The motion landed on U.S. District Judge Timothy S. Hillman’s docket Wednesday afternoon, asking for his final blessing on the trio of settlements that would secure the companies’ exit from a proposed class action they’ve been battling for years.
Along with the cash payments, all three companies have agreed to cooperate with the proposed class as they continue to go after others that they suspect had a role to play in the multibillion internet phone service scheme, according to court filings.
“[The] scope of that criminal enterprise and the extent to which other third-party actors knowingly enabled its existence and exponential growth in the United States — and those actors’ liability to their innocent victims — remains far from settled despite the passage of over five years since plaintiffs’ institution of their civil actions,” according to a filing.
The litigation — which is part of sprawling multidistrict litigation currently working its way through a Massachusetts federal court under Judge Hillman — has been percolating for years. Suits began piling up after TelexFree filed for bankruptcy back in 2014, and the U.S. Department of Justice and U.S. Securities and Exchange Commission accused the company of running an elaborate Ponzi scheme.
Judge Hillman also handled the criminal side of the Telexfree case and sentenced TelexFree’s former CEO to six years in prison back in 2017 after he pled guilty to wire fraud in connection with the scheme.
TelexFree offered voice-over-internet telephone service, but federal prosecutors said the company’s money ultimately came not from the service it offered but from a massive pyramid scheme that brought in cash by having those already signed up convince others to pay for the privilege of being a “promoter” of the brand.
Representatives for the parties did not immediately return a request for comment.
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; 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.
Counsel information for Synovus Bank, Craft Financial Solutions and Base Commerce was not immediately available.
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.
–Editing by Gemma Horowitz.
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