Banks Call TelexFree Suit Revision A Waste of Time

A slew of financial services providers including Wells FargoBank of AmericaTD Bank and PwC pushed back Friday in Massachusetts federal court against an attempt to revise allegations linking them to the TelexFree Ponzi scheme, arguing the repeat bids for revision are wasting the court’s time.

The defendants, who also include Fidelity Co-Operative Bank, International Payout Systems Inc. and Propay Inc., were protesting a Nov. 29 bid by victims of the vast Ponzi scheme to have the case reconsidered.

Early 2019 decisions by U.S. District Judge Timothy S. Hillman had appeared to end claims in the case for some of those defendants, including Bank of America NA, TD Bank NA, Wells Fargo Bank NA and PwC, also known as PricewaterhouseCoopers.

But in November, the victims claimed that newly discovered evidence from a trove of documents they received as part of a settlement with one of the defendants shows the financial service defendants shouldn’t be able to escape the allegations.

The victims claimed the new evidence merited consideration in a revised version of their complaint, which has already been amended four times.

Five strongly worded responses to the victims were filed with the court Friday, showing strong opposition from the defendants to the unconventional November request.

“Plaintiffs’ continual attempts to amend the operative complaint in this matter are wasting the court’s and defendants’ time and imposing unnecessary costs and burdens on everyone,” Fidelity Bank’s motion said. “They are also symptomatic of a broader pattern of disregarding the Federal Rules of Civil Procedure and the orders of this court.”

Without receiving permission from Judge Hillman to amend their complaint, in November the victims had filed the proposed 418-page amendment alongside their motion for reconsideration of the dismissal order.

In particular, the plaintiffs sought to revive their claims of aiding and abetting and conspiracy against Bank of America, TD Bank, Wells Fargo and PwC and their personal jurisdiction claims against payment processing service company Global Payroll Gateway.

The proposed class action dates back to 2014, the year TelexFree LLC declared bankruptcy and drew scrutiny from the U.S. Department of Justice and the U.S. Securities and Exchange Commission for running a billion-dollar Ponzi scheme.

The scam left about 1.9 million people in nearly every country in the world more than $3 billion in the red, including almost 170,000 Americans, a quarter of whom were from Massachusetts and lost an average of $2,940 each.

The company filed for bankruptcy in April 2014, when it owed $6 billion to participants but had only $120 million on hand, according to prosecutors.

Representatives for TD Bank, Bank of America and PwC declined to comment.

Attorneys for Wells Fargo, Fidelity Co-Operative Bank and its chief executive, International Payout Systems and ProPay, and thoir representatives did not immediately respond to requests for comment Monday.

Attorneys for the victims also did not immediately respond to requests for comment Monday.

Plaintiffs Igor Shikhman, Rita Dos Santos, Edivaldo A. Reis, Anthony Cellucci, Jamilly Lake and Gerivaldo Pacheco are represented by interim lead counsel Robert J. Bonsignore and Lisa Sleboda of Bonsignore Trial Lawyers PLLC and interim executive committee members William Coulthard, Michael J. Gayan and Anna A. Karabachev of Kemp Jones & Coulthard LLP, Ronald A. Dardeno and Alexander D. Wall of the Law Offices of Frank N. Dardeno, R. Alexander Saveri and Sarah Van Culin of Saveri & Saveri Inc. and D. Michael Noonan, Christine Craig, Nicholas Kline and William Shaheen of Shaheen & Gordon.

Bank of America is represented by Kenneth I. Schacter and S. Elaine McChesney of Morgan Lewis & Bockius LLP.

TD Bank is represented by Jarrod D. Shaw and Mary J. Hackett of McGuireWoods LLP.

Wells Fargo is represented by Robert W. Fuller and Adam Doerr of Robinson Bradshaw & Hinson PA and Paul Samson of Riemer & Braunstein LLP.

PwC was represented as recently as 2017 by Paul P. O’Connor of Milton Laurence & Dixon LLP and Gabor Balassa of Kirkland & Ellis LLP.

Fidelity Co-Operative Bank is represented by Ian D. Roffman and Joseph T. Toomey of Nutter McClennen & Fish LLP. Fidelity’s president and chief operating officer, John Merrill, who is a party to Fidelity’s opposition, is represented by Michael J. Pineault of Clements & Pinault LLP.

International Payout Systems is represented by Justin P. O’Brien, Anthony E. Fuller, Julia McLetchie and Diana Van Leeuwen of Hogan Lovells US LLP.

ProPay is represented by Phyllis B. Sumner, Jonathan R. Chally, J. Andrew Pratt and Timothy H. Lee of King & Spalding LLP.

The case is In Re: TelexFree Securities Litigation, case number 4:14-md-02566, in the U.S. District Court for the District of Massachusetts.

–Additional reporting by Dean Seal and Reenat Sinay. Editing by Jay Jackson Jr.
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