I haven’t really been paying attention to the TelexFree class-action case. Mostly due to figuring it wasn’t going to go anywhere competing against the SEC’s own civil case.
Turns out maybe I should have been following along.
On July 7th class plaintiffs entered into a $22.5 million dollar settlement with Fidelity Co-operative Bank.
You might remember Fidelity Bank as being run by John Merrill, brother of jailed TelexFree co-founder Jim Merrill.
As a result of Fidelity Bank assisting TelexFree launder stolen investor funds, the bank previously settled for $3.5 million with the Massachusetts Securities Division.
The signed settlement agreement reveals Fidelity Bank was unsuccessful in dismissing the class-action filed against it.
That prompted the settlement agreement, after which Fidelity Bank ‘shall have no monetary obligation whatsoever in excess of the Settlement Amount.’
The Fidelity Bank settlement, although easily the largest, is in addition to three other previously reached settlements:
- $1.75 million with Base Commerce (then known as Phoenix Payments), John Hughes, Brian Bonfiglio, John Kirchhefer and Alex Sidel (processor used to launder TelexFree funds)
- $425,000 with Synovus Bank (bank used to launder TelexFree funds)
- $100,000 with Joseph Craft and Craft Financial Solutions (TelexFree’s accountant)
As per a created TelexFree settlement website;
The first three settlements received final approval from the Court on July 28, 2020.
The Court must still decide whether to approve the fourth settlement with the Fidelity Bank Defendants.
The case docket reveals preliminary approval of the Fidelity Bank settlement was granted on November 6th.
Looking forward, the court has set a January 11th deadline for anyone who invested in TelexFree to file an objection to the Fidelity Bank settlement.
By doing nothing TelexFree affiliate investors consent to be part of the class-action and receive a share of the reached settlement.
TelexFree affiliate investors can also opt to exclude themselves from the class-action, allowing them to individually sue any of the above defendants if they wish.
A fairness hearing for the Fidelity Bank settlement has been scheduled for February 26th, 2021.
Depending on the outcome of that hearing, I believe TelexFree affiliate class-action members can look forward to a settlement distribution payment later in the year.
As I understand it participation in the TelexFree class-action does not interfere with the TelexFree Trustee claims process.
I am not a lawyer though and you should absolutely seek legal advice if you have any legal questions pertaining to the class-action.
I’ve added the TelexFree class-action to our list of tracked cases. Stay tuned for updates as I continue to monitor the case docket.