TelexFree Trustee’s Proposed Class Actions May Affect Nearly 100,000 Alleged ‘Winners’ Globally

It’s another MLM legal and PR catastrophe.

Let’s begin with the numbers, which are staggering: In two separate actions on Jan. 15, TelexFree bankruptcy Trustee Stephen B. Darr sued 56 named alleged “winners” in the MLM Ponzi- and pyramid scheme believed to have generated about $3 billion in corrupt, cross-border economic activity.

These 56 promoters — 23 with U.S. addresses and 33 with overseas addresses — effectively are the stand-ins for about 93,000 others who received more from TelexFree or “from other persons in connection with the purchase of membership plans or VoIP Packages” than they paid in. The adversary action in federal bankruptcy court in Massachusetts is filed as a proposed defendant class-action, meaning rulings for or against the named winners would apply to the unnamed 93,000 others.

“The members of the Net Winner Class are so numerous that joinder of all members is impracticable,” Darr argued to Chief Bankruptcy Judge Melvin S. Hoffman.

At least 11 U.S.-based promoters of TelexFree hauled more than $1 million each from the program, according to Darr’s complaint. At the top of the list was Benjamin Argueta of Somerville, Mass. He is alleged to have received more than $4 million, including more than $2.2 million in the last 90 days of the scheme.

With alleged winnings of more than $2.5 million, including more than $1 million in the closing days, Zollo Alecci of Canico, Portugal, was the alleged top international winner. Canico is situated in the Madeira Islands, a spot apparently favored by Brazil-based TelexFree executive Carlos Costa.

Costa, associated with a TelexFree branch known as Ympactus, also is a failed politician and alleged international racketeer.

Much like Zeek Rewards’ receiver Kenneth D. Bell, who also filed a defendant class action, Darr is arguing that the alleged winners must return the money because it represents an ill-gotten gain.

Hoffman already has ruled TelexFree a Ponzi- and pyramid scheme.

Accused TelexFree huckster Sann Rodrigues, who once claimed a $3 million haul, was not named an alleged winner in either of Darr’s proposed class actions — even though the sum Rodrigues claimed easily would have put him among the top winners.

The reason why Rodrigues wasn’t named was not immediately clear, although he possibly used shell companies to offload some of his haul.

TelexFree involved as many as 1.9 million participants, according to Darr.

NOTE: Thanks to the ASD Updates Blog.