A Nevada bankruptcy judge last Friday ordered the transfer of the TelexFree bankruptcy case to Massachusetts. Judge Landis ruled that the alleged global Ponzi scheme's filing, initially made in Nevada, should proceed in the state where the company faces active lawsuits from the SEC and the Massachusetts Securities Division.

Judge Landis issued his decision after an eight-hour hearing in Nevada's bankruptcy court. He cited several factors favoring the transfer, including the geographic distribution of creditors. Approximately 90% of TelexFree's creditors live outside Nevada and Massachusetts. About 75% of customers and promoters reside outside the United States. While less than 5% live in Massachusetts, the court noted even fewer customers or promoters were located in Nevada. Ten of the largest unsecured creditors, however, reside in Massachusetts.

The physical location of TelexFree's operations also weighed heavily in the decision. The LLC shares its headquarters with the Inc. entity in Massachusetts. The company's chief restructuring officer had planned to work from the Massachusetts headquarters. All IT and office equipment for TelexFree is located there. Nevada holds no office presence or employees for the company. Access to books and records is most readily available in Massachusetts.

The court also considered the testimony of TelexFree CEO Stuart MacMillan and William Runge. While their credentials were not questioned, the court found they had little knowledge of the LLC's and Financial's business administration. Neither could identify competitors during their testimony. Their proximity as witnesses further supported the transfer to Massachusetts.

MacMillan and Runge's answers during the May 2nd hearing often fell between "I don't know" and "I don't have that information" when not prompted by TelexFree lawyers. Judge Landis considered this lack of direct knowledge a determining factor in his judgment. The judge determined that the need for ancillary administration, particularly in case of liquidation, further supported a Massachusetts venue.

The transfer moves the bankruptcy proceedings to the same jurisdiction where the U.S. Securities and Exchange Commission and the Massachusetts Securities Division have already filed lawsuits against TelexFree.