On October 28, a Utah federal court denied the Traffic Monsoon Receiver's initial request to retain Canadian legal counsel, citing concerns over cost. U.S. District Judge Jill N. Parrish questioned the necessity of expensive bankruptcy law specialists for enforcing judgments against Canadian individuals who profited from the alleged Ponzi scheme. The Receiver had proposed hourly rates for three lawyers reaching $702, $607, and $221.
Traffic Monsoon operated as an online advertising platform that the U.S. Securities and Exchange Commission (SEC) shut down in July 2016, alleging it was a $207 million Ponzi scheme. Kenneth D. Bell was appointed as the Receiver to identify assets, recover funds from participants who withdrew more than they invested (known as net-winners), and distribute the recovered money to victims. This process often involves complex legal actions across multiple jurisdictions.
The Receiver's mandate extends to clawing back funds from these net-winners, regardless of their location. Pursuing judgments against individuals residing in Canada requires navigating Canadian legal frameworks, which differ from those in the United States. The Receiver had sought to engage specific Canadian attorneys to manage these cross-border enforcement efforts.
Judge Parrish's order suggested a more cost-effective approach. She recommended the Receiver solicit multiple bids from attorneys experienced in Canadian law, rather than immediately approving the initial high-cost proposal. This direction aims to ensure the maximum possible recovery for victims by minimizing administrative expenses.
The pursuit of net-winners in other countries complicates the receivership process. Each nation presents its own set of procedural rules, local counsel requirements, and potential for lengthy litigation. These factors frequently add significant time and expense to recovery efforts.
Despite the initial denial, the Traffic Monsoon Receiver renewed efforts to engage Canadian counsel on April 30, 2021. This continued push indicates the Receiver's commitment to recovering all available funds for the victims, even when faced with jurisdictional and cost challenges. The total amount sought from Canadian net-winners remains a critical component of the overall recovery strategy for the Traffic Monsoon victims.