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Thursday, 27 September 2012

Former Stanford girlfriend, Stoelker, ordered to pay $600K

Date: Wednesday, September 26, 2012, 11:25am CDT
Andrea Stoelker, the girlfriend of R. Allen Stanford and a former Stanford Financial Group executive, has been ordered to pay more than $600,000, court records show.
Documents show U.S. District Judge David Godbey issued the final judgment against Stoelker on Sept. 24, ruling on a complaint filed in 2010 in the U.S. District Court’s Northern District of Texas Dallas Division by Ralph Janvey, the court-appointed receiver for the Stanford International Bank Ltd.
According to the complaint, Stoelker, a Houston resident, was the former president of Stanford Financial Group Global Management LLC, the former president of Stanford 20/20 (Stanford’s cricket organization), and Stanford’s girlfriend. In June, Stanford was sentenced to 110 years in prison for his role in a $7 billion Ponzi scheme. He was found guilty of 13 counts of fraud in March.
According to the 2010 complaint, “revenue from the sale of fraudulent certificates of deposit generated substantially all of the income for the Stanford defendants and the many related Stanford entities,” and Janvey identified more than $560,000 in transfers of CD proceeds from Stanford parties to Stoelker.
“Each payment of CD proceeds from the Stanford parties to Stoelker was made with actual intent to hinder, delay, and defraud the Stanford parties’ creditors,” Janvey asserted in the complaint.
In the Sept. 24 judgment, court documents show Godbey ordered Stoelker to pay $568,206 in voidable fraudulent transfers she received, $35,748 in attorneys’ fees and $406 in costs and expenses, as well as prejudgment interest at the rate of 6 percent per year, as calculated from the date of each respective transfer to Stoelker.

Thursday, 13 September 2012

Ex-Stanford exec gets 3 years for $7B swindle

A top executive in the now-defunct empire of disgraced Texas financier R. Allen Stanford was sentenced to three years in prison Thursday for her role in helping the once jet-setting businessman bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history.
Associated Press

A top executive in the now-defunct empire of disgraced Texas financier R. Allen Stanford was sentenced to three years in prison Thursday for her role in helping the once jet-setting businessman bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history.

Former Stanford chief investment officer Laura Pendergest-Holt's sentence was part of a plea agreement reached with federal prosecutors. She had pleaded guilty in June to one count of obstruction of a U.S. Securities and Exchange Commission proceeding in exchange for the sentence.

After U.S. District Judge David Hittner handed down the sentence he revoked Pendergest-Holt's bond, and she was taken into custody. She waved to her husband Jim Holt before she was put in handcuffs and taken from the courtroom by federal marshals.

A tearful Pendergest-Holt told Hittner prior to sentencing that she was sorry for putting her trust in Stanford and others in his financial empire, including the former chief financial officer, James M. Davis, who also has pleaded guilty and faces up to 30 years in prison.

"I'm sorry I was so trusting in people who didn't deserve my trust, and my trusting them caused harm in others. I apologize greatly," she said.

Prosecutors said Stanford, 62, used the money from investors who bought certificates of deposit from his bank on the Caribbean island nation of Antigua to fund a string of failed businesses, bribe regulators and pay for a lavish lifestyle that included yachts, a fleet of private jets and sponsorship of cricket tournaments. Authorities said Stanford and others in his companies lied to investors from more than 100 countries, telling them their funds were being safely invested in stocks, bonds and other securities.

Pendergest-Holt, 38, a native of Baldwyn, Miss., was the first person indicted in the case. Prosecutors said she and other executives conspired to hide the bank's true financial health and provide misleading testimony to the SEC in 2009 when it was investigating Stanford's bank.

One of her attorneys, Chris Flood, told Hittner that Pendergest-Holt was also a victim of Stanford's Ponzi scheme and lost her life savings. Flood had asked that she not be imprisoned for three years but be allowed to serve that time in home confinement, a halfway house or a combination of the two.

She "is an extremely upstanding citizen and not a danger to anyone," Flood said. "Don't punish her for the crimes of Allen Stanford or Jim Davis."

But prosecutor Jason Varnado told Hittner that from Pendergest-Holt's statement in court on Thursday and from letters her family and friends had submitted calling her a victim, the former Stanford executive wasn't taking full responsibility for what she had done. Varnado asked that she be sent to prison.

"She led (investors) to believe (their money) was invested in a particular manner ... Ms. Holt is not a victim. She is a federal felon," Varnado said.

As part of the plea deal, prosecutors will drop 20 other counts she faced, including conspiracy, wire and mail fraud.

Stanford, the one-time billionaire, was convicted in March on 13 of 14 fraud-related counts. In June, Hittner sentenced Stanford to 110 years in prison. He is serving his sentence in a prison in Central Florida.

Two other indicted ex-executives - Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller - are set for trial later this month. A former Antiguan financial regulator was also indicted and awaits extradition to the U.S.


Dear Stanford Investors and Attorneys of Stanford Investors:

We at KLS, and the managers of this blog "Stanford's Forgotten Victims", are very pleased that we have been able to overcome the sovereign immunity hurdle, and the U.S. Government’s motion to dismiss in this case.

We recognize, however, that this is an opportunity not only for KLS and its clients but for all investors who have filed, or attempted to file claims with the SEC. As you know, we have filed our case as a class action. As such any victory we obtain is a victory for all class members (all those who have filed claims with the SEC).

Along with KLS, there were many other attorneys who did attempt to file claims with the SEC on behalf of their clients. Regardless of the rancor that may have existed between attorneys and investors in the past, now is not the time to dwell on conflict, but to breed the kind of bond that can assist this case in going forward with the kind of strength we want to engender, with seriousness, collegiality, fairness, and propriety as our guide.

Investor recovery should be first and foremost for all investors and all attorneys of investors. As such, we would like to encourage all investors (who have filed with the SEC in any manner whatsoever) or their attorneys who have done so, to contact us so that we can determine a common strategy forward to benefit all investors.

We thank you all for your support, and your criticism. After all, we believe, all the feedback we have received has assisted us, and culminated in the formulation of our initial victory in this case!

Best wishes,
Gaytri Kachroo

Dr. Gaytri D. Kachroo
KLS-Kachroo Legal Services, P.C.
225R Concord Ave.
Cambridge, MA 02138
Direct: 1-617-864-0755
Facsimile: 1-617-864-1125

Pendergest-Holt sentence due Thursday for Stanford crime

by PATSY R. BRUMFIELD/Daily Journal
HOUSTON, Texas – Baldwyn native Laura Pendergest-Holt is set for sentencing Thursday for her attempts to obstruct the investigation of a Ponzi scheme at Stanford International Bank Ltd. Holt was chief investment officer at Stanford Financial Group based out of Memphis, with offices in Tupelo, when the entire Stanford financial empire came crashing down in 2009 under the weight of a federal investigation. Her boss, R. Allen Stanford, was convicted last March of masterminding the scheme, which cost worldwide investors $7.2 billion. He is serving a 110-year prison sentence. In a deal with the government, Holt pleaded guilty June 21 to one count and faces up to five years in prison. Her deal recommends three years. She’ll appear before District Judge David Hittner for a 9:45 a.m. hearing in Houston, where Stanford built his empire. Co-defendants Mark Kuhrt and Gilbert Lopez, former Stanford executives, are set for trial there starting Sept. 28. Read more: - Update Pendergest Holt sentence due Thursday for Stanford crime

Monday, 10 September 2012

Stanford Victims in Antigua Praise Latest Development

Source: Caribarena

Antigua St. John’s - Stanford victims in Antigua are calling the historic victory over the United States Securities Exchange Commission (SEC) a landmark achievement and “the best news the victims have had in three-and-a-half years.”

On Friday, a US Court ruled that the SEC must defend a negligence claim contending that the Commission had failed to act appropriately after concluding at least four times before 2008 that R. Allen Stanford was indeed operating a Ponzi scheme.

“We have made legal history with this latest ruling and I encourage all Stanford victims to go to to read how they can join this lawsuit and for the first time have a chance of recovering their stolen money,” said spokesperson for the Stanford International Victims Group (SIVG) Kate Freeman.

She added that the achievement of attorney Gaytrie Kachroo is the first for any lawyer in finding a legal solution to the Discretionary Rule that has long protected the SEC from legal sanction when it failed to act accordingly.

“There are thousands of Stanford Victims that need to be made aware of what we have done here and also be given the chance of joining Kachroo Legal Services on this journey,” Freeman said.

The victims now have a clear passage to continue forward with the claim against SEC examiners, according to the ruling.

The lawsuit being carried by Kachroo claims that the SEC had a “nondiscretionary duty” to report Stanford to the Securities Investor Protection Corp. (SIPC) in the USA. The landmark judgment was filed on September 7.

“Gaytri Kachroo was originally contacted by me and another victim and asked to work on the behalf of the Stanford International Victims group to sue the American Government and the SEC. All other lawyers said this could not be done due to the “Discretionary Rule” that protects the US government and its departments,” Freeman said.

The attorney is reported as saying on Friday in a report that the judge’s decision was the first to overcome the SEC’s “sovereign immunity.”

“The ruling handed down… is a bold statement and a warning to the government: if you fail to carry out your statutory obligations to protect the public against wrongdoing with massive repercussions to the investing public, you will be held liable,” Kachroo said in a statement.

According to the judgment, “…The Securities and Exchange Commission was obligated to report Stanford’s company to the Securities Investor Protection Corp. This obligation to report was not discretionary because the controlling statute mandates that the report be made.”

The SEC may use the next stage of the litigation to raise the argument that it had not concluded before 2009 that Stanford was running a Ponzi scheme, despite the plaintiff’s claims.

It is also being reported that the SEC shied away from investigating the case because of the clear complexities involved, as they reportedly preferred to investigate more slam-dunk cases due to work evaluation purposes.

The case is Zelaya v. United States, 11-cv-62644, U.S. District Court, Southern District of Florida (Miami).

Sunday, 9 September 2012

KLS - Stanford Update #17


Miami, Florida - September 7, 2012

Federal District Court Judge Robert N. Scola, Jr. handed down an historic opinion against the U.S. Government today, holding the Securities and Exchange Commission potentially liable for billions of dollars for not notifying the Securities Investor Protection Corporation when it had information about Allen Stanford’s Ponzi scheme. In the wake of the Madoff and Stanford Ponzi schemes and the dozens of lawsuits filed against the Government for the SEC’s failure to protect the public, today marks the first time that a lawsuit survived the Government’s motion to dismiss.

The case is being fought by Dr. Gaytri Kachroo and her law firm, Kachroo Legal Services, P.C., on behalf of thousands of Stanford victims. KLS filed a class action against the government, alleging that the SEC knew Stanford was operating a multi-billion dollar Ponzi scheme and “sat and watched the scheme grow for years, as it ballooned into a $7 billion enterprise, second only to Bernard Madoff as the largest Ponzi scheme in history.”

In an unprecedented decision denying the Government’s efforts to dismiss the lawsuit, the Court held today that the SEC can be held liable for failing to act appropriately when put on notice that an investment advisor is operating a Ponzi scheme. To achieve this important and unprecedented goal on behalf of its clients, KLS crafted an argument not raised in any of the prior complaints against the government: that the SEC violated a statutory duty to notify SIPC that an investment advisor was in or approaching financial difficulty.

Dr. Gaytri Kachroo is proud of her firm’s achievement: “This decision reaffirms the SEC’s fundamental mission. For decades, the SEC has relied on sovereign immunity to avoid the consequences of its inaction in the face of Ponzi schemes. The ruling handed down today is a bold statement and a warning to the Government: If you fail to carry out your statutory obligations to protect the public against wrong doing with massive repercussions to the investing public, you will be held liable.”

Victims of the Stanford Ponzi scheme have not only lost billions of dollars as a result of the SEC’s failure to put an end to the scheme, but they have also lost hope that they will see any recovery, as the SEC- appointed receiver has recovered only pennies on the dollar at this point, and has not made any distribution to victims. “We are in an unprecedented position, and are thrilled to succeed in this first major hurdle in the case. Today, our small firm accomplished what thousands of lawyers and consultants employed by the Receiver could not do in over three years: restore hope for the victims of Stanford’s Ponzi scheme.”

Kachroo Legal Services represents individuals and corporate entities in business and securities litigation, companies and their Boards in ethics and audit compliance, funds and investors in their government and SEC relations, and in general corporate law and general counsel services for companies both domestic and international. Dr. Gaytri Kachroo is the attorney for Madoff whistleblower Harry Markopolos.

Friday, 7 September 2012

Lawsuit against U.S. over Stanford Ponzi scheme can go ahead

Source:Joseph Ax (Reuters)

(Reuters) - A lawsuit claiming U.S. securities regulators were negligent in failing to respond earlier to Allen Stanford's $7 billion Ponzi scheme can go forward for now, a federal judge ruled in Florida on Friday.

U.S. District Judge Robert Scola rejected the U.S. government's motion to dismiss the case, according to court documents. The government claimed the court did not have jurisdiction over the U.S. Securities and Exchange Commission's handling of the Stanford case.

The purported class action complaint, filed by two investors who say they lost a combined $1.65 million when the scheme collapsed, claims the SEC knew as early as 1997 that Stanford was likely operating a Ponzi scheme but took no action against him until 2009. The SEC had a duty to notify the Securities Investor Protection Corp (SIPC) of Stanford's fraud, the lawsuit asserts.

The SIPC, funded by the brokerage industry, handles investors' claims when brokers fail and has overseen liquidation proceedings for Bernard Madoff's Ponzi scheme and the collapse of MF Global.

In his ruling, Scola found that the SEC was required to act if it concluded that Stanford was running a Ponzi scheme.

"When the Securities and Exchange Commission believes that a broker or dealer is in or approaching financial difficulty then it must report that broker/dealer to the Securities Investor Protection Corporation," he wrote.

Scola did, however, dismiss the lawsuit's second claim, which faulted the SEC for not considering whether to deny Stanford's company's annual registration as an investment advisor. The judge agreed with the government's argument that such decisions are entirely within the SEC's discretion.

The government's argument that the SEC did not know Stanford was running a Ponzi scheme will be addressed if and when it moves for summary judgment, the judge said.

A similar $18.7 million lawsuit against the U.S. was tossed by a Texas federal judge last year for lack of jurisdiction.

In a March 2010 report, the SEC's inspector general found the SEC was aware since 1997 that Stanford was likely running a Ponzi scheme and that numerous agencies, including the Federal Bureau of Investigation, the Justice Department and the Secret Service, all probed Stanford's operations at one time or another.

An SEC spokeswoman declined to comment on Friday's ruling.

"This is a historic ruling showing that the SEC can finally be held accountable for not notifying SIPC," said Gaytri Kachroo, a lawyer for the plaintiffs.

Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent CDs issued by Stanford International Bank, his bank in Antigua.

The plaintiffs are seeking unspecified damages and certification of the class action.

The case is Zelaya et al. v. United States, U.S. District Court for the Southern District of Florida, No. 11-62644.

(Reporting by Joseph Ax; editing by Carol Bishopric)

KLS Beats the SEC Motion to Dismiss!!!!


Zelaya Order MTD

Monday, 3 September 2012

IRS Hit Stanford Estate for $432 million

The Internal Revenue Service filed a "notice of claim" yesterday with the US District Court advising the Court that it is IRS's view that Allen Stanford is indebted to the United States for approximately $432 million in personal tax liability. The IRS intervened in the SEC's lawsuit against Allen Stanford three years ago and asserted the existence of a claim against Allen and Susan Stanford, which at that time was for approximately $226 million in personal tax liability. The U.S. District Court permitted the intervention and retained the authority to adjudicate all aspects of the IRS claim.
SIVG has been warning victims for years about the IRS having a claim against the Stanford estate, now we see our claims are all true.
Time is running out we have only two days before the JL's Grant-Thornton neet with the DoJ in Washington. Please write to the DOJ and tell them you want the money to go to Grant Thornton now before its to late!.
I want to see some sort of interim payout before the end of this year......if you want the same it is your duty to make the DOJ aware of how you feel.
 Addresses to send emails:


Saturday, 1 September 2012

SEC Seeks Sanctions Against Ex-Stanford Brokerage Execs

By Joshua Gallu (Bloomberg)

 The U.S. Securities and Exchange Commission accused four former executives of R. Allen Stanford’s Houston-based brokerage of facilitating the sale of bogus investments that fueled a $7 billion Ponzi scheme.
Top officials at the Stanford Financial Group Co. unit willfully aided and abetted the fraud, which unraveled in February 2009, the SEC said today in an administrative order. The agency named Jay Comeaux, the brokerage’s president from 1996 to 2005, his successor Daniel Bogar, private client group head Jason Green and Bernerd Young, a former regulator who became chief compliance officer.

Comeaux settled the claims without admitting or denying the allegations and agreed to be barred from associating with a broker or investment adviser. An administrative law judge will determine any financial penalties. Bogar, Green and Young are fighting the SEC’s claims.
Stanford, 62, was found guilty in March of using the brokerage to sell fraudulent certificates of deposit issued by his Antigua-based bank over the course of 20 years. He is serving a 110-year prison sentence for the fraud, which drew on more than 20,000 investors worldwide. Stanford’s former accountants and other executives also face criminal and civil claims.
The SEC has been reviewing the brokerage’s role for more than two years amid criticism from investors and lawmakers who said regulators should’ve caught the fraud sooner. The SEC’s internal watchdog faulted the agency in a report, saying no meaningful probe of Stanford’s businesses was conducted until 2005, even though examiners suspected fraud eight years earlier.

Fighting Claims

J. Randall Henderson, an attorney for Young, said yesterday his client will fight the claims “with whatever possible in terms of resources and energy.”
John Kincade, an attorney for Green, said in an e-mail that his client had no knowledge of Stanford’s fraud. “We look forward to the opportunity to clear Mr. Green’s name, and we are confident we will succeed.”
Phone calls to attorneys for Comeaux and Bogar weren’t immediately returned.
Bogar, Young and Green took several trips to Antigua to investigate and perform due diligence on Stanford’s bank, and they knew that the bank refused to allow the brokerage to review and confirm its investment portfolio, including historical performance and claims that it was focused on highly liquid investments, the SEC said.

False Claims

They then armed brokers with offering documents making claims they knew to be false, including that depositors were protected by a comprehensive insurance program. In 2007 and 2008, the brokerage sold more than $2 billion of the CDs, the SEC said.
“They mischaracterized Stanford’s CD program as safe and secure when in fact it was a secret trading program known only to a select few individuals,” Kevin Edmundson, an assistant director of enforcement in the SEC’s regional office in Fort Worth, Texas, said in an interview. “U.S. investors deserved to know that the CD program was a black box.”
The brokerage, which derived more than half of its revenue from the CDs, also gave employees financial incentives to sell the fraudulent products, according to the order. Advisers got 1 percent upon the sale, a trailing commission of 1 percent for each year of the CD’s term and additional quarterly bonuses based on total volume of CDs sold. By February 2008, an outside consultant advised the executives that the compensation was above the market rate and resulted in a distorted focus on the sale of Stanford CDs, the SEC said.

Conflicts of Interest

Bogar and Young also knew or were reckless in not knowing that the brokerage failed to disclose certain conflicts of interest, according to the SEC. The conflicts included the brokerage earning revenue from Stanford’s bank by managing its private equity investments and producing research reports on its asset allocation at the same time it was selling the CDs, according to the order.
Young became the top compliance official at Stanford’s brokerage in 2006 after having worked for nearly two decades at the National Association of Securities Dealers, which became the Financial Industry Regulatory Authority in 2007. He headed NASD’s Dallas office from 1999 to 2003, the brokerage-industry self-regulator said in a 2009 report. Young now works at Magnolia, Texas-based MGL Consulting LLC.
To contact the reporter on this story: Joshua Gallu in Washington at

SEC appeals in bid to help Stanford victims file claims

WASHINGTON (Reuters) - Securities regulators said on Friday they would appeal a federal judge's ruling rejecting their request for an industry-backed fund to start a court proceeding that could help compensate the victims of Allen Stanford's $7 billion Ponzi scheme.

The Securities and Exchange Commission announced its decision in a filing in federal district court in Washington, D.C., on Friday.

"We believe investors who bought Stanford CDs through the Stanford broker-dealer are protected under the law and therefore should at least be able to present their claims for relief in a court of law," SEC spokesman John Nester said.

"That is why we are appealing the lower court ruling and seeking an order compelling SIPC to begin a proceeding."

The SEC is trying to force the Securities Investor Protection Corp to start liquidation proceedings for the victims, some of whom lost millions of dollars in the fraud.

In July, a federal judge rejected the plea, saying the agency had not met its legal burden to show why SIPC should be compelled to act.

SIPC, which has handled high-profile liquidations such as Bernard Madoff's Ponzi scheme, contended that Stanford's offshore bank fell outside the scope of its authority.

It argued that the law limits it to protecting customers against the loss of missing cash or securities in the custody of failing or insolvent SIPC-member brokerages.

Allen Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

"We will defend our position and the court's opinion," said Stephen Harbeck, the president and CEO of SIPC. "We just think that the SEC is attempting to require us to provide a guarantee of the value of a certificate of deposit issued by an off-shore bank, and that is not what our statutory mission is."

"Our mission is to protect the custody function that brokerage firms perform," he added.

The decision to appeal the judge's ruling will tee up a precedent-setting case for the SEC, which until now has never taken legal action against the industry-backed fund in its 42-year history.

Since 2009, when Stanford was first arrested and charged, victims of the fraud have been fighting for SIPC to start a liquidation proceeding in the hope of getting back at least some of the funds they lost.

In a brokerage liquidation, a trustee winds down the business, returns securities and other assets to customers and creditors, and often tries to recover additional assets. The goal is to maximize what customers and creditors recover, and distribute assets fairly.

(Reporting by Sarah N. Lynch; Editing by Gary Hill)