U.S. Judge Hoffman recently approved a second round of subpoenas in the TelexFree Ponzi scheme case, targeting numerous individuals and entities. Among those named are attorney Gerry Nehra and payment processor i-Payout, both previously central to the company's operations and defense against fraud allegations.

Gerry Nehra served as TelexFree's public legal representative. He sent cease and desist letters to individuals questioning the company's business model, a role he maintained until regulatory issues emerged. i-Payout, a payment processor, publicly defended TelexFree, asserting the company was not a Ponzi scheme. This stance coincided with millions of dollars i-Payout earned in processing fees from TelexFree transactions.

Initial objections to the Trustee's requests came from Opt3 Solutions, an IT service provider, and ProPay Inc., another payment processor. Opt3 Solutions' concerns focused on confidentiality, specifically the potential for information circulation by the Trustee. ProPay also raised confidentiality issues. But ProPay additionally sought 20 days to respond to any Trustee requests, differing from the Trustee's proposed 10-day response time for subpoenas and 5 days for depositions.

ProPay's objection also challenged the Trustee's authorization to compel "any additional documents he deems necessary." The payment processor argued this request exceeded the scope of Bankruptcy Rule 2004. Rule 2004 examinations are broad, ProPay stated, but courts have limited them, prohibiting use for "abuse or harassment" or for matters "not relevant to the basic inquiry." ProPay suggested the Trustee's broad request could fall outside these boundaries.

Judge Hoffman ultimately endorsed orders granting subpoena requests to a wide range of entities. These include law firms Babener and Associates, Garvey Schubert Barer, Lane Powell Prof. Corp, Gerald Nehra and Nehra & Waak, and Joele Frank, Wilkinson, Brimmer, Katcher. The Sheffield Group, MLM consultants, also received a subpoena. Payment processors Global Payroll Gateway (GPG), International Payout Systems (i-Payout), ProPay, Argus Payments, and Allied Wallet were similarly targeted. i-Payout's lawyers had already reached an agreement with the Trustee.