Beware of TelexFree – Review Part 2

The privilege to “contest the correctness of TelexFree’s records” has been won by 18 TelexFree “victims”.

Given that the “victims” have had plenty of opportunities to substantiate their allegations, the conclusion seems a little strange.

The 18 TelexFree participants (Appellants) who have contested TelexFree records are:

Bellagat, Abdeltif

Toqi Abdelkhalak

Racing Moukhtari

John Nasr

Nieves, Ruben

Rojas, Merlo

Hazem Wehbe

St. Theresa Peter

Said Peter Rahhaoui

Michael Costa

Saif Muhammad

Georgios Iatrou

Hamadi Manal

Claude Lubin

DeAlvarenga, Carlos

Boughalem Rahima

George Berube and Earley Barbosa

These seem to be net-winners trying to manipulate the system given the conditions.

Many participants had numerous user accounts, each of which had data from various transactions.

Some others remembered having as many as thirty separate user identities, including appellant-participant Panagiotis Iatrou.

The quantity and caliber of the personal data provided by user accounts vary.

In a Ponzi scam, it seems to reason that honest victims wouldn’t have thirty accounts. Swindlers do.

In any case, Timothy Martin of Huron Consulting Group’s methodology has been contested by the affiliates.

The algorithm connected user accounts to participants using the self-reported personal data associated with each user account.

TelexFree net-winners have contested Martin’s algorithm in the past. In a hearing earlier this year, Judge Hoffman determined that Martin’s algorithm’s output was “possibly untrustworthy,” in the words of District Judge Woodlock.

This is because of several technical issues that Martin is held responsible for.

In his expertise as an accountant, he had never encountered the problem of “many user accounts and the necessity to link those accounts.”

The District Judge’s decision highlights certain deficiencies, including:

The algorithm didn’t account for incorrect or misspelled names; the data supplied into Martin’s algorithm, acquired from TelexFree, was of “low quality”; in short, Martin expected the data provided by fraudsters would be legitimate. It isn’t feasible to combine accounts “too distinct” in the name. He was ignorant of the MLM Ponzi scheme scams that con artists use.

To be honest, TelexFree also shares some of the blame in this.

To guarantee that there would be little proof of participant transactions, TelexFree established its business operations.

Martin’s method was accepted for use in claim determination despite the noted technical flaws.

The eighteen affiliates who were contesting the results were unable to demonstrate that they were the owners of the accounts and monies linked to them.

A “TelexFree Participant Questionnaire” was frequently the only accompanying paperwork.

Some participants offered justifications for the dearth of paperwork, such as the fact that they paid cash and received no receipt or were unable to access the TelexFree database.

Others offered printouts of a contract with TelexFree, third-party affidavits, or other mysterious handwritten notes as verification of their claims.

Others claimed there could be documentation, but they omitted to include it in their surveys. A few people were able to provide checks and bank statements to support their assertions.

I’m oversimplifying a little, but the court effectively said, “No proof, no claim.”

When evidence was offered, the affiliate was frequently categorized as a net-winner as a consequence.

According to Mr. Martin, many of these claims did not have enough supporting paperwork to back up their assertions that they paid TelexFree.

Some appellant-participants, like appellant-participant Carlos Dealvarenga, submitted proof of their contributions to TelexFree, but Mr. Martin found additional accounts linked to them with positive balances that much surpassed any payments that were formally documented. According to Mr. Martin, the participants were “net winners” and were not allowed to file claims.

Consequently, a request for further time to provide additional records was made.

None were eventually given. Instead, the affiliates offered affidavits that were pre-made.

Appellant Participants added further evidence to support their arguments in April 2020.

These documents featured boilerplate affidavits where participants filled in their claim amount, claimed to be “net losers,” and to varied degrees described their dealings with TelexFree.

Do not doubt us, dude.

Martin specified the disputed amount in an affidavit supporting the Trustee’s denial of claims by the eighteen affiliates.

Participants altered transactions or accounts without enough justification.

In August 2020, the bankruptcy court approved the claim rejections.

The affiliates appealed the denial of the claims, arguing for

a thorough trial on the merits to address crucial factual questions relating to TelexFree’s payment documentation and record-keeping.

The Trustee upholds

Because the participants did not present the necessary evidence to support their allegations, there is no need for an evidentiary hearing.

District Judge Woodlock stated in approving the hearing request:

Even if each of the user’s accounts for the Appellant Participants did have a complete and accurate transaction history in the TelexFree database, Mr. Martin’s algorithm might not have combined all of those accounts and connected them to the right Appellant-Participant.

In the absence of a thorough evidentiary hearing, I do not believe the Trustee’s evidence to be convincing enough to disprove the Appellant-Participants’ claims to be genuine at least in theory.

Given the recent reservations voiced by Judge Hoffman, (The Appellant Participants) must have the opportunity to examine the validity of the Trustee’s aggregation procedure.

How long this will take to resolve is not something I can estimate.

I believe that regardless of how long it takes, the “just trust us bro” controversy will ultimately be brought up during the evidentiary hearing.

It becomes possible to say things like, “Hey people, I invested one hundred and ten billion dollars over one hundred and ten billion accounts. Just believe us man.” no evidence I need some cash. nonsense.

In my opinion, if you took part in a Ponzi scam, you are not eligible for compensation.

It’s on you if you can’t pass the test of account ownership and submitting financial documents.

It’s true that the method is far from flawless and that some net losers will be surprised. However, I am unable to find a solution to the “just believe us dude” problem.

I’ll keep an eye out for any developments in the situation.

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