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TelexFree – How We Got Here and Where We Are Going

Tuesday, October 14, 2014 12:00 PM to 1:00 PM
Boston Bar Association - 16 Beacon Street, Boston, MA


Description:

TelexFree operated an unprecedented $1 billion pyramid scheme headquartered in Massachusetts harming victims all over the world.  The scheme unraveled in the spring of 2014 when civil and criminal actions were initiated by the Massachusetts Securities Division ("MSD"), the Securities & Exchange Commission ("SEC") and the United States Department of Justice ("DOJ").  TelexFree filed for bankruptcy protection in the District of Nevada narrowly ahead of the government actions for the purpose of rejecting the $1 billion in obligations it owed to its promoters. 

The filing was challenged by the government agencies and the case was moved to Massachusetts where a Chapter 11 Trustee was appointed.  With different roles in the various cases, the Chapter 11 Trustee and the government agencies (MSD, SEC, DOJ, and the United States Trustee's Office) need to negotiate and work together to determine how best to evaluate legitimate claims and distribute recovered funds to the victims of the pyramid scheme and creditors of TelexFree.

Topics to be discussed include:

  • History of TelexFree and how the pyramid scheme operated.
  • What has happened in the Nevada and Massachusetts' bankruptcy proceedings, the SEC and MSD civil cases, and DOJ criminal action to date.
  • The roles and relationships of the Chapter 11 Trustee and government agencies in the actions and whether assets seized or recovered by the government will be turned over to the bankruptcy estate.
  • Who will be compensated and who will be subject to clawback actions (net winners v. net losers).
  • How the claims process and distribution schemes are likely to be structured.

Join the discussion on Twitter with #TelexFreeNoFreeLunch and @bostonbar

Sponsoring Section/Committee(s):

Speakers:

  • Timothy J. Durken
    • LEDVANCE LLP
  • Jonathan M. Horne

 

Contact:

Elizabeth Vincensi
evincensi@bostonbar.org

 

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