Unavailable at the time the
order denying James Merrill’s supression motions
was published, Judge Hillman’s accompanying memorandum has since surfaced.

In the memorandum the reasoning behind Judge Hillman’s decision is explained. In great detail too I might add, with the memorandum coming in at a whopping twenty-five pages.

At issue is Merrill’s 
request for a Franks hearing and suppression of evidence
collected against him.

Search warrants were granted to the DOJ based on affidavits filed by Special Agent Soares. Merrill contends the affidavits contain false and misleading statements.

One point of dispute Merrill raised was Agent Soares’ assertion that

TelexFree derived a miniscule amount of revenue from sales of VOIP service – less than 1% of TelexFree’s hundreds of millions of dollars in revenue over the last two years,” and that the “overwhelming majority of its revenue – the other roughly 99% – came from new people buying into the scheme.

Merrill argues that this conclusion was fundamentally unreliable because it was based on “[a]n analysis of the bank and credit card processing accounts” while ignoring the primary method of payment by TelexFree’s customers, which was a “back office” system of debits and credits.

The DOJ argue that Soares knew of the backoffice when he drafted his affidavits, and that his ‘
opinion was a reasonable interpretation of the information available
‘.

Judge Hillman concluded that Merrill, in his motions, had

not shown any material misstatements of fact in Soares’s analysis of TelexFree’s incoming revenue.

Rather, he disagrees with Soares’s conclusions based on the facts set forth in the affidavit.

Even if that conclusion was questionable, the underlying facts were disclosed in the affidavit, and Merrill has not challenged their veracity.

Accordingly, he has not shown any material misstatements to warrant a Franks hearing.

In a nutshell, Merrill was arguing on pseudo-compliance (in that the possibility of a conclusion drawn meant Soares was intentionally being deceptive), rather than pointing out “material misstatements” as required.

Other points of contention shot down include

the omission of VOIP minutes being sold constituted reckless behaviour

usage of TelexFree’s VOIP product countered Soares’ assertion that 99TelexFree was not a “genuinely competitive product”

TelexFree’s Alexa ranking had nothing to do with advertisements TelexFree affiliates were required to spam on classified websites (“the Alexa rating was likely boosted by the promoters themselves”)

that the aforementioned required spam 
could
generate VOIP sales does not automatically mean that it did

TelexFree’s weekly ROI buyback was “discretionary” and “not guaranteed” (pseudo-compliance)

Brazilian Help was not an MLM company and therefore had nothing to do with TelexFree (despite Wanzeler testifying otherwise before the Massachusetts Securities Division)

A recurring theme was Merrill simply disagreeing with Soares’ opinion, r

🤖 Quick Answer

What was the main constitutional issue in Judge Hillman's decision regarding James Merrill's suppression motions?
Judge Hillman's 25-page memorandum addressed Merrill's request for a Franks hearing and evidence suppression, examining whether search warrants issued to the DOJ based on Special Agent Soares' affidavits contained false or misleading statements, particularly concerning TelexFree's revenue sources and VOIP service earnings.

Did the court find the search warrants constitutionally valid despite Merrill's contentions?
Judge Hillman's decision upheld the constitutional validity of the warrants and denied Merrill's suppression motions, rejecting his arguments that Special Agent Soares' affidavits contained material misrepresentations about TelexFree's financial structure and revenue composition.

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