James Merrill, the American partner in bankrupt TelexFree Inc., an alleged $3 billion global Ponzi scheme, is asking a federal court to suppress evidence gathered through a search of the company’s Marlborough office two years ago.
In a court filing last week, Merrill’s lawyer argued that a document seizure by US officials on April 15, 2014, was “unconstitutionally overbroad” and invalid.
Homeland Security agents raided the offices of TelexFree the same week it filed for federal bankruptcy protection. Securities regulators filed fraud charges against the Internet phone service seller and its principals, accusing them of running a scheme that ensnared investors around the world.
The agents stopped a financial executive from leaving with a laptop and a bag stuffed with $38 million in cashiers’ checks, according to court records. The agents also seized numerous computers, servers, records, and storage devices, according to a document included in the court filing.
Merrill’s lawyer, Robert Goldstein, in the filing said his client “respectfully submits that all evidence seized pursuant to the warrant must be suppressed.”
Merrill and his co-owner, Carlos Wanzeler, are facing criminal charges in the TelexFree case. Merrill was arrested shortly after the Homeland Security raid and was held for more than a month before being released on $900,000 bail. He is wearing a GPS tracking device and had to give up his passport.
Wanzeler, a Brazilian native who lived with his family in Northborough for a period, fled to Brazil, where TelexFree started, and is considered a fugitive. US authorities have been negotiating to bring him back for trial because there is no extradition treaty with Brazil.
Goldstein in the latest filing again wrote of Merrill as a respected member of his community. He said that Merrill, “a devoted and hard-working father of three and husband of 25 years, has never before been in trouble. Indeed, for his entire life, Jim has embodied the antithesis of a federally charged criminal defendant.”
The trustee in the TelexFree bankruptcy case has said the company pulled in nearly 2 million participants, from every country in the world. Those people will only be eligible to submit claims for the money they put in — not the estimated $3 billion they may believe they had in their accounts.
So far there is only $150 million to go around. Trustee Stephen Darr also is pursuing “net winners,” or people who reaped false profits from TelexFree that was really money brought in by other investors.
Darr is suing 15,000 US residents and 78,000 people abroad who reaped profits improperly in TelexFree.