The United States Judicial Panel on Multidistrict Litigation has moved TelexFree-related litigation pending in federal courts in other states to Massachusetts. A directive ordering the transfers for the sake of judicial efficiency was issued on Oct. 21.
Some plaintiffs from outside of Massachusetts sued TelexFree and other defendants in federal courts in Florida, Georgia and North Carolina. The order moves all of these cases to federal court in Massachusetts and puts them in the hands of U.S. District Judge Timothy S. Hillman, who is presiding over the criminal cases against TelexFree figures James Merrill and Carlos Wanzeler.
Wanzeler has been deemed an international fugitive by U.S. federal prosecutors. He was born in Brazil, a country that has its own TelexFree-related investigations at both the state and federal levels.
The U.S. Judicial Panel order provides yet another example of how cross-border MLM HYIP schemes that involve hundreds of thousands of people can lead to severe economic fallout and tidal waves of litigation that strain the resources of all parties involved. There are at two government actions against TelexFree and at least six private actions, all occurring while a court-appointed bankruptcy trustee for TelexFree is conducting an investigation.
The great irony of the cases is that TelexFree, while operating, was presented as a means of making lives easier, a rising tide that would lift all boats. Serial promoters of fraud schemes continue to push similar “programs,” often using appeals to religious faith and lost economic opportunity as a lure
From the order (italics added):
On the basis of the papers filed and the hearing session held, we find that the actions listed on Schedule A involve common questions of fact, and that centralization in the District of Massachusetts will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation.
These actions share factual questions relating to the allegation that the TelexFree companies operated a Ponzi pyramid scheme involving the recruitment of investors in marketing TelexFree’s telephone service plan and that defendants directly participated in or aided and abetted the alleged scheme. Centralization will eliminate duplicative discovery; prevent inconsistent pretrial rulings, especially with respect to class certification; and conserve the resources of the parties, their counsel and the judiciary.
Weighing all factors, we are persuaded that the District of Massachusetts is the most appropriate location for this litigation. The events giving rise to the alleged claims primarily occurred in Massachusetts, which is the principal place of business of the TelexFree companies. The federal and state enforcement actions against TelexFree and affiliated individuals are pending there. Thus, the primary witnesses and other evidence likely will be located in Massachusetts. Additionally, transfer of actions to this district will facilitate coordination with the TelexFree bankruptcy cases, which also are pending in this district. The Honorable Timothy S. Hillman, to whom we assign this litigation, presides over the related criminal action and thus is familiar with the factual and legal issues presented by these actions. We are confident he will steer this litigation on a prudent course.
Current cases listed in Schedule A that began outside of Massachusetts and now have been moved there include:
GUEVARA v. MERRILL, ET AL., C.A. No. 1:14-22405 (Southern District of Florida).
COOK v. TELEXELECTRIC, LLLP, ET AL., C.A. No. 2:14-00134 (Northern District of Georgia).
Cases already residing in Massachusetts include:
GITHERE, ET AL. v. TELEXELECTRIC, LLLP, ET AL., C.A. No. 1:14-12825.
MARTIN, ET AL. v. TELEXFREE, INC., ET AL., Bky. Adv. No. 4:14-04044.
CELLUCCI, ET AL. v. TELEXFREE, INC., ET AL., Bky. Adv. No. 4:14-04057.
FERGUSON, ET AL. v. TELEXELECTRIC, LLLP, ET AL., C.A. No. 4:14-40138 (transferred from the Eastern District of North Carolina).