Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Telexfree Securities Litigation

United States District Court, D. Massachusetts

June 25, 2019

In re TELEXFREE SECURITIES LITIGATION

          FINDINGS AND ORDER ON DEFENDANT ALLIED WALLET, LTD.'S MOTION FOR JUDGMENT ON THE PLEADINGS (DOCUMENT # 666)

          TIMOTHY S. HILLMAN DISTRICT JUDGE.

         Introduction

          The Defendant Allied Wallet, Ltd., (“Allied Wallet”), is a Defendant in the TelexFree multi-district securities litigation. They move for judgment on the pleadings on the Third Claim for Relief: Aiding and Abetting General Laws Chapter 93 §12 and 69 and Chapter 93A §2 and 11, the Fourth Claim for Relief: Unjust enrichment, and the Tenth Claim for Relief: Tortious Aiding and Abetting in the Plaintiff's Fourth Consolidated Amended Complaint (“FCAC”) pursuant to Fed.R.Civ.P. 12(c).

         TelexFree, Inc. (“TelexFree”) was a pyramid scheme that operated from February 2012 until April 2014. It involved approximately two million participants worldwide, nearly one million of whom suffered financial loss. Several Plaintiffs filed actions in District Courts across the United States seeking to recover their losses against dozens of defendants, ranging from financial service providers, payment processing companies (such as Allied Wallet) and the principals of the fraudulent scheme employed by, or otherwise involved with TelexFree. As the actions involved common questions of fact, the Judicial Panel on Multi-District Litigation joined the actions into a multi-district litigation in order to transfer all actions to the District of Massachusetts for coordinated or consolidated pre-trial proceedings.

         Background

         Allied Wallet is a financial service provider which processed the electronic transfer of funds from participants to TelexFree. In 2013 Allied Wallet agreed to accept TelexFree as a customer and began processing transactions on their behalf. This relationship continued until April of 2014. Allied Wallet shared a close business relationship with co-defendants Vantage Payment and Dustin Sparman. (FCAC ¶ 1073) and Allied Wallet became the processing company for TelexFree through the efforts of Vantage Payments. (FCAC ¶ 1075 & 1076). During the time that the business relationship was in existence, TelexFree principal James Merrill instructed Allied Wallet to transfer funds from their processing account into accounts at Fidelity Bank which was operated by Defendant Merrill's brother, John Merrill. John Merrill and Fidelity Bank are Defendants in this case. Allied Wallet also made transfers from TelexFree's Corporate accounts to private accounts held in the names of the principal founders of TelexFree and despite knowledge that TelexFree was shut down in Brazil.

         Because of Allied Wallet's concern about TelexFree's questionable activity they informed TelexFree that they would be increasing the rolling reserves on the processing accounts to 20%. (FCAC ¶ 1078). However, despite these reservations, Allied Wallet reversed that decision after they were heavily lobbied by co-defendant Vantage Payments.

         Discussion

         A Fed. Rule Civ. Pro. 12(c), Motion for Judgment on the Pleadings “is treated much like a Rule 12(b)(6) Motion to Dismiss, Perez-Acevedo v. Rivero-Cubano, 520 F.3d 26, 29, (1st Cir. 2008) and much like a 12(b)(6) Motion, a Plaintiff “must state a Claim for Relief that is plausible on its face”. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).

         Third Claim for Relief: Aiding and Abetting General Laws C 93 § 12 & 69 & C 93A § 2 & 11 Fourth Claim for Relief: Unjust Enrichment

         For the reasons set forth in the Defendant's Memorandum I grant the Motion as to the Plaintiffs Third and Fourth Claims for Relief.

         Tenth Claim for Relief: Tortious Aiding and Abetting

         To state a Claim for Tortious Aiding and Abetting a Plaintiff must show that (1) the primary actor committed a wrongful act that causes injury; (2) the aider and abettor was aware of his role in the overall wrongful activity when he provided the assistance; and (3) the aider and abettor knowingly and substantially assisted the primary actor's wrongful act. In re Sharp Int'l Corp., 403 F.3d 43, 49-53 (2d Cir. 2005).

         Knowing and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.