United States District Court, D. Massachusetts
FINDINGS AND ORDER ON DEFENDANT ALLIED WALLET,
LTD.'S MOTION FOR JUDGMENT ON THE PLEADINGS (DOCUMENT #
TIMOTHY S. HILLMAN DISTRICT JUDGE.
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).
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.
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.
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.
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).
Claim for Relief: Aiding and Abetting General Laws C 93
§ 12 & 69 & C 93A § 2 & 11
Fourth Claim for Relief: Unjust Enrichment
reasons set forth in the Defendant's Memorandum I grant
the Motion as to the Plaintiffs Third and Fourth Claims for
Claim for Relief: Tortious Aiding and Abetting
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