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United States v. Carlos Wanzeler and James Matthew Merrill

Docket Number 14-CR-40028

Status of the case:

Restitution order: The District Court has approved the governments request providing administration and payment of restitution to victims by the Trustee in the related Chapter 11 cases. A copy of the order can be located in the attachments.

Outcome of sentence:

On March 22, 2017 the defendant, James Merrill received a sentence of six years of incarceration followed by three years of supervised release.

Defendant Carlos Wanzeler:

The defendant Carlos Wanzeler fled to the country of Brazil upon learning of the federal charges filed against him. There is currently a federal warrant for his arrest.

Related case:

United States v. Cleber Rene Rizerio Rocha Docket 17-CR-10048

In January 2017, Cleber Rene Rizerio Rocha was charged with a money laundering scheme to assist defendant Carlos Wanzeler to transfer $20 million dollars from the United States to Brazil. In September of 2017 the defendant pled guilty and was sentenced on February 2018 to 33 months incarceration followed by 1 year of supervised release. The United States Attorney will seek to forfeit the funds through the Department of Justice’s Asset Forfeiture Process to be included in the United States Bankruptcy funds to be returned to identified TelexFree victims.


Bankruptcy Proceedings

The Status of the Bankruptcy Cases

UPDATE:

Bankruptcy case Petition#: 14-40987:  Update as of Spetember 7, 2018 

The Chapter 11 trustee for the TelexFree cases has just completed reviewing approximately 130,000 claims which were received.  He has sent out approximately 20,000 objections to these claims for a variety of reasons (primarily related to duplicate claims and claim amounts incorrectly calculated).  These objections will have to be substantially resolved before any distribution to victims can be made. This claim resolution process is anticipated to take at least three or four months.  The distributions to victims will be made based on the amount of funds available for distribution and the total amount of claims allowed.  The amount of funds to be distributed and the amount of the allowed claims are not yet determined, so no estimate of recoveries is possible at this time.

Update as of January 26th, 2018.  In December, 2017, the Bankruptcy Court approved claims resolution procedures proposed by the trustee to facilitate the review and allowance of claims and to expedite any necessary objections to claims. The trustee has begun the claims review process and, once the review of claims and resolution of any disputed claims is complete, the distribution of funds to allowed claims will begin. There is no specific date on when the distribution of funds will take place; however it is anticipated that monies will be disbursed later in 2018. view the Bankruptcy Trustee’s website, http://www.kccllc.net/TelexFree for up-to-date information.

Update as of December 22, 2017. The bankruptcy trustees office is in the process of finalizing agreed terms with the class action defendants to submit to the court to establish procedures for the Trustee to resolve any disputed claims. The resolution of disputed claims need to be resolved before any distribution to participants is made. The timing of distribution will be dependent upon the time it takes to object to and resolve claims and the resolution of the forfeiture action being pursued by the US Attorneys Office. Please view the Bankruptcy Trustee’s website, http://www.kccllc.net/TelexFree for up-to-date information and a copy of motions filed in this case.

The United States Attorney’s Office has received the following update about the Bankruptcy proceedings. The Bankruptcy Trustee is seeking permission to close the web site for submitting claims - http://telexfreeclaims.com/ – because the time to file claims has expired. The Bankruptcy Trustee is also opposing a motion filed in court by the class action defendants, who object to the Trustee’s process for handling claims. The class action defendants are asking that no claims be approved until their experts have completed their analyses. If the class defendants are successful there will be a delay in distributing funds.Please view the Bankruptcy Trustee’s website, http://www.kccllc.net/TelexFree for up-to-date information and a copy of motions filed in this case.

The court-established deadline for filing a claim through the bankruptcy process has passed (deadline was March 15th, 2017). Please refer to the bankruptcy trustee’s website for information on how to file a late claim (“Notice of Extended Deadline for Filing Electronic Proofs of Claim and Claims Procedures” located at( http://www.kccllc.net/telexfree). This information is being provide to aide TelexFree victims in receiving important updates from both the criminal and civil cases involving TelexFree.

On April 13, 2014, TelexFree LLC, TelexFree, Inc. and TelexFree Financial, Inc. (together, “TelexFree”) filed petitions for bankruptcy under Chapter 11 of the United States Bankruptcy Code. The bankruptcy cases are being heard in the United States Bankruptcy Court for the District of Massachusetts. In June of 2014, Stephen B. Darr of the financial advisory firm Huron Consulting was appointed the bankruptcy Trustee. As Trustee, Mr. Darr is responsible for collecting the assets of TelexFree, resolving disputes as to claims filed against TelexFree and distributing available funds to creditors. This process is ongoing.It is important to note that the civil bankruptcy case and the criminal case charging James Merrill and Carlos Wanzeler are different legal actions being heard in different courts by different judges.

 

Claims Process – How Participants Will Be Reimbursed For Their Losses

The Trustee has filed two class action complaints to recover amounts paid to Net Winners, that is, those Participants who received more money from the TelexFree scheme than they invested. Any monies recovered from Net Winners will be available to distribute to creditors who are owed money from TelexFree.

Payment of claims that are filed and allowed will depend upon the availability of funds.

For additional information as to the status of the bankruptcy cases or to review any documents filed in those cases, participants can log onto the website managed by the TelexFree claims agent, Kurtzman Carson Consultants (KCC). The website address is http://www.kccllc.net/TelexFree. If Participants have not received any notices in the bankruptcy cases, they should contact KCC to register their electronic mail address.


 

DOCUMENTS

Updated November 5, 2018

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