applications will last 33 (or less) seconds from the moment the Judge opens the paperwork showing Telexfrees’ “proof in support of its’ claims.
well looks like the site is back up, i guess u spoke too soon ?
These were filed late afternoon on the day after the trustee was approved. Since they request Nunc Pro Tunc appointment and discuss consulting fees my interpretation is that both filings are in effect asking the Court to approve payment for work already performed on behalf of the debtor.
Your opinion is that that judge will deny the applications in 33 seconds, or less. Fair enough. Start your watch.
So, you are familiar with a lawyer / trustee who would do the work for free, I presume.
Better still, are you familiar with any other situation where a bankruptcy trustee ended up administering the estate of a company involved in a billion dollar fraud ??
The bankruptcy case has avoided dismissal so far. Stuart A. MacMillan and William Runge managed to “survive” the May 2nd hearing because they didn’t have access to the information they were asked about.
“We don’t have access to that information” and similar defense strategies are good enough in the initial stages, e.g. to prevent the bankruptcy case from being dismissed or converted to a Chapter 7 case.
It will require an evidentiary hearing before the case can be dismissed or be converted.
Arguments and proofs in support of restructuring:
* new experienced management
* number of VOIP customers before the bankruptcy
* use of the VOIP service in minutes
* growth in the last months
* potential growth in the future
* existing sales force / users
* alleged Ponzi/pyramid has been disabled
In general, restructuring is based on a completely new plan and a completely new management, trying to conserve the values generated under the previous management (e.g. existing customers and sales force).
Arguments and proofs against restructuring:
* transaction data (most users didn’t pay any money)
* user data (e.g. from online complaints)
* Ponzi and pyramid scheme proofs (e.g. a memberlist from a fraud can’t legally be included as assets in a new plan).
The last argument there can be controversial. A list of existing customers and sales force will be among the most important factors for a restructuring operation.
TelexFree will be vulnerable to all those arguments / proofs.
TelexFree’s list of promoters will contain sensitive data about people who have been involved in an alleged fraud, people who potentially can be vulnerable to use or misuses of the data.
The point was that it was hosted in Madrid, not that it was finished. I couldn’t care less about that DFS scam.
Neither McMillin or Alvarez & Marsal were acting as attorneys/trustees and neither has indicated its willingness to work for free….In fact their applications indicate just the opposite….They are asserting a right to be paid.
Ever hear of Enron?
Data from the criminal case, doc-2-1.pdf, AFFIDAVIT OF JOHN S. SOARES IN SUPPORT OF CRIMINAL COMPLAINT, can probably be used as evidence in the bankruptcy case.
Points #57 and #58 in that affidavit show that the debt derives from “phantom transactions” in an internal system. MacMillan has testified that the internal system does exist, but he saw it as “unproblematic” since it reduced the amount the company had to pay out.
MacMillan was asked directly about it in the May 2nd hearing.
The data in point #57 are from TelexFree’s own balance sheet, submitted to MSD in February 2014.
I don’t think that type of debt can be discharged through a bankruptcy. It’s about debt derived from a fraudulent system, where “empty promises” have been accepted as payments in both directions.
Hoss seems to be the only one on here who knows what he is talking about. Calling people out on here because they make stupid statements, ignore key evidentiary facts, or show an incredible lack of understanding of the law, does not mean they support Ponzi schemes. It just means they are trying to help you understand what is actually happening versus what you think is happening.
MacMillan and Runge are out. Not fired as posted here, but essentially resigned as the deal Telexfree lawyers laid out on Tuesday was that all professionals would resign in favor of a trustee as long as all the professionals fee apps were entered.
Clearly at this point everyone agreed that a trustee would be in a better position to handle the Chapter 11. All of this happened today. So while headlines of moles and liasons with Carlos Wanzeler are fun for you to write about, they have no relation to the facts.
All paid professionals agreed on Tuesday to step away in favor of a Trustee including MacMillan, Runge (alvarezand marsal), the lawyers Greenberg Traurig: everyone. I am sad that nonsense like this ruins it for other legitimate MLM businesses.
I am also sad that people who slander and libel from blogs are allowed to hide behind pseudonyms. I will say that a little man behind a curtain pulling levers while he pretends to be great and powerful to the people just naive enough to believe him to be an expert is an apt name for the author.
I swear, some people watch too much TV, read too many sensationalized media reports and over complicate simple situations without any need.
If anyone thinks the US Government or any of its’ agencies, in particular the FFETF, is going to be outmaneuvered by Telexfrees’ abuse of the bankruptcy system, come right out and say so.
Bloody hell, people, there are a lot of people who are more experienced and a helluva lot smarter than any of us taking care of the situation and, rest assured, Telexfree and/or its’ organizers are NOT going to win, no matter how many lies they tell, how many press releases they release or how many armchair experts play “what if” and hypothetical games.
A Trusteee have been ordered – http://www.kccllc.net/telexfree/document/1440987140530000000000006.
@James
Please don’t make up bullshit.
MacMillan and Runge got buttfucked by the Trustee appointment. They were out the second that Judge said he was going to appoint one.
Stop trying to PR spin.
@littleroundman… I take exception to the notion that people who work for the Federal Government are smart. Cunning, manipulative, parasitic, and Gestapo like yes. Smart, no.
Strangely, I find the “negative” terms you used apply to Ponzi pimps rather than the Feds who find them and prosecute them.
Who can forget Dawn Wright-Olivares attempt at manipulation with the toilet paper analogy and the burger analogy? And started instituting “Zeek Patrol” to root out alleged violations on the net? Or Craddock and crew trying to raise money from Zeek victims to “redeem Zeek”?
And how about Sann Rodrigues’ attempt to “help” the downlines he suckered in TelexFree by “organizing” them to protect their rights?
Interesting. This rings true and is consistent with the Retention and Nunc Pro Tunc filings that showed up the following day. The professionals get paid, they get out of the way and the system grinds on. Sometimes it seems that this is 50% of what bankruptcies are about. (that percentage may be a little low)
Thanks James.
No doubt, but what James said is that their exit was negotiated in advance of the ruling. Its plausible. The applications for payment were filed the next day.
I don’t get where you’re getting “application for payment”. I might have missed something but they filed a retention motion. They want to retain MacMillan and Runge, not just pay them off.
WOW! Here we have an unprecedented billion dollar fraud being committed on people with a network of lies, misinformation and unscrupulous ponzi pimps. And you are speaking against one of the few people who has been raising awareness and consistently reporting based on facts since July 2012.
Although Oz may not be completely right 100% of the time, he is reporting on unfolding events and things that people in favor of Telexfree don’t want you to hear. So the facts are not easy to come by, and, in the case of court documents, not easy to understand. But yet he tries to put together what he has in a easily digestible fashion with a little humor interjected. I totally respect him for that.
In terms of what you are challenging Oz on regarding McMillan and Runge being out not fired, you will have to show me one place in this blog post where Oz said they were fired. He never made that claim so I think it is YOU, James Charles, that is making shit up.
I think what ruins it for other MLMs is the business plans focused on recruitment of others rather than selling product, not some blog posts that are trying to provide an analysis of MLM business plans with some interjected humor and sarcasm. The people who post here are just like you are just expressing their freedom of speech (minus spam).
What I don’t get is that you are accusing Oz of slander and libel where he is really using facts and court documents. I think you are mistaking the interjected humor and sarcasm for slander and libel.
There is tons of TF info out there that is complete crap full of lies and laws being broken and lives being hurt and you are nitpicking on some technicalities that you yourself have wrong. In my opinion, you really don’t get it.
@Naz
Investor fury is widespread and manifests itself in any number of ways.
Please excuse my limited knowledge of bankruptcy law, but this is what I understand of the MA bankruptcy case so far:
***May 27***
Major hearing was held and the transcript is not released yet. In it, “A Massachusetts bankruptcy judge on Tuesday signaled he will move quickly to appoint a Chapter 11 trustee to take control of TelexFree LLC.”
TF lawyers agreed saying “We agree that it makes sense to put in place a Chapter 11 trustee,” “I understand why control of the company should not remain in the hands of management that preceded the bankruptcy.”
By management “that preceded the bankruptcy,” TF lawyers meant the old management (Merrill, Wanzeler, Craft) that preceded the Nevada filing of bankruptcy. They did not mean Macmillan and Runge who were the new kids on the block. Therefore,
***May 28***
TF lawyer file a motion to retain Stuart Macmillian as head of the company so he can restructure the company (ie. negate all contracts and pretend that this ponzi thing never happened). TF lawyers sited several reasons why Mr. Macmillian should maintain control of the company and all of the reasons smelled like horse shit some coming from left field. So
***May 30***
Judge Hoffman appoints a UNITED STATES Trustee to administer the bankruptcy. No more McMillian. It is officially over (minus any appeals of course). The fat lady has sung.
Now the hard part begins of figuring out how to salvage the millions that were defrauded and how to try to get as much as possible back for the victims.
Based upon what James Charles said and my own sense of how this is going to play out I don’t think the trustee wants to employ Mc Millin and Runge.
I can not vouch for this with 100% certainty without having access to the transcripts but follow this. We know the trustee was appointed which almost certainly means that McMillin, Runge Alvarez & Marsal and Greenburg are out.
The Trustee will use his own attorney and his own staff. This is most likely…. to believe otherwise is to believe that the trustee is going to work with McMillin, Runge, Alvarez and Marsal on a temporary or semi permanent basis to formulate a reorganization plan. Its possible, but I bet not.
…
The Retention motion requests the court to confirm the retainer agreement which Telexfree management signed with Greenburg Traurig.
…
The Application Motions ask the Court to confirm the consultant’s terms of employment “nunc pro tunc” (meaning as of an earlier time…I.e., from the day the consultants signed contracts with Telexfree to provide services.
..
By their terms and if approved, the Court would acknowledge the “disinterested person” status of the Applicants, the terms of their contracts and the terms of Greenburg’s retainer agreement…..all of which effectively would charge the estate with the payment of their fees from the moment they were hired until the date the trustee was appointed.
…….
Administrative and Professional fees are paid upon motion and approval so approval it is tantamount to the Court telling the trustee to “pay them.”
Normally the trustee could oppose any or all fee requests and contracts but if James Charles is correct this may have been a negotiated deal, meaning that the Telexfree group agreed not to contest the trustee’s appointment in return for a promise that the trustee would not oppose payments for services already rendered. That’s the general outline of what may have happened. Results may vary.
My impression is that they are indeed some kind of applications allowing for past payments. They have been approved Nunc Pro Trunc (retroactively) to the petition date.
It is not evident to me that the court is retaining them in the last orders, with the exception of KCC possibly.
To the moment the court apparently has allowed KCC, and past wages to the two lawyer firms (not sure if they have been retained). Decisions about MacMillan and Runge firm are notoriously absent.
There are two types of motions here. The retention Motions which relates to payment of attorneys retained by the debtors. and the Application for fees Motion which relates to payment of the consultants such as McMillan and Runge who were hired by Telexfree. The form for each is slightly different but the purpose is the same. Release the parties from liability and pay them off.
@kchang…. The ponzi pimps themselves are slime, pure and simple. Even though I believe that excessive whining these days has replaced common sense and ye ole Caveat Emptor. Federal Government employees, especially the law enforcement types, are absolutely becoming more Gestapo like and pompous with every passing year. In every arena.
Right you are. KCC is confirmed, Greenburg and Gordon & Silver get paid and McMillin, Alvez and Marsal are on hold. Could be suspicion or reasonableness of fees. I’ll go with the latter.
@Holytroller
Federal Government employees, especially the law enforcement types, are absolutely becoming more Gestapo like and pompous with every passing year. In every arena.
Let’s stick to the arena at hand. And where are you seeing this behavior in regards to the handling of Telexfree so far?
@hoss Not really sure what was negotiated. Only going by Davis comments at status hearing that “they were in agreement with US Trustee to have a trustee appointed as long as all retainer apps were admitted”.
My guess is that with Chapter 11 being transferred from Nevada to mass these may have fallen through the cracks. Much more process oriented and less salacious than talks of moles and butt kickings but probably closer to the truth.
McMillan and Runge who were hired by Telexfree.
Could be suspicion or reasonableness of fees. I’ll go with the latter.
I’m going to go with the former. I can’t help but feel there is some culpability on the part of MacMillan and Runge who were heading up the bankruptcy that would relieve Telexfree’s debts. I beleive their own testimony shows negligence.
The list of those to be paid was not properly researched and included many family and friends of the schemers. They couldn’t have been business men and not seen that this was a blatant Ponzie scheme and new darn well that bankruptcy was planned to get Telex out of hot water. NOT to re organize.
And the idea to take the case to Nevada was “who’s” bright idea? And why didn’t Runge take possession of the million dollar checks since that was what he was hired for.
It seems to me they are in fact the “designers” of the flight plan for the big exit. The answer to them being paid and heading to Disney Land may be responded to with a “Not so fast gentlemen” …..”You got some splainin to do”
I’m going with BOTH those reasons.
Both MacMillan and Runge were directly or indirectly hired by the former management as “insiders” (opposite of “external consultants”). Both seems to have been hired for the purpose of protecting the interests of the former management and owners at the expense of creditors.
The work they did wasn’t very useful. MacMillan’s optimistic report revolved mostly around his own “expertise”. It was vague where it should have been clear, i.e. he didn’t really investigate anything.
All he has delivered is a failed exit plan. It failed within few days, it simply wasn’t solid enough to work.
BUT!!! If Macmillan’s plan had worked…he would have earned 50,000 a month on top of the 300,000 give or take a dollar or two retainer fee for as long as he could keep “his” scam of reorganizing of the company going.
Was he thinking I’ll risk my reputation on winning the Telexfree lottery and take half a million or more and retire? None of us know “his” real life circumstances or story.
Seems to me that the thread of thinking “I can fake my way through anything” is a common denominator with this whole scenario of the Telexfree story.
Just a hunch…I have a feeling the judge or who ever will decide, they aren’t going to pay them …the reason will be that they didn’t do diligence in researching the company and they also will now be investigated. just a hunch
Can’t go wrong there unless the answer is number 3.
Even if they were “hired for the purpose of protecting the interests of the former management and owners at the expense of creditors” don’t equity holders (owners) have a right to protect their interests as well?
….
I don’t mean by this that its ok for the owners to hire someone to hide assets or lie to the Court but engaging a management team to guide their company through reorganization (especially when the current ownership is incapable of doing so is not of itself wrongful.
McMillan and Runge didn’t break any laws, Wanzeler and Merrill did.
The main thing for me is that McRunge did not provide any reasonable value to the estate for the money they received and requested to be paid I would give them something just to get lost but I would object to payment in full. They were two-bit actors and should be paid accordingly.
A, B or BOTH all have relatively similar chances for 100% result? There’s 4 possible options = Option A, Option B, BOTH, NONE.
A but not B will have 1 100% result, 1 50% result, 2 0% result
B but not A will have 1 100% result, 1 50% result, 2 0% result
Both A and B will have 1 100% result, 2 50% result, 1 0% result
Neither A nor B will have 1 100% result, 2 50% result, 1 0% result
my cousin in Brasil received today on the mail a check for his initial investment on Telexfree
Well two endorsed orders have been granted for MacMillan and Runge (with emphasised June 9th objection deadlines).
I’m still not convinced “retain” isn’t an attempt to keep them on staff. If you read the actual motions, it reads like they want to keep them on as CEO and Runge’s firm in an advisory capacity.
Looking at the bigger picture, isn’t it likely all these firms/people are going to have to pay whatever stolen Ponzi funds TelexFree wants to/did pay them with eventually anyway?
Seems entirely a moot point to fight for fees dating back to the bankruptcy unless I’m missing something obvious.
The Trustee appointment order appears after the MacMillan and Runge endorsed orders were posted so it’ll be interesting to see if the Trustee has any impact on the orders going forward.
Faith Sloan is now a school bus driver in her home town. At least she is trying hard to stand on her feet again.
@Asdrubal
From who? Obviously not TelexFree.
To that end, from Jordan Maglich (lawyer at large):
http://www.ponzitracker.com/main/2014/5/30/court-appoints-independent-trustee-for-telexfree.html
Quite obviously anything paid to anyone is going to have to be returned sometime in the future.
If this thing plays out in a similar fashion to the last couple of ponzi / pyramid prosecutions, and I see nothing indicating it won’t, I would predict we are probably in for at least two or three years of ducking and diving and seemingly pointless legal maneuvering before any sort of resolution is achieved.
You seem to have it right. The code sections mentioned in the applications relate to a trustee’s ability to retain specialists and also how those persons may be dismissed or denied compensation if they are deemed at a later date to have interests that were or are adverse to the estate.
The style of endorsement by Hoffman is tantamount to a consent decree meaning the judge has approved an agreement between parties without having considered the merits or ruling upon it. The objection date is what it is. Who might object? The SEC? MSD? A creditor? Nobody?
I don’t follow you. if the Court approves employment nunc pro tunc or otherwise then compensation is payable from the assets of the estate.
Again I do not follow. If the court approves the compensation then it does not have to be returned.
Did you type that with a beak?
Re. The payments. The bankruptcy court hasn’t considered the criminal and fraud aspects of the case yet.
I can’t see how once that’s taken into consideration any of the TelexFree insiders are going to walk away with Ponzi funds.
You work for a Ponzi scheme, you don’t get paid.
It’s as if Telexfree sychophants are forgetting the Bankruptcy court is a division of the Department of Justice, then further imagining the trustee is shut away somewhere in complete isolation, unable to communicate with the outside world or the rest of the DoJ.
The fact that Telexfree and its’ organizers are exercising their constitutional right to explore every avenue available to them, and the courts are allowing them to do so, should not be taken to indicate Telexfree is “winning” anything.
Folks, you have to keep in mind that bankruptcy attorneys have been hired on for like what? 45 days or a little more? Alvarez and whatever a little longer, but they’ve been on their jobs for like 2 months, 3 at the most. Some of them don’t even have a full fee schedule written up yet, much less an itemized bill.
IIRC TelexFree is like we signed you, we’re going bankruptcy next week. Time is of the essence! Now they’re going to be out of a job, of course they’re going to file whatever it is to claim “we did our job, we are creditors too and we need to get paid”. That’s what “retain” means, and that is a part of the bankruptcy itself.
All these petitions are backdated to when the petition was first filed. Same with MacMillan, except he was on, what? A few weeks longer?
Other than a class-action lawsuit, where is the original attorney for TelexFree?
Sloan is driving a bus for a living? Where is San Rodrigues and the rest of the indicted gang? Any criminal trials in the horizon? BK first, jury trials later? Where is katia now? Free at home, passports retained by authorities?
It seems to me that as time goes by, all the main characters in the TelexFree sharade seem to be slowly fading away in the background.
If I understand it correctly, “nunc pro trunc to the petition date” means retroactively to the date bankruptcy was filled (13 April), right?
Also, seems the final decision about all those applications is now at the hands of the trustee?
Yes. As I understand it. They have been properly employed in service of the debtor and the debtors in possession since the petition date.
Ultimately its in the hands of the Judge, but Code sections 327 and 328 and 363 etc. authorize the trustee to employ professionals to assist in the administration of the estate.
The two Applications were submitted by Greenburg Traurig on behalf of the Debtors with what must have been the concurrence of the trustee. The Judge endorsed the Application giving it the weight of an Order…. unless an objection is filed by June 9
Reading anew the scope of employment recitations, indicates A&M has particular capabilities in the area of forensic accounting, while McMillin appears to be valued for his experience in managing network marketing businesses. He may be viewed as a competent appraiser of value in the event Telexfree is broken up and it assets sold for the benefit of the creditors.
18. The Debtors understand that A&M intends to apply to the Court for allowance of compensation and reimbursement of expenses for its financial advisory services in accordance with the applicable provisions of the Bankruptcy Code,
The fee schedules were originally negotiated and approved by Merrill and they are included by reference in the Applications to Employ M & A and McMillan Nunc Pro Tunc. Itemizations will be provided as time goes by and the bills will be submitted for Court approval subject to review and objection.
The Retentions of attorneys are already approved and they will be paid per their retention agreements. The Bankruptcy system takes care of its own.
Bankruptcy Courts are not a division of the Department of Justice.
The Department of Justice is part of the Executive Branch, while the Courts are part of the Judiciary Branch.
So, what is it, Hoss ??
OCD, Aspergers – what ???
Yeah probably but undiagnosed.
How about you?
A.D.D.?
I can see how you might have gotten confused, but the straight truth is that the Courts are part of an independent Judiciary Branch and the DOJ is part of the Executive Branch.
If you are interested in learning something about this, I suggest you search for a organizational map of the US government or read a Wiki article concerning “separation of powers under the US Constitution.”
Normal first duties of a Trustee is to examine the Debtor and to write a preliminary report. I expect a different type of report from a Trustee than the reports written by the “insiders” William H. Runge and Stuart A. MacMillan (“McMillin” or “McMullin” as Hoss prefer to call him).
It would be fun if anyone filed some detailed objections to docket numbers #227, #228, #229, #230 = all the current documents about retaining Alvarez & Marsal and Stuart A. MacMillan as professional assistants.
Objections can be about misleading information in documents supporting a Chapter 11 reorganizing. It can be specified to be about missing information about legal problems, missing information about type of debt, vague and misleading information about VOIP sales, etc. = information that is necessary to decide whether or not a Chapter 11 bankruptcy actually can be performed.
It only makes sense retaining them if the original reorganizing plan actually can be performed = if the debt really can be discharged, if the number of VOIP customers have been correctly described, if legal trouble won’t affect the reorganizing efforts, etc.
Paying them for writing an exit plan for the former management won’t make much sense. It won’t make much sense paying them for bending the rules either.
Sad, some Brazilian newspapers are reciting local interpretations rather than real experts in the case. One of them claims bankruptcy was accepted, another even claimed that Kakay said it.
NOLINK:www.diariodepernambuco.com.br/app/noticia/economia/2014/05/30/internas_economia,507271/justica-dos-norte-americana-autoriza-recuperacao-judicial-da-telexfree.shtml
NOLINK:digital.odiario.com/economia/noticia/835662/acatado-pedido-de-recuperacao-da-telexfree/
At least Veja is more antifraud.
http://veja.abril.com.br/noticia/economia/telexfree-admite-que-nao-consegue-gerenciar-proprio-negocio
It HAS been “accepted.” However it may also be “unaccepted.” (in a manner of speaking.) It was “accepted” (filed as a matter of right) on April 13th as Chapter 11 case.
Unsurprisingly things are getting lost in translation.
Forgetting all that, the appointment of a trustee should remove any doubt anyone has as to whether or not Telexfree is in bankruptcy… It is…. and since bankruptcy is a perfectly useful way of resolving messes like this, it will probably stay there.
What is apparently being lost or unreported in the foreign press is that the appointment of a trustee was contested by Telexfree under the premise that they could be trusted to run their own affairs. They lost that argument.
The appointment of a trustee is no indication that Telexfree will continue in business at all, in fact its the opposite. With rare exceptions trustees liquidate businesses they do not attempt to run them.
It would.
Putting that possibility aside for a moment….
Take a look at their qualifications as shown in Docs 227 and 228 if you have not done so. I think you will see that they can be of immense use to the trustee even if/when this converts to a CH 7.
The Trustee is likely to have limited or no experience with mlm business practices, Voip, how assets could be deployed, if they are useful to anybody etc. MacMillan can assist the trustee in evaluating what value there is, if any, what she’s got , what she can sell, and probably provide expert testimony to justify her decisions.
She needs somebody with experience and familiarity to assist her. It could be someone else, but for now at least, its him.
A & M is a management consulting firm and claims to have extensive experience in global forensics, restructuring… Certified Public Accountants / Chartered Accountants / Forensic CPAs
• Certified Fraud Examiners
• Chartered Financial Analysts
• Former Big Four partners and staff
• Former SEC, Financial Services Authority, and Office of the Comptroller of the Currency professionals
• Former Federal Special Agents
• Private Investigators
• Forensic technology specialists
• PhD economists
• Valuation professionals
• Banking and securities professionals
• Former C-Suite Executives
All of which are useful capabilities if the trustee is going to unravel Telexfree.
It’s even worse: some low class newspapers are publishing only the “good part” (if any) of all TF news, knowing telexzombies will buy their paper to “rub” on people’s faces as in “See? Now these are news! The other papers are just lying! Let’s all buy this one and show people its no pyramid scheme”.
Yuck!
Boy are we in for some exciting times, then.
Billion dollar fraud cases being “resolved” by the fraudsters applying for bankruptcy protection.
Exciting times indeed.
I think the TelexZombies are taking “accepted” as TF will rise again when it’s nothing of the sort. But you and I know that.
There’s various degrees of accepted. But then, the Zombies have to find brains where they see it, even if it’s fake. 😉
Bankruptcy isn’t a “perfectly useful way” to resolve fraud?
The so called “rejected contracts” were the AdCentral contracts, fraudulent by design. They were supported by a fraudulent internal payment system based on empty promises. The debt derived from it will be fraudulent too.
TelexFree’s payment problems are clearly related to all the empty promises. Empty promises were “paid” to the back offices, promises about “we will replace these promises with real money when you want to withdraw money from the system”. It DID replace promises with money as long as enough money was coming in from new promoters.
It accepted its own empty promises as payment. It even generated commissions from those empty promises, e.g. it paid out 90% commission as empty promises when people used empty promises to pay for new VOIP subscriptions.
It got payment problems when people stopped putting in more money through AdCentral purchases, when people wanted to withdraw those empty promises as money. As an emergency solution, the empty promises were converted to “TelexCredits” people no longer could withdraw as money.
@hoss
I’m still not seeing how that’s going to fly in the face of a Trustee being appointed.
“You were hired to try and negate Ponzi liabilities through the bankruptcy court? Well ok then, hundreds of thousands of dollars for you!”
The accounting firms were paid millions were they not?
Asserting they are going to be permitted to keep any TelexFree funds in the face of billion dollar fraud when the dust settles is laughable.
They’re insiders (had access to the books), plain and simple. I don’t think there’s any criminal liability (unless orchestrating the bankruptcy counts), but they certainly don’t deserve any share of stolen funds. That’s affiliate money.
@hoss
Uh… MacMillan has no idea about the MLM side of the business and thinks TelexFree99 is going to generate $50 million a year. Did you forget his “I know nothing outside of what I was paid to parrot here today” testimony?
If I smashed my left nut with a hammer it’d still have a better idea about MLM and TelexFree’s business than him. The Trustee comes from the DoJ. It won’t take much to come up to speed (going by what the DoJ filed in their request for a Trustee appointment).
Sure it is. The trustee will assert all the causes of action that the estate has against net winners (fraudulent transfers) , banks, insiders, etc. just the same as the Reciever has been doing over at Zeek. You’ll hardly be able to tell the difference once this settles in.
Here’s some of the duties of U.S. Trustee:
Source: thompsonhall (random search hit).
I was looking for the specific duties of a Chapter 11 Trustee AFTER a Trustee had been appointed by a court, e.g. “the first duties”. It was only partly answered in that quoted source.
We can pander to Hosses’ obsessive compulsive disorder and play the semantics game all day, the fact remains, the DoJ has a direct conduit into the bankruptcy proceedings against Telexfree and is not required to act as trustee itself.
The court order states:
“The United States Trustee is directed to appoint a Chapter 11 trustee”
It does NOT add “from within the office of the United States Trustee”
In theory, the United States Trustee COULD act as trustee, which would undoubtedly make Hoss “right” and therefore a happy chappy.
In practice, the office of the United States Trustee has neither the resources nor experience to handle such a task and will most likely / probably / may / might / should / could ( whatever exact terminology wil keep Hoss happy )defer to a DoJ nominated entity.
None of which makes any difference to the fact Telexfree is / was an international billion dollar plus fraud / wirefraud / money laundering / conspiracy (whatever exact terminology will keep Hoss happy) operation and its’ perpetrators / organizers / owner / promoters (whatever exact terminology will keep Hoss happy) are as guilty as sin.
So unless somebody raises a compelling objection to the Applications how else its going to be? You saw Hoffman’s endorsement.
Deals like this keep the sausage moving through the grinder.
As you note, his responses were scripted therefore I don’t know what he really thinks. If he’s worthless to her the trustee can dump him.
This trustee (with a little t) is a private individual drawn from a pool of candidates available to the US Trustee. Her role is to administer the estate according to the Bankruptcy Code, not to act as a puppet for the prosecution, SEC or DOJ. Its even theoretically possible that she could defend the debtor or negotiate settlements with the SEC.
@hoss
Well we’ll see how it plays out over the next few weeks.
I’m still convinced nobody who performed services for TelexFree, pertaining to them trying to abuse the bankruptcy court to negate Ponzi liability, will get to keep any money paid to them as fees.
It’s obviously going to happen slowly, but things will slowly catch up with those who got on board the TelexFree gravy train.
Oh, goody,
we have now made it into “theoretical possibilities “ in an effort to keep Hosses’ position relevant to the discussion.
The good thing is, the fraud and fraudsters have been stopped in their tracks, no one can lose any more money without trying really hard, and who is right or wrong about how and who does what from here on in is irrelevant.
Is it just me or have we gone full circle? Wasn’t Hoss slamming M_Norway for indulging in “theoretical possibilities” a week or so ago?
I do enjoy the discussion though :). Just sort of which we could fast forward time a bit to see what happens!
My only concern at this point is that we have the Telexfree pimps trumpeting “we won, we won” and keeping hope alive among what appears to be a largely inexperienced victim pool, while here we have others playing into the pimps’ hands and confusing victims even more by introducing increasingly bizarre “possibilities” into the discussion.
It’s as if being “right” is only possible by making everyone else “wrong”
Who-bloody-cares ??
The US Department of Justice is “inside” the US arm of the billion dollar Telexfree fraud, and, if anyone wants to think that’s a good thing or there is any chance of Telexfree being resurrected in any meaningful form, good luck to you.
It’s dead, finis, kaput, over.
It’s always the same at the end of one of these “next-big-thing” HYIP frauds.
Reminds me of being in a pathologists’ autopsy room watching as half the spectators argue the corpse isn’t dead and can be revived while the other half argue about the best way to conduct the autopsy.
Just think, if history is any guide, we can look forward to another 3 or 4 years of this.
What on Earth are you trying to say. The Department of Justice is a Federal Agency employing approximately 3,200,000 individuals. Certainly the entirety of the Department does not have a “direct conduit” into the bankruptcy proceedings and is not required to act as a trustee itself. Or does it? Or is it? Fuck if I know. You don’t make a lick of sense.
So far so good……. The US Trustee is directed to appoint….. remember that. REALLY remember that.
Uh oh. Were starting to get in trouble.
But he doesn’t Because….
Wha? Really?
The US Trustee is so completely without resources AND experience that he would, might, should, could defer to a DoJ nominated entity?
Sproing ~~~~~~~~~~~~~~~~~!!!!!
A few questions if you don’t mind LRM
Do all 3,200,000 DOJ employees nominate the “entity?” I mean, how exactly do they do this? Is it an “All in favor say Aye” type of thing?
Does this “DOJ nominated entity” have a name or a title?
It does! What? They are called private trustees. No way. You must be kidding. OK next question.
Why doesn’t the DOJ employ some competent civil servant (preferably with legal training) that is intimately familiar with Bankruptcy law to nominate or appoint this “entity” called a private trustee.
They do! What? Who? How can this be? What is this competent legally trained civil servant employed by the Department of Justice who appoints private trustees called?????????
The US Trustee? Holy Flying Eagle guano Batman it can’t be. I can’t breath. Everyone knows the The United States Trustee has neither the resources nor experience to handle such a task!
You could be right.
Hoss, you’re right.
Everyone else is wrong.
The FFETF wasn’t behind this.
The DoJ has no knowledge of what is happening.
The DoJ will allow whichever minions are appointed to the trusteeship to operate autonomously.
The DoJ is not communicating and/or collaborating with any other agency in the case at all.
Telexfree will probably re emerge as a viable entity, probably rebadged as “Hoss Inc” in recognition of the Hoss contribution to the saga.
There, you have my full permission to gloat, hi five yourself and down an extra celebratory Twinkie tonight as a reward for your intrepid reporting.
(P.S. The HYIP industry says “Hi, and thanks”)
“Endorsed Order” is probably the same as a “Proposed Order”, endorsed or proposed by one of the parties. In this case, the endorsed order was endorsed by TelexFree itself = Stuart A. MacMillan and William H. Runge. They’re simply endorsing their own employment.
Please, just do some research before making these kind of statements. Is that too much to ask.
It has always been about ME slamming HIM for “constructed theories” where arguments like that have been relevant.
“Constructed theories” can both be about inclusion of something of low relevance or exclusion of something of high relevance, e.g. Gerald Nehra’s theories about “flow of products” were rather constructed (they failed to look at the realities, they revolved mostly around constructed law theories).
Ignoring the Ponzi scheme and looking SOLELY at the bankruptcy case will be a rather constructed idea. The Ponzi scheme is clearly a relevant factor to look at.
You interpreted it to be “Hoffman’s endorsement”, endorsed by the bankruptcy Judge.
I interpreted it to be “TelexFree’s endorsement”, endorsed by a party.
I confess I’m confused about those two “endorsed orders”. What is the judge signature doing there? It isn’t even worded as a court order.
What is that? An authorization?
I’m continuing to look at the types of legal arguments Telexfree will be vulnerable to. It’s not a part of any ongoing discussion.
“VALID CASE” ARGUMENTS
A valid Chapter 11 case will need to be supported by the realities of that case. Some factors must have been presented correctly right from the start.
TelexFree’s bankruptcy declaration was rather vague on details where it should have been clear, e.g. it didn’t clearly separate between AdCentral contracts and VOIP sales in its revenue statements, it didn’t clearly separate between internal transactions of empty promises and real transactions of money.
A reorganization will be impossible to perform if the company’s assets are frozen, its database have been seized, it’s subject to restraining orders.
“WRONG LAW” ARGUMENTS
The fact that bankruptcy rules CAN be applied doesn’t automatically mean it’s the correct types of rules to apply.
Arguments pointing out that “bankruptcy rules should not be allowed to be used as an exit strategy from fraudulent activities” can clearly be valid.
“FAILED TO DO DUE DILIGENCE” ARGUMENTS
Arguments like that can be used against any of the professionals, against their claims for payment. The bankruptcy case was rather immediately followed up by a Ponzi scheme complaint from MSD, a pyramid scheme complaint from SEC, and a criminal investigation from different agencies.
Any rational professional would have turned on the brakes and done some due diligence, rather than continuing to push their own cases.
They may have acted in good faith initially, but at some point that “good faith” will no longer be realistic.
I’m not 100% sure, but I interpreted it to be an application for a court order allowing employment of Alvarez & Marsal (William H. Runge) and Stuart A. MacMillan, endorsed by the Debtor (not by the Judge).
Hoss seems to have interpreted it differently, as an order endorsed by the Judge. That’s probably why he asked me to do some research.
I’m not sure whether it only is about payment or about continued employment. It surely sounds like it’s about continued employment.
As you have noted the application has been signed (endorsed) by Judge Hoffman which gives it the weight of an Order. (an endorsed Order as the Docket description calls it) However as you may also note, it is subject to objection.
Judges have an enormous case load. They do not want or need to look into every detail So where there is a negotiation going on that is not a matter of law they basically say go work it out and let me know what you decide.
The submission of the Applications for endorsement likely indicates that a hallway agreement was reached between the parties. The inclusion of an objection period is to ensure that any party who expressed reservations is afforded an opportunity to object. This is not only fair but forestalls the chance of an appeal later on while providing the judge comfort in that he does not need to review the matter before signing.
This is my best guess. I have never seen this before except I have read that this type of endorsement is used extensively in divorce cases when the attorneys have completed negotiating a settlement.
Other valid arguments can be about pointing out the court’s own responsibility to identify the case correctly. The fact that the case was FILED as a Chapter 11 case doesn’t automatically make the case valid in itself (a case can be valid until proven otherwise, but it doesn’t make the case valid in itself).
The Chapter 11 filing can be interpreted to be an “Exit strategy” from a fraudulent scheme, rather than as a genuine attempt to reorganize a legitimate business. An interpretation like that will of course need to be supported by evidence.
In this case, new types of information and evidence have become available AFTER the initial bankruptcy filing. We have evidence showing that the facts were poorly interpreted or grossly misinterpreted. We will probably find some misinterpretations of legal theories too, they will be reflected in the change of venue and the appointment of a Trustee.
Presumption standards like “innocent until proven guilty” or “valid until proven otherwise” can not be used to exclude valid evidence. They have temporarily uses as some types of “replacement of evidence, until evidence is available”.
I think that’s going to be a moot point if no one objects to the endorsed applications in a timely fashion.
ANY argument can be said to be moot if no one is using it correctly. That’s rather obvious. 🙂
Look up the definition of moot.
Correction I misused moot. You are correct
What I should have said is that it is going to be too late. What describes that? The order is final. Further objection is barred. (laches?) I can’t recall the right word. It will come to me later.
The order has been vertically signed in the left margin, clearly related to the statement about objection date:
“05/29/2014 OBJECTIONS TO THE MOTION ARE TO BE FILED BY JUNE 9 2014”, plus Hoffman’s signature.
You will probably accept ANY TYPE of signature as long as it can support your own ideas, e.g. “vertical or horizontal isn’t really important as long as the order is signed somewhere by the Judge”.
That’s correct. What difference does the direction of the signature make. What if it had been diagonal?
Are you trying to tell me its an invalid order because of the direction it was signed? That’s novel
I was trying to tell you something like that. You have interpreted that part correctly.
It’s a Motion rather than an “order endorsed by the Judge”. Judge Hoffman has signed the vertical part about objection date, he has not signed the order itself.
It may come as a shock to you, but it’s possible to sign parts of a document while excluding other parts.
Pointing out that the signature is vertical and probably is related to something specific should be a valid argument for how to interprete it.
ITs an APPLICATON prepared and submitted by Greenburg and their is no space for the Judge to sign on the “horizontal. It is NOT a MOTION
The clerk entered Endorsed ORDER:RE Application etc into the docket NOT endorsed MOTION
The clerk entered the unendorsed version of the Applications as Applications not Proposed Orders.
I could go on, You are barking up the wrong tree.
If he had signed it on the diagonal would it mean that the order was 50% valid and 50% invalid? What if he had signed upside down or in blue ink or on the right side.
I can not take your arguments seriously. Sorry
I’ve been looking at other Endorsed Orders in other cases to try to understand what it is. Apparently it’s usually the first page of a motion or application, with a very short, generally one-line sentence from the judge and his signature, like “granted”, “motion denied” and so on.
I can’t find any sentence on those two Endorsed Orders, they merely have a line with “objections to the motion are to be filled by…” followed by the judge’s signature.
I believe those applications have not been granted nor denied, the only decision is the final date for objections, after which a proper sentence should be expected.
I understand. You could be right. What do you suppose will happen if there are no objections filed by the objection deadline?
The judge will decide on the application, I’ve no way to know or predict what that decision will be.
I’m willing to believe, however, that objections will appear this week, unless a deal has already been achieved behind the curtains, as you proposed initially.
I have no interest in that. I am challenging you to look at your your assumptions.
You can probably interpret it like this:
The Debtor, represented by William H. Runge and Stuart A. MacMillan, can clearly recommend the retention and employment of William H. Runge and Stuart A. MacMillan in their respective roles as hired professionals for the Debtor. They clearly deserve the payment they have been offered! 🙂
The Debtor (Telexfree) is not represented by Runge and MacMillan but Greenburg Traurig.
Quote from Ponzitracker.com, but I found it on patrickpretty.com:
Source:
patrickpretty.com/2014/05/30/bulletin-judge-issues-order-that-directs-justice-departments-bankruptcy-watchdog-to-appoint-trustee-over-telexfree-case/
It’s probably exactly what a Trustee will find, “fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity”. 🙂
The court-appointed bankruptcy trustee for the third-largest Ponzi scheme in history has assembled a legal team hailing from all over the globe as the quest to recover assets for victims will now target foreign investors that were fortunate enough to profit from their investment.
Doug Kelley, the trustee tasked with returning funds to victims of Thomas Petters’ $3.65 billion Ponzi scheme, has secured legal representation in countries from Germany to Bermuda to the British Virgin Islands as he prepares to launch a series of “clawback” lawsuits.
At stake in the lawsuits: more than $100 million of “false profits” paid to Petters’ investors, including offshore hedge funds.
Good boy,
now,
is it the US Trustee ??
I have covered some different types of arguments:
* “Not a valid case”
* “Incorrect law”
* “Due diligence failure”
* “Responsibility of the court itself”
All those arguments have been about potential objections to the “Endorsed orders” about employing William H. Runge and Stuart A. MacMillan as “reorganizing advisors”.
The primary function of a court is to provide fair trials. That’s primarily about “correctness”, e.g. correct procedure, correct type of court, correct law, correct interpretation of legal sources, etc.
The fact that a case has been accepted by a court doesn’t make the case valid in itself. It’s only presumed to be valid, but evidence introduced later can prove otherwise. This case has that type of evidence available, it will only need to be identified correctly.
“Fair trial” may also include that an incorrectly filed case may cause negative consequences. This case CAN be an incorrectly filed case, it was based on several vague half truths.
If I should have filed an objection against the “Endorsed orders”, I would probably have pointed out that the case currently only is PRESUMED to be a valid Chapter 11 case. There’s evidence available pointing in other directions. An order about employment can potentially expose them to unknown legal and financial risks they haven’t been prepared for.
The U. S. Trustee:
•files motions to dismiss or convert Chapter 11 cases to Chapter 7 where it appears that the financial situation of the debtor cannot effectively be reorganized or to prevent unnecessary delay.
•requests the appointment of a case trustee where it appears that the debtor-in-possession is not adequately performing its duties in according with the bankruptcy law.
Excerpt from Order on Motion to Appoint (docket 237) directing Appointment of a Chapter 11 Trustee Pursuant to § 1104(a)
Strong medicine.
“current management” would be MacMillan and Runge wouldn’t it.
….so why submit applications for employment for these two immediately after appointing a case trustee “for cause”
Two things you can bank on with the demise of one of the “next-big-thing” frauds:
1) Pimps will work feverishly trying to put a positive spin on any news to ensure as many victims hang around as long as possible, giving the pimps the chance to bleed them dry.
2) Pseudo intellectuals will come out of the woodwork with more “possible” explanations for what is occurring / about to occur than any reasonable person could imagine.
It’s a toss up to see who misleads more victims, the professional pimps or the pseudo intellectuals with an obsessive need to be “right”
The simple fact is, no one, outside of the DoJ / FFETF knows.
Telexfree has been stopped via the civil proceedings.
No one can deposit any more money.
Now comes the “fun” part – watching and waiting.
Why speculate ??
Do you need to be “right” so badly ???
Can you express an opinion without all the snot?
Is that something you can do?
Oz and the guys are better than Penn & Teller .. as what you do helps future victims.
On May 25th Penn Jillette’s podcast 119 started with his story of how sitting in Starbucks he and Teller witnessed a street scam with sweet baby couple & a stooge rope an innocent ‘mark’ into a ponzi scheme.
– The end was Penn and Teller wussed out and sat and did nothing.
(Basically once the scammer saw them looking , he came over with ‘an atitude’ which intimidated P & T into thinking “we are powerless whatever we try to help the ‘mark’ who is on the table with the other 2 scammers.”
.. 1. this is on their homeground where all the Starbucks staff know them.
.. 2. is happening overtime.
(On June 1st edition he opens with it again, but doesn’t really say anything new)
My suggestion :
1. See a Crime – think Camera phone’
2. imagine chain of future victims * not just todays mark *
3. write “BehindMLM.com true stories of victims ” and instruct Starbucks staff to sneak it to the mark.
4. Don’t go thru life saying “what if I hadn’t take that non-lethal risk”. Do it cos at least you learn.
* main job is to help the ‘bad guys’/criminals so help world, by getting them get back straight (& out of scam biz)..you don’t do that by being a pussy.
I looked on Twitter, All I found was 2 people chastised Penn and he replied..
..Penn tweeted “@ZacharyReid I don’t believe there was any illegal activity happening. No money. Just talk 10:27pm – 27 May 14”
link : http://pennsundayschool.com/episodes/
Not when dealing with pseudo intellectuals and their mental masturbation.
Most of the time I purposely remain neutral, but when it comes to you and your nonsense, Hoss, I allow myself the luxury of giving rein to my more base instincts.
Stop adding to the confusion victims are feeling Hoss.
Stop supporting the fraudsters with your hypotheticals.
You DON’T know,
I DON’T know.
That’s clear.
That’s crap. Give people credit for their intelligence.
If you need to feel self important and pretend you are the Emperor Protector of Ponzi Victims I can’t stop you, but at least put on your pants. Your ignorance is showing.
Well rein it in. You’re acting like a primitive.
@Hoss @littleroundman:
Leave the ego out, take a dose of humility. if you have a point just show it politely, don’t let the jerk in you be on display.
Meanwhile, new documentation have shown up at ASDUpdates.
Faith Sloan is alive and kicking.
James Merrill is asking (convincingly, IMO) to be released under a lot of conditions until the trial takes place.
Bring the violins –
I specially noted the “remained married” bit, it’s such a nice touch. 🙂
I had a look at the Sloan documents and they make little sense to me.
She’s claiming what, after dodging the authorities that she wasn’t served until the end of May? And what, that even though her mother was served it’s null and void because it’s not her? And her lawyer not having a password to access the court system? Lol!
Sloan’s already had the preliminary injunction granted against her three weeks ago, what does she hope to achieve by replying to it now? Of note is that she just recently had a lawyer file a notice of appearance.
Memo to Sloan: Don’t expect the courts to indulge you now after you were off in denial this past month. You should have been taking this seriously from the start.
I guess the weight of the prelim injunction must have finally taken its toll (say goodbye to that house), otherwise she seemed happy enough pretending none of this was happening. (And she’s still pimping the Changes Worldwide Ponzi on her Facebook page, despite the injunction lololol).
On a related matter, did Rodrigues accept that medal in Brazil or the US? There’s embarrassingly cheesy photos of him with some BS award on his Facebook page infront of two skyscrapers. I’m not familiar enough with the landscape to know if they’re US or Brazilian landmarks.
Rodrigues popping off to Brazil would be worrying…
Even if the court agreed with Sloan and her lawyer and ordered the documents re served, so what ??
It’s not like improper serving is going to undo the events of the past few years, is it ??
Good Point Bernie.
It’s about extension of time (to June 29 ?) to respond to some of the orders, if I interpreted it correctly.
I’m not a lawyer, but what is the point of asking for an extension of time to reply to a motion for a preliminary injunction that was granted three weeks ago?
I get Sloan’s been playing denial and hide and seek with regulators since TelexFree went down, but I don’t get what she’s trying to achieve here.
Meanwhile Merril’s new lawyer seems to be rather clueless about MLM.
Firstly where does he think the SEC got their evidence from?
Secondly, the SEC made the claim based on retail sales revenue. That Gerry Nehra had affiliates “buying” VOIP “stock” to participate in the Ponzi scheme is no secret.
Claiming that that revenue in any way shape or form constitutes legitimate business however is laughable.
The fact of the matter is, without the AdCentral Ponzi investment scheme, retail or otherwise TelexFree would have no VOIP customers (“it’s impossible to sell”).
Those would be the modernist twin towers of Niemeyer’s Congresso Nacional do Brasil, in Brasília.
It is not exactly a BS award, it’s Cruz do Mérito Empreendedor Juscelino Kubitschek “Jóia de JK”, an award maintained by CICESP (Centro de Integração Cultural e Empresarial de São Paulo) named in honour of former Brazilian president Juscelino Kubitschek, best known for building the new capital of Brazil, Brasília.
The medal was created in 2002, centenary of Kubitschek’s birth. You can see it in more detail here:
http://www.cicesp.org/site/homenagensoficiais/soberanaordemdoempreendedorjk_descricaodaspecas.php
It is considered the highest Brazilian award for entrepreneurs.
It doesn’t seem to have been awarded to Sanderley Rodrigues, however, nor does he seem to be a candidate for that medal, not even in a million years.
Those photos seem to be of Sann Rodrigues in Brasília, wearing a “joia de JK” award at its neck – devoided of all dignity, like if it was an Hawaiian flower collar – but it was not awarded to him, in all certainty.
So it’s confirmed he’s hiding out in Brazil then?
Seems to be the MO for anyone with Brazilian citizenship. Hide stolen investor funds outside of US jurisdiction and then run off back to Brazil when you’re caught. What a farce.
It’s hard to tell, since we don’t know when he took those photos.
The group of photos uploaded 31 May wearing the medal were undoubtedly taken in Brasília, but the video he published yesterday was filmed at the Coliseum in Rome.
Italy? I wonder if he’s hanging out with Carlos Wanzeler’s daughter…
Bow chikawow-… oh wait, he’s married.
IIRC, they asked Merrill for the figures, and Merrill came up with the idea of checking credit card receipts? Or did SEC chose to go by recurring credit card receipts as proof of “subscription”?
The photos seem to have been taken in Brasilia at 30 May. The photographer is identified as Renato Braga, who lives there. He published them in his facebook at that date.
Sann Rodrigues published in his page an absolutely pathetic apology of himself as if it was an article published in some newspaper about the medal ceremony, complete with some stupid orthographic errors.
He wrote a speech in the style of a star accepting an Oscar, purporting to be his speech at the ceremony, where he was the most notable guest among all those awarded.
It’s painfully pathetic.
If history is anything to go by, this will be just the first of many seemingly pointless delays.
It’s obviously a tactic to delay every response until the last minute and challenge everything, to what end, I don’t know.
Perhaps they think over time facts will change or prosecutors will lose interest.
It doesn’t look like the Telexfree mess being any different than AdSurf Daily in that it took four years from “go to whoa”
@Restelo
So uh, how’s this dude getting away with passing off a costume shop medal as him actually receiving the award?
Surely if he didn’t receive it, it’d take all of thirty seconds for anyone in Brazil to confirm?
None of the information is in English so it’s obviously only for domestic consumption… what’s the logic here? What am I missing??
According to this article, Rodrigues was to receive a medal in some kind of ceremony on the 29th of May. The assembly room was reserved by senator Cicero Lucena. The event was cancelled after the news reporter contacted the senator’s office.
http://jornaldehoje.com.br/homenagem-a-lider-da-telexfree-no-senado-e-cancelada/
Did he decide to give himself a medal anyways?
There may be more to that than it meets the eye. Photographer Renato Braga, who took his photos at Brasília last 30 May, claims to own a business called “I Love Vitória” in Vitória, ES, precisely the town where Carlos Wanzeler is now.
Sann Rodrigues seems to have been indeed at Brasília at that date, as he was supposed to be awarded there “MLM man of the year” by Regino Barros the day before, 29 May, in a ceremony which was cancelled hours before happening, as you already know.
Regino Barros is the president of CICESP, the entity which awards the “jóia de JK” medal. He is also partner of Sann Rodigues in his new MLM business, UNOS. Despite Sann Rodrigues not being scheduled to receive that medal, Barros possibly lend one to him temporarily, which he wore in those pathetic photographs.
The Coliseum video seems to be an older one, it’s a coaching video directed at a team, dealing with the difference between true and false leaders, and leaders who lie and instill fear, and those who tell the true.
He gives the example of the Roman leaders as false leaders, since they cheated their people by providing games and spectacles so that they would not care about crisis. Quite ironic.
But Sann Rodrigues is now in Brazil, most probably.
The medal seems to be the real thing, I presume it was lend to him by his recent partner Regino Barros, who awards them. It’s a true jewel, by the way, with 25 rubies and 5 emeralds. But it was not awarded to Sann Rodrigues, nor is there any chance it would be.
I’m as puzzled as you with his actions, it doesn’t seem something logic or rational. Those claims are plain lies – the ceremony was cancelled, and even if it wasn’t, he would not have been awarded that medal, which is the top of the tops, but a significantly lower “MLM man of the year” kind of prize.
@Thomas
I think the Senate event and this latest medal photoshoot are two different things.
That article says quite clearly
After the incident, Regino Barros removed Sann’s name from the list of awarded immigrants, and cancelled his nomination as counselor for Aromm.
Sann Rodrigues play-acting with that medal as if he had received it is so pathetic it hurts.
One thing is to dramatize an Oscar award speech in front of the bathroom mirror during our first infancy, poignantly holding the plunger while thanking our friends and family for all their support, eyes wet with tears of gratitude, another is as a grown up man doing this as if it had really happened.
Absolutely embarrassing.
It’s the same thing. Despite it being cancelled, Sann Rodrigues describes it as if it really happened, and misrepresents his ex-future award as that medal.
The award was to take place in Brasília at 29 May, where and when Sann claims to have received that medal. The photoshoot took place the day after in the same place, purporting to show and prove the received award.
Why would they cancel an entire award ceremony bacause of the illegitimacy of one of the awardees of a lesser award?
Obviously Rodriguez is delusional thinking he is deservant of a top entrepreneur award. This trait is not uncommon of many “leaders” of fraudulent schemes.
Which begs the question… Was he *really* in Brasilia that day, or did all this video simply was filmed AHEAD OF TIME, and then released on Youtube via a timer, and thus it cannot react to cancellation of the event?
And what kind of person is Barros to let Sann have the medal ahead of time to film an acceptance speech? (Or are you suggesting that Sann bought a replica somewhere and was showing off?)
As everybody took their part and the correct thing is to return it now so all affected promoters could be compensated. Why could not be asked to US government to return all the money paid to them in taxes by promoters who earnt with Telexfree.
@Vic
Doesn’t the IRS have provisions for this?
The IRS will refund taxes paid if the proper forms are submitted by the taxpayer. A refund will be paid to the taxpayer/promoter and to no one else.
Since many did not declare income, paid no tax, or paid only a small percentage of their declared income to begin with this is not really a viable source of repayment for those who lost money.
Here is the answer:
The room at the Federal Senate where the ceremony was to be held was granted by senator Cícero Lucena cabinet at request of Regino Barros. The cabinet forfeited the room use as soon as they knew Sann Rodrigues was part of the awarded list of people
The video, I believe it’s not from the day it was posted, but it’s filmed at the Coliseum in Rome, and has nothing to do with that award. It doesn’t even mentions Telexfree, it’s only about MLM and teams in general.
The photos were most probably shot at 30 May in Brasília, and posted the next day in Facebook.
I say this because:
* Sann Rodrigues was expected in Brasília in 29 May for the award ceremony, which was cancelled only hours before the time it was expected to take place. Therefore, he was there in all probability the next day, 30 May.
* Renato Braga, who presents himself as a professional photographer, posted those photos in his FaceBook page at 30 May, saying it was his work for that day.
First of all, Sann Rodrigues was not to be awarded that medal, nor will he be ever fit for receive one, at least in this universe.
I don’t believe for a moment that Regino Barros would disgrace the hard earned reputation he managed to got for that award in the 12 years it exists – really famous people have been awarded by it, like the late actor José Wilker, the mythical singer Ângela Maria, former president Fernando Henrique Cardoso, among many others. That medal is the highest award in Brazil for entrepreneurs.
Instead, he was to receive a minor award, “MLM man of the year 2013”. Nothing compared to the “Jóia de JK” (literally Jewel of Juscelino Kubitschek) he displays in the photos.
About the medal he displays, I’ve no way to know, of course, but I don’t see how he would arrange for a good replica in just 1 day, as he certainly would not be displaying that in case he was awarded a real award and could show it the day before, as was expected (not that medal, but a real award nevertheless).
On the other hand, the medals were there in Brasília, in all probability, if they were to be awarded that day. Barros has implied a few days ago that Sann Rodrigues is one of his new partners in his new business UNOS, which could explain that minor award he was to receive.
It’s also very clear Barros & Rodrigues are in very good relations, as after the ceremony being cancelled he still defended Rodrigues, even if in a meekly way “We should not crucify him before the light of the Law as come”.
I therefore find it plausible that Barros, who would never award that medal to Sann Rodrigues, could have lend one to him temporarily, even if not knowing what he would be doing with it.
I repeat that I’m very puzzled with Sann Rodrigues last actions.
He somehow gets his hand on a “Jóia de JK” medal he was not supposed to receive, hires a professional photograph and shoots a photo-op wearing that medal, then publishes it along a speech he supposedly made in the award ceremony that never happened, and even goes to the length of entirely fabricating a newspaper like article describing the ceremony, emphasizing his own role there being awarded “Jóia de JK” in what would have looked as an apotheosis.
His speech at the ceremony, according to himself:
It’s not funny as Muttley, the medal dog. It’s sad and pathetic. I don’t believe he is in perfect mental shape.
^^ Maybe Rodrigues has lost his marbles now that he’s had to effectively give up his house and fancy toys?
I can’t imagine the Wanzeler/Costa/Rodrigues bachelor pad as being much fun. Wanzeler and Rodrigues in particular are going to have intense levels of stress over the next decade if they keep this up.
He’s like Orrin Woodward, from Amway/MonaVie/TEAM/LIFE “fame,” making up awards to put on his blog and make himself better. The final analysis is they are liars and frauds.
(post #147)
You missed some information there. Bankruptcy rule 1104 is about the appointment of a Trustee, there’s more information available in the “Duties of a Trustee” (rule 1106).
The logic goes like this.
1. If fraud is suspected, rule 1104e order U.S. Trustee to move for appointment of a Trustee under rule 1104a
2. The Bankruptcy court then order appointment of a Trustee under rule 1104a (the rule you quoted). Removing current management if necessary.
3. The appointed Trustee have duties described under rule 1106a (etc.), investigating any relevant matter (including the former management).
I’m quite sure I could have gone on all day but I said what I wanted to say. The further information you supplied is very interesting and pretty much describes the path Darr will take before motioning for a conversion to Chapter 7.
That really has to be where this is heading. Wouldn’t you agree?
From the Ponzi Tracker……
Thus we see that it is not only “hypothetically possible” that the Trustee should defend Telexfree against multiple civil suits (including the SEC’s) but a decision that will be “closely watched” to see what the Telex Trustee actually does.
It wasn’t about that (prediction), it was primarily about the logic (1104e –> 1104a –> 1106a), as “steps in a more complete process”. 1104a is only initial investigation, 1106a is a more complete report.
1104a alone wouldn’t make much sense. Fraud doesn’t need to be limited to a current management.
The appointment was in accordance with Section1104a of the Bankruptcy Code. If you want to cite his duties that’s up to you but its understood that if he is appointed under 1104a that the various duties you cited follow.
The judge appointed him per 1104a and left it at that. So did I as it was sufficient to my purpose.
And yes he can remove current management. He can also do other stuff as well.
Appointment of a Chapter 11 Trustee Pursuant to § 1104(a)
Current Management means current management, not Merrill and Wanzeler and Craft. They resigned and were fired before the bankruptcy was filed.
If we’re going to play hypotheticals, it is also equally as “hypothetically possible” the trustee will find evidence of a massive fraud / money laundering scheme beyond the scope of his charter and / or experience and then ask the court to be relieved of his duties and hand everything over to the relevant agency / agencies.
I am not “playing.” My previous statement that it was possible that the trustee would defend Telex against the SEC was a statement of fact. The possibility existed/exists.
You dismissed the possibility as fantasy, as an impossibility but you were wrong. I invite you to read the quote from Ponzi tracker again.
You confuse Possibility with Probability.
If your opinion is that the trustee will “ask the court to be relieved of his duties and hand everything over to the relevant agency / agencies” you are entitled to your opinion. Its possible. In my opinion it is not very probable.
Your opinion seems to be based on your understanding of how ASD was handled. That’s fine, providing you actually understood it, but regardless of that, this is not ASD and as such there are other possibilities.
As I previously showed, large and complex frauds and Ponzi schemes have been addressed in bankruptcy many times before. Telexfree is in bankruptcy (whether anybody thinks they should be or not) and there is a newly assigned trustee.
If you want to insist that Telex must be handled “like” ASD then make your case, I am willing to entertain the idea, but based on how THIS CASE is shaping up it does not appear probable.
Since the appointment of a bankruptcy trustee is now an accomplished fact we can look at the possibilities open to him under the Bankruptcy Code per section 1106a (etc) to wit:
(5)as soon as practicable, file a plan under section 1121 of this title, file a report of why the trustee will not file a plan, or recommend conversion of the case to a case under chapter 7, 12, or 13 of this title or dismissal of the case;
You, LRM, are of the opinion that the trustee will “ask the court to be relieved of his duties and hand everything over to the relevant agency / agencies.”
I do not want to put words into your mouth but presumably by this you mean that the trustee would motion for dismissal, have it approved and then resign permitting the SEC to manage the situation the rest of the way. Do you believe this needs to be handled like ASD or Zeek was handled?
Correct me if I am wrong but it is my understanding that there was no receiver in the ASD case, no clawbacks, no class actions, no pursuit of banks or payment processors, nor any particular consideration given to how foreign nationals could effectively file proof of claims.
Since I do not know enough about the ASD case to understand why the relevant agencies would want to allocate their assets to cleaning up the mess that is Telexfree I rely on you to make me understand.
Perhaps you believe bankruptcy dismissal would permit the agencies to appoint a receiver as the SEC did in Zeek, and if so then I ask why you think a zeek style receiver would be more appropriate and effective than the bankruptcy trustee that is already in place?
See that, Hoss “hypothetically possible
Not “probable”
Not “seems”
possible
If you don’t want to put words in my mouth, why are you doing so ??
As I have said previously you / I, / we simply don’t know enough to do anything but speculate.
What we DO know is, It is not a “normal” situation if there is any such thing.
The FFETF is involved and those behind Telexfree have attempted to use bankruptcy to somehow circumvent the inevitable.
That’s all any of us on the outside know.
This is not CNN or Fox and you are not an expert witness discussing the OJ Simpson case.
You DON’T know a bloody thing
That’s why I pointed out the logic. The 1104a rule is a response to 1104e, but the Trustee will still need to follow rule 1106a (etc.).
1104e: US Trustee shall move for the appointment … subsection (a)
1104a: The court’s response to that Motion
1106: Duties of the Trustee
You can’t use the logic “the court only ordered investigation of the current management, so the Trustee will not check the former one (Merrill, Wanzeler, etc.)”. That will be a misinterpretation of the court order. It didn’t restrict the normal duties of the Trustee, it ordered something in addition to the normal duties.
Nobody said “only” but the conduct and competence of the current management was the rationale used for the appointment of the trustee.
Clear as mud.
Because you so poorly expressed what you were trying to say.
What evidence do you have that the FFETF is involved? What do you know about the inevitable?
Fair enough but then you have speculated that the FFETF is involved, that you can foresee the inevitable and that “the trustee will… ask the court to be relieved of his duties and hand everything over to the relevant agency / agencies.”
I have challenged your assumptions and you have not defended them. Bleating that I don’t know a bloody thing does not change that. The question remains. What do you know?
OK then, consider yourself corrected.
Is a useless comparison. Its possible I have chewing gum on my right shoe. Its possible that I have chewing gum on my left shoe. Its possible that I will have pizza on Tuesday. They are all equally as possible but given my lifestyle one is much more probable.
You mean there was or you think there was. Provide some proof and you win a gold star.
Carry on with your nonsense, Hoss.
There’s absolutely no point in having a discussion with someone with your lack of knowledge of the subject at hand.
I think we’re all a bit on edge waiting for the Trustee to make his first move.
Too much speculation fries the brain :).
Nobody said “only”, but somebody said “current management would be MacMillan and Runge, wouldn’t it?”. I simply identified it to be something ordered in addition to the normal duties of the Trustee, to avoid confusion about that.
The dialogue was about the quote from Ponzitracker, about what a Trustee potentially will find.
The rationale for that order was simply “follow standard procedure”, nothing more or less.
Most people will probably guess one of the chewing gum alternatives, because of the “given my lifestyle” argument. 🙂
That’s cool, which foot.
Eh, you three are taking this way too seriously.
Unlike ASD and Zeek a whole bankruptcy apparatus has been inserted into these proceedings. I am “closely watching” how the parties work through that.
The fact that the judge has turned to a private law firm for a Trustee to handle the bankruptcy makes me feel that the regulators prefer the bankruptcy route for whatever reason. Although possible, I doubt that this will be turned over from a private law firm back to the DOJ to set up a receivership.
Perhaps there is the anticipation that numerous lawsuits will have to be filed to handle clawbacks and this may be better handled by the currently assigned Trustee.
I’m not sure if assigning a Trustee or Reciever from a private law firm is the usual way to go when handling a fraudulent company. But the end goal for the regulators is the same- to track and recover as much as possible for distributing to the victims.
It’s simply the law (standard procedure).
Current stage:
A Trustee has been appointed, and will
* investigate current and former management for fraud, misconduct, dishonesty, mismanagement;
* pay critical bills, etc.;
* write financial report;
* write a plan for reorganizing or a report for why that can’t be done, or write recommendation for conversion to Chapter 7, 12 or 13 or for dismissal of the case.
If no fraud is found and the company is worth reorganizing, the Trustee will probably be terminated / remove itself.
Fraud will most likely be found. The case will most likely either be converted to a Chapter 7 or be dismissed.
If the case is dismissed, SEC will most likely move for the appointment of a temporary Receiver (a type of extended Trustee).
This is not quite the case, the newly appointed trustee is named Darr. He is a partner of Mesirow Financial, which is a large diversified consulting firm that provides restructuring and bankruptcy management services to industry.
Mesirow Financial is not a law firm and I don’t think Darr is a lawyer, but he will hire his own attorney to advise him as he executes his duties. This is a typical arrangement, i.e., a qualified but private individual is appointed as the case trustee. This is small details and does not change the overall picture.
I agree, dismissal just dumps the whole mess in the SEC’s lap and then they have to file more motions to appoint someone just like Darr to do the same thing. I suppose Darr could move to Dismiss the case, take off his trustee hat and put on a Receiver hat if there was some advantage to it.
I have been enquiring into the way another notorious scheme was handled (ASD.) It did not have a receiver, had no clawback litigation and was never in bankruptcy, while Zeek has a receiver who intends to pursue clawbacks but as of yet has not accomplished much and success is not assured.
I don’t know what conclusion to draw from this other than a bankruptcy trustee appears to be just as well situated to bring suit against net winners and third parties as a receiver but sometimes clawbacks are not worth pursuing.
Correct. Once the case is in bankruptcy the Bankruptcy Code must be followed.
Comment: However, a trustee can only be appointed after Notice, and a Hearing.
Not exactly. They are similar but different animals.
A bankruptcy trustee is appointed by the US Trustee and approved by a Bankruptcy Court. He operates within , and derives his powers from the Bankruptcy Code itself (which is approved by Congress)
A Reciever’s powers are enumerated by whatever Court appoints him.
Look at the Zeek Order Appointing a Temporary Receiver and you will see that the Court specifically grants powers to the Reciever. Contrast that with Telexfree and you will note that the trustee is appointed with the duties, powers and authority specified under 11 U.S.C. 1106.
The powers of a bankruptcy trustee are crystal clear, codified and time tested.
A Receiver’s powers, a little less so.
As everybody knows A bankruptcy court is empowered to discharge debt. This is powerful medicine so there are volumes of safeguards in place (Such as the Bankruptcy Code).
Gotta call bullshit on your answer. ASD did not have a Receiver but of course you knew that.
Or did you?
So, what did happen, Hoss ?
No bankruptcy, no receivership, yet verified victims received a 100% remission of their losses.
Is it possible bankruptcy and receivership are not the only two options here ??
Hypothetically possible? Sure. Its always been a possibility.
Who said there were no other options?
Are you suggesting that if this bankruptcy is dismissed and a simple claims administrator is appointed that claimants will recover 100% of their investment? I think not.
90% or 80%, 70%, 60% 50%? Possibly.
As discussed before Merrill beat the agencies to the punch by filing for bankruptcy before the SEC made their play. That has driven events from day one and it alone is why the discussion has centered around bankruptcy.
Secondarily the discussion has emphasized both trustees and receivers. This is for good reason….since both have the capability of pursuing litigation and filing clawback suits against net winners. A simple claims administrator like Rust Consulting can not.
Forgetting ASD for the moment, which way do you think the Telexfree case will be handled? Trustee, Receiver, an ASD style claims administrator or some other way?
Of those choices I think a ASD style claims administrator is least likely. It does not accommodate the recovery of funds through clawbacks and damage suits and provides no deterrent effect…net winners walk away unscathed because no one is authorized to pursue claims on behalf of the estate.
As I’ve said before, like you, I have no idea.
Unlike you, however, I have absolutely no need to confuse people by speculating.
You think I have a “NEED to confuse people?” You’ve reached some bizarre conclusions lately but that one takes the cake.
ASD had no Receiver. Rust Consulting was a not a Receiver. Now you know. You should be a little less confused.
Once again, you win, Hoss.
Bravo.
Well it certainly appears that might be the case, but it didn’t stop you from asserting that you knew the “inevitable” outcome and speculating that the “trustee will hand everything over to the relevant agency / agencies.”
Maybe he will.
Which is apparently how the “no bankruptcy, no receivership process is going to provide “verified victims” with 100% remission of their losses.
Maybe you’re right….but don’t pretend you have not engaged in a little conjecture of your own.
Please don’t say that. We’re on the same page now.
No, Hoss, what has happened is that you have been speculating that I am speculating.
Stick around a few years and you may come up with some sources of your own and not have to refer to Mr Google every time someone brings up something about the online HYIP ponzi / fraud / get-rich-quick / pyramid scene, and it’s history.
Oh Please. I have been speculating that you’ve been speculating that I have been speculating that that you have been speculating that I have been speculating ad infinitum. Suck it up. You own it.
Ooooooh. As if I even give a crap about things like that.
Suck what up, Hoss ???
That you were spot on in your assessment that the US Trustee would handle the Telexfree bankruptcy
OOPS, can’t be that, can it ???
Maybe it’s the fact, in your expert opinion, Telexfree has trumped the DoJ and SEC with its’ bankruptcy application.
Let’s wait and see, shall we ?
Don’t even try to be clever and cute. You don’t have it in you.
Being clever and cute is my job. I have it in me.
Its good to hear from a professional who has it in him. I visited your website and read about the tools scam. I get it.
My friend, had a glove box full of zig ziglar recordings and other stuff he bought at Amway conventions and promotions. If belief and effort were enough this guy would have succeeded, but apparently he did not have the talent for it. He abandoned the business after a few years.
Thanks. It isn’t so much that your friend lacked talent, he lacked enough money to get over the hump, and, if he figured it out before he got out, he lacked being able to act unethically, immorally, and illegally.
I think he lacked the money to get over the hump. I will keep reading to put that into context.
Like the fishhook. Is it symbolic?
Retaining of Stuart MacMillan confirmed today by the court, no objections filled:
http://www.kccllc.net/telexfree/document/1440987140610000000000001
How about that.
Brazilian telexdorks celebrating and shouting “yaaaaayyyyhhh… we no piramid no more” in about 3… 2… 1…
Here’s what I mean by getting over the hump: When someone joins Amway, Herbalife, and many other MLMs, they have to spend a LOT of time, money, and effort. The reason for this is knowingly or unknowingly, they are ripping off their downline via high product prices and to feed the tool scam, and the turnover rate is very high.
In Amway, it has been shown a distributor has to be between Platinum and Emerald to start operating at a net profit, which means almost all of their downline is operating at a net loss.
This is extremely difficult to overcome, as the people just below the Platinum to Emerald level has been losing money for several years, so it doesn’t take much to tick them off, attract them to the “negative” (better described as the truth) online, etc.
When this person leaves, virtually their entire group drops out with them, wiping out a huge piece of the Platinum to Emerald’s group. Then, when the crossline get a whiff of what’s happening, other groups drop out as well, and before you know it most of the group is history.
However, if the Platinum to Emerald can build Platinums and Emeralds in depth, it is less likely for the whole thing to fall apart, as there is “defense in depth.” This is the hump, and you have to really “hump it” to get there.
After reading that I’m ready to strap on my jock and put on a Kevlar vest.
Good description. I got it. Thanks.
Not sure if I get the jock and Kevlar vest references.
Reading the Merrill memorandum is amusing. At no point do they address the fact that Wanzeler fled and can channel funds to Merrill, other than to claim it does not satisfy the criteria of burden of proof.
Right.
And despite TelexFree affiliates assisting in Wanzeler’s escape, again at no point do they provide any reason why the same will not occur again with Merrill.
What’s worse is they rely on the testimony of the “I know nothing about TelexFree’s business model” twins, MacMillan and Runge.
These guys were made a laughing stock at the last Nevada bankruptcy hearing, is anyone ever going to take them seriously again?
Protect your balls and your chest, eh?
As for the endorsed orders re. MacMillan and Runge, I’m reading them as the Judge punting the decision over to the Trustee.
We’ll get a clearer picture of what’s going to happen going forward when the Trustee makes his first move.
Protect them from who/what?
This is a fair way to handle it. The trustee will look to MacMillan and Runge for one perspective and the SEC/MSD for another and then present his findings and recommendations to the Court. The decision still rests with the Judge.
Here, Darr is acting in the capacity of a neutral examiner, as the Court’s eyes and ears.
This even handed approach greatly diminishes the chance of an appeal because it gives the debtor his due. Due process that is.
US Marines have long trained using “forced marches” or “humps”, fast paced walks over hilly rough terrain (the humps) with loaded backpacks (Kevlar vest, weapon and helmet optional).
Humps are or can be, competitive like a sport or a workout. I associated your use of “really humping it” or making it over the “hump” with this military practice.
At all times! One can hump it over to the chow hall (walk) or really hump it for the grade (study,) or make it over the hump (pass the test) but it all relates back to difficult training marches over hills (humps).
I suppose this slang has been around since the first Marine went through basic training.
The current situation is a definite case of Telexfree (appearing to) win the battle and losing the war.
Anyone who sees anything positive in this for Telexfree has to first believe:
1) a group of fraudsters are able to game the bankruptcy laws to suit their purposes
2) The DoJ and other agencies are going to allow themselves to be out manouvered by a gang of fraudsters
3) A billion dollar fraud is going to be treated as a “normal” bankruptcy.
Hoss, I’m still not sure about who/what I am protecting them from….
You made me wonder why it’s commonly known as boot camp. Here’s a source that discusses the possible origins of the term: http://www.worldwidewords.org/qa/qa-boo4.htm
….and there are people who do, which is why they see the appointment of a trustee along with MacMillan as a positive, At the very least it means Telexfree is not dead, hope is not dead.
In this context “normal” means what it always means when a company declares bankruptcy. The company/debtor is by right entitled to be treated in accordance with the Bankruptcy Code. Nothing more than that. Nothing less than that.
In Australia at least, “hump” has a very different meaning.
Which definitely doesn’t require the wearing of a jock strap or kevlar vest.
Chang brought up the idea of protection but that was not my association.
I think the rubber boot sailor origin of “boot” is probably accurate. In the Navy Department anyway a new or younger guy that checks into a unit is still called a “boot” until he’s been around awhile.
Thinking Boot Camp comes from people wearing boots is natural and has probably been perpetuated for that reason but new recruits are also issued shower shoes (known as flip flops) and no body ever calls basic training Flip Flop Camp.
That’s our language for you, Its “about as pure as a cribhouse whore. We don’t just borrow words; on occasion, English has pursued other languages down alleyways to beat them unconscious and rifle their pockets for new vocabulary.”
In this case, Australians must have rifled the pockets of a camel.
I see the orders signed by the judge retaining Macmillan as Interim CEO and Alvarez/Runge as Financial adviser.
Unfortunately, no explanation is provided, but I hope that some justification will be provided soon for taking this money out of the hands of TF victims.
Why weren’t any objections filed? Are the authorities dropping the ball here?
IIRC, Macmillan was hired to negate all the old contracts and restructure the company around its new smartphone app product. So, in my mind, if the goal is to ultimately liquidate the company and try to help victims recover as much as they can, then Macmillan has no place there.
Plus he was hired by the old TF management who are accused of criminal and civil wrongdoing. He was hired at the last minute (after the boat had almost sunk) to give the appearance that TF was moving forward.
He then fired all the old managemnt who gave him his job. And then he played like a naive puppy in court when he was cross examined and basically knew very little about the fraud and did not provide a realistic direction for the company out of the mess. To me the whole situation of hiring MacMillan and firing old management smells fishy.
MacMillian- $50,000/month. Alvarez & Marsal North America/Runge- $325 – 925/hour!! plus travel, lodging and other expenses. Plus who know how much the private firm where the Trustee is from will charge.
Can someone say Cha-ching! TF victims don’t get rid of the lube yet…
An endorsed order is the granting of the motion as is.
I’m thinking there’s communication between the SEC and DoJ going on behind the scenes. We’ll have a clearer picture when the Trustee makes his first move.
Till then it’s a bit like the investigations before the trigger is pulled, we aren’t clued into what’s going on in order to make the execution that much more effective.
Wanzeler’s a loose cannon with money, the regulators are likely to not want to give the game away until all the pieces are in place.
That’s my take based on the information we currently have at hand.
As someone with extensive MLM scamming background, I think the regulators want to get additional insights from MacMillan.
Bringing in a legitimate business person would unravel before they could get this additional information helpful for the prosecution’s side.
I don’t think so, they are just following the Bankruptcy Code. Runge is a managing partner out of Alvarez & Marsal’s Atlanta Office. You can read about him here.
http://www.alvarezandmarsal.com/bill-runge
This guy is not going to put his career and reputation on the line for Carlos Wenzeler, Sann Rodriquez or James Merrill, so whatever comes out of this is going to be done above board, in concert with the trustee, subject to objection, and with the approval of the Court.
What Runge and his company can and almost certainly will do is provide a good faith evaluation of Telexfree as an ongoing business. This should enable the trustee to evaluate the company before he makes a recommendation to the Court.
MacMillan has been tapped expressly because he was Merrill’s pick. He should know the companies prospects and if not, and if he turns out to be an empty suit, well maybe its for the better.
In actual fact one or both of these men may be employed for no more time than it takes the trustee to go through a few perfunctory enquiries. The point here is to go through the steps that the Code requires and a trustee would be derelict in his duties if he made recommendations without at least the appearance of doing the research.
Has this guy got that kind of reputation?
I hope that this is the case.
At any rate, I’m grossed out by the amount that they are charging nun pro trunc and by knowing where the money will likely come from.
I wish there was a way of getting these absurd amounts of compensation down to the minimum necessary.
To me, the fact that these individuals and entities were hired by the old TelexFree management, speaks to where their loyalties and biases may be.
As of right now, I don’t trust them and don’t think it was the right decision to retain their services (at least not at the nunc pro trunc rates they are charging). My opinion may change somewhat as more information becomes available.
If there is evidence of malfeasance or breech of faith those fees would probably be at risk. Should it be discovered that Mac Millan or Runge were acting in a way contrary to the interest of the estate, which is to say for the benefit of the individual owners they could be held accountable.
I read the code section governing this a few weeks ago and the trustee has a lot of latitude here. Basically from the day malfeasance began the consulting contracts are retroactively kaput. There are a lot of safeguards built into the BK system, which is not to say that it isn’t ungodly expensive, because it is.
hoss, yes: https://www.linkedin.com/pub/stuart-a-macmillan/6/218/880
Naz, I’m sure the judge is giving them deference to pick the guy of their choice, or else they could appeal the case later.
There was a dirtbag former Amway Diamond recently sentenced to 20 years prison, and that was for only one of many charges that haven’t been adjudicated yet. He ran a series of Ponzi scams and was nabbed.
The trial was delayed by various tricks for 2-3 years, and if the judge had done the right thing and had the trial 2-3 years ago, he could have squealed he didn’t have enough time to prepare, had inadequate counsel, etc. Unfortunate, but that’s how the system “works.”
Is there something on the LinkedIn page that indicates he has an irregular background? I can’t tell.
I think its like that too. Management is being afforded the opportunity to present their ideas to the trustee before the next step.
hoss – Just his previous affiliations with other MLM scam companies.
Maybe they’re trying to avert “Paul Burks was a free man, then his attorney went to the toilet for 5 minutes and now Zeek Rewards is a Ponzi WTF?!? They were forced to agree!” type nonsense from TelexFree affiliates.
Yeah, it could dampen that type of narrative a bit, but its still true that MacMillan is being waterboarded isn’t it?
Don’t get rid of it? Go to Costco.
Buy a lot more.
This has barely begun.
Umm, no, that’s absolutely wrong. The IRS considers income as income no matter what, even if proceeds of a crime.
If you are convicted of bank robbery, in which you stole $10,000 you owe tax on the entire amount, even if you are later forced to pay it back in restitution. And no, you criminal restitution is not an allowable deduction.