BULLETIN: Judge Certifies Class-Action Lawsuit Against 15,000 Alleged TelexFree ‘Winners’ In United States

BULLETIN: U.S. Bankruptcy Judge Melvin S. Hoffman has certified a defendant class-action lawsuit brought by TelexFree Trustee Stephen B. Darr against about 15,000 alleged TelexFree “net winners” in the United States.

The ruling means “clawback” cases against alleged U.S. winners will proceed. Darr has alleged aggregate payments to the domestic net winners exceed $100 million and must be returned to the bankruptcy estate. This is the second such order since last year affecting MLM promoters on a large scale. Class-certification also was approved in 2015 against Zeek Rewards’ winners.

Hoffman appointed alleged winner Frantz Balan as the putative class representative. The law firm of Milligan Rona Duran & King LLC will be class counsel. Class counsel will be paid with funds from the Trustee estate: up to $225,000 for legal fees and costs, and up to $87,500 for a class expert.

Balaan was a net winner of $516,875.00 and received $315,572.00 in net preference payments from TelexFree, Darr alleged. Balaan disputes those numbers, according to counsel.

Darr also is suing tens of thousands of alleged TelexFree international winners in a proposed class action. The international case hasn’t yet proceeded to the certification phase.

TelexFree created more than $3 billion in illicit transactions and hundreds of thousands of net losers, Darr has contended.

James Merrill, the alleged president of TelexFree, is scheduled to go on trial on 17 criminal counts next month. The trial initially had been set for October.

Read the class-certification order.

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