Following an order to file a Status Report regarding victim distribution by February 16th, the Traffic Monsoon Receiver has done so.

Today we’re covering two filings, a February 13th Motion for Approval of Proposed Plan of Distribution, and the February 16th filed Status Report.

As per the Receiver’s filed Proposed Plan of Distribution;

  • over 14,276 Proofs of Claim asserting claims totaling $43,177,843 were allowed without the need for objection
  • 6136 Proofs of Claim were objected to, totalling over $93 million

As of February 13th, the Traffic Monsoon Receivership is sitting on $43.8 million to put towards victim claims.

The dollar amount attached to allowed claims is $56.3 million. Note this might be adjusted downward owing to their still being a small handful of unresolved claims.

Pending court approval, the Receiver has proposed victim distribution claims be paid pro rata.

Under this approach, $43,818,051 is available to be distributed pro rata to all holders of Allowed Claims.

The amount of the pro rata distribution percentage is calculated by dividing the total amount available for distribution in the amount of $43,818,051 by $56,326,662, the adjusted total amount of all Allowed Claims (exclusive of the PayPal Claim, Mailed Claim, and Disputed Claims).

This comes to a projected payout of around 77.8% of allowed claims.

Pending resolution of various outstanding claims, this percentage may increase slightly (the Receiver is holding funds in reserve to cover the outstanding claims).

One interesting thing to note is the Receiver’s proposed plan does screw 1586 victims out of sub $100 payments.

Under the Receiver’s proposed initial distribution, there are 1,586 holders of Allowed Claims whose proposed distribution is below $100.00, for a total cumulative amount of $82,732.

Given the administrative costs in making the distributions, the Receiver, in his business judgment, has determined that these distributions are not cost-effective and should not be made.

The $82,732 attached to sub $100 claims will be pooled towards the larger distribution payments.

Pending approval by the court, Traffic Monsoon victims with allowed claims will have to sign into a Distribution Portal and submit information for verification.

In order to receive a distribution, the Receiver requests that the Court require the holders of Allowed Claims to submit either an IRS Form W-9 if the holder is treated as a “United States person” for U.S. federal income tax purposes (such as a U.S. citizen or resident individual or a U.S. corporation), or an IRS Form W-8 if the holder is not a “United States person” for U.S. federal income tax purposes (i.e., a “foreign person”).

With 90% of allowed claims coming from non-US residents, the Receiver also advises names of claimants will be checked against “standard Office of Foreign Asset Control watch lists”.

Moreover, the Receiver requests that holders of Allowed Claims be required to submit a certificate (“OFAC Certificate”), which will be included on the online Distribution Portal, requiring the holders of Allowed Claims to certify that they are permitted to transact business in the United States.

Once all that has cleared, payments will be made on allowed claims either via bank wire of mailed check.

We’ve seen issues in some countries where victims of other Ponzi schemes have been unable to cash US checks or receive US bank wires. With that in mind, Traffic Monsoon victims should probably make sure any local requirements are met before submitting payment info.

Following the first round of distribution payments, the Receiver anticipates “t there may be one additional distribution in this case”.

The Receiver’s filed February 16th Status Report is three pages in length. In light of the filed Proposed Plan of Distribution above, the takeaway is the last paragraph;

If the Plan is approved by the Court, the Receiver will be able to make distributions to the holders of Allowed Claims, as contemplated by the Plan.

On February 15th, the court scheduled a hearing on the Receiver’s Proposed Plan of Distribution motion for April 23rd, 2024.

It’s expected an order on the distribution motion will be made during the hearing or shortly thereafter.

 

Update 28th July 2024 – The Receiver’s proposed distribution plan has been approved. Unfortunately the court has declined to set a date for initial distribution.