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Thursday, 29 December 2011

Allen Stanford’s Bid to Delay January Trial for Investment Fraud Is Denied

R. Allen Stanford’s request for more time to prepare to face charges he led a $7 billion investment fraud scheme was denied by the judge who declared him mentally fit for trial. Jury selection will begin in Houston federal court on Jan. 23.

“This case needs to be tried,” U.S. District Judge David Hittner said in an eight-page ruling today. “This trial will decide not just whether Stanford is guilty of the criminal charges, but also whether hundreds of millions of dollars of investor funds currently frozen may be forfeited and returned to his alleged victims.”

Hittner ruled Dec. 22 that Stanford has sufficiently recovered from a head injury suffered in a jailhouse assault and an addiction to anxiety medications prescribed to him by prison doctors after the attack.

The judge delayed Stanford’s original trial date last January and ordered him into a prison rehabilitation program after finding Stanford’s medical conditions had made him incompetent to understand the proceedings or assist his defense team.

“Our ability to defend our client has been consistently limited by matters the court is well aware of,” Ali Fazel, Stanford’s lead lawyer, said in an e-mailed statement today about the ruling. “We are now reviewing our options.”

Flight Risk

Stanford, 61, has been detained as a flight risk since his June 2009 indictment on charges he defrauded investors of more than $7 billion through allegedly bogus certificates of deposit at his Antiguan bank. The former financier has denied all wrongdoing.

Stanford’s attorneys had asked to delay the trial until late April to give them more time to review millions of pages of company documents with Stanford. They argued they’d had only a few days to review documents with Stanford while he was clear- headed. They said they needed to search beyond the limited set of papers the government has identified as critical to the case.

“The accused’s position is that this case is about the flow of money” through Antigua-based Stanford International Bank and more than 100 related Stanford companies scattered around the globe, Fazel said in a Dec. 27 court filing.

“Therefore, the defense in this case does not merely require knowledge of one company as the government contends, but rather, depends upon knowledge of the finances and operations” of all the companies, Fazel said in the filing.

Thousands of Investors

Prosecutors, who opposed a lengthy delay, said a four-to- six-week extension wasn’t unreasonable given the time Stanford’s lawyers had needed to devote to his recent competency hearing. They said further delay wasn’t fair to thousands of Stanford investors, whose recovery of funds from Stanford’s holdings is stalled until his criminal case is concluded.

ustice Department spokeswoman Laura Sweeney declined to comment on the ruling.

The government contends Stanford’s bank operated as a Ponzi scheme, in which early investors were paid above-market interest rates with funds taken from later investors.

Prosecutors claim Stanford siphoned off more than $1 billion to fund a lavish lifestyle of private jets, yachts, multiple mansions and a private Caribbean island.

Wednesday, 28 December 2011

Government Opposes Stanford Bid to Delay Trial

Scott Cohn (CNBC)
Federal prosecutors say a bid by accused Ponzi mastermind Allen Stanford to delay his criminal trial until late April ignores the interests of thousands of investors in the alleged $7 billion scam.
Attorneys for Stanford, who last week was ruled competent to stand trial following eight months in drug treatment, asked for the delay to give their client more time to prepare. He faces 14 counts in the scheme centered on allegedly bogus certificates of deposit. The trial is currently set for January 23.

"The public's interest in a speedy trial is particularly acute in this case in which thousands of individuals who purchased CDs from Stanford have lost billions of dollars," writes Assistant U.S. Attorney Gregg Costa in a court filing today. "This trial will decide not just whether Stanford is guilty of the criminal charges but also whether hundreds of millions of dollars of investor funds currently frozen in foreign countries will be forfeited and returned to the victims."

Prosecutors say the alleged Stanford fraud is the second largest in U.S. history, surpassed only by Bernard Madoff's Ponzi scheme.

U.S. District Judge David Hittner has promised a ruling this week on Stanford's motion for a three-month continuance.

While Costa said the government does not oppose a shorter delay of four to six weeks, he says a longer delay ignores the interests of the public and the alleged victims.

Those investors--some 28,000 of them--have often found themselves lost in the shuffle of a case that has been marked by bizarre twists and unusual delays.

Stanford was indicted in June, 2009 and detained as a flight risk, but he was severely beaten by another inmate and then became addicted to prescription drugs while in custody. On Thursday, Hittner ruled Stanford has sufficiently recovered from his injuries and his addiction, and is fit for trial.

Meanwhile, the investors are locked in a dispute with the Securities Investor Protection Corporation (SIPC), which insures U.S. brokerage accounts, over whether their losses should be covered.

With the insurance coverage and Stanford's trial still undecided, the investors have recovered just pennies on the dollar, nearly three years after the alleged scam was first exposed.

Friday, 23 December 2011

Allen Stanford Found Mentally Fit for Fraud Trial in January

By Laurel Brubaker Calkins

Dec. 23 (Bloomberg) -- R. Allen Stanford, whose lawyers failed to convince a judge that he’s mentally unfit to stand trial, was ordered to face a jury next month on charges he swindled investors of more than $7 billion. The trial is to begin with jury selection on Jan. 23.

Stanford’s defense team argued unsuccessfully that his mental capacity was diminished by head injuries he suffered in a 2009 jailhouse assault and the effects of powerful anxiety medications prescribed in prison after the beating.

“I have found by a preponderance of the evidence that Stanford is competent to stand trial,” U.S. District Judge David Hittner in Houston said yesterday in finding Stanford able to assist in his defense.

Hittner’s ruling followed 2 1/2 days of debate over the extent of brain damage Stanford, 61, suffered from the assault and the extent to which he might be faking memory loss.

“He wants to con his way out of this case the same way he conned investors for more than 20 years,” Assistant U.S. Attorney Gregg Costa told Hittner yesterday. “Don’t let him do it.”

Robert E. Cochrane, the psychologist who was Stanford’s lead evaluator at the federal prison hospital in Butner, North Carolina, testified that the former financier failed every test designed to expose fakers.

Stanford’s claim of complete retrograde amnesia, the loss of the memory of what happened before the event responsible, is “remarkable” because it is so rare, Cochrane said.

First Amnesia Report

Stanford first reported having lost his memory after he arrived at Butner in February, more than a year after the assault, the government said.

“Every doctor on the stand agreed that Mr. Stanford is not suffering from the complete retrograde amnesia he repeatedly claimed he had,” Costa said. Once it is accepted that Stanford is exaggerating his memory loss, “it pulls the rug out from under all the other psychological problems he’s reporting,” the prosecutor said.

Ali Fazel, Stanford’s lead lawyer, argued that all the examining doctors agreed “He’s not right. There’s something wrong with him.”

Fazel said Stanford’s brain trauma and psychological impairments leave him incapable of assisting his lawyers or testifying in his own defense.

“Mr. Stanford isn’t running away from anything,” Fazel said. “He wants to fight.” Fazel said.

Desire to Help

Stanford was assaulted and over-medicated while in government custody and wanted the “opportunity to get better and help his counsel,” Fazel argued.

The defense put on testimony from three psychiatrists or neuropsychologists who all said the former billionaire is incompetent.

“He says it’s like there’s a blackboard with all his life written on it, but there are clouds that obscure it,” Victor Scarano, a forensic psychiatrist who examined Stanford for the defense, testified Dec. 21. “Every once in a while, a cloud opens up and he can connect with the memory, and then the clouds comes back.”

Scarano testified Stanford can’t recall some of his children, romantic encounters or business details. He retains “partial pieces” of memory, Scarano said.

Ralph Lilly, a neurologist for Stanford’s defense, testified Dec. 21 that the ex-financier’s brain damage and health problems, including depression, heart and liver disease, have put him “at risk for suicide.”

All-Night Observation

Based on news media reports of that testimony, Stanford was placed under psychiatric watch last night at the federal lockup in Houston. He arrived in court this morning complaining heatedly to his attorneys of having been kept awake and under observation in the jail’s “psyche hole” all night.

A prison official told Hittner an overnight mental evaluation was conducted out of “an abundance of caution,” given Stanford’s high profile and his own doctor’s testimony. She said Stanford will be re-evaluated tonight to determine if he can be returned to the general prison population.

Stanford has been held as a flight risk since his June 2009 indictment on charges of defrauding investors through a scheme built on allegedly bogus certificates of deposit at Antigua- based Stanford International Bank Ltd.

Hittner delayed Stanford’s trial, first set for last January, after three doctors testified that the financier was incapable of assisting in his defense because of his drug dependency and potential effects from the head injury.

Houston Jail

Stanford was sent back to a Houston lockup in November after Butner medical officials certified him competent to stand trial.

Prosecutors say Stanford skimmed more than $1 billion of investor funds to acquire a fleet of jets and yachts, multiple mansions and a private Caribbean island, as well as to give money to women with whom he had children. He has denied wrongdoing.

The case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).

Wednesday, 21 December 2011

KLS complaint against the U.S. Government/SEC

Please find below the KLS complaint against the U.S. Government/SEC for its negligence in the Stanford case causing billions of dollars of losses to investors. KLS continues to amend and file claims with the U.S. Securities and Exchange Commission so that you can all be covered by this complaint and the class that it represents. All those of you who may have filed with another attorney must amend your claims in order to be covered by this complaint.


Dr. Gaytri D. Kachroo
219 Concord Avenue
Cambridge, MA 02142
Telephone: (617) 864-0755
Facsimile (617) 864-1125

Press Release

Ft. Lauderdale, FLA – A class action lawsuit was filed against the United States yesterday, December 13, 2011, for the billions in losses suffered by investors in the Allen Stanford international Ponzi scheme.

The case, filed in the United States District Court for the Southern District of Florida seeks to hold the SEC responsible for its failure to stop Stanford and his registered investment advisor and broker/dealer company Stanford Group Company (“SGC”), who the SEC investigated several times between 1997 and 2004. The suit claims that the SEC was grossly negligent in its actions following each investigation in failing to take any action to stop Stanford, whom SEC official had determined was operating a Ponzi scheme. The class action against the SEC was filed the day after the SEC filed suit against the Securities Investor Protection Corporation (“SIPC”) for its refusal to reimburse investors for their losses.

“This case is unique because the SEC knew all along that this was a fraud and did nothing,” said lead attorney Dr. Gaytri Kachroo of Kachroo Legal Services, P.C. (KLS), who is representing investors in the class action. “If the SEC had simply refused to register SGC for any of its various securities laws violations or reported to SIPC that SBC was a Ponzi scheme and insolvent, the SEC could have stopped this scheme over a decade ago.”

In government investigations in 1997, 1998, 2002, and 2004, the SEC determined that Stanford was operating a Ponzi Scheme, but failed to take action to prevent his fraud. After increasing pressure from the Madoff collapse, the SEC finally acted in 2009, filing a case in federal court against Stanford and his companies, but only after investors had been defrauded of over $7 billion. The suit also alleges that the court-appointed SEC receiver has only been able to recover $100 million, net of expenses, out of the $7 billion investors lost because of the SEC’s negligence.

The case is Zelaya et al. v. United States of America, Case No. 11-CV-62644-RNS (S. D. Fla. 2011).

KLS complaint against the U.S. Government/SEC

Complaint Docket Stamped

Allen Stanford Suicidal, Unfit for Trial: Doctor

By Laurel Brubaker Calkins - Dec 21, 2011

Indicted financier R. Allen Stanford, accused of leading a $7 billion investment fraud scheme, arrives for a hearing at the Bob Casey Federal Courthouse in Houston on Jan. 6, 2011.

R. Allen Stanford is suicidal and may never recover sufficiently from a jailhouse beating to stand trial next month on charges he ran a $7 billion Ponzi scheme, a doctor who examined him for the defense testified.

Defense lawyers and U.S. prosecutors argued for the second day in federal court in Houston over Stanford’s mental fitness. Stanford, 61, says he can’t remember family vacations, business dealings or romantic encounters with women because of the attack and because of anxiety drugs. The U.S. says he’s faking it.

Dr. Ralph Lilly, a neurologist, testified today that Stanford sustained “a major injury that required major surgery’’ in the 2009 inmate assault. Stanford is delusional and believes the government is out to destroy him, Lilly said. The doctor said he couldn’t predict when Stanford might be ready for trial.

“He’s at risk for suicide,” Lilly told U.S. District Judge David Hittner, citing an examination of Stanford this month. “His memory is like a crossword puzzle that’s fallen to the ground and doesn’t come together anymore.”

Lilly told the judge he didn’t know when or whether Stanford would be able to go on trial.

“I can’t say in the next month or ever,’’ he said.

Further Treatment
Depending on how Hittner rules, Stanford will undergo further treatment or face a trial Jan. 23 on charges of running a Ponzi scheme that cost investors more than $7 billion. If convicted, he could go to prison for the rest of his life.

Stanford has been imprisoned as a flight risk since his June 2009 indictment on charges of defrauding investors through a scheme built on allegedly bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

Stanford benefited from eight months of treatment in Butner, where he was successfully weaned from powerful anti- anxiety drugs prescribed after the assault, Lilly said. The lasting effects of the brain injury have left him depressed and occasionally hallucinatory, Lilly said.

“He’s delusional, paranoid and he feels the government has selected him to destroy him for whatever reason they may have,’’ Lilly testified. He said Stanford believes the U.S. wants to “make money off his businesses’’ and has tortured him.

Prison Psychologist
Robert E. Cochrane, a psychologist at the Federal Bureau of Prisons’ medical center in Butner, North Carolina, testified yesterday that Stanford failed every test designed to expose fakers. His claim of complete retrograde amnesia, loss of the memory of things that happened before the event that caused it, is “remarkable” because the condition is so rare, Cochrane said.

Lilly said today that Stanford is “absolutely’’ not faking his condition and isn’t even aware of the extent to which his mental faculties are impaired.

“His symptoms are characteristic of someone with a brain injury,’’ Lilly said. “His prognosis is limited.’’

The case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).

Stanford Receivers Vie in U.S. Court for Control of Assets

By Andrew Harris and Laurel Brubaker Calkins

(Updates with comment from lawyer for Antiguan-appointed receiver in sixth paragraph.)

U.S. and Antiguan-appointed receivers for R. Allen Stanford’s holdings vied in court for control of his assets as investors await payment for losses in his alleged $7 billion fraud scheme.

U.S. District Judge David Godbey in Dallas today is hearing evidence and arguments from attorneys for Ralph Janvey -- whom he appointed almost three years ago to marshal and liquidate Stanford’s business and personal holdings -- and from lawyers for executives of the global auditing firm Grant Thornton chosen by an Antiguan court for the same task.

At the heart of Stanford’s alleged fraud are certificates of deposit sold by his Antigua-based Stanford International Bank Ltd. to about 28,000 investors. That makes the island nation the legal center of interest, the two Grant Thornton receivers contend. Janvey’s lawyer, Kevin Sadler, disagreed.

“The last thing this receivership needs, the last thing that investors need, is two liquidators of the bank here in the U.S.,” Sadler told Godbey. “It duplicates work that has already been done.”

The claims and distributions could be coordinated between the U.S. and Antiguan receivers, said Gregory Grossman, lawyer for the Grant Thornton liquidators. “For reasons that have been mystifying to me, we have been unable to reach a joint protocol.”

“I’m sad to hear the mediation didn’t work,” Godbey told the attorneys. “I’m sadder that the money going to this to pay lawyers is not going to compensate the victims.”

The U.S. Securities and Exchange Commission in February 2009 sued Stanford, alleging that he and his employees lied about the CDs, telling investors the proceeds were invested in safe, liquid assets.

Lavish Spending
In reality, the SEC said, Stanford was spending that money to fund illiquid real estate ventures, a life of wealth and the operation of more than 130 companies, including his Houston- based broker dealer, Stanford Group Co. Later-arriving investors’ money was allegedly being used to pay off earlier investors.

The financier, who had been knighted by the government of Antigua and Barbuda, has been jailed as a flight risk since his June 2009 indictment by a U.S. grand jury in Houston. Among the allegations is a claim he bribed an Antiguan banking regulator to ignore irregularities.

Trial Jan. 23?
Stanford, who maintains his innocence, is scheduled to be tried on Jan. 23. At a hearing this week in Houston, defense lawyers and U.S. prosecutors are asking a judge to determine his mental fitness to stand trial. Stanford says he suffered severe memory loss in a jailhouse beating. Prosecutors say he’s faking.

“Only 20 per cent of Stanford’s victims are Americans,” Edward Davis, one of the attorneys for Grant Thornton executives Marcus Wide and Hugh Dickson, said in a phone interview before today’s hearing. “This was not a U.S.-centric fraud, although there were U.S.-centred parts. This was an offshore fraud.”

Dickson and Wide are seeking global control of Stanford’s assets, he said, with no role for the U.S. receiver.

“It’s not like they found a bunch of new money,” Sadler said before the hearing. “What are they going to do that will put new money in the investors’ pockets?”

Janvey has recovered more than $114 million in cash and $96 million in assets while spending about $102 million winding up Stanford’s operations and pursuing litigation, according to a report submitted to Godbey last month.

Amounts Recovered
The Grant Thornton receivers said in a Dec. 7 online briefing to investors said they recovered $3.2 million in Panama, obtained a freeze on real estate holdings worth $70 million and were working to recover $9 million in assets in Columbia.

“Our costs will be significantly lower with significantly higher assets,” said Davis, of Miami-based Astigarraga Davis Mullins & Grossman PA.

Antiguan law requires his clients to set up an investor distribution system, even if it duplicates the one that Janvey establishes, Davis said.

The Antiguan estate will be able to distribute more than $300 million of Stanford’s European bank funds, which are claimed by both receivers, Davis said. Custody of the funds, now frozen at the request of the U.S. Justice Department, were awarded to Antiguan control by U.K. and Swiss courts, as well as proceeds realized from the sale of Stanford’s considerable Antiguan real estate and resort properties, he said.

Getting and Spending
Stanford’s Antiguan bank “generated the money” through its CD sales, Davis said. He called the financier’s U.S. operations “the companies that spent the money.”

Opposing the Antiguan receivership’s bid for primacy, the SEC filed papers Dec. 5 with Godbey, arguing that the Stanford Ponzi scheme was Houston-born.

“The evidence is overwhelming that Stanford’s fraud (and, in fact, Stanford International Bank even if viewed in isolation) was orchestrated from the United States,” attorneys for the agency said.

Janvey and Dallas lawyer John J. Little, appointed by Godbey to advocate for investors, agreed. In a court filing last week, they said the centre of interest in the Stanford case ought to remain in the U.S.

“It is clear that the entire Stanford enterprise, including SIB, was run from the United States,” they said.

So far, those claiming they lost money with Stanford have received no pay-out.

At Victims’ Expense
“Millions of dollars have been spent litigating these jurisdictional issues -- all at the expense of the victims,” attorney Peter D. Morgenstern, a member of the Godbey-sanctioned Stanford investors’ committee, said in letter to the Justice Department last month.

The liquidation proceeding is In re Stanford International Bank Ltd., 3:09-cv-00721, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 4:09- cr-00342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 3:09-cv-00298, U.S. District Court, Northern District of Texas (Dallas).

Stanford International Bank, Ltd. (In Liquidation) - Online Presentation for the creditors/victims

"The Joint Liquidators of Stanford International Bank, Marcus Wide and Hugh Dickson of Grant Thornton, held a webinar to discuss recent accomplishments. In the two months since the last webinar, the Joint Liquidators have:

• Recovery efforts in place to seek US$9 million in Colombia

• Eastern Caribbean Amalgamated Bank building in Antigua under contract for US$4.5 million

• Uncovered evidence of “red flags” in support of claims against financial institutions

• Obtained a partial recognition in Canada and permission to sue high value targets, thus preventing the loss of rights

• Uploaded in excess of 2 Terabyte of data and commenced forensic analysis

• Traced an interest in property outside of Antigua with a value of over US$6 million

• Independent investigators and experts engaged to assist on asset recovery efforts

• Perfected claim in cooperation with Swiss Trustee to US$230 million in funds

• Intervention in Swiss criminal proceedings

Provided below is a link to the latest webinar:

The Joint Liquidators are available to address any of your questions on greater detail. Please let us know."

Tuesday, 20 December 2011

Stanford Failed Every Mental Test for Uncovering Fakes, Doctor Testifies

By Laurel Brubaker Calkins - Dec 20, 2011 2:22 PM GMT-0400

R. Allen Stanford, the accused financier claiming he’s mentally unfit to stand trial next month, failed every test designed to expose fakers, a government psychologist testified.

“When it comes to the amnesia, I’m convinced that complaint is malingered,” Dr. Robert E. Cochrane, a staff psychologist at the Federal Bureau of Prisons’ medical center in Butner, North Carolina, said today at a hearing in federal court in Houston.

Depending on a ruling by U.S. District Judge David Hittner, Stanford, 61, will undergo further treatment or face a trial Jan. 23 on charges of running a Ponzi scheme that cost investors more than $7 billion and might put him prison for the rest of his life. Cochrane was the government’s first witness.

Stanford claims he can’t recall family vacations, his business dealings or romantic encounters with women because “59 years were stolen” by a jailhouse beating and anxiety drugs, the government said in court papers. The government says he is faking.

Stanford arrived in court today shackled, looking thin and alert in green prison clothes. He smiled at family members in the back of the courtroom after greeting his attorney and the lead prosecutor, saying softly, “Good Christmas.”

On every neuropsychological test designed to unmask feigning, “Mr. Stanford failed,” Cochrane said, “and that was pretty strong evidence he was exaggerating the memory loss.”

Rare Condition

The claim of complete retrograde amnesia, loss of the memory of things that happened before the event that caused it, is “remarkable” because the condition is so rare, the doctor said.

“ It happens so infrequently it’s hardly documented in the medical literature,” he said.

He said Stanford’s purported amnesia didn’t fit the pattern, because his memory was normal immediately after the jailhouse beating that his lawyers say caused the condition, then supposedly deteriorated when he arrived at the medical center more than a year later.

“ If the head injury was the source of his amnesia, how could he remember then and not now?” Cochrane asked. “You have amnesia right after the head injury, not after a delay.”

Stanford, the doctor said, performed so poorly on certain memory tests that “mentally retarded children did much better” on them.

Defense Filing

Ali R. Fazel, one of Stanford’s attorneys, said in a filing before the hearing that doctors’ testimony will show the Texas financier suffered a traumatic brain injury in jail made worse by “the cocktail of medications” administered in the federal lockup.

Hittner today ruled that Stanford’s former lawyer and mother, listed as witnesses by the defense, won’t be allowed to testify.

The judge said he’ll hear from “only the treating doctors” who can address Stanford’s ability to proceed to trial.

Stanford has been imprisoned as a flight risk since his June 2009 indictment on charges of defrauding investors through a scheme built on allegedly bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

Prosecutors say Stanford skimmed more than $1 billion of investor funds to acquire fleet of jets and yachts, multiple mansions and a private Caribbean island, as well as to give money to women with whom he had children.

Hittner delayed Stanford’s trial, first set for last January, after three doctors testified that the financier was incapable of assisting in his defense because of his drug dependency and potential effects from the head injury.

The case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).

Stanford bank official’s description of CDs undermines SIPC argument

Loren Steffy

Testimony in a legal dispute between the U.S. and Antiguan liquidators of the Stanford Financial empire seems to bolster investors’ arguments that Stanford’s certificates of deposit were more securities than traditional bank notes. Stanford’s U.S. investors have argued that because of the unusual nature of Stanford’s CDs, some of their losses from Stanford’s 2009 collapse should be covered by the Securities Investor Protection Corp.

The Securities and Exchange Commission agrees and has ordered SIPC to pay, but SIPC has refused, arguing that Stanford’s CDs weren’t securities. The two sides are now headed to court, in yet another legal standoff involving Stanford’s alleged $7 billion Ponzi scheme.

Documents filed recently in the liquidator case include testimony from Beverly Jacobs, the vice president of customer service for Antigua-based Stanford International Bank. Asked if special rules applied to U.S. investors who purchased the CDs, Jacobs replied that they did. “Clients who were U.S. residents had to qualify as `accredited investors,’” she said. The term is a reference Regulation D of the Securities Exchange Act of 1933, which establishes registration requirements for unregistered stock sales.

The CD purchases “had to be referred to the bank through Stanford Group Company brokerage only, with the financial advisor being a registered broker.” Stanford’s brokerage was a member of SIPC, an industry-funded pool to cover investments missing from customer accounts when member brokerages fail. Stanford used the SIPC insurance to tout the safety of its investments.

The securities industry has argued, in part, that Stanford clients don’t qualify for coverage because they sent their money directly to the Stanford bank. Jacobs testimony shows that wasn’t true. For U.S. investors, all money was funneled through the brokerage accounts and sold by registered brokers. In other words, the CDs were, for all intents and purposes, treated as securities by Stanford and its employees.

Meanwhile, R. Allen Stanford himself is set to appear in court today to determine if he’s competent to stand trial next month. Stanford, who’s been jailed since his arrest in 2009, claim injuries he sustained in prison have wiped out most of his memory. His attorneys plan to call about 10 medical experts, former attorneys and even Stanford’s 81-year-old mother.

Stanford due in court today (20th December 2011) for Competency Hearing

Accused Ponzi Schemer Lying About Having Amnesia, Say Prosecutors

Federal prosecutors say R. Allen Stanford, the financier accused of defrauding investors of $7 billion, is mentally competent to stand trial and is faking amnesia, according to court documents.

A competency hearing is scheduled for Tuesday 20th December 2011 in a Texas court.

Stanford, 61, pleaded not guilty to all charges and later claimed he developed amnesia after a fellow inmate assaulted him in 2009. His defense attorney said in separate documents that the inmate smashed Stanford's face into a pole and threw him onto the concrete floor.

But in their motion to have Stanford declared competent, U.S. attorneys said doctors at the federal prison in Butner, N.C., determined that Stanford was "not credible" when he said he was "completely amnestic to his life prior to the assault." Stanford said he could not remember past romances, vacations with his children or any details about his business operations.

Additional psychological testing, the motion says, prove he was lying and faking cognitive impairments. On some of the tests, he even scored lower than people with brain injuries and dementia.

Defense experts, according to prosecutors, blamed Stanford's poor performance on depression and fatigue. In a separate motion, Stanford's attorney, Ali Fazel, said his client "suffered a traumatic brain injury" in the assault and the medications given to him by prison medical staff, which included anti-anxiety drugs and antidepressants, made his condition worse.

Stanford claims to have retrograde amnesia, the loss of memory of events that happened before an injury. Memories from a few days before to even a few years before could be lost with retrograde amnesia.

Cases in which decades of memories are lost are extremely rare, and in most cases, if memory loss is that severe, a person has likely suffered a very serious brain injury.

"In this situation, generally, brain damage is so severe that this person would not be walking, talking, conversing or reasoning," said David Loewenstein, a neuropsychologist and professor of psychiatry at the University of Miami's Miller School of Medicine. Loewenstein did not evaluate Stanford and was referring to amnesia in general.

While he couldn't comment on whether Stanford is lying about his memory loss, Loewenstein said skilled neuropsychologists can tell the difference between someone truly experiencing amnesia and someone who is faking it.

There are numerous tests available that psychologists and psychiatrists use that assess, among other things, a person's memory, personality and language.

"These tests are very sensitive, and you can tell with a high degree of accuracy whether someone really has amnesia," he said.

Prosecutors said in addition to psychological tests that prove Stanford is faking amnesia, they also have emails, phone calls and other evidence that they say show he does remember events prior to the prison assault.

If a judge rules Stanford is mentally fit for trial, his trial will begin Jan. 23.

SEC, SIPC ready to rumble over Ponzi pay-outs

Regulator demands repayment of losses by Stanford investors

By Dan Jamieson
December 18, 2011 6:01 am ET

The securities industry is watching intently as the Securities and Exchange Commission and the Securities Investor Protection Corp. get set to do battle in court over SIPC's refusal to make good on some of the losses suffered by victims of R. Allen Stanford's alleged $7 billion Ponzi scheme.

A lawsuit filed by the SEC last week to force SIPC's hand is an unprecedented legal test of the limits of the commission's power over the government-created and industry-funded entity that protects investors in cases where brokerage firms fail, observers said.

But more than just a legal question is in dispute. Broker-dealers are worried about higher SIPC assessments if Stanford claims are paid out of the non-profit organization's reserve fund.

“It's a scary thought,” David Sobel, general counsel of Abel/Noser Corp., said about higher assessments.

Mr. Sobel, who also is chairman of the National Association of Independent Broker/Dealers Inc., said representatives of small broker-dealers have been actively discussing the ramifications of the case and are looking for ways to aid SIPC's legal fight against the SEC.

SIPC president Steve Harbeck acknowledged that higher assessments might be necessary if SIPC has to cover Stanford victims. The added burden could put its $1.4 billion reserve fund at risk, he said.

That's of concern to the brokerage industry, which is still smarting from the costs of covering victims of the $65 billion Bernard Madoff Ponzi scheme. In 2009, SIPC increased assessments on broker-dealers to 0.25% of net operating revenue, from a flat $150 prior to the Madoff scandal.

The bump-up meant that even small firms faced SIPC bills of several thousand dollars a year.

“It's killing off the small firms,” Mr. Sobel said. “Why should we be paying off for fraud?”

Indeed, SIPC does not protect investors from fraud — only for missing cash and securities held in custody at a failed broker-dealer.

That's why many in the securities industry questioned SIPC's liquidation of the Madoff firm, where it is covering claims based on how much cash investors deposited.

Mr. Harbeck said investors at Bernard L. Madoff Investment Securities LLC were issued statements showing that securities were held at the Madoff brokerage firm, while Stanford investors knew they were buying CDs from an Antiguan bank.

“It's a bright-line rule — if you leave it with a brokerage firm, SIPC will give it back to you,” while in the Stanford case, customers actually held the CDs, he said.

The Securities Industry and Financial Markets Association has been urging SIPC to hang tough on Stanford.

“Crucially, unlike the situation [with Madoff], the purchasers of [Stanford] CDs actually purchased the very security they sought to acquire,” SIFMA said in an August letter to SIPC.

Covering Stanford would be “an unprecedented expansion of SIPC protection to investment fraud losses,” SIFMA added in a statement last week after the SEC filed suit.

In its court filing, the SEC argued that Stanford customers should be covered by SIPC because the fraudulent CDs were sold through the brokerage firm and because Allen Stanford controlled all of the firm's non- brokerage entities.

Even for experts, the distinction between the Madoff and Stanford cases isn't an easy one to make.

“It isn't clear to me why SIPC isn't doing what they normally do,” Thomas Gorman, a former SEC lawyer and a partner at Dorsey & Whitney LLP, said about SIPC's refusal to liquidate the Stanford brokerage firm.

Legal observers were struck by the SEC's tone in essentially pulling rank on both SIPC and the court.

In its court filing, the agency claims that it has sole authority to determine if SIPC should get involved in a case — a determination the SEC says is not subject to judicial review.

The SEC said that disputes over what assets deserve SIPC protection should be handled via the claims process SIPC administers after taking over a failed firm.

SIPC countered that the SEC's move was an “extraordinary example of overreaching.” In its own filing last week, SIPC said the SEC “wants to avoid judicial scrutiny [because it] cannot prevail under any serious analysis of the facts and the law in this case.”

The legal action by the SEC is the first time the agency has invoked its authority to force action by SIPC.

If the court grants the SEC's request, Mr. Harbeck said SIPC would appeal. SEC spokesman John Nester declined to comment.

Legal observers were uncertain how the dispute might play out, given its unprecedented nature.

The legal fight is a marked contrast with what many have viewed as a hands-off policy the SEC historically has taken toward SIPC.

A March 2011 report from the SEC's inspector general faulted the agency for not having a formal SIPC oversight process.

But the Stanford case and other major frauds have given the SIPC liquidation process a high profile. The SEC's action in suing SIPC came amidst intense political pressure to cover Stanford victims.

Despite the fight, SIPC and the SEC are working more closely together than ever. In addition to the Lehman Brothers Holdings Inc. and Madoff cases, the SEC and SIPC are now dealing with the MF Global Holdings Ltd. failure.

“We work with those folks every day, and that will continue,” Mr. Harbeck said about the SEC. “We have to compartmentalize that” cooperation from the legal dispute.

Monday, 19 December 2011

SEC Lawsuit against SIPC


Friday, 16 December 2011

Leroy King Appeal Hearing Begins

By Martina Johnson - Friday, December 16th, 2011.

ST JOHN’S, Antigua – After waiting nearly a year for a court to hear his appeal against his extradition committal, lawyers for former Chief Executive Officer (CEO) of the Financial Services Regulatory Commission (FSRC) Leroy King yesterday began oral arguments in the High Court.

King is wanted in the United States for his alleged role in the masterminding of the R Allen Stanford US $7 billion Ponzi Scheme.

Appearing before Justice Mario Michel, King’s lawyers Dane Hamilton QC and Dane R Hamilton argued two main points in support of the application for a writ of habeas corpus in a bid to get the court to quash the earlier decision of former Chief Magistrate Ivan Walters.

King, who was also the FSRC administrator, is accused of 10 counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to commit money laundering and conspiracy to obstruct the Securities Exchange Commission (SEC) as an accomplice to Stanford’s alleged crimes.

The complaint accuses King of conducting sham audits and examinations of Stanford International Bank (SIBL), an offshore bank located in Antigua, in exchange for large sums of money and other bribes while he allegedly made sure that the SEC did not peruse the offshore bank’s investment records.

Hamilton QC contended that some of the crime(s) King is accused of are not crimes under the laws of Antigua & Barbuda and as such he has not committed any offence for which he can be extradited.

He also said if the offences existed under the laws of Antigua & Barbuda it must be stated, expressly, that they are extra-territorial as well.

The appellant’s counsel then questioned how it is that King is before the court for conspiracy to commit various types of fraud when no counterpart has been named.

The senior lawyer dismissed information in witness statements of other persons allegedly or admittedly implicated in the fraud and said they were nothing but unsubstantiated hearsay evidence.

Hamilton spent the entire day addressing the court on the aforementioned issues in addition to others and is expected to resume next Wednesday. After that the Director of Public Prosecution (DPP) Anthony Armstrong would respond.

While the matter is ongoing, King would remain on $600,000 bail with strict orders not to leave his home without being accompanied by one of his sureties.

He must also continue to report to the police station nearest his home every day among other conditions.

Allen Stanford Appears to Be 'Faking' Amnesia: Prosecutors

Published: Thursday, 15 Dec 2011
By: Scott Cohn
Senior Correspondent, CNBC

Federal prosecutors say accused Ponzi schemer R. Allen Stanford appears to be "faking" memory loss in order to avoid his criminal trial scheduled for next month.

The accusation comes in a court filing ahead of a hearing next week to determine if Stanford is competent to stand trial.

"Convincing, reliable evidence demonstrates that Stanford is faking memory loss," prosecutors say in the 20-page filing.

Stanford's attorneys say he has lost all memory of events preceding his assault in a federal detention facility in September, 2009. Following the assault, while still in federal custody, Stanford became addicted to prescription drugs.

Stanford was indicted in June of that year for allegedly running a $7 billion Ponzi scheme. In January of this year, a judge ruled him incompetent to stand trial and ordered him to undergo drug treatment and evaluation at the Bureau of Prisons medical center in Butner, NC.

That treatment ended last month, and doctors at the medical center declared Stanford competent. But doctors hired by the defense have claimed — and apparently continue to claim — that Stanford has "no independent recollection of personal life events or business dealings that predated the head trauma he sustained in the September 2009," according to the filing.

Stanford even indicated to prison doctors "feeling bad after being informed by his family that he was known as a 'womanizer'," according to the filing.

Stanford, 61, has been separated from his wife for years, and has fathered multiple children with mistresses he referred to as his "outside wives."

Prosecutors, citing doctors at the Butner medical center, say Stanford's claims of memory loss are not credible, since he had no trouble with memory immediately following the assault and only claimed amnesia much later.

As late as last December, according to the prison doctors, Stanford was able to recall specific experiences, including prior interactions with then-Congressman, now House Speaker John Boehner.

The filing says prison doctors testing Stanford's memory found he "either was not trying or was faking."

Defense attorneys have not yet responded to the prosecution's filing. It will be up to U.S. District Judge David Hittner to decide if Stanford is competent for trial. Hittner has scheduled a competency hearing for Tuesday in Houston.

Stanford faces 14 criminal counts in the alleged fraud. He has repeatedly denied wrongdoing

Stanford competent for trial, government says

R. Allen Stanford (Bloomberg News)
(Updates with filing from Stanford’s attorneys.)
Government prosecutors say jailed former billionaire R. Allen Stanford is competent to stand trial next month. Attorneys for the U.S. Justice Department will argue at a hearing next week that Stanford’s trial, coming almost three years after the collapse of his financial empire, should go forward.

Stanford, who has been in custody since his arrest in 2009, became addicted to painkillers while recovering from injuries sustained in a fight with another inmate. At the time, doctors determined that Stanford was unable to understand the 14 criminal charges pending against him.

He was set to a treatment program at the Bureau of Prisons’ facility in Butner, N.C. On Nov. 4, eight months after he entered the program, Stanford was released after doctors determined he had “regained his competence.”

Stanford’s attorneys, in a separate court filing today, argue that he “suffered a traumatic brain injury due to the assault” and that the “cocktail of medications” administered to him in prison exacerbated his medical condition.

Prosecutors claim that Stanford is faking his memory loss, which he claims has essentially erased all memories of his life before the prison assault.

For much of his time in Butner, Stanford was “alert, lucid and oriented,” and as recently as September he exhibited no difficulty in discussing recent world news, the government said in its filing.

As a result, the government claims Stanford’s “cognitive abilities are not significantly impaired.”

Stanford, who has maintained his innocence, is accused of running a massive international Ponzi scheme that bilked as many as 20,000 investors out of more than $7 billion

Thursday, 15 December 2011

Antiguan Liquidators letter to Senators re Senate Resolution 436

The Honorable David Vitter
United States Senate
Washington, DC 20510

The Honorable Richard C. Shelby
SR -304
United States Senate
Washington, DC 20510

The Honorable Thad Cochran
United States Senate
Washington, DC 20510

The Honorable Roger Wicker
United States Senate
Washington, DC 20510

12 December, 2011

Dear Sirs,
Re: Senate Resolution 346
Re: Stanford International Bank Limited in Liquidation

I am writing in response to your recent introduction of Senate Resolution 346 which takes exception to certain alleged actions by the Government of Antigua and Barbuda (GoAB) related to the fraud perpetrated by Robert Allen Stanford and by implication the process for the liquidation of Stanford International Bank Limited (SIBL). I believe it is important to correct and/or clarify a number of assertions contained in the resolution as they relate to the activities of the Joint Liquidators of SIBL.

By way of background, Hugh Dickson and I, from the international firm of Grant Thornton, were appointed Joint Liquidators of Stanford International Bank Limited (SIBL) by the High Court of Antigua (Court), part of the Eastern Caribbean Court Circuit based in St Lucia. The final court of appeal from the High Court of Antigua is to the Law Lords of the British Privy Council. Mr. Dickson and I are experienced Liquidators with collectively sixty years of work in the field. Our appointment resulted from an application to Court by a group of victims not the GoAB or its agencies.

We note that S Res 346 seems not to draw a distinction between the Court ordered liquidation (bankruptcy) of SIBL in Antigua, and the GoAB itself. As Court officers we are independent of the GoAB, do not report to the GoAB, do not take direction from the GoAB, and, if necessary, we will be adverse to the GoAB and any of its agencies. Finally any funds we recover cannot be accessed by GoAB. That we are in some way associated with or an Agent of GoAB is a falsehood perpetuated by certain parties in the US.

Our appointment arises from the International Business Corporations Act (IBCA) of Antigua, under which the bank was incorporated. This contains a statutory obligation to gather in the assets of SIBL, and distribute them to its creditors under a process set out in the IBCA and the 1986 English Insolvency Rules. In short, our mission is to recover an estimated $4.5 billion in losses stemming from the fraud perpetrated by Allen Stanford and return the money to all 21,000 creditors/victims (of which around 16% by depositor number and 22% by value are American) in the shortest time possible.

We are guided by an uncompensated Creditors Committee composed of victims who are not allowed to profit from the Liquidation. We have held two web-based creditor meetings. The first meeting resulted in over three thousand creditor emails expressing their concerns, and what they would like to see happen to maximise their recovery. The second meeting results are still coming in. We intend to do this regularly. As far as we know, we are the first to engage the creditors/victims directly to ask what they want.

The Receiver has reported to the US court that he has ceased any proceeding outside the US. We believe that there are substantial recoveries available in a number of international jurisdictions. We are vigorously pursuing these for the benefit of the creditor/victims.

With this background in mind we are concerned that SR. 346 is in part based on a misunderstanding of the facts.

Firstly the GoAB does not have control of any of the SIBL lands. These are in our possession. We are devising a strategy, with expert advice, to maximise value for the creditor/victims.

An equity receiver, such as Mr. Janvey (Receiver) appointed at the request of the US Securities and Exchange Commission (SEC) has significant limitations to his authority. Our only intent is to provide a solution to some of these limitations through the exercise of remedies not available to the Receiver but available to us through Chapter 15. This will increase total recoveries to victims. We have stated our intent often and to confirm it we drafted and delivered a detailed proposal for cooperation to the Receiver. This proposal was rejected out of hand. Any standing granted will be subject to control by the US Court. To be clear we are not seeking to intervene in anyway with the plethora of entities over which the Receiver has control except for this limited purpose in SIBL under the control of the US Court.

Receiver was not recognised in Antigua largely as a consequence of these limitations in authority. However we are advised by our own legal counsel that the Receiver was, and is, entitled to appear in any proceeding in Antigua with respect to SIBL. We have no objection to him doing so as confirmed in the draft cooperation proposal he rejected. The Receiver has terminated his legal counsel in Antigua and presumably chosen not to appear.

There is criticism of us for not attempting to collect sums allegedly due from the GoAB. SIBL’s records fail to provide evidence that SIBL advanced money to GoAB, as confirmed by sworn reports of the Receiver and his forensic expert filed in Dallas last week. In this the loans referred to appear to have been advanced to GoAB through other entities, mostly under the Receiver’s control. He has not advanced those claims to date.

The process under which the Department of Justice (DoJ) seeks to “repatriate” assets to the US does not in our view allow these funds to be equitably, quickly and cheaply distributed to victims. On the contrary had these funds been allowed to flow into the Liquidation at the outset, a large distribution to creditor/victims could already have taken place. We have met with officials of the Asset Forfeiture and Money Laundering Section (AFMLS) at DoJ and we have also met with officials of the SEC, to try to find a mechanism to work together to achieve the common goal of maximising recoveries for the victims. We intend to continue these dialogues.

We have provided documents to the DoJ to assist them in the prosecution of Mr. Stanford and will continue to assist them where we can.

We are also trying to co-ordinate the claims process in both jurisdictions so that only one claim need be filed with a single pool from which victims’ claims are paid, overseen by both the US and Antiguan Court. If we are successful, this will significantly mitigate costs.

We are investigating the issue of Bank of Antigua (BoA)and its expropriation by the Eastern Caribbean Central Bank (ECCB), the Central Bank for all nine Eastern Caribbean countries. There is an independent valuation report by Ernst & Young, which indicates the shares BoA, a domestic bank serving Antiguans, had negative value, and that a bailout, with an injection of capital by ECCB was required to protect innocent depositors.

We cannot comment on other issues raised in S Res 346 outside the Liquidation of SIBL.

In summary, we have put significant effort into our attempts to co-ordinate our work with that of the US DoJ, SEC and the Receiver, in order to maximize the total return to the creditor/victims in a manner consistent with our statutory obligations, the direction of Antiguan High Court, and with respect to any standing granted in the US, the US Court. We are deeply concerned that language such as that proposed in your resolution may inadvertently be detrimental to this process.

To this end we would welcome a meeting with you to expand on our comments so you can determine your position on the matter based on all the facts.

Yours truly

Marcus A. Wide, Joint Liquidator
For the Joint Liquidators of Stanford International Bank Limited

Copies. Department of Justice
Securities and Exchange Commission

Tuesday, 13 December 2011

Battle Heats Up Between Stanford Receiver and Antiguan Liquidators

Julie Triedman ContactAll Articles
The American LawyerDecember 12, 2011

Ralph Janvey, the court-appointed receiver leading U.S. efforts to recover worldwide assets of alleged Ponzi schemer R. Allen Stanford's empire, is suddenly facing a new challenge: a revived Stanford bank liquidation proceeding in Antigua.

On Dec. 5 the joint liquidators for Stanford International Bank, the Stanford-owned bank in Antigua that issued bogus CDs to investors, filed a renewed motion for the Antiguan proceedings to be recognized as the authoritative Stanford insolvency. Dallas federal district court judge David Godbey, who is overseeing the U.S. receivership, will hear arguments on Dec. 21.

The motion could be a game changer. (The brief is here.) Filed by Edward Davis at Miami's Astigarraga Davis, Christopher Redmond at Husch Blackwell, and Joseph Wielebinski at Dallas's Munsch Hardt Kopf & Harr on behalf of the Antiguan joint liquidators at Grant Thornton, it asks the judge to recognize SIB's Antiguan liquidation as the "foreign main proceeding" under Chapter 15, a 2005 bankruptcy statute that governs the handling of cross-border insolvencies. If granted full recognition, the Antiguan liquidators would assume the rights of a U.S. bankruptcy trustee in U.S. courts.

Such a ruling could throw a big wrench in U.S. efforts to repatriate investor funds. Under international insolvency guidelines, the U.S. receivership is not recognized as an insolvency proceeding. Since their appointment in May, the Antiguan liquidators have already managed to block ongoing efforts by the Department of Justice to repatriate of tens of millions of dollars of frozen Stanford assets to the U.S. from the U.K. and Canada, according to Baker Botts' Kevin Sadler, lead legal advisor to Janvey.

Monday, 12 December 2011

SIPC Rebuffs Stanford Investors Demands to Cover Losses

The agency that insures U.S. brokerage accounts has again rebuffed demands it provide coverage to investors in Allen Stanford's alleged $7 billion Ponzi scheme, making it increasingly likely the issue is headed to court.
In a December 2 letter to members of Congress, obtained by CNBC, the head of the Securities Investor Protection Corporation (SIPC) says the organization has a "fundamental disagreement" with the Securities and Exchange Commission, which demanded in June that SIPC pay the investors or be sued.

Thousands of investors lost everything in the 2009 collapse of Stanford Financial Group, which the SEC alleges was a global Ponzi scheme involving bogus certificates of deposit.

In the letter to members of Congress, SIPC Chairman Orlan Johnson says providing the coverage would be "unprecedented," because the investors "chose to purchase CDs issued by an offshore bank in Antigua," which is not covered by SIPC.

The investors have countered that most of the CDs were purchased through Stanford's U.S. broker-dealer, a SIPC member.

In June, the SEC sided with the investors and threatened to sue SIPC to force the coverage, which provides as much as $500,000 per account.

SIPC promised to reconsider its position at its September board meeting, but instead has remained publicly silent on the issue.

In the letter to Congress, Johnson claims that privately, SIPC and the SEC have been working "in good faith" to resolve their disagreement.

Neither SIPC nor the SEC would comment on the discussions, which apparently are aimed at settlement to avert a lawsuit by offering a partial payout to investors.

Meantime, patience among the investors and members of Congress is wearing thin.

On Tuesday, Sen. David Vitter, Republican from Louisiana, urged SEC Chairwoman Mary Schapiro to make good on the threat to sue.

"This again is dragging on, six months after your positive, concrete action," Sen. David Vitter, told Schapiro at a Senate Banking Committee hearing.

"I think the SEC needs to take definite action again before the end of the year in a positive way, and I'm afraid that's going to mean suing SIPC," Vitter said.

"I share deeply your concern about this and that we not take longer than is absolutely necessary," said Schapiro in response. But she was non-committal about filing suit.

Schapiro said the SEC is working on "the best possible result for victims."

But the main group representing Stanford's 28,000 investors says they are entitled to full coverage, and in a letter to the SEC's general counsel this week, the Official Stanford Investors Committee echoed Vitter's call for the SEC to go through with the court action.

SIPC is essentially caught between the SEC and its own members--brokerage firms that would bear the cost of any payout while they are already compensating customers of Bernard Madoff and MF Global.

Wall Street's main trade group, the Securities Industry Financial Markets Association (SIFMA), has come out against coverage for Stanford investors. SIFMA argues SIPC coverage does not extend to fraud, but only guarantees the return of investors' cash and securities. In the case of Stanford, SIFMA contends, those securities are the certificates of deposit which are now worthless.

A SIFMA spokesperson would not comment on the possibility of a partial payout to investors.

The SEC sued Stanford and his companies in February 2009, putting them out of business. Stanford, 61, has denied wrongdoing.

Senate Resolution Seeks Sanctions Against Antigua

Monday, 12 December 2011 02:30 Colin Sampson

Antigua St John's - A group of United States senators has again asked the US Senate to recommend the imposition of economic and financial sanctions on Antigua & Barbuda.

The proposed sanctions are outlined in Senate Resolution No 346, placed before the Senate on December 8.

The full text of Senate Resolution 346 is appended below.

The resolution deals extensively with matters relating to actions taken by the Government of Antigua & Barbuda (GOAB) in response to the Allen Stanford debacle.

Resolution 346 describes Antigua & Barbuda as committing “numerous acts against the interest of US citizens,” violating “the order of the United States District Court for the Northern District of Texas,” and challenging “the authority of the (said) Court” as well as “the authority of the United States Department of Justice”.

The resolution accuses the GOAB of benefitting from Stanford International Bank (SIB) certificates of deposit to the tune of US$85M, and demands the return of the money. It also points to a March 2010 statement by the GOAB which shows that Antigua & Barbuda knew – or ought to have known – that SIB was operating outside accepted banking international standards.

In this connection, Resolution 346 accuses Antigua & Barbuda of harbouring former FSRC CEO Leroy King by failing to extradite him to the US to stand trial. The role played by former finance minister Dr Errol Cort, and his law firm, Cort & Cort, was not overlooked. The resolution alleges that over US$1M of Stanford investor funds found its way either to Cort or the firm.

Most striking, perhaps, is the specific mention of the expropriation by the GOAB of the Half Moon Bay resort property. This matter is prominently referred to in Resolution 346, and among the several remedies (acts of restitution and subordination) that the US Senate is asked to require from Antigua & Barbuda is a demand that Antigua & Barbuda fulfill its obligations regarding the expropriation.

The ultimate punch line of Resolution 346 is found in the final paragraph, which reads as follows:

“The Secretary of the Treasury should direct the United States Executive Directors of the International Bank for Reconstruction and Development and the International Development Association (commonly known as the “World Bank'') and the International Monetary Fund to use the voice and vote of the United States to ensure that any future loan made by the World Bank or the International Monetary Fund to the Government of Antigua and Barbuda is conditioned on providing complete redress of the matters, and satisfaction of the requirements, described under paragraph (1).”

The resolution was read into the Congressional Record and referred to the Senate Committee on Foreign Relations for further consideration before being returned to the floor of the Senate for possible action.

The Senate Committee on Foreign Relations is chaired by John Kerry (D) Massachusetts – no stranger to Antigua & Barbuda. However Richard Lugar (R) Indiana is Ranking Member (Leader of the Minority). Something of a Republican activist, Lugar is seen as likely to take the matter up by scheduling a hearing before the committee.

This is not the first time the United States Senate has been asked to adopt a resolution of this kind. In 2009, the Senate passed a comparable resolution, on that occasion sponsored by a group of seven senators led by Senator Richard Shelby (R) Alabama.

In 2010, Congressman Mike Coffman (R) Colorado introduced a similar measure into the House of Representatives. Coffman is expected to revive his own resolution in support of the latest action in the Senate.

The House Committee on Foreign Relations is chaired by Congresswoman Ileana Ross-Lehtinen (R) Florida. Ross-Lehtinen represents a state where many investors lost huge sums in the fall of the Stanford Empire. She has already indicated her willingness to hold hearings in the matter.

After hearings – most likely early in 2012 - the House and Senate committees may bring the matter to the floor of their respective chambers with a recommendation to proceed with a general vote.

Senate Resolution No 346 is sponsored by senators David Vitter (R) Louisiana, Thad Cochran (R) Mississippi, Roger Wicker (R) Mississippi, and Richard Shelby (R) Alabama. All these senators represent states where many citizens have been severely damaged by the collapse of the alleged Allen Stanford “Ponzi Scheme”.

Senator Vitter is a member of the Senate Committee on Banking and the Committee on Small Business & Entrepreneurship – among others.

Ranking Member (Leader of the Minority) on the powerful Senate Appropriations Committee, Cochran fulfills the same role on the Subcommittee on Defense, and serves on the Subcommittee on Homeland Security.
Senator Wicker is an active member of the Senate Committees on Banking, Commerce and Armed Services.

Possibly the most powerful of the resolution’s four co-sponsors, Senator Shelby is Leader of the Minority on the Senate Banking Committee. He also serves on several Subcommittees, including Economic Policy, Financial Institutions and International Trade & Finance.

Saturday, 10 December 2011

Observations on Report by Morganstern Re Stanford-Related Cases

December 9, 2011

PM says:
Since our last update, there have been several developments that I wanted to call to your attention. This past Monday, we filed our response to the bank defendant's motions to dismiss our complaint against them. Unfortunately, we are not in a position to share the actual response with you because of confidentiality requirements imposed on us. We will continue to aggressively press ahead with this lawsuit against the banks, and have asked the Court to permit the Official Stanford Investors’ Committee (on which we serve) to join the case. The banks have an opportunity to respond, and it is unclear when the Court will consider and decide the motions. We remain confident about our cases, and believe that the claims against the banks could result in significant recoveries. Of course there remain no guarantees of success.

So you filed your response to the banks but we can’t know what that response is, well there’s a familiar story. Surely if you are filing on behalf of your clients (Stanford victims) then the clients have a right to know what you are saying? How much more time (It’s been nearly 3 years since you originally filed these actions against the banks) are you going to spend on these lawsuits before we hear something positive? And, as these are class action lawsuits (filed in Texas I believe) are they all going to be thrown out under SLUSA ? Can you also give me a reason why you feel the need to include the committee to join this case?  I am glad you are not giving any guarantees about this one as I lost all confidence in this action a long time ago.

PM says:
On a second front, the hearing on the Antiguan liquidators’ motion for Chapter 15 recognition is scheduled for December 21 in Dallas. We are actively opposing that application, as we are very concerned about the prospect of the Antiguan court and government exercising control over (i) the hundreds of millions of funds located and frozen by the Department of Justice in overseas bank accounts, and (ii) the Antiguan government gaining access to litigation recoveries that we anticipate in the future and other assets. The Antiguan government itself owes at least tens, if not hundreds of millions of dollars to the Stanford investors, has a history of being corrupt, facilitated and was complicit in this fraud, and has since even failed to extradite Leroy King to the United States to respond to the serious criminal charges pending against him. Although the U.S. legal system is certainly not perfect, we believe it to be far superior to the Antiguan alternative for maximizing investor recoveries.

 If you bothered to take any interest in the mood of Antigua, the government here and what is happening, you would (and do) know that Grant Thornton are acting completely independent from the Antigua Government. You would also know that the courts here come under English law and the appeals procedure again is laid down in English law. To date the courts in the US do not appear to be doing a very good job for the victims, hell they allowed mostly US lawyers to highjack all the positions on the committee. You also know that the Antigua government no longer have possession of any of the Stanford properties and assets and that Grant Thornton are working very hard to bring these under their control for the benefit of all victims. Talking about what the Antigua government owes to the victims, how about we look at what the US politicians owe from “donations” made by Stanford? Isn’t it about time all these politicians paid the money back? It comes to far more than Antigua ever borrowed from Stanford? Again, you talk about the Antigua government being complicit in the fraud. What about America, the CIA, the DEA, the last president, the SEC, the politicians? Compare that to one stupid Antiguan who accepted cash to keep Stanford informed about what was happening, he was a very small fish and he will be brought to justice. Let’s get things into prospective and get your own house in order before you start on Antigua. Also while we are talking about maximising the investors recovery, let’s just think for a moment about the IRS and what they are sitting waiting to take out of the Stanford estate, $260Million I believe at the last count and that can change if and when they take into account the $1.8 Billion “loan” that Stanford gave himself.

PM says:
Our opposition to the Antiguan liquidators is not an endorsement of how this case has proceeded to date. We remain very frustrated by the lack of substantial progress, and are continuing our constant efforts to speed up the cases and maximize recovery for all Stanford investors.

Grant Thornton have only been in situ for less than 6 months and have done a fantastic job, not least at keeping the investors informed about what they are doing and what is happening. They have brought together a TOTALLY INDEPENDENT VICTIM committee, which surprise, surprise is actually made up of VITIMS from around the world. They are asking the victims what their questions are and they are taking the trouble to answer those questions. Compare this to the US committee who for the most part have ignored letters and questions from the victims, have ignored their grievances, for the most part have failed to keep the victims informed, have misled the victims (I refer here to the idea and original composition of the committee we were led to believe would be formed). It’s no wonder they don’t want another (in my opinion) more professional and capable group of Liquidators (GT) coming in and spoiling their nice cosy little set-up.

PM says:
As usual, there continue to be unfounded and untrue rumors being circulated about the Investors Committee. The Committee, which we are part of, is working very hard and represents ALL Stanford investors, regardless of nationality or residence. This allegation about the Committee only serving U.S. investors, is completely untrue and unfair. This was the finding of the Court when it recently denied an attempt by the Kachroo firm to reconstruct the Committee, and denied their motion to intervene in the case.

With regard to the rumours, how are the victims supposed to feel when (see comments above) we have been ignored and to date the majority of efforts seem to have been spent trying to get SIPC for mainly US victims. The committee is made up of mainly Americans, the Political scene is working purely for the American victims, Angela Shaw sends out emails saying she will ONLY REPRESENT THE AMERICANS….der, I wonder why all the international victims doubt your sincerity about representing them? With regard to the finding of the courts regarding Kachroo’s motion to intervene,I believe this was denied on a point of law. Actions speak louder than words and the actions of the committee to date reflect the grave concerns the International Victims have about their neglect by you and the committee. If victim beleive they are not being fairly represented then clearly you have afiled to keep them informed.  It would seem that Kachroo gave you all the kick up the butt that was so badly needed.

We are continuing to move forward with our investigation of potential sources of recoveries, are in discussions (which cannot be made public) with certain significant litigation targets, and are proceeding as quickly as possible with the filed litigations seeking substantial recoveries for investors. We are also representing your interests in all of the major court proceedings.

PM says:
I expect that we will have a further report for you after the next Court hearing on December 21. I know that many of you are frustrated by our lack of personal, individual contact with you. We are trying our best to concentrate virtually all of our efforts on the lawsuits and recovery efforts which we hope will result in significant distributions to you eventually. After the hearings in December and the upcoming holidays, I do plan to schedule a trip to Mexico and other locations, at the beginning of the year, to provide an in-person update to anyone who is interested in attending. In the meantime, please keep watching for updates and monitor the examiner’s website for other Committee news.

Well you are right about us being frustrated by your lack of personal, individual contact.  There are a lot of very disillusioned victims out there. Hope you plan a trip to Antigua, I would LOVE to meet up with you…and while you are at it, please bring Ms. Shaw, I would also love to meet her…as would most of the Antigua population!!

Finally, we are all anxiously awaiting word about the commencement of Allen Stanford’s criminal trial, which remains unscheduled. We will provide you with that information as soon as possible.

Peter D. Morgenstern

Stanford's donations still stain lawmakers' hands

American Lawmakers Hypocrisy

These so-called lawmakers should make sure their hands are clean before coming to the table. It would appear that in this situation they all forget to wash.

They should be putting their own house in order before making demands on SIPC and making sure that they - and every other US politician who benefited from Stanford's generosity (with the money he stole from his victims) - pay back the stolen funds.

Could it be that these US politicians think that if they can get SIPC paid out (mostly to the American victims) the whole situation will die down and the pressure will be off them to do the right thing? Because let's face it not one of these "lawmakers" gives a fig about the International Victims whose stolen money they so readily took and now refuse to return, and not one of these politicians have mentioned that apart from the 4,000 US victims, there are another 20,000+ International victims who they do not fight for.

Then again, the International Victims can't be counted on to vote for them, so why should these political hypocrites bother about spending the International Victims stolen money while they sit on their fat backsides in Washington??

Published 07:31 p.m., Thursday, December 8, 2011

In the battle over insurance coverage for investors who lost money in the collapse of Stanford Financial's U.S. brokerage, it's difficult to know who's on investors' side.

Recently, 27 lawmakers sent a letter to the Securities Investor Protection Corp., which is funded by the brokerage industry and overseen by the government, demanding that SIPC cover investors for their losses. SIPC granted similar coverage to clients of Bernard Madoff and the recently bankrupted commodities trader MF Global.

The 23 Republicans and four Democrats threatened to convene hearings in Washington next week if SIPC didn't act.

That, apparently, is easier than living up to their own shortcomings.

Seven of the lawmakers who signed the letter received campaign contributions from Stanford. Only two - Rep. Michael McCaul, R-Austin, and Rep. Rep. Charles Boustany, R-La. - returned the money. Five others - Republicans Pete Sessions of Dallas, Lamar Smith of San Antonio and Vern Buchanan and Ileana Ros-Lehtinen of Florida, as well as Democrat Steve Cohen of Tennessee - owe Stanford's estate money, according to the court-appointed receiver in the company's bankruptcy.

The firm's namesake, R. Allen Stanford, liked to spread cash around Washington. The receiver has been trying to recover political donations for almost two years. About $1.8 million remains outstanding, and only about $142,000, has been returned.

Even more disturbing, five committees of the two political parties - the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee, the National Republican Congressional Committee, the Republican National Committee and the National Republican Senatorial Committee - have refused to return a combined $1.6 million.

In other words, while lawmakers are quick to call on the brokerage industry to insure the losses of Stanford's investors, they are far less willing to demand the same of themselves or their political parties.

Many of the elected officials who received campaign contributions from Stanford - including both Texas senators and Sessions - donated them to charity. That, however, doesn't let the politicians off the hook.

If Stanford was a fraud as the government contends, then the money is stolen. Donating stolen money doesn't eliminate the potential theft. Even if no theft is proved, the receiver is operating under a court order to recover money on behalf of investors, and donating it doesn't absolve lawmakers of the court's order.

Meanwhile, the Securities and Exchange Commission, which is charged with overseeing SIPC, ordered the fund to pay investors in June. So far, it hasn't. As recently as last week, SIPC's chairman sent a letter to one member of Congress saying SIPC disagrees with the SEC's decision.

Sen. David Vitter, R-La., had been trying to arrange some sort of settlement between the SEC and SIPC. Those efforts apparently fell through.

"The SEC needs to take definite action before the end of the year, and I'm afraid that's going to mean suing SIPC," he told SEC Chairman Mary Schapiro.

The SEC, of course, is making up for past mistakes. Having bungled earlier investigations into Stanford, it then took more than two years to reach a decision on SIPC coverage.

It may be getting tough now, but suing SIPC means investors, who have been strung along for almost three years, must wait even longer to find out if their losses are covered. Sadly, in this case, that's progress.

Thursday, 8 December 2011

Antigua liquidators on Stanford case target US$ 240 million

December 8,2011

A few weeks after being accused of squandering victims’ compensation, the Antigua-based liquidators of the Stanford International Bank are defending their accomplishments.

In a public update issued via e-mail to the media this morning (December 8), joint liquidators Marcus Wide and Hugh Dickson of Grant Thornton revealed that they held a webinar for depositors, former employees and trade creditors yesterday, Wednesday, to discuss their recent accomplishments.

The joint liquidators revealed that in the two months since their last webinar, they had work toward a target of US$240.5 million in their liquidation efforts.

This included putting recovery efforts in place to seek US$9 million in Colombia; securing a US$4.5 million for the Eastern Caribbean Amalgamated Bank building in Antigua; tracing an interest in property outside of Antigua with a value of over US$6 million; and perfecting a claim in cooperation with Swiss Trustee to US$230 million in funds.

They revealed that over the past two months they had also uncovered evidence of “red flags” in support of claims against financial institutions; obtained a partial recognition in Canada and permission to sue high value targets, thus preventing the loss of rights; uploaded in excess of 2 Terabyte of data and commenced forensic analysis; engaged independent investigators and experts to assist on asset recovery efforts; and intervened in Swiss criminal proceedings.

These disclosures come weeks after a group of US based Standford fraud victims appealed to the US justice system to keep Grant Thornton and the US-based receiver away from US$330 million in frozen assets that they argued should be disbursed directly to the victims and not used to fund costly liquidation

Why should I pay US taxes???

Some very interesting points came out of the presentation by Grant Thornton yesterday.

One of the most compelling arguments in support of Grant Thornton distributing the money frozen by the DoJ to victims as opposed to Janvey was made by Marcus Wide. We were informed that if Janvey was allowed to distribute the money, Number One on his list of claimants is the IRS who are claiming over US$226 million. On top of this they are also looking at the "loan" Stanford took out from the bank for US$1.8 BILLION. If they consider this as unearned income this will add another US$900 million to the tax debt they are claiming against the Estate and the IRS will become the largest single creditor!!!.

I believe (someone correct me if I am wrong) that the IRS have priority over all other claims in the US. They are the first to be paid, and if this is the case there will be nothing left for ANY other victims!! But regardless of their position in the queue to be paid, their claim will significantly reduce any money available for the rest of the GENUINE victims.

This reason alone is a strong enough argument as to why we must support Grant Thornton in their efforts to get the frozen money released to them and NOT to Janvey. Ask yourself, how can the IRS make such a claim against the estate when (according to the SEC) all money that went through Stanford's hands was stolen from the investors? And when (according to the SEC) no profit was ever made? Seems the goalposts are being continually moved by the US Government agencies to suit whatever game they want to play.

If this money was stolen, then the majority of it came from victims OUTSIDE of the US.......Why the hell are we expected to allow OUR money to pay US taxes for a dishonest US citizen???

Wednesday, 7 December 2011

Grant Thornton Webinar Presentaion

If you were unable to listen to the Webinar Online Presentation for the creditors/victims on December 7 at 11:00 a.m presented by Grant Thornton, then please go to 24hours after presentation where you will have the opportunity to listen and read a full transcript in both English and Spanish. You will also be able to see a tour of the SIB offices by Marcus Wide and see the amount of paperwork they are having to deal with and the amount of files that have to be looked at and checked.

Please listen to the presentation and it will be explained to you why (and how) you need to register your claim with Grant Thornton as well as Janvey. Why Grant Thornton feel it is so important that they are recognised by the American courts. Why Grant Thornton feel it is in the interests of the victims to have them deal with distribution of the funds that are frozen by the DoJ as opposed to the DoJ distributing these funds. Plus lots more information that victims will find useful.

Marcus Wide and Hugh Dickson from Grant Thornton clearly have the best interest of the victims at heart and are working in a professional way to try and achieve maximum results for all victims.


SEC is urged to sue over Stanford victims' claims

3:24 p.m. EST, December 6, 2011

A senator is calling on federal securities regulators to take legal action against a brokerage industry-backed fund for failing to cover claims for the victims of Allen Stanford's alleged Ponzi scheme.

Republican Senator David Vitter, a Senate Banking Committee member, said that the Securities and Exchange Commission needs to compel the Securities Investor Protection Corp to take action because victims have now been waiting since Stanford's arrest in 2009 for a resolution.

"Sue SIPC on behalf of the Stanford victims now," the Louisiana lawmaker said in a statement after discussing his concerns publicly during a congressional hearing.

Stanford, 61, was arrested in 2009 and faces a 14-count criminal indictment over an alleged $7 billion scheme linked to certificates of deposit issued by his Antigua-based bank. The SEC has also filed civil charges against him.

Investigators accused the one-time billionaire of using Ponzi scheme proceeds to fund other ventures and a lavish lifestyle that included several yachts, private jets, and homes around the world. Stanford has denied wrongdoing.

SIPC, which handles claims for investors if their brokerage fails, had previously said in 2009 that it did not believe Stanford victims who bought certificates of deposit through the U.S. brokerage arm of Stanford's company were eligible to receive compensation because the customers, rather than the brokerage, held custody of the CDs.

After two years of mulling it over, however the SEC rejected SIPC's argument in June and issued a statement that called on SIPC to institute a liquidation proceeding.

In that statement, the SEC said it would be forced to file a court action if SIPC did not comply.

SIPC's board met on September 15 to review the matter, but has still not taken any action and remains in talks with the SEC.

Spokespeople for the SEC and SIPC both declined to comment on Vitter's statement.

Tuesday, 6 December 2011

US-Committee in opposition to Grant Thornton

Stanford International Victims find it necessary to make the courts aware of how strongly we support the recognition of Grant Thornton. We must let the court know that we have no trust or faith in Janvey and the "Official Investors Committee." If you have not yet signed the petition that will be filed with the courts and the U.S. government, please do so because there is still time. This committee speaks only for themselves and for U.S. investors, we must make the courts aware of the international investors feelings.

Notice how the committee sign themselves as the "US-Committee" speaks volumes, it appears even they acknowledge they don't represent the interests of International victims.

December 5, 2011
By the US-Committee

The Official Stanford Investors Committee (the "Investors Committee") submits this brief in opposition to the Petition for Recognition of Foreign Main Proceeding Pursuant to Chapter 15 of Bankruptcy Code (the "Petition"). The Petition was originally filed by former liquidators, Nigel Hamilton-Smith and Peter Wastell, and is now championed by Marcus Wide and Hugh Dickson (the "Joint Liquidators").

The Investors Committee respectfully urges the Court to deny the Joint Liquidators any form of recognition under Chapter 15. Any recognition of these Joint Liquidators would be "manifestly contrary to the public policy of the United States". That is so for at least four separate reasons.

First, the appointment of the Joint Liquidators (and their predecessors) was pursued and obtained in violation of this Court's Orders. Granting these Joint Liquidators any form of Chapter 15 recognition, under these circumstances, would undermine fundamental regulatory and jurisdictional policies of the United States.

Second, there are significant conflicts of interest raised by the Joint Liquidators's request for recognition as the "foreign main" proceeding. The Receivership Estate has significant claims against the Antiguan government that will likely be frustrated (or abandoned) if the Joint Liquidators achieve "foreign main" recognition. The Investors Committee believes those conflicts are exacerbated by the multiple representations that have been undertaken in this proceeding by counsel for the Joint Liquidators.

Third, the recognition sought by the Joint Liquidators should be denied because it is very much a "one-way street." The Antiguan courts have already refused to recognize this Court's Receiver, finding both that the Receiver has "no legal entitlement to standing in Antigua and Barbuda" and that this Court's Order appointing the Receiver and taking sole possession of the assets of the various Stanford entities, including SIBL, was "unenforceable."

Fourth, recognition should be denied because it has become painfully obvious that the Antiguan government and the Antiguan judicial system have no real interest in prosecuting the individuals responsible for the Stanford fraud, nor in recovering assets for the benefit of Stanford's investor-victims.