Jordan Maglich of PonziTracker provided the primary information stream from the May 2nd TelexFree bankruptcy proceedings, offering updates over an eight-hour period. Court streaming prohibitions meant Maglich's phone reports became the key source for the day's events. The hearing revealed new regulatory actions against TelexFree.
During the proceedings, news emerged that the US Attorney's Office had filed civil and criminal forfeiture actions against TelexFree. Asset forfeiture allows the state to confiscate property linked to alleged criminal activity. Civil cases target the property itself, with the government needing to show a preponderance of evidence that the assets are subject to forfeiture. Criminal forfeiture, conversely, typically follows a conviction and acts as a punitive measure against the offender.
TelexFree counsel argued these new forfeiture filings held no bearing on the immediate bankruptcy hearings. The US Attorney's Office was not present as a party in the bankruptcy court. Judge Landis therefore stated he would "not consider papers in connection with rulings on pending matters" in the bankruptcy case. He also indicated he was "not inclined to take (the forfeiture) papers into evidence" for the current session.
Judge Landis did order a short recess. He used this time to review the forfeiture documents, stating he would remain "mindful" of them moving forward. The specific details within these forfeiture documents remain sealed.
The filings by the US Attorney's Office suggest future civil and criminal legal action against TelexFree. These potential new cases would run in addition to the existing civil actions already initiated by the SEC and the Massachusetts Securities Division.