Announcement: Important Preliminary Information
January 25, 2017
Our law firm, Milligan Rona Duran & King LLC, has been appointed by the United States Bankruptcy Court for the District of Massachusetts to represent a class of defendants related to TelexFree litigation concerning so-called “net winners.” You are receiving this email because you may be a member of a class of “net winners.” The information set forth below is important preliminary information for your review, as there are steps you may need to take to comply with bankruptcy court orders.
Please read this notice and maintain a copy in your records—DO NOT DELETE
The TelexFree Bankruptcy
As you most likely know, TelexFree closed its doors and filed for bankruptcy protection in 2014. A Trustee has been appointed to administer the estate and, among other things, recover money that was fraudulently transferred from the company. To this end, the Trustee is authorized by law to bring lawsuits to recover money that he believes was fraudulently transferred. One such lawsuit is Darr v. Argueta et al., Adv. Pro. No. 16–04006, which is pending in Massachusetts Bankruptcy Court in the TelexFree bankruptcy case (Ch. 11 Cases 14–40987–MSH).
It is our understanding that the Trustee believes that you may have received more money (in the form of cash, checks, and wire transfers) than you spent in connection with TelexFree, thus making you a “net winner” in the Trustee’s opinion. For this reason, you have most likely received various notices from the Trustee. If you have not seen such notices in the past, please check your spam filter or junk mail.
On October 6, 2016, the Bankruptcy Court for the District of Massachusetts certified a class of defendants for various proceedings in connection with “net winner” lawsuit. In connection with this order, the Court has appointed this firm as class counsel. For this reason, we are writing to you on behalf of the class to give the following explanations and to convey the following instructions:
Scope of Class Certification
The scope of class certification is limited to issues that are common to all members of the class and ensuring that the procedures for determining liability on the Trustee’s claims are as fair and accurate as possible. Class certification will not address individual liability issues or defenses. In the event that liability on one or more of the Trustee’s claims is established, the Trustee intends to seek a process to determine the net winnings of each Net Winner Class member. Therefore, it is not necessary for you to communicate with our firm related to determining the amount of your net winnings because each member of the Class will have an opportunity to address those issues in the damages process ordered by the Court.
It is important to note that being a potential member of the class of “net winners” does not indicate any intentional fault on your part, nor are we suggesting that to be the case. The Trustee does not base his claims on intentional wrongdoing but rather on the legal theory that a person who received more money from a Ponzi/pyramid scheme than he or she contributed has received a fraudulent transfer. There may be a number of legal and factual defenses available to class members, such as good faith, but the Trustee does not need to prove that members of the class knowingly defrauded TelexFree or its creditors.
Preservation of Documents, Email, Bank Records, and Related Information
Because you may be obligated to produce records relevant to your involvement in TelexFree in the near future, we are informing you of the need, if you have not already done so, to gather and preserve any documents or information (including electronic files) related to the amount each paid into and received from TelexFree. These documents include, but are not limited to:
- Bank records and statements for all bank accounts you used from 2012 to the present
- Credit card and payment processing records and statements from 2012 to the present
- Check registers and cash receipts from 2012 to the present
- Email messages (including email messages sent and received from this account) to or from TelexFree or involving any person with whom you communicated concerning: (a) buying, selling, transfer of TelexFree credits, (b) invoices from TelexFree, (c) the purchase of TelexFree memberships, phone plans, kits or packages (AdCentral or AdCentral Family), (d) posting internet TelexFree advertisements, (e) the costs and efforts in connection with recruiting, marketing, or other events designed to encourage people to participate in TelexFree, and (f) the transfer of cash to or from any person involved in TelexFree
- Any journals, calendars, logbooks or other documents reflecting the appointments, conference calls, trips, and daily hours that you worked on TelexFree
- Accounting records for all business activities related to TelexFree, whether as a corporation, LLC, partnership, or self-employed business
- All computers, internal or external hard-drives, memory storage devices (including CDs, DVDs, USB thumb drives, etc.) containing TelexFree-related files
- All notices you received from TelexFree
- All notices you received related to the TelexFree bankruptcy
- All notices you received from the TelexFree Trustee
- Any other paper documents relating to TelexFree
If any of the above records are maintained by third parties (such as a bank or credit card processor), please contact that party to determine your options for record preservation.
Please note that your obligation to preserve records is true regardless of whether you dispute that you are a “net winner.”
Preservation of these documents and information is vital because they can be used in the later process to determine the amount of your individual net winnings, if any. They may also be vital for your defense. This is true regardless of whether you or corporate entity you own or control has been named individually or served with a complaint.
Failing to preserve potentially relevant documents may result in adverse consequences to you and your ability to defend yourself from the Trustee’s claims.
In the next few months, we will be working to defend the class in the next stage of the litigation. As we do so, we expect to provide regular updates on our progress to make sure the process is as fair and transparent as possible.
Because the Trustee believes that there are more than 14,000 net winners, it will not be possible at this stage for us to communicate individually with each person. We will inform you when the need for legal representation arises. For this reason, we ask that you review all notices we send as they may contain important information and require that you take additional actions.