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Wednesday, 31 March 2010

New Official Committee to Represent Victims Interests Announced


March 30, 2010


CONTACT: Peter Morgenstern (, 212-750-6776

Kevin Sadler (, 512-322-2589
Dallas, Texas – Ralph Janvey, the Court-appointed Receiver in the Securities and Exchange Commission’s civil enforcement action against R. Allen Stanford, today announced, together with Peter D. Morgenstern, an attorney representing victims of the alleged $7.2 billion Stanford Financial Group “Ponzi” scheme, that they have reached an agreement to resolve a pending motion seeking to force the Stanford entities into bankruptcy, by establishing an official committee to represent the victims’ interests in the continuing receivership case.
The agreement, submitted as a proposed stipulation and order to Judge David Godbey of the United States District Court for the Northern District of Texas, who is presiding over the case has the support of the SEC, John J. Little, the Court-appointed Examiner, and the Stanford Victims Coalition. Under the terms of the agreement, a formal committee would be established to represent the interests of investors who purchased certificates of deposit (CDs) from Antigua-based Stanford International Bank, Ltd. Among other things, the agreement provides a framework that allows the Receiver and the Committee to coordinate and cooperate in several important areas, including providing access to the Committee to review Stanford records that are under the control of the Receiver and pursuing litigation against third parties. The agreement also provides for regular consultations between the Receiver and the Committee on a variety of issues of importance to the Stanford Receivership.
The agreement, if approved by the Court, would resolve long running dispute over whether investors should have the right to file an involuntary bankruptcy petition against Allen Stanford and one or more of the Stanford companies and have a formal role in the receivership proceedings. In a court hearing last month, the investors argued that a bankruptcy filing would afford them greater rights to participate in the identification and liquidation of Stanford’s assets, and to pursue claims against third parties that may have helped perpetrate the fraud. The Receiver and the SEC opposed that request, arguing that a bankruptcy filing would be disruptive and expensive.
“This agreement recognizes the legitimate rights of Stanford’s thousands of victims to participate in the receivership process, including the pursuit of assets and lawsuits aimed at recovering funds to at least partially satisfy their multi-billion dollar claims,” said Mr. Morgenstern. “We have essentially obtained all of the benefits of a bankruptcy filing for the victims while accommodating the Receiver’s legitimate concerns about the potential difficulties that such a filing would pose. We are hopeful that this agreement represents a turning point in the case, ushering in a new phase characterized by a cooperative effort by the Receiver and investors to maximize recoveries for the thousands of Stanford victims worldwide.”
Ralph Janvey, the Stanford Receiver said that the agreement “is in the best interests of the Receivership Estate and will allow both the Receiver and the Committee to work together to provide the greatest return possible to those injured by the Stanford fraud.”
Angela Shaw, founder and director of the Stanford Victims Coalition, an international advocacy group representing victims of the alleged fraud, supports the agreement and would serve as a member of the newly-formed Committee. Mr. Little has also agreed to serve on the Committee, whose other members would be designated once the Court approves the agreement.
The case is Securities and Exchange Commission v. Stanford International Bank, Ltd., Civil Action No. 3:09-CV-00298-N, United States District Court, Northern District of Texas (Dallas).

Antiguans Were Allowed To Invest in SIB

Chief Executive Officer (CEO) of the Financial Services Regulatory Commission (FSRC) John Benjamin has refused to discuss the contents of a recent report on its practices.

Senator Joanne Massiah said last week that an investigation had resulted in a report being passed to Cabinet.

Benjamin, when asked whether he had already seen the report, said "I have heard of it."

He added, “I will not discuss the report,” then admitted that he was aware of the Freedom of Information act.

No member of Cabinet has revealed the contents either, although understands that there are details of some serious allegations. has also been reliably informed that a number of Antiguans and Barbudans were allowed to invest in the Stanford International Bank (SIB), although by law, nationals are not allowed to invest in offshore banks in their personal capacities.

An Antiguan national who wishes to invest in an offshore bank can do so by registering an International Business Corporation (IBC) outside the local jurisdiction.

This was designed so that offshore banks cannot compete with domestic banks.

The FSRC is responsible for regulating offshore banks like SIB.

Its former head, Leroy King, is accused of conspiring with R Allen Stanford, the sole owner of SIB, to defraud investors.

King is awaiting an extradition hearing after he was indicted with Stanford in what has been described as a massive Ponzi scheme.

Tuesday, 30 March 2010

Stanford asks for new team to defend him

Jailed businessman R. Allen Stanford is changing lawyers again and wants to be tried someplace else.

Criminal defense lawyer Michael Essmyer said Monday that Stanford, 60, founder and chairman of Stanford Financial Group who faces 21 federal criminal charges, has asked for new representation.

Since the Securities and Exchange Commission first froze assets of Stanford and the company in February 2009, Stanford's criminal counselors, at various times, have been lawyers with a Washington firm, a Houston civil lawyer, Houston criminal defense lawyer Dick DeGuerin, a court-appointed public defender and most recently Houston criminal defense lawyers Kent Schaffer and George “Mac” Secrest.

Stanford has pleaded not guilty to charges of conspiracy, fraud and obstruction of justice. Prosecutors allege he ran a $7 billion Ponzi scheme.

Essmyer said Stanford, who is being detained without bail as a flight risk, has asked to be represented by Essmyer and Robert S. Bennett, a Houston-based consumer lawyer who does some criminal work. Essmyer said that if Senior U.S. District Judge David Hittner accepts the change of attorneys, he plans to ask that the trial be moved because the Houston jury pool may be tainted by publicity about the case.

He cited the case of ex-Enron CEO Jeff Skilling, whose appeal before the U.S. Supreme Court includes an argument that he should not have been tried in Houston because Enron's collapse so deeply shook the Houston community.

In the Skilling case arguments before the high court earlier this month, the justices focused largely on the amount of time the Houston trial judge spent on jury selection and why he didn't strike some potentially prejudiced people from the pool of jury prospects.

The court is not likely to decide the Skilling case for several months and could rule solely on the other issue in that case — whether the government properly prosecuted Skilling under a federal law that makes it a crime to deprive a business or government of “honest services.”

Hittner is the only Houston judge who granted a change of venue motion in an Enron case. That was in the case against Lea Fastow, an Enron employee and the wife of the chief financial officer. Hittner moved it to Brownsville for trial but Fastow entered into a plea bargain instead.

Schaffer said he and Secrest are happy to step aside for the lawyers Stanford now requests.

Essmyer said if the court approves the new counsel, they may add to the team in the future.

This possible changing of the legal guard for Stanford coincides with an expected attorney payday from Lloyd's of London. The insurance company has fought paying criminal defense legal fees for Stanford and his codefendants since the day a former Stanford company official pleaded guilty to wrongdoing at the company.

The insurer said that plea triggered an agreement in its contract with the Stanford firms and directors and officers, and that they no longer are covered in criminal cases.

An appellate court recently ruled that Lloyd's must pay now but can still take the question of its obligations to trial in Houston.

Richard Kuniansky, lawyer for Stanford codefendant Mark Kuhrt, said Monday that he will submit a $94,000 bill to Lloyd's, and asked the court that he no longer be considered court-appointed and paid by taxpayers.

The trial for Stanford, Kuhrt and codefendants Laura Holt and Gilbert Lopez is scheduled for January 2011.

Some lawyers said Stanford, the only jailed defendant, may now ask that his case be tried sooner or that he be released. But Essmyer said he has no current plans to ask for an immediate trial. Since Hittner is known to run a fast docket, such a motion likely would mean Stanford's case would be severed from those of his codefendants and he'd be tried quickly.

Stanford investors hoping to recover losses in alleged fraud

Members of the Stanford Victims Coalition from Louisiana and Texas are scheduled to meet today in Washington, D.C., with Mary L. Schapiro, head of the Securities and Exchange Commission.

They will ask Schapiro to require financial-industry coverage of billions in fraud losses allegedly caused by jailed Texas financier Robert Allen Stanford, John Wade of Folsom said Friday.

Wade is a partner in a small business that lost more than $1 million in pension funds in the Stanford case.

Members of Louisiana’s congressional delegation support the effort to help victims of the alleged fraud.

“I’m all for it,” U.S. Rep. Bill Cassidy said Friday.

Added Robert Sawicki, press secretary for U.S. Sen. Mary Landrieu: “Sen. Landrieu supports extending (this) protection to the victims of Allen Stanford’s Ponzi scheme.”

The coverage under discussion — up to $500,000 per investment account — repeatedly has been denied by the Securities Investor Protection Corp. since Stanford was indicted in Houston in June. Stanford remains in federal custody and faces trial in January on charges that he masterminded $7.2 billion in frauds against more than 25,000 investors around the world.

SIPC was created by Congress in 1970, but it is funded by member brokers and dealers across the nation.

The nonprofit corporation granted more than $500 million in coverage to fraud victims of confessed swindler Bernard Madoff of New York. Madoff is serving a 150-year prison term.

As many as 1,000 residents of the Baton Rouge, Lafayette and Covington areas lost as much as $1 billion to Stanford’s promotions, Baton Rouge lawyer Phillip W. Preis and state Rep. Bodi White, R-Central, have estimated.

And residents of other states have lost additional billions to Stanford, but SIPC repeatedly has refused to help them.

Wade said SEC and SIPC officials base that denial on the fact that most of Stanford’s investors lost money earmarked for his offshore Stanford International Bank.

Wade added, though, that he and many other investors sent their payments to Stanford Group Co., a member of SIPC, and bank statements show those funds were never sent to Stanford’s bank on the Caribbean island of Antigua.

“A lot of people didn’t even know they were dealing with Antigua,” Wade said. “They were dealing with Stanford Group Co. That’s our message.”

Preis, the Baton Rouge attorney who represents more than 100 Stanford investors, said the policy technically favors Schapiro’s and SIPC’s current stance against extending coverage to his clients.

But Preis noted that Schapiro easily could authorize an exception in the Stanford case.

“If Ms. Schapiro were to focus on who is more deserving between the Madoff and Stanford victims, she would have to conclude the Stanford victims are more deserving of SIPC coverage,” Preis added.

“Most of the Madoff victims were not retirees,” Preis said. “Most were very wealthy people.

“The Stanford victims, as a group, are smaller investors and retirees,” Preis said.

In November, Cassidy, R-La., spearheaded a request by the entire Louisiana congressional delegation and 40 other federal lawmakers for a directive from Schapiro that would require SIPC coverage.

“I am elated that the Stanford victims are having a chance to meet with Schapiro,” Cassidy said Friday.

In a written statement, Landrieu, D-La., added that she and 16 other senators are pushing a bill that would enable individual Stanford investors to deduct as much as $1.5 million of their losses from their income taxes.

“The massive fraud perpetrated by the Stanford Financial Group robbed people of their entire life savings and of their trust in our financial institutions and in our government’s capacity to regulate markets,” Landrieu said. “That’s why it is so important for us to act quickly in correcting this injustice.”

Friday, 26 March 2010

Magistrate Dithers on Leroy King Extradition Decision

Leroy King, the former head of the Financial Services Regulatory Commission (FSRC), will have to wait a bit longer to find out whether he will be committed for extradition to the United States (US).

King appeared in the St. John’s Magistrates’ Court yesterday before Chief Magistrate Ivan Walters, who informed him that he (Walters) was not ready with his decision.

Chief Magistrate Walters adjourned the matter until 26 April and told King that his bail will continue in the same terms as before.

The former FSRC head has been charged by the United States Securities and Exchange Commission (SEC) with taking hundreds of thousands of dollars in bribes to ignore wrongs in relation to the alleged Sir Allen Stanford $8 billion Ponzi scheme. He is facing 10 counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to obstruct the SEC, and conspiracy to launder illegal proceeds.

The SEC’s complaint alleges that King facilitated the Ponzi scheme by ensuring that the FSRC conducted sham audits and examinations of Stanford International Bank Limited’s (SIBL’s) books and records. They also allege that in exchange for bribes paid to him over several years, King made sure the FSRC did not examine SIBL’s investment portfolio.

In January, King’s lawyer, Dane Hamilton QC, made submissions before the court as to why his client should not be sent to the US to stand trial for his alleged involvement in a Ponzi scheme with Sir Allen Stanford and others.

Hamilton said it has not been

shown in anyway whatsoever that King benefitted from sums of monies lodged with Stanford Bank in the USA by investors Jonathon Davis and William Julian.

He said SIBL was an offshore banking corporation that was registered in Antigua and Barbuda and fell under the regulatory purview of the FSRC. Hamilton explained that the regulatory body (the FSRC) is headed by a board of directors and King was the administrative head of the commission at the material time.

Hamilton stated that King had no control of the processes of the FSRC and added that there was no evidence to show that in any way, he (King) influenced the examination of the supervisor of banking over SIBL.

Director of Public Prosecutions (DPP), Anthony Armstrong, in his submissions said the government’s case was based on three areas- direct, circumstantial and documentary evidence.

The DPP told the court that King wrote to Elizabeth Jacobs, the deputy director of SEC on 10 Feb., 2006, assuring her that the FSRC had examined SIBL’s conduct some five months before and that the bank was complying with all the applicable laws and regulations. King also assured that all the other relevant things were examined and were in place.

According to Armstrong, King’s role in the conspiracy was indeed critical because of what he said in his letter-that on site examination proved that the bank was complying with depositors’ safety and insolvency.

Armstrong said in 2005, King was put on notice by the SEC that all was not well at SIBL. The DPP said the SEC had disclosed that evidence was gathered by its staff about legitimacy of the CDs, which King had assured were safe and solvent.

King, Armstrong said was put on guard in no uncertain manner.

It is alleged that King sought advice from Sir Allen Stanford’s legal counsel pertaining to questions being raised by the Eastern Caribbean Central Bank (ECCB.)

Armstrong said in one of the hand-written letters King writes, "My good friend (referring to the attorney.) In another letter written to the attorney, he (King) again writes, "To America’s best and greatest attorney. Maurice (Alvarado), I am sending you two versions- one short and one long with a little more knock out punch. I prefer the shorter version, a little more subtle and diplomatic."

It was further quoted in that letter by King to Alvarez, "Any other idea? Must conclude tomorrow. Will send you a package to include the annual report for SIBL and STCL. I am sending a message to these guys that the institutions concerned are not run of the mill, they are great quality institutions and the numbers speak for themselves. Please do not bill me (laugh) Thanks a million, Lee (short for Leroy.)"

The DPP questioned why King would be sending these letters from the ECCB concerning SIBL and STCL to his "good friend Maurice Alvarado" when he is refusing to disclose any information to the US regulatory body (the SEC.)

Thursday, 25 March 2010

Ben Barnes Sued for $5 million by Stanford Receiver

Democratic lobbyist and former Texas Lieutenant Gov. Ben Barnes has been slapped with a $5 million lawsuit over lobbying and consulting services he provided to R. Allen Stanford, the indicted financier accused of running a multibillion-dollar Ponzi scheme.

The suit was filed on Mar. 15 by Ralph Janvey, the receiver appointed by the court to recoup the investors’ losses. It alleges that Barnes raked in millions doing consulting and lobbying work for Stanford’s fraudulent investment empire since 2005. Stanford is accused of bilking tens of thousands of investors out of nearly $8 billion, in one of the largest phony investment schemes of all time.

Barnes’s attorney, Jay Madrid, said that the lawsuit was baseless because his client was unaware that Stanford’s businesses were illegitimate at the time the services were provided. "This lawsuit is without merit and creates a dangerous precedent for service providers in all fields," said Madrid in a written statement. "This is particularly true of those who deal in good faith with entities that have all the characteristics of legitimate enterprises but who after-the-fact become subject to receiverships, bankruptcies or similar business failings."

But the lawyer for the court-appointed receiver said that that argument does not absolve Barnes of responsibility. "In a fraudulent transfer action, lack of knowledge of the fraud is not a defense," attorney Kevin Sadler told the NLPC over email. He said that Barnes must prove that he was both unaware of the fraud and that the services he provided to Stanford were equivalent in value to the fees he collected.

"Barnes will not be able to establish the affirmative defense of objective good faith and reasonably equivalent value. His services left creditors of the Stanford entities with nothing of value," wrote Sadler.

The lawsuit alleges that in many cases Barnes’s company "performed services [for Stanford] that simply furthered the Ponzi scheme." This work reportedly included consulting Stanford on how to reduce his personal federal income taxes through the Virgin Islands tax incentive laws and providing investment advice. The lawsuit also says that marketing work done by Barnes for Stanford’s businesses "had the unfortunate effect of attracting new victims to [Stanford’s] fraudulent investment scheme."

Barnes, a heavy-hitter in Democratic political circles, is no stranger to financial scandals. While serving as Texas Lt. Gov. the early 1970s, allegations that Barnes and other state politicians accepted bribes for political favors surfaced in an incident known as the Sharpstown scandal. Barnes was never charged, but the episode helped contribute to his exit from career politics.

Now a successful lobbyist, Barnes is still very much involved in the political arena. Last September, he hosted a Democratic Congressional Campaign Committee fundraiser for House Speaker Nancy Pelosi (D-CA) at his home in Austin, TX. Barnes and his wife have given $249,800 in political contributions in 2010, with 100 percent of those contributions going toward Democratic candidates, according to Open Secrets.

Click here to download a 14-page pdf of the Complaint.

Allen Stanford's Investors Want Alleged Swindler's Political Donations Returned

Democratic and Republican lawyers are scrambling this week to figure out how to contend with an unusual lawsuit filed by the Texas official tasked with recovering money spent by Allen Stanford, the alleged mastermind of an $8 billion Ponzi scheme.

More than $1.6 million from Stanford and his businesses went to fund Democratic and Republican Congressional campaigns between 2000 and 2008, and now the investors want the political parties to give that cash back, according to a lawsuit filed in U.S. District Court.

The suit could be an important one to watch, because of a recent spate of alleged swindlers who also happen to be prolific political donors. Most notable was Florida lawyer Scott Rothstein, convicted last month in a $1.2 billion Ponzi scheme. He and his law firm had parceled out more than $600,000 to politicians in the past five years.

The case against the party committees is also notable because it is built, in part, on an unusual rationale -- the contention that Stanford didn't actually get anything in return for his contributions. Under a quirk of the law, if the lawyers for the political parties can't show that he did receive some tangible benefit, they may have to come up with the money. And it's a point they'll have a hard time contesting, since they can't exactly argue that he bought influence with his money.

Ralph S Janvey, the lawyer who filed the case in Dallas Tuesday, said he began requesting the money in writing a year ago and continued making written requests until earlier this month. The party committees "have ignored these requests, and, as a result, the Receiver has been forced to file this lawsuit seeking the return of the funds," Janvey wrote.

Overall, the Democratic Senatorial Campaign Committee received the largest share of the Stanford money -- $950,500 – according to the Texas lawsuit. The National Republican Congressional Committee received $238,500, the Democratic Congressional Campaign Committee got $200,000, the Republican National Committee took in $128,500, and the National Republican Senatorial Committee received $83,345.

Lawyers and press aides for several of the political committees initially told ABC News they thought the case would be dismissed right away, and they saw little chance they would have to give the money back.

"The money's been spent. It's not going to be returned," one party official said, speaking on the condition he not be named because the litigation is pending.

But after spending more time reviewing the situation, several campaign finance lawyers told ABC News that this could actually be a far more tricky case than it initially seemed.

Under election laws, there are only a small handful of legal reasons a political committee would be forced to return contributions. They would have to refund money if it came from a corporation, came from a foreign source, or was funneled through an illegal straw donor arrangement, said Lawrence M. Noble, a former chief counsel to the Federal Election Commission.

"On the other hand, if the receiver has an independent legal basis for getting the money back, I don't think the party committees would be treated any differently than any other recipient of Stanford funds, whether it is a charity or a business," Noble said

And that, potentially, is where the trouble starts for the Democratic and Republican committees, said Jan Baran, a Washington election lawyer.

There's a separate set of laws covering something called a "fraudulent conveyance," Baran said. Victims of swindling are entitled to recover any goods that were obtained with their swindled money. If the money was donated or given away rather than used to obtain something tangible, the victim can ask for the money back rather than tangible items. Any charity or other third party that has received money from a swindler may then be compelled to return that money to the person from whom it was originally obtained.

Hence one of the key arguments in Janvey's court filing -- that the political parties to which Stanford donated did not provide anything tangible in exchange for the allegedly swindled funds. They are more like charities that have been given swindled money and must return it.

Just because Janvey's legal argument "is unprecedented, that doesn't mean it will be unsuccessful," Trevor Potter, the campaign lawyer who represented Sen. John McCain during his presidential bid, said in an interview.

Lawyers for the five party committees involved in the case either declined to comment or did not respond to emails and phone calls. They can't argue that Stanford's donations bought him influence, but they are known to be checking if the money got him any tangible perks, like access to a concert or a sporting event or an exclusive gala at one of the party conventions.

Baran, who used to represent Republican congressional committees, said he suspects the party lawyers will try to reach a settlement with Janvey, rather than risk seeing this case resolved by a judge.

"I think Stanford's [alleged] victims are going to get some of the money, if not all of it," Baran said.

Stanford, who has pleaded not guilty to all charges, is awaiting trial

Tuesday, 23 March 2010

New International Forum for Stanford's Victims Established

A new International forum has been established for Stanford's Victims.

To register and join the forum follow this link:

Judge mulls bankruptcy for Stanford fraud case

A Dallas federal judge is considering whether to continue a receivership searching for $7.2 billion in investments alleged to have been stolen by jailed promoter Robert Allen Stanford, of Houston.

U.S. District Judge David C. Godbey said last month that he may turn the case over to a bankruptcy court.

The issue is important to hundreds of residents in the Baton Rouge, Lafayette and Covington areas because as much as $1 billion of their money vanished last year when federal authorities shut down Stanford’s worldwide operations.

Across the globe, more than 25,000 investors lost money to Stanford, 60, who has remained in federal custody since June. He is scheduled for trial in January.

Investors and attorneys are divided as to whether bankruptcy would provide more money to devastated victims than the receivership.

Jean Anne Mayhall, of Folsom, is a partner in a small business. She saw the firm’s pension plan lose more than $1 million in the Stanford collapse.

Mayhall said Friday that moving the Stanford receivership into bankruptcy possibly could help defrauded investors persuade the Securities Investor Protection Corp. to cover some of their losses.

Although SIPC has provided more than $500 million to victims of convicted fraud artist Bernard Madoff, of New York, the broker-dealer-funded non-profit has refused to help Stanford victims.

“The very first rule is that the (Stanford) companies must be liquidated,” Mayhall said, adding that placement of the Stanford firms into bankruptcy would be the first step toward liquidation.

Once in bankruptcy, Mayhall said, SIPC possibly could be persuaded to cover losses up to $500,000 per individual account.

Blaine Smith, of Baton Rouge, agreed. Smith lost about $1.5 million in retirement savings to Stanford.

“Bankruptcy court is where they should have gone in the first place,” Smith said.

But Phillip W. Preis, a Baton Rouge attorney for more than 100 Stanford victims, said Friday that transfer of the case to bankruptcy court would cost investors more of their salvaged funds. And, he added, the move probably would not persuade SIPC officials to extend coverage to the Stanford case.

“I don’t see it happening,” Preis said.

Preis said SIPC helped Madoff victims because their money was never invested in anything. Madoff just pocketed investors’ cash and sent them phony earnings statements.

Stanford invested his clients’ money, but lied about the kinds of investments that he made and the thefts that he allegedly committed, Preis said.

The kinds of frauds Stanford is accused of committing are much more common than that of Madoff, Preis said. So, opening the door to that type of coverage would bankrupt SIPC, he said.

In Dallas, Godbey has listened to additional arguments, a transcript of a recent court hearing shows.

Attorneys for the Securities and Exchange Commission and the court-appointed receiver, as well as an examiner representing the interests of all investors, asked Godbey not to throw the case into bankruptcy. All argued that such action would further drain assets recovered by the receiver for investors.

But Gregory A. Blue, a New York attorney representing hundreds of Stanford victims, argued that bankruptcy proceedings could be no more expensive than the receivership team put together by Dallas attorney Ralph S. Janvey.

Since the receivership was established 13 months ago, Janvey has recovered less than $200 million while billing the receivership estate for more than $40 million in fees and expenses, court records show.

“Bankruptcy is not the magic bullet,” Kevin Sadler, an attorney for Janvey, told the judge. “Bankruptcy, I believe, would lead to serious delay, serious costs, and deplete the (receivership) estate.”

Janvey then received support from one of his most vocal critics — Dallas attorney John J. Little, the court-appointed examiner representing the interests of Stanford victims.

“Let me just say, from the investors’ viewpoint, if this were a popular vote, the receiver (Janvey) would lose,” said Little, who repeatedly has criticized Janvey’s efforts as too expensive.

But Little added: “I can’t convince myself that moving to bankruptcy will somehow make life better for the investors at the end of the day.”

Blue then said Little should be replaced by a creditors’ committee if the case remains in receivership.

Blue told Godbey that various investor groups disagree as to whether the case should continue in receivership or be moved to bankruptcy court.

The disagreements are too serious for one person to handle, Blue added.

An example, Blue said, is the divide between the majority of investors who lost most or all of their savings, and several hundred who were lucky enough to recover all of their money before the SEC closed Stanford down.

Last year, Janvey twice attempted to claw back nearly $900 million from the innocent winners over the opposition of the SEC.

Janvey wanted to distribute the winners’ money among all the Stanford investors. But Godbey and the 5th U.S. Circuit Court of Appeals ruled against him.

“There are winners and losers in the clawback,” Blue told Godbey. “The people who are the losers on that undoubtedly would want to see the money clawed back. The people who are winners don’t.”

Bankruptcy rules are different from those for federal district courts, so Preis was asked Friday whether a transfer to bankruptcy court could re-open the clawback issue.

“A ruling of the 5th Circuit is binding,” Preis said. “That would be binding against the bankruptcy trustee just like it was against Janvey in his receivership.”

Godbey took the matter under study last month. A check of court records Saturday showed that the judge had not yet ruled on the issue.

Stanford companies say Antigua government owes them millions

The Stanford Group of Companies has sent a letter of demand to the Commissioner of Inland Revenue alleging that Stanford Development Company (SDC) is owed over $11 million for Antigua & Barbuda Sales Tax (ABST) returns for the period June to November 2008.

The letter was prepared and sent to Inland Revenue by SDC‘s legal representative Hugh Marshall and Company mid-February – just days after the Antigua Public Utilities Authority (APUA) pulled the plug on a number of Stanford companies resulting in the halting of operations. Some of the affected businesses are Sticky Wicket Restaurant, Antigua Athletic Club and Stanford Warehouse.

A Stanford affiliate who requested anonymity said the company is asking that the ABST returns and loans to government, prior to 2004, be repaid or at least credited towards the $7 million reportedly owed to APUA for utilities.

The source accused government of contributing to the companies’ disconnection woes, adding that government is stalling negotiations regarding restoration of utilities needed to resume operations.

The source said that while there has been settlement talks between government and Andrea Stoelker, who is one of the directors of the Stanford Group, those discussions ceased because Stoelker does not have a work permit and government “refused to grant her one, which has caused her to have to leave the island at least three times since Stanford was indicted for fraud.”

The affiliate said the Stanford Group is owed just over $2.1 million as of June 27, 2008, a further $5.7 million as of August 1, 2008 and a little over $4.4 million as of November 4, 2008.

Meantime, a government source said APUA is a statutory corporation and any utility bills incurred should be paid.

“APUA is a statutory corporation and whatever money SDC claims to be owed in ABST returns or for another reason, has nothing to do with the sums they owe for the utilities they failed to pay for,” the individual said. “They should have been paying their monthly bills. It has nothing to do with whether government owes the company ABST.

“If those are the figures they’ve indicated, then they must be corroborated by Inland Revenue records.”

The group reportedly began talks with government in mid-February, this year, to discuss a number of issues, including repayment of loans to government prior to 2004, monies owed to APUA, continued operations of the Athletic Club, Sticky Wicket, the Pavilion Restaurant, FBO Hangar, Sun Printing and Publishing, among other companies, and acquisition of Stanford lands.

Other issues government wants to address with the Stanford companies reportedly relate to severance payment to the hundreds of employees sent home after US authorities accused Sir R Allen Stanford of running a massive Ponzi Scheme, and repayment of loans to government pre-2004.

Also on the table for discussion is APUA’s interest in the osmosis plant owned by Stanford Group.

This newspaper was reliably informed that APUA was seeking to purchase water from the group but had to turn down the company’s offer because “the price was way above the cost currently being paid to another private company.”

On February 4, operations ceased at Sticky Wicket, the Pavilion, Stanford Warehouse and the Athletic Club when APUA halted utility services to these businesses. The employees were sent home “for three months.”

Saturday, 20 March 2010

Insurance Companies Must Fund Former Stanford Executives' Defense Until Court Rules

A three-judge panel of the 5th U.S. Circuit Court of Appeals held March 15 that a court -- not insurance companies -- will determine whether two insurance companies have to pay defense costs for R. Allen Stanford and three other former Stanford Financial Group (SFG) executives who face criminal charges and civil litigation.

The civil litigation filed by the U.S. Securities and Exchange Commission and the federal criminal charges stem from allegations that the former SFG executives conspired to defraud investors who bought about $7 million in certificates of deposit sold through Stanford International Bank Ltd. The criminal case, United States v. Robert Allen Stanford, et al. is pending in U.S. District Judge David Hittner's court in the Southern District of Texas in Houston. The civil case, Securities and Exchange Commission v. Stanford International Bank Ltd., et al., is pending before U.S. District Judge David Godbey of the Northern District of Texas in Dallas. Stanford and the other three executives, Laura Pendergest-Holt, Gilberto Lopez Jr. and Mark Kuhrt, have pleaded not guilty to the criminal charges against them and deny the allegations in the civil suit.

The insurance companies had appealed a Jan. 25 preliminary injunction Hittner issued in Laura Pendergest-Holt, et al. v. Certain Underwriters at Lloyds of London, et al. Hittner ordered Certain Underwriters at Lloyds of London and Arch Specialty Insurance Co. to advance defense costs to the four former SFG executives. The two insurance companies contended that they should not have to pay under the SFG directors-and-officers policy because they determined in November 2009 that the former executives engaged in "money laundering."

According to the 5th Circuit's opinion, written by Senior Judge Patrick Higginbotham, the liability policy limit is $100 million. But, as noted in the opinion, a money-laundering exclusion in the policy bars coverage for loss from any claim "arising directly or indirectly as a result of or in connection with any act or acts (or alleged act or acts) of Money Laundering."

The policy also provides that the insurance companies must pay the costs in the event that money laundering is alleged "until such time that it is determined that the alleged act or acts did in fact occur." As the 5th Circuit reads the policy, "the determination is a judicial act" and that act must occur in a separate coverage proceeding.

The 5th Circuit modified Hittner's injunction, affirming the order "only insofar as it provides for coverage until a court determines otherwise." But to avoid any "awkwardness" for Hittner, who presides over the criminal case against the SFG executives, the 5th Circuit remanded the case to the Southern District so that the chief judge might assign it to another judge. Higginbotham wrote that the 5th Circuit cannot "ignore the awkwardness -- readily recognized by Judge Hittner -- in putting the civil 'cart' before the criminal 'horse,' especially when the judge who decides the question of coverage, with its demand for assessing the strength of the government's criminal case, is set to later preside over the criminal trial."

Lee Shidlofsky, attorney for the executives and a partner in Austin's Visser Shidlofsky, writes in an e-mail, "We are pleased that the 5th Circuit concluded that Underwriters does not have the unilateral right to act as the judge and jury. Under the court's holding, Underwriters are obligated to pay defense costs until a court determines that money laundering has in fact occurred."

Neel Lane and Rex Heinke, attorneys representing the insurance companies and partners in Akin Gump Strauss Hauer & Feld in San Antonio and Los Angeles, respectively, each did not return a telephone call seeking comment before press time on Thursday.

Thursday, 18 March 2010

Stanford Receiver Sues Lobbyist Barnes for $5 Million

Ralph Janvey, the receiver for R. Allen Stanford’s businesses, sued former Texas Lieutenant Governor Ben Barnes to recover consulting and lobbying fees he got from the indicted financier during the past five years.

Janvey seeks a court order requiring Barnes to return more than $5 million that he was paid by Stanford or his companies from 2005 to 2009, when the U.S. Securities and Exchange Commission accused Stanford of leading a $7 billion investment fraud. Janvey said the funds should be used to repay investors allegedly defrauded through bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

Barnes “did not perform services of reasonably equivalent value in exchange for those payments, and in many instances performed services that simply furthered the Ponzi scheme,” Kevin Sadler, Janvey’s lawyer, said in a complaint filed March 15 in Dallas federal court.

Janvey said Barnes’s payments constituted fraudulent transfers. Payments to the lobbyist, who has offices in Austin, Texas and Washington, were made with “funds taken from unwitting CD investors” at a time when Stanford’s businesses were technically insolvent, Janvey said.

‘Dangerous Precedent’

“This lawsuit is without merit and creates a dangerous precedent for service providers in all fields,” Jay Madrid, a lawyer for Barnes, said today in an e-mailed statement. “Like dozens of other professionals, we provided services to Stanford Financial Group under the belief that it was just what it appeared to be -- a robust, vibrant international business.”

Stanford, who is in jail awaiting trial on related criminal charges, denies any wrongdoing.

Janvey said Barnes’s firm received a total of $5 million for lobbying and consulting that included such varied tasks as advising Stanford on tax law in the U.S. Virgin Islands and consulting for Stanford’s annual “20/20” cricket tournament in Antigua.

Barnes also advised Stanford on contributions to U.S. politicians, many of whom have been asked by Janvey to return donations they received from Stanford. Barnes also consulted on Stanford investments including Caribbean airlines, alternative energy and development plans for a private Antiguan island, Janvey said.

Barnes, 71, rose rapidly through Texas politics under the patronage of U.S. President Lyndon B. Johnson and former Texas Governor John Connally. Barnes served as the Texas Legislature’s Speaker of the House from 1965 to 1969 and as the state’s lieutenant governor from 1969 to 1973.

Stanford to remain jailed until Jan. trial

Jailed Texas promoter Robert Allen Stanford will remain in custody until his January trial on charges he masterminded more than $7 billion in frauds against investors in Louisiana and around the world, an appellate panel has ruled.

Stanford, 60, is in a federal detention center in Houston and has been incarcerated since his indictment in June.

A three-judge panel of the 5th U.S. Circuit Court of Appeals — Carl E. Stewart, of Shreveport, Carolyn Dineen King, of Houston, and Catharina Haynes, of Dallas — on Tuesday rejected Stanford’s request for release on bond.

Stanford could ask for a rehearing before the full, or en banc, 17-member appellate court in New Orleans.

Kent A. Schaffer, one of Stanford’s two Houston attorneys, ruled out that option Wednesday.

“We are not seeking rehearing en banc,” Schaffer said. “Our experience is that it is relatively pointless to do so when there is a unanimous panel opinion.”

When asked whether Stanford could appeal to the U.S. Supreme Court, Schaffer replied: “Our efforts are now pointed toward preparing this case for trial.”

About 1,000 investors in the Baton Rouge, Lafayette and Covington areas lost as much as $1 billion to Stanford International Bank, Baton Rouge attorney Phillip W. Preis and state Rep. Bodi White, R-Central, have estimated.

As many as 30,000 investors in more than 100 countries also lost savings to Stanford’s bank on the Caribbean island of Antigua, the Securities and Exchange Commission and federal prosecutors have stated in court records.

Stanford’s former chief financial officer, 61-year-old James M. Davis, of Baldwyn, Miss., has pleaded guilty to conspiracy and fraud charges in the case. Davis also has agreed to testify against Stanford and other defendants.

U.S. District Judge David Hittner of Houston ruled in June that no condition of release could guarantee Stanford would return for trial.

After a 5th Circuit panel upheld Hittner’s decision last year, Stanford asked Hittner to reconsider the issue.

Hittner, who earlier noted that more than $1 billion of Stanford’s money had not been accounted for, refused to reconsider.

King, Stewart and Haynes upheld Hittner’s decision Tuesday, ruling “the district court did not abuse its discretion in denying Stanford’s motion.”

Tuesday, 16 March 2010

US considers resolution to block aid to Antigua-Barbuda

The Stanford Victims Coalition announced Monday a second United States Congressional Resolution asking the US Secretary of the Treasury to direct the IMF and the World Bank to block funding to the government of Antigua and Barbuda. The Resolution, introduced in the US House of Representatives by Congressman Mike Coffman of Colorado, also demands Antigua release to the US.

Receiver overseeing the liquidation of the Stanford estate the 49 properties it has taken actions to expropriate, and repay the loans made by Allen Stanford or any Stanford entity as well as "payments made to officials of the government of Antigua and Barbuda for the purpose of subverting regulatory oversight."

The Resolution has been referred to the powerful US House of Representatives Financial Services Committee for a vote. This action comes on the heels of a similar Senate Resolution sponsored by eight US Senators in December 2009, which is now pending a vote by the Senate Foreign Relations Committee.

The Stanford Victims Coalition, an advocacy group representing the 28,000 victims of the Stanford Financial Group fraud, recently launched its “Anti-Crime, Anti-Antigua” campaign which calls on travel professionals, prospective tourists, and investors from around the world to boycott Antiguan hotels and resorts, cruises to Antigua, investments in Antiguan financial institutions or in companies or ventures based in Antigua. The “Anti-Antigua” campaign also encompasses a comprehensive lobbyist component focused on efforts to block foreign aid and trade with Antigua, according to the SVC.

“When Antigua is ready to make things right and release the assets that were purchased with Stanford victims’ investments, the SVC will stop its efforts to expose Antigua for its corrupt actions,” said Angela Shaw, Executive Director and Founder of the Stanford Victims Coalition, which represents 28,000 defrauded Stanford International Bank-Antigua depositors. “When the crime stops, so will we. Until then, we will pursue every effort we possibly can to warn potential tourists, developers and investors about the dangers of Antigua.”

“This is a very serious matter and in over a year since the Stanford fraud was exposed, the government of Antigua and Barbuda has not publicly acknowledged Stanford investors or shown any level of sympathy or remorse - or worse - its intention to address the devastation this crime has inflicted on innocent people from around the world,” Shaw said. “Prime Minister Spencer has had a chance to show the world Antigua finally knows right from wrong, yet not unlike the previous regime, its actions thus far do not lead anyone to believe the current administration is any different. It’s just business as usual in Antigua.”

Monday, 15 March 2010

The European Branch of the Stanford Victims Coalition to Join Anti-Crime, Anti-Antigua Campaign

Following the recent Campaign led by the American branch of the Stanford Victims Coalition (SVC) and recently supported by the Latin American Branch of the SVC, the European Branch of the SVC are now adding their support to the campaign and intend to target Travel Agencies, Holiday Forums, Cruise Lines, Travel Shows and Hotels in seeking support for a total boycott on Antigua as a holiday destination.

The campaign will be conducted throughout the whole of Europe and through its members will include The United Kingdom, Germany, France, Spain, Italy and all other European Countries; thus with the support of the American & Latin American SVC making this a global campaign against Antigua and its corrupt government.

This is a sad day for the people of Antigua brought about by the ineptitude and dishonesty of its government. The repercussions of this action will resound throughout the whole of the island and will affect every person living there.

The Government of Antigua have been given every opportunity to deal with this matter and correct their error in judgement when they seized the Stanford lands and property. Property that was bought and paid for by the victims of Stanford International Bank and has to be returned to them, together with repayment of the $230 million dollar loan the government of Antigua owes to SIB.

For over one year the government of Antigua have steadfastly refused to enter into any debate or contact with the SVC, despite repeated letters and requests for them to do so. They have buried their heads in the sand in the hope the victims of SIB would ignore the criminal activities they have perpetrated against them. The Baldwin Spencer government have continuously tried to blame everyone else for the situation that has arisen regarding SIB, including the previous government, the United States and the victims themselves. At no time have they acknowledged the part played by the Antiguan government, the FSRC and Leroy King and the fact that Leroy King was being overseen by a Government Minister Mr Errol Cort. This has resulted in the SVC being forced to bring legal actions and now engage in the Anti-Crime, Anti-Antigua Campaign.

The European Branch of the SVC would like the Prime Minister and his government to invoke Articles 4, 5 and 6 of the treaty that was co-signed by Antigua and the United Kingdom and also Germany “For the Promotion and Protection of Investments”.
Article 4 of the Treaty addresses the Compensation for losses, Article 5 addresses Expropriation of land and assets by governments, and Article 6 addresses the Repatriation of Investment and Returns.

The government has had every opportunity to end this situation but have instead preferred to ignore all attempts to engage in talks about how to resolve the issue. The Prime Minister of Antigua has not made a single statement regarding this matter and what he intends to do about it. The Prime Minister and his elected government are content to sit idly by and watch the lives of the very people it was elected to protect once again reduced to “eating cockles and widdy widdy bush”. Meanwhile they continue to sit in their ivory towers enjoying their luxurious homes, trips abroad and expensive lifestyles oblivious to the suffering of its people caused by their lack of action.

The European Branch of the SVC insists the Prime Minister and his government take this opportunity to turn the situation around and find a resolution to make good the losses SIB victims have suffered. We demand they honour the treaty “For the Promotion and Protection of Investments”, return the lands and assets “expropriated”, make good the loans of around $230 million dollars they acquired from Stanford and begin talks with the government leaders of Great Britain, Germany, France, the United States and all other countries involved.

This will send a clear signal to the rest of the world that Antigua takes its obligations seriously and intends to clean up its international reputation. It will also show their talk about being a government that wishes to change the image of Antigua from a corrupt and dishonest country led by thieves was not just political speak, but a genuine concern that they wish to address and rectify.

Prime Minister Baldwin Spencer has two choices here, he will either continue to ignore the situation and watch as the people of Antigua suffer. Or, he will show that he is a man of integrity, a true leader and someone who will help resolve this situation.

The SVC hope that he will avoid any more conflict and do the job he was elected to do.

Signed on behalf of all the European Stanford Victims

Friday, 12 March 2010

Gaston advises Gov’t to leave Stanford’s assets

Deputy leader of the Opposition Antigua Labour Party Gaston Browne has urged the government to cease its compulsory acquisition of Allen Stanford’s assets.

Stanford is awaiting trial in the US for his alleged $7 billion Ponzi scheme.

Browne said the assets should be left for beneficiaries, as determined by the Companies Act or the Court.

“In the interim, pending the Court’s decision, the government should protect the interest of all stakeholders to include Stanford Victims’ Coalition members, former staff members of the Stanford Group of Companies and various government agencies to include Inland Revenue and APUA, by placing a caution or lien over these assets,” Browne said.

The deputy opposition leader said it would be unfair for the United Progressive Party government to opportunistically seek to confiscate these assets, “which, more than likely, would form part of the receivership estate, thereby exacerbating the pain and losses of depositors, some of whom, incidentally, are Antiguans and Barbudans.”

He noted that rather than allow the problem to fester to the detriment of Antigua & Barbuda, government should “indicate unequivocally, to all stakeholders, including the Stanford Victims’ Coalition members, how it intends to treat these assets to avert the anxieties, frustrations and counterproductive actions of the victims here and abroad.”

He stressed that this is necessary because it is clear that the Stanford Victims’ Coalition is making progress in waging what he calls a dishonest and malicious smear campaign, against Antigua & Barbuda.

That group is trying to get travel agents, tourists and potential investors to boycott Antigua &Barbuda.

Thursday, 11 March 2010

Browne: Government should meet with Stanford Victims Coalition

Parliamentary representative for the St. John’s City West constituency and Deputy Leader of the Antigua Labour Party (ALP), Gaston Browne, is advising government to meet with the group calling itself the Stanford Victims Coalition (SVC) in an attempt to work out an amicable solution to the current impasse between both entities.

“Clearly these so-called victims are making some progress in waging what is considered by many as a form of “economic terrorism” with their dishonest and downright malicious “Anti-Antigua Campaign,” Browne said.

He added that the SVC recently circulated 20,000 leaflets at a tourism promotion show in the USA as a counter strategy to our delegation’s efforts to promote Antigua and Barbuda as a premier tourism destination.

The MP continued by saying that in the leaflet the SVC characterised the UPP government as corrupt and asserted that the UPP government is pursuing a brazen act of thievery by seeking to expropriate hundreds of millions of dollars in assets owned by R. Allen Stanford and have established a Web site to wage their smear campaign.

Browne said that, “Notwithstanding the claims against former regulator Leroy King, which incidentally, are yet to be proven, there is no evidence of collusion by the government past or present, confirming that the government colluded with Stanford in any way to defraud depositors.

"The Stanford Victims Coalition members must, however, understand that they are not the only victims, all of the stakeholders to include, the former employees of the Stanford Group of Companies and the government and people of Antigua and Barbuda are victims of this unfortunate development.

Therefore, it is patently wrong for the SVC members to hold the Antiguan and Barbuda government exclusively responsible for what, if proven, would have been a global crime spanning 28 countries including the USA, which incidentally had similar regulatory responsibilities. This “lose-lose,” selective, economic terroristic strategy that is being pursued by SVC is self-defeating and begs the question as to why aren’t they targeting the US regulators and the US government, whose regulatory control was equally defective. I imagine this is a typical bullying tactic against a vulnerable small island state which should be resisted.”

Browne said, “The chairman of the SVC indicated during a recent radio programme on Observer Radio that they are reluctantly pursing this destructive course of action out of frustration and that they are willing to meet and settle the issue amicably.

“Rather than allowing this problem to fester to the detriment of the state, the government should indicate unequivocally, to all stakeholders, including the SVC members, how it intends to treat these assets to avert the anxieties, frustrations and counterproductive actions of the victims here and abroad.

"The UPP government should constructively engage all stakeholders to include SVC members, the former staff members of (SGC) and others to develop a national response to this problem, instead of running the risks of antagonising 500 individuals of means who, clearly, are prepared to utilise their influence and financial resources to sully the name of Antigua and Barbuda and to damage our tourism product, he concluded.

US pressures Antigua over Stanford debacle

One motion is still awaiting a vote, but another resolution has been introduced in the US House of Representatives to pressure Antigua and Barbuda into co-operating with Allen Stanford’s jilted investors. Congressman Mike Coffman of Colorado piloted the resolution asking the United States Secretary of the Treasury to direct the International Monetary Fund and the World Bank to block funding to the Antigua and Barbuda government. This action comes on the heels of a similar Senate Resolution sponsored by eight US senators in December 2009, which is now pending a vote by the Senate Foreign Relations Committee. This latest resolution, however, also demands Antigua release to the US Receiver overseeing the liquidation of the Stanford estate the 49 properties it has taken actions to expropriate, and repay the loans made by Allen Stanford or any Stanford entity as well as “payments made to officials of the government of Antigua and Barbuda for the purpose of subverting regulatory oversight.”

It has been referred to the US House of Representatives Financial Services Committee for a vote. This latest action is part of the efforts by the Stanford Victims Coalition (SVC) to force the Baldwin Spencer administration into giving back to the investors what they lost in Stanford’s alleged multi-billion dollar Ponzi scheme. In addition to seeking the support of US politicians in their efforts, the group recently launched a campaign urging a boycott of tourism and investment in the twin-island nation. “When Antigua is ready to make things right and release the assets that were purchased with Stanford victims’ investments, the SVC will stop its efforts to expose Antigua for its corrupt actions,” said Angela Shaw, the SVC’s executive director and founder. “When the crime stops, so will we.

Until then, we will pursue every effort we possibly can to warn potential tourists, developers and investors about the dangers of Antigua.” “This is a very serious matter and in over a year since the Stanford fraud was exposed, the government of Antigua and Barbuda has not publicly acknowledged Stanford investors or shown any level of sympathy or remorse—or worse—its intention to address the devastation this crime has inflicted on innocent people from around the world,” Shaw added. The Antigua and Barbuda government has not offered a response to the latest resolution introduced in the US House of Representatives.

Monday, 8 March 2010

Pressure mounts on Antiguan government over Stanford fiasco

Source - Antigua Sun

Congressman Mike Coffman of Colorado has introduced a resolution in the US House of Representatives seeking to pressure Antigua and Barbuda over the alleged multi-billion dollar Ponzi scheme involving disgraced Texan financier, Sir Allen Stanford.

The four-page resolution which was introduced last Friday has been referred to the US House of Representatives Financial Services Committee and is now awaiting a vote.

It calls on US Executive Directors to the International Monetary Fund (IMF) and the World Bank to ensure that any loan provided to Antigua and Barbuda should have conditions attached.

Coffman wants the Baldwin Spencer administration to release to the US receiver all of Sir Allen properties that were compulsorily acquired and that the country makes several monetary contributions for the benefit of investors who lost money in the alleged scheme that US regulators said amounted to US$ 7 billion.

Specifically, it asks that the government be pressed to give the US receivership estate being managed by Ralph Janvey the same amount of money provided to Antigua and Barbuda by Sir Allen or any Stanford-affiliated entity.

A similar Senate resolution sponsored by eight US Senators in December 2009 is now pending a vote by the Senate Foreign Relations Committee.

The Baldwin Spencer government has in the past criticised the moves to blacklist the country over the affair and has described as “unbelievable” a class action lawsuit filed in the United States by a group of disgruntled investors against the Eastern Caribbean Central Bank (ECCB) and the government.

The so-called Stanford Victims Coalition, which filed the action in a New York court claims its 28,000 members fell prey to Sir Allen, who is alleged to have conducted the scheme through his Antigua-based Stanford International Bank.

Sunday, 7 March 2010

Victims target Stanford base

Some Latin American citizens say they plan to punish cruise lines for financial losses allegedly suffered at the hands of jailed Texas promoter Robert Allen Stanford.

Stanford, 60, is in a Houston detention center. He has been in custody since June, when a federal grand jury indicted him and several associates for allegedly defrauding thousands of investors of more than $7 billion. His trial is scheduled for January.

Approximately $1 billion of the Stanford losses occurred in the Baton Rouge, Lafayette and Covington areas, according to estimates by state Rep. Bodi White, R-Central, and Baton Rouge lawyer Phillip W. Preis.

But the U.S. Securities and Exchange Commission has alleged in court filings in Dallas that significant losses also occurred in more than 100 other countries.

Most losses resulted from the purchase of worthless certificates of deposit from Stanford International Bank, based in the island nation of Antigua and Barbuda in the Caribbean Sea, SEC officials allege in their court filings.

And the Stanford Victims Coalition of Latin America now plans to punish cruise lines that bring tourists to that island nation.

Jaime Rodriguez Escalona, of Caracas, Venezuela, was announced as one of two leaders of that group when it was formed in May.

Escalona said last week that damaging Antigua and Barbuda’s tourism business is the only leverage Latin American investors have over that country.

He said the governments of Latin American countries do not appear interested in pursuing any legal action on Stanford victims’ behalf.

“The Venezuelans … are in the worst situation because they live under a non-democratic government that criminally persecutes those people that have savings overseas,” Escalona said.

He added that a former Venezuelan finance minister said in a television interview “that the government would do nothing to help the victims.”

Under Escalona’s name, the coalition’s blog has referred to Antigua as “Pirates of the Caribbean.”

One of Antigua’s former top bank regulators is under indictment in the U.S. for allegedly accepting bribes from Stanford as payment for blocking investigations into the Texan’s island operations.
Escalona conceded that cruise lines had nothing to do with Stanford’s alleged crimes. But he said his group will work to enforce a boycott of those companies if they do not cease service to Antigua and Barbuda.

Escalona said the government of Antigua and Barbuda seized more than $200 million of Stanford’s property after his arrest. He said his coalition wants to pressure the island nation to return that money to Latin American people who lost their retirement savings to Stanford.

Four cruise lines that currently stop at Antigua — Royal Caribbean International, Princess Cruises, Carnival Cruise Lines, and Norwegian Cruise Line — did not respond Friday to requests for comment on the threatened boycott.

Escalona said his group is relatively small, consisting of fewer than 500 of the more than 10,000 Latin Americans who lost money when the SEC shut down Stanford’s operations 13 months ago.

He said members of the coalition reside in Mexico, Argentina, Bolivia, Colombia, Ecuador, the Dominican Republic, El Salvador, Honduras, Nicaragua, Costa Rica, Peru, Puerto Rico (a U.S. territory) and Venezuela.

Some investors in Spain and Portugal also have joined the coalition, Escalona said.

Escalona described himself as a consultant in both real estate and wind turbine technology. He said he divides his time between Venezuela and Austin, Texas.

Tuesday, 2 March 2010

Stanford Victims Want Receiver in Antigua Ousted

Investor Alex Fundora feels like he's been forgotten as court-appointed receivers fight over the scraps of R. Allen's Stanford's fallen $7 billion financial empire.

The Miami man lost $2.7 million on certificates of deposit -- money he thought was safe -- when government regulators in Antigua and Dallas took over Stanford's operations, accusing him of running a Ponzi scheme.

Fundora filed an amended affidavit Feb. 17 asking the Eastern Caribbean Supreme Court of Antigua and Barbuda to remove an accounting company liquidating Stanford International Bank, saying London-based Vantis is in over its head and in jeopardy of going bankrupt itself.

But Fundora doesn't stop there. He finds fault with the U.S. receiver, Dallas attorney Ralph Janvey of Krage & Janvey, who is generating $1.1 million in fees a month. Janvey plans to sue Stanford depositors who lost money, and a federal class action case in Miami alleges the U.S. receiver has ignored depositors who created trust funds.

"My biggest problem is I'm a victim," Fundora said in an interview. "Everyone who was a depositor was a victim, and we are being re-vicitimized. It seems like everyone is having a feast at our expense."

His affidavit filed in the Antigua bankruptcy case sums up the growing discontent with Vantis and Janvey among Stanford's alleged victims. Fundora urges the Antigua court to replace Vantis' Nigel Hamilton-Smith and Peter Wastell as bankruptcy liquidators with Marcus A. Wide of PriceWaterhouse Canada.

Wide has done 35 Caribbean bank liquidations, said Fundora's attorney, Ed Davis of Astigarraga Davis in Miami. Wide "is a master of the Caribbean. They (Hamilton-Smith and Wastell) are complete neophytes, and they have proven it over and over again in this liquidation."

Fundora is the face leading about 100 investors who claim a total of $70 million in losses in Antigua-based Stanford International Bank and want Vantis to be removed. The thrust of their argument is the accounting firm Ernst & Young has issued a "going-concern warning" regarding Vantis' continued financial viability.

Davis blames Vantis' financial difficulties on its decision to pay $11 million to contractors who worked on the bankruptcy rather than wait for court approval of a fee application.

"Another mistake," he said.

Elsewhere, a Quebec Superior Court judge said Vantis' application to be named foreign receiver for Canadian investors was riddled with untruths and misrepresentations. As a result, the court named Janvey the official representative for Stanford's Canadian customers, finding that Vantis destroyed computer servers with information about Stanford Canadian accounts.

Superior Court Justice Claude Auclair said he was removing Vantis as representative "because of the absence of good faith and of respect towards the Canadian public interest, represented by the court and the regulatory authorities."

But back on its home turf in London, Vantis got the upper hand on Janvey in a court ruling Thursday from the British Court of Appeal, which ruled the Antigua liquidators are the recognized foreign representatives of Stanford International Bank.

"This is a big, big blow to Janvey," Davis said. "Janvey lost hands down."

Janvey's Web site for victims of Stanford's alleged fraud said he disagrees with the decision as well as its finding that Stanford International Bank's "center of main interest" is in the Caribbean country and not the United States.

"The court's conclusion is wrong because the U.S. receivership clearly is an insolvency proceeding," Janvey said on the Web site. Stanford International Bank "is dramatically insolvent. It is being liquidated for the benefit of creditors."

What is worrisome to creditors is that a faltering Vantis may negotiate with Janvey and "give away rights that would be beneficial to the victims in order to keep its position," Davis said.

Jeffrey Schneider, a partner with Levine Kellogg Lehman Schneider & Grossman in Miami, said it's not unusual for receiverships in different jurisdictions to fight for turf.

"Turf wars accomplish nothing other than exponentially increasing the fees of the professionals," said Schneider, who has frequently served as a receiver. "Victims' recovery certainly aren't enhanced under those circumstances."

Fundora sees all this posturing by receivers as draining Stanford's assets. He said Vantis and Janvey's "burn rate" is insulting to victims of the alleged fraud.

Janvey angered Stanford victims last summer when he requested $20 million in fees. Earlier this month, the U.S. Bankruptcy Court in Dallas approved another $8.8 million in fees for Janvey, and he estimated he is spending about $1.1 million each month in search of remaining assets.

In a highly unusual move, the Securities and Exchange Commission, which recommended Janvey for the job, opposed his initial fee request.

"Having the SEC object to the receiver's fees is very uncommon," Schneider said. "Janvey should be sharing his fee applications with the SEC before his is filing them."

Janvey, who did not return phone calls for comment, has taken plenty of heat from Stanford clients. Here's just one item from a bulletin board on the Web site Frauds and Victims: "Janvey will go down in history as the worst receiver ever appointed by the SEC and in American Ponzi history. Most of the receivers get back between 40 percent and 85 percent. He could not even get 1 percent, but he charged 33 percent over his miserable findings."

The post is signed "Was a calm cool investor."

Luis Delgado, a partner with Homer Bonner in Miami, represents plaintiffs in a class action suit filed in Miami federal court on behalf of Stanford trust depositors who claim they lost more than $200 million. He said Janvey has blatantly ignored his frustrated clients.

"They don't understand why Janvey and Vantis aren't working together and why we have two parties generating fees," he said.

Delgado contends Janvey is going after lost causes by suing net losers, former Stanford customers who may have earned some interest but ended up losing money when the bank went belly-up. The SEC has asked him to drop such lawsuits.

"I don't understand this receiver going after a lot of the same people he is supposed to be protecting," Delgado said. "I think it's a waste of time and waste of the estates' assets."

An examiner appointed in the SEC case to advocate for Stanford investors said Janvey has not explained adequately why he needs to use so many professionals. Intervenor examiner John Little, a partner with Little Pedersen Fankhauser in Dallas, said Janvey's fee requests suggest "the substantial possibility that the whole of the receiver estate could end up, not in the hands of the victimized investors, but in the pockets of the receiver and the firms he has retained," according to a court filing in August.

But it's noteworthy that both Little and the SEC signed off on Janvey's latest $8.8 million fee request. Either way, the turf war is far from over. The Dallas bankruptcy judge has yet to decide who is the top receiver in Stanford. People who claim they lost money to Stanford can't even ask to remove Janvey because he serves at the behest of the SEC.

"They basically ate the roast and left the drippings," Davis said. "This case is a poster child on how you shouldn't do a multi-jurisdictional international asset recovery."