This paper develops a multi-user downlink communication framework for distributed low Earth orbit satellite networks serving ground users equipped with multiple antennas. Building upon the concept of cell-free multiple-input multiple-output in terrestrial networks, we propose a coordinated transmission scheme where multiple satellites jointly transmit spatially multiplexed data streams to each user. Using a new approximate achievable rate expression, we formulate a sum rate maximization problem under per-satellite and per-antenna power constraints and use the classical equivalence between sum rate maximization and mean square error minimization to optimize the satellites' precoding matrices using statistical channel state information. We numerically examine the performance of the proposed scheme in different settings and validate its effectiveness by comparing it against traditional precoding designs.