Attention has shifted to pending regulatory action in Massachusetts now that TelexFree's bankruptcy proceedings have stalled. The SEC and Massachusetts Securities Division charged TelexFree as a Ponzi and pyramid scheme, pushing for a permanent injunction. While the company and some management relied on the now-defunct Nevada bankruptcy, other insiders have engaged with the SEC.

Carlos Wanzeler, a TelexFree owner, saw his pre-injunction settlement discussions with the SEC break down. Wanzeler opposes a preliminary injunction, claiming he lacks access to information required by a Temporary Restraining Order (TRO) after raids on TelexFree's offices on April 15th and his home on April 17th. His response came after TelexFree lost the bankruptcy case, which he previously believed would absolve him of regulatory liability. He requests a delay on the preliminary injunction decision until June 13th.

Wanzeler also argues that a preliminary injunction violates his Fifth Amendment rights. He claims Paragraph IV of the SEC's proposed order would force him into testimonial conduct, which the Fifth Amendment prohibits. This amendment includes protection against self-incrimination, which applies before most government bodies. Wanzeler protests that testifying about his role in the $1 billion TelexFree Ponzi scheme would incriminate him.

Joseph Craft, TelexFree's CFO, also had settlement negotiations with the SEC collapse on the morning of May 6th. Craft's attorneys demanded the SEC acknowledge his alleged innocence, despite his involvement with TelexFree since 2012, including setting up money-laundering offshoot companies. The disagreement centered on an order suggesting his likely participation in wrongdoing and issues with his accounting practice.

Craft does not concede he likely violated US Securities laws. He claims out-of-state witnesses can prove his TelexFree activities were lawful. Craft asked that the current TRO against him remain in place, delaying a preliminary injunction decision until a hearing allows him to prove his innocence.

The SEC filed proposed preliminary injunctions for TelexFree, James Merrill (owner), Steve Labriola (International Marketing Director), Sannderly Rodrigues (top promoter), and Faith Sloan (top promoter). These largely mirror existing TROs. Some parties can make a single $6000 withdrawal from their SEC-controlled seized asset accounts for living expenses.

Santiago De La Rosa, a top promoter, appears to be cooperating with the SEC after a preliminary injunction was granted against him. A May 7th "memorandum of lis pendens" from the SEC identifies a Massachusetts property De La Rosa owns, which may satisfy any judgment.

De La Rosa has surrendered all available US funds under his control to the SEC. He sold his 2013 Land Rover Range Rover Sport HSE back to the dealership for $1773 and continues efforts to sell or surrender his BMW. He has also started the process of repatriating all funds under his control outside the US. De La Rosa's international funds appear to be in the Dominican Republic, as he visited the Boston Office of the Consulate to complete repatriation paperwork.

Randy Crosby, another top promoter, also had a preliminary injunction entered against him on May 1st. On May 7th, he filed a declaration stating he deposited all available funds under his control.