Law36O (October 3, 2023, 8:54 PM EDT) -- A Massachusetts federal judge has given the first green light to a $95 million settlement between TD Bank and the victims of the $3billion TelexFree Ponzi scheme after the consumers told the court that the deal was more than twice the $47 million worth of TelexFree-related deposits processed by TD Bank throughout the alleged scheme.

U.S. District Judge Timothy S. Hillman issued an order on Tuesday approving the $95 million settlement and two other smaller deals with Telecom Logic and a group known as the IPS defendants for  $25,000 and $500,000, respectively.

In a motion for preliminary approval filed last month, the TelexFree victims argued that approval of the deals should be granted because the representation of the class has been adequate, the settlement negotiations were fair and done at arm's length, and the relief is reasonable.

According to the motion, the $95 million deal with TD Bank is a "substantial sum" given the risks of continued litigation.

Under the terms of the two smaller deals, the defendants have agreed to provide ongoing cooperation and information related to TelexFree's operations, the motion states.

The plaintiffs also plan to ask the court for attorney fees worth upto one-third of the settlements, according to the motion.

The three deals approved in Tuesday's order are the latest in an expansive multidistrict litigation over the roles several financial institutions played in TelexFree's scheme. The TelexFree victims have alleged that the defendant banks provided accounts and "other services that the TelexFree insiders used to collect and abscond with massive amounts of money from their victims."

TelexFree, based in Marlborough, Massachusetts, ran its scheme by charging people to become promoters of a bare-bones Voiceover Internet Protocol service that was rarely used, promising commissions for online advertisements the promoters placed. The scheme, which involved about 2 million people worldwide, sold fake securities to those and other people and used part of the VoIP membership fees to pay what appeared to be returns on investments or commissions, prosecutors said.

The sprawling multidistrict litigation, which was transferred to the district nearly nine years ago, has seen banks including Fidelity Bank and Synovus Bank settle out of the action, and have seen claims dismissed against other defendants including PwC and PNC Bank.

Last month, Wells Fargo Bank NA, a remaining defendant in the action, accused the victims of failing to properly respond to the bank's discovery requests and asked the court to require a tidy handover of the requested documents.

Representatives for the parties did not immediately respond to requests for comment on Tuesday.

The victims are represented by Robert J. Bonsignore and Melanie A. Porter of Bonsignore Trial Lawyers PLLC, James M. Wagstaffe of WVBR Law Firm, J. Gerard Stranch IV, Michael G. Stewart and Kyle C. Mallinak of Stranch Jennings & Garvey PLLC, Geoff C. Rushing and R. Alexander Saveri of Saveri & Saveri Inc., D. Michael Noonan of Shaheen & Gordan PA, Ronald A. Dardeno of the Law Offices of Frank N. Dardeno, and Steven W. Rhodes.

TD Bank is represented by Nicholas J. Ramacher and George W. Vien of Donnelly Conroy & Gelhaar LLP.

Telecom Logic and Ryan Mitchell are represented by John A. Sten of Armstrong Teasdale LLP.

The IPS defendants are represented by Anthony E. Fuller of Hogan Lovells and Brian M. Nichilo and Richard Joseph Zack of Troutman Pepper.

The case is In Re: TelexFree Securities Litigation, case number 4: 14-md-0256, in the U.S. District Court for the District of Massachusetts.

--Additional reporting by Emilie Ruscoe. Editing by Rich Mills.