United States Court of Appeals For the First Circuit No. 18-2001 IN RE: TELEXFREE, LLC; TELEXFREE, INC.; TELEXFREE FINANCIAL, INC., Debtors. STEPHEN DARR, as Trustee of the Estates of TelexFree, LLC, TelexFree, Inc., and TelexFree Financial, Inc., Plaintiff, Appellee, v. RITA DOS SANTOS, individually and as putative class representative; MARIA MURDOCH, individually and as putative class representative; ANGELA BATISTA-JIMENEZ, individually and as putative class representative; ELISANGELA OLIVEIRA, individually and as putative class representative; DIOGO DE ARAUGO, individually and as putative class representative, Defendants, PLAINTIFFS' INTERIM EXECUTIVE COMMITTEE, Interested Party, Appellant. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Timothy S. Hillman, U.S. District Judge] Before Lynch, Selya, and Barron, Circuit Judges. Robert J. Bonsignore, with whom Lisa Sleboda, Bonsignore Trial Lawyers, PLLC, William R. Baldiga, James W. Stoll, and Brown Rudnick LLP were on brief, for Appellant. Harold B. Murphy, with whom Charles R. Bennett, Jr., Andrew G. Lizotte, Shawn Lu, and Murphy & King, P.C. were on brief, for Appellee. October 29, 2019 LYNCH, Circuit Judge. This appeal is from bankruptcy court orders adopted by the district court arising out of the bankruptcies of TelexFree, LLC; TelexFree, Inc.; and TelexFree Financial, Inc. (collectively, "TelexFree"), one of the largest Ponzi/pyramid schemes in U.S. history. The dispute in this case is over who will be allowed to seek to recover payments made by new participants in the scheme to the existing participants who recruited them (the "Contested Funds"). Trustee Stephen Darr is attempting to recoup these Contested Funds through avoidance actions, while victims represented by the Plaintiffs' Interim Executive Committee ("PIEC") are asserting unjust enrichment claims to recover the same sums. Adopting the bankruptcy court's analysis, the district court stayed the unjust enrichment claims under 11 U.S.C. § 362(a)(3) based on the following findings: (1) that the trustee has standing to bring the avoidance actions because the Contested Funds were "interests of the debtor in property" under 11 U.S.C. §§ 547 and 548; (2) that these avoidance actions were themselves "property of the estate" under 11 U.S.C. § 541; and (3) that the unjust enrichment claims were acts to "obtain" or "control" property of the estate (i.e., the avoidance actions) -- and thus barred by 11 U.S.C. § 362(a)(3) -- because they are "derivative" of the avoidance actions under the analyses set forth - 3 - in the Second Circuit's Madoff cases. See Picard v. Fairfield Greenwich Ltd. ("Madoff III"), 762 F.3d 199 (2d Cir. 2014); Marshall v. Picard (In re Bernard L. Madoff Inv. Sec. LLC) ("Madoff II"), 740 F.3d 81 (2d Cir. 2014). The net effect of these rulings was to permit the trustee to pursue the Contested Funds and to stop PIEC's efforts to pursue those funds. We assess and reject the only arguments that the appellant makes as to why the bankruptcy court erred in ruling that their unjust enrichment claims are stayed pursuant to § 362(a)(3). Those arguments, which we reject, are: (1) that the avoidance action claims are not "property ...
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