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WORCESTER — A bankruptcy judge cleared the way Tuesday for a U.S. trustee to seek records about TelexFree LLC from lawyers and advisers who worked with the shuttered company.Judge Melvin S. Hoffman ruled that U.S. Trustee Stephen P. Darr may issue subpoenas for emails and documents related to TelexFree of Marlboro, a company that federal investigators allege was a massive pyramid scheme.
Mr. Darr, who was appointed June 6 to administer the TelexFree bankruptcy reorganization case, argued he needed records from lawyers and advisers because federal authorities seized and continue to hold TelexFree's records and computers.
"There are no employees left. There's no insurance. There never was insurance," said Mr. Darr. "I have no money to start up the business. I just don't know if there ever was a business. I'm hampered by a lack of records."As many as 1.1 million "victims" may make claims in the case, Mr. Darr said. Federal authorities have secured more than $101.5 million in TelexFree accounts, he said.
Judge Hoffman's decision allows Mr. Darr to seek records from PricewaterhouseCoopers LLC, an accounting and consulting firm hired by TelexFree before the bankruptcy; and Alvarez & Marsal North America LLC and its managing director William H. Runge III, who were retained by TelexFree after the bankruptcy filing for financial and restructuring advice.
Mr. Darr also obtained approval to seek documents from Kurtzman Carson Consultants LLC, which was hired by TelexFree for bankruptcy services; and law firms Gordon Silver and Greenberg Traurig LLP. TelexFree hired Gordon Silver after its bankruptcy filing. Greenberg Traurig worked with TelexFree before the filing, Mr. Darr said in a court filing.
Since taking over as trustee in the bankruptcy case, Mr. Darr said, he has met with the Securities and Exchange Commission and the U.S. attorney's office. He notified TelexFree's landlord that he would end the company's $6,000-a-month lease of five offices, three conference rooms and cubicle space in Marlboro. Office furniture will be auctioned off, he said.
TelexFree billed itself as a service that allowed users to make telephone calls over the Internet. Federal authorities allege it was actually a pyramid scheme that promised substantial payments to "promoters" who bought telephone service packages, even if they failed to sell anything.
Many promoters were immigrants and people living outside the United States.
TelexFree filed for bankruptcy in April. The Securities and Exchange Commission has filed civil charges against the business, and several executives and promoters are facing criminal charges.
TelexFree co-owner Carlos Wanzeler of Northboro fled to his native Brazil in April, according to government legal filings. Co-owner James M. Merrill of Ashland, who had been held in custody since his arrest in May, was recently released on bond.
