A class action lawsuit brought on behalf of victims of the TelexFree Pyramid Scheme is currently pending before Judge Timothy S. Hillman of the United States District Court for the District of Massachusetts.

Plaintiffs allege that they were injured as a result of the Defendants’ assistance and participation in the TelexFree Pyramid Scheme. Defendants dispute Plaintiffs’ claims.

Four settlements totaling $24,775,000 have now been reached in this litigation regarding claims against twelve parties, nine of which are Defendants and three of which are related third parties.

• The first settlement for $1,750,000 was with Defendants Base Commerce, LLC (f/k/a Phoenix Payments, LLC), John Hughes, Brian Bonfiglio, John Kirchhefer, and Alex Sidel.
• The second settlement for $425,000 was with Defendant Synovus Bank.
• The third settlement for $100,000 was with Defendants Joseph Craft and Craft Financial Solutions, Inc. and related third parties BWFC Processing Center, LLC, ACE LLP, and Audra Craft.
• A fourth settlement for $ 22.5 million has now been reached with Fidelity Co-operative Bank ("Fidelity Bank") and John Merrill (together, the "Fidelity Bank Defendants").

The first three settlements received final approval from the Court on July 28, 2020. The Court must still decide whether to approve the fourth settlement with the Fidelity Bank Defendants.
Your legal rights will be affected whether you act or don’t act.

YOUR LEGAL RIGHTS AND OPTIONS

You are a member of the Class if:

You purchased one or more TelexFree AdCentral or AdCentral Family packages and suffered a Net Loss between January 1, 2012, and April 16, 2014.

What is this lawsuit about?

Plaintiffs allege that they were injured as a result of the Defendants’ assistance and participation in the TelexFree Pyramid/Ponzi Scheme.

Plaintiffs allege that TelexFree, Inc., TelexFree, LLC, TelexFree Financial, Inc. and its related entities and individuals operated an illegal scheme whereby it sold memberships and ostensibly paid its promoters for placing advertisements for a voice over internet protocol (“VOIP”) product, but in reality paid them to recruit other investors whose new membership fees kept the scheme afloat. Plaintiffs further allege that TelexFree, Inc., TelexFree, LLC, TelexFree Financial, Inc. and its related entities and individuals carried out other related ongoing operations including money laundering and the transfer of funds and operations offshore and beyond the reach of the United States justice system.

Plaintiffs allege that TelexFree’s business and operations constituted a hybrid illegal Pyramid/Ponzi Scheme. Plaintiffs seek compensation for the economic loss they suffered as a result of the Defendants’ participation in, or aiding or abetting of, TelexFree’s illegal Scheme. Plaintiffs also seek equitable relief.

Defendants dispute Plaintiffs’ claims. The Court has not yet decided who is right.

What does the settlement with the Fidelity Bank Defendants provide?

The settlement with the Fidelity Bank Defendants provides for a payment of $22,500,000 in cash and continuing cooperation by the Fidelity Bank Defendants. In return for the payment and benefits, Settlement Class Members are required to give up their claims against Fidelity Bank, John Merrill and their past, present and future employees, officers, directors, corporators, spouses, heirs, trusts, trustees, executors, estates, administrators, beneficiaries, distributees, foundations, agents, fiduciaries, partners, partnerships, joint ventures, member firms, limited liability companies, corporations, parents, subsidiaries, divisions, affiliates, associated entities, principals, managing directors, members, managers, predecessors, predecessors-in-interest, successors, successors-in-interest, assigns, advisors, consultants, brokers, dealers, lenders, attorneys, representatives, accountants, insurers, coinsurers, reinsurers, associates and their related parties.

Three previous settlements received final approval from the Court on July 28, 2020. The Court must still decide whether to approve the fourth settlement with the Fidelity Bank Defendants.

All the Settlement Agreements are available to view and download on the “Court Documents” page of this website.

When can you get a payment?

No money will be distributed to any Class Member yet. The lawyers will continue to pursue the lawsuit against the other, non-settling Defendants to see if any future settlements or judgments can be obtained in the case and then the funds will be distributed in the best method available in order to reduce administrative expenses.

The plan of distribution for the settlement funds will depend on the total amount recovered from the Defendants, as well as attorney fees and case costs. You will be notified when and how to submit a claim. The plan of distribution for the settlement funds must be approved by the Court before the funds can be distributed.

Your Rights in The Settlement Classes:

You May Remain in the Settlement Class: If you wish to remain a member of the Settlement Class, you do not need to take any action at this time. If you remain in the Settlement Class and participate in the settlement, you retain your right to administratively contest the amount you are awarded after you are notified what that amount is.

You May Opt Out of the Settlement Class: If you wish to keep your rights to sue the Fidelity Bank Defendants about the conduct alleged in this litigation, any act or omission of the Fidelity Bank Defendants alleged in the Complaints as it relates to the TelexFree Scheme or any conduct alleged and causes of action asserted or that could have been alleged or asserted, in any class action or other complaints filed in this litigation, you must exclude yourself from the Settlement Class or classes. You will not get any money from the settlements from which you exclude yourself.

To exclude yourself from the Settlement Class, you must send a letter that includes the following:

a) Your name, home address at the time of your transactions with TelexFree, your current home address if different, your phone number, your current email, your email address(es) at the time you conducted business with TelexFree, evidence of your transactions with TelexFree, your estimate of the date range of your transactions with TelexFree, and your estimated dollar transactions with TelexFree;

b) the name and contact information for all legal counsel(s) that you have consulted with as it relates to TelexFree or that represent you;

c) A statement saying that you wish to be excluded from the Settlement Class in In re TelexFree Securities Litigation – Case No. 4:14-md-2566-TSH, as to the Fidelity Bank Defendants for which you wish to retain your rights to sue; and

d) Your signature and the date you sign.
You must mail your exclusion request, postmarked no later than January 11, 2021, to:

Remain in the Settlement Classes and Object: You can ask the Court to deny approval of one settlement by filing an objection. You can’t ask the Court to order a larger settlement; the Court can only approve or deny the settlements. If the Court denies approval of a settlement, no payments from that settlement will be sent out and the lawsuit will continue. If that is what you want to happen, you must object.

You may object to the proposed settlements in writing. You may also appear at the Fairness Hearing, either in person or through your own attorney. If you wish to speak at the Final Approval Hearing, you must send a letter so informing the Clerk of the Court, Lead Class Counsel, and Settling Defendants’ Counsel. If you appear through your own attorney, you are responsible for paying that attorney.

All written objections must be made under penalty of perjury and the supporting papers must include:

a) A heading that clearly identifies the case name and number (In re TelexFree Securities Litigation – Case No. 4:14-md-2566-TSH);
b) The objector’s name, address, telephone number, and the contact information for any attorney retained in connection with the objection or otherwise in connection with the lawsuit;
c) Documentary proof of the Objector’s membership in this class action;
d) A detailed statement of the specific factual and legal basis for the objection to the proposed settlement with the Fidelity Bank Defendants;
e) A statement as to whether the objector intends to appear at the Final Approval Hearing, either in person or through counsel, and, if through counsel, identifying the counsel by name, address and telephone number;
f) A list of any witnesses the objector may call at the Final Approval Hearing, together with a brief summary of each witness’s expected testimony;
g) A list of and copies of any exhibits which the objector may seek to use at the Final Approval Hearing;
h) A list of any legal authority the objector may present at the Final Approval Hearing; and
i) The objector’s signature executed under penalty of perjury.

Objections must be submitted to the Court by mailing them to the Clerk’s Office, United States District Court for Massachusetts, Donohue Federal Building, 595 Main Street, Worcester, Massachusetts 01608.

Objections must be filed or postmarked on or before January 11, 2021.

The information contained on this website is only a summary. You may download a full copy of the Notice by clicking here. Since this website presents only summary information, you should review the Notice for additional details.