TelexFree victims with approved claims have yet to receive distribution payments, nearly three years after the claim portal opened in mid-2016. A status report filed by the Trustee on April 12th details the complex administrative process hindering these disbursements.
The Trustee received 131,351 claims. Of these, 99,549 were only partially allowed, requiring extensive individual review and negotiation. This lengthy process involved several mandatory steps for each contested claim.
First, the Trustee had to send a notice to claimants whose submitted figures did not match TelexFree's internal records. Claimants then had 30 days to respond to this initial discrepancy notice. If no response arrived, the Trustee filed a notice with the court either allowing or disallowing the claim and served a copy to the claimant. A further 14-day period followed, allowing for any final objections.
When a response to the initial notice was received, the Trustee’s team engaged in negotiations with the claimant. The goal was to resolve the claim amount without further court intervention. If an agreement was reached, an affidavit was filed with the court, confirming the resolution. If no agreement could be reached, or if the claim was deemed invalid, the Trustee filed an omnibus objection, detailing the reasons for disallowance. This multi-stage process applied to nearly 100,000 individual claims.
The volume of unsubstantiated or inflated claims significantly complicated the process. Only 38 of the 98,549 claims requiring initial notice were resolved at that first stage. Another 33 claims were settled after a second notice. A substantial 1,360 claimants did not respond to any notices sent by the Trustee.
Initial claim amounts were drastically reduced upon closer scrutiny. For instance, $45 million in claims, initially presented by the 38 claimants resolved early, were ultimately reduced to $372,403. Similarly, $1.03 million in outstanding claims, as of the second notice, dropped to $194,983 after review. Claims totaling $54 million from non-responsive claimants were re-evaluated and reduced to $6.4 million.
The Trustee's team also had to contend with tens of thousands of disputed claims that required individual processing. More than 12,000 claims originated from individuals who had defrauded other TelexFree victims, claiming losses they did not genuinely incur. These bogus claims, totaling $587 million, were rejected outright. Additionally, 777 TelexFree affiliates filed claims seeking $34.3 million after the final bar date had passed, and all of these were also rejected.
The claims determination process remains active. The Trustee continues to pursue the resolution of all remaining unresolved claims. This will include filing additional omnibus objections to deny outstanding claims en masse, based on the findings from their ongoing review.