Over a decade after the TelexFree Ponzi scheme collapsed, a class of investors deemed "net-winners" reached a settlement with the court-appointed Trustee. The U.S. District Court granted preliminary approval for the agreement on November 18th.
Net-winners are individuals who withdrew more money from the scheme than they originally invested. In the TelexFree case, thousands of participants fall into this category, making them targets for fund recovery by the Trustee. The Trustee's mandate involves reclaiming funds for victims who lost money, known as net-losers.
Frantz Balan represents the United States-based net-winners in this class action. Overseas net-winners are represented by Marco Puzzarini and Sandro Paulo Freitas. These representatives negotiated the terms on behalf of their respective groups.
The settlement details were first outlined in a Joint Motion seeking preliminary approval, filed on August 15th. All TelexFree investors classified as net-winners by the Trustee received information about the proposed terms.
Under the agreement, individual net-winners face specific liability caps based on transaction type. They are liable for no more than 100% of net Direct Transactions. These transactions involve money directly invested into TelexFree or funds received from TelexFree to redeem credits.
For net Triangular Transactions, where individuals accepted money from recruited investors and used credits to fund those accounts, the liability limit is 85%. Net Credit Transfers, which involve moving credits from a net-winner's TelexFree account to another's, carry a 75% liability cap.
The court instructed the TelexFree Trustee to provide formal notice of the settlement to both net-winners and net-losers. This notification process was scheduled for completion by December 3rd, 2024.
Net-winners within the class have an opportunity to file objections to the approved settlement. The deadline for these objections is February 20th, 2025. A Final Approval Hearing for the settlement was then scheduled for March 6th, 2025.
TelexFree victims with allowed claims have already received two distribution payments from the Trustee. The second of these distributions occurred in 2022, raising the overall victim recovery rate to approximately 45% of their losses.
Additional distribution payments are expected for net-losers following the final approval of this net-winner class settlement. The recovery of these clawback funds will contribute directly to increasing the pool available for victims.
The TelexFree net-winner settlement received final court approval on March 6th, 2025, after the scheduled hearing.