A federal judge in Las Vegas has ruled that the TelexFree Inc. bankruptcy case will be moved to Massachusetts, after regulators argued that the Marlborough phone-service company had virtually no operations in Nevada.
US Bankruptcy Judge August B. Landis made a ruling from the bench Tuesday to move the case to Massachusetts and temporarily suspend proceedings, a court official confirmed.
TelexFree filed for Chapter 11 protection on a Sunday night last month, 2,700 miles away from its main office in Massachusetts, just days before state and federal securities regulators brought civil fraud charges against the company’s principals.
Federal agents raided TelexFree’s Marlborough office on April 15, two days after the bankruptcy filing, and regulators soon froze the company’s assets. Secretary of State William F. Galvin accused the company of luring $90 million from Massachusetts residents who signed up for TelexFree’s Internet phone service and opened investment accounts with the company on promises of large returns.
The Securities and Exchange Commission said as much as $300 million may have been invested across the country. Federal authorities had urged the Las Vegas court to send the case to Massachusetts, alleging that TelexFree filed for bankruptcy protection in Las Vegas merely to evade regulators and victims in the Boston area.
Paul Levenson, chief of the SEC’s Boston office, said, “We’re pleased that the bankruptcy court in Nevada has sent the matter back to Massachusetts so that we can address the many issues this case raises, in a systemic way, here in Massachusetts.’’
A spokeswoman for TelexFree did not respond to requests for comment.
Among other reasons, the SEC wanted the bankruptcy case moved because the regulator’s civil case will be heard in Boston in another federal court. The SEC also argued that it would be more efficient to coordinate legal maters in Boston if a fund was eventually established for victims. Many of TelexFree’s alleged victims live in Massachusetts.
The judge’s decision also means a class-action lawsuit filed on behalf of some TelexFree victims will be transferred to Boston, according to Robert J. Bonsignore, a Belmont, N.H., lawyer who filed the case initially in Nevada. The case, filed on behalf of two Massachusetts residents, seeks damages for victims and names numerous parties as defendants beyond TelexFree and its principals, including banks and lawyers.
“I think that the bankruptcy judge in Nevada made a sound ruling, and that moving it to Massachusetts makes common sense and will in the end benefit the victims,’’ Bonsignore said.
TelexFree was shut down by a judge in Brazil in 2013 and then shifted its attention to US investors, according to the lawsuits filed by regulators and Bonsignore. The company has thousands of victims around the world, according to the regulators.
In Massachusetts, the company appears to have targeted predominantly Brazilian and Dominican immigrant communities.