Monday, 27 December 2010

Barbados DLP and BLP must return proceeds of crime to Allen Stanford’s victims

Source:Barbados Free Press

Barbados politicians received Stanford money – stolen money.

The same anonymous insider who accurately tipped us off to the 3S scandal now reports that Allen Stanford gave political donations to both the Barbados Labour Party and the Democratic Labour Party.

Our source says that both US and UK Authorities contacted the current Government of Barbados about various Stanford financial transactions that occurred in or through Barbados. A small part of the information received, (almost as an afterthought, according to the source) contains details of Standford companies’ political donations and expenditures in Barbados.

With this in mind, the question must be asked:

“Considering that Stanford’s political donations are now known to be ‘Proceeds of Crime’, will the DLP and BLP politicians declare how much was received and return those funds to the victims of Stanford’s ponzi scheme?”

Prior to his arrest, Allen Stanford provided more than US$7 million dollars to US politicians alone. We know that because US politicians are required to declare their sources of funding.

Unlike the United States and many other countries, Barbados has no campaign financing rules, disclosure requirements or conflicts of interest laws for elected and appointed government officials. In Barbados “campaign donations” are just as likely to end up in the Prime Minister’s personal bank account, but as former PM Owen Arthur knows – even when caught it doesn’t matter because there is no law against it.

How much did Stanford provide to the Barbados Labour Party and Democratic Labour Party and associated individuals over the years?

Prime Minister Freundal Stuart and Opposition Leader Owen Arthur need to come clean with their fellow citizens and to return the stolen money to the victims.

Propaganda Continues at The Barbados Advocate

In the latest edition of the Barbados Advocate, Guyson Mayers states that Barbados was “spared” from Allen Stanford because our “relevant authority” was warned about him before any damage was done. Wishful thinking by Mr. Mayers or just part of the normal spin at the Barbados Advocate since that paper became the de facto political mouthpiece of the DLP government?

Considering that even the TD Bank saw US$2.1 billion of victims’ funds flow through its accounts and the lawsuits haven’t stopped coming, it’s a little early to be saying Barbados has been “spared”…

“…I can say that Sir Allan Stanford arrived in the Caribbean bearing gifts like Santa Clause out of season, and nearly everybody fell at his feet. To our credit, when it looked like he had an interest in Barbados, one of our principal officials at the time put the relevant authority on notice that such an interest was expressed and that the appropriate care should be taken to protect Barbados. We were spared him.”

Friday, 24 December 2010

Stanford's Lawyers Say They Need Two More Years to Prepare for Fraud Trial

Source:Laurel Brubaker Calkins (Bloomberg)

Lawyers for R. Allen Stanford, the Texas financier accused of a $7 billion Ponzi scheme, asked to delay a trial set to begin Jan. 24 for at least two years so they can prepare their defense.

Stanford’s trial preparation suffered during the first nine months of this year because his previous lawyer “focused on attempting to obtain funds from the insurance provider” more than on the financier’s defense,” the lawyers, Ali Fazel and Richard Scardino, said yesterday in a court filing. “During this period of time, the accused determined that little progress was made toward actual trial preparation.”

Fazel and Scardino were appointed as Stanford’s attorneys in October, after U.S. District Judge David Hittner in Houston declared the former billionaire indigent. They told Hittner in October that they would try to be ready for a January trial, which was then about 90 days away.

In requesting a delay yesterday, the lawyers said they won’t have enough time to properly analyze more than 5 million documents and dozens of potential witnesses before the current trial date.

Stanford, 60, has been detained as a flight risk since June 2009 on charges he swindled investors through the sale of bogus certificates of deposit by Antigua-based Stanford International Bank Ltd. His lawyers also have asked that Stanford be released on bond, claiming he is too heavily medicated in prison to participate in his defense.

Mental Fitness

Stanford’s personal doctor declared him incompetent to stand trial in court papers this month, and his lawyers have asked for a hearing to gauge the financier’s mental fitness, according to court records. Prosecutors received court approval to conduct their own psychiatric evaluation of Stanford, according to court records.

Fazel said in yesterday’s filing that the government, while it doesn’t oppose a delay, “wishes to be heard on the length of the continuance.”

Laura Sweeney, a Justice Department spokeswoman, declined to comment.

Stanford, who denies all wrongdoing, is on his fifth team of criminal defense lawyers after losing a court fight over access to $100 million in legal defense insurance coverage through his Stanford Financial Group of companies.

Stanford fired two successive criminal-defense lawyers in 2009 after each experienced what they described as personality and strategic conflicts with the jailed financier. Stanford was also briefly represented by the Houston Federal Public Defender’s Office and by two lawyers who were allowed to withdraw from the case after Stanford lost his insurance coverage in September.

Jets, Yachts, Island

Stanford was ranked by Forbes magazine as one of the world’s richest men in 2008, with an estimated net worth of more than $2 billion including a fleet of jets, yachts and a private Caribbean island. All of his corporate and personal assets were frozen by court order when the U.S. Securities and Exchange Commission accused him of running a “massive” Ponzi scheme in February 2009.

The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas).

Long wait continues for Stanford investors

Source:LOREN STEFFY (Houston Chronicle)

Another Christmas is about to pass, and once again, investors of R. Allen Stanford find their stockings — and their nest eggs - empty.

The former Caribbean money man's trial date is approaching here in Houston next month, but it's unclear if it will proceed as scheduled.

During the past year, Stanford has been changing lawyers more often than Lady Gaga changes outfits, and he's now left with court-appointed counsel that argues the erstwhile billionaire is unable to stand trial because he's doped up on pain medication.

Stanford has, by white-collar crime standards, received harsh treatment. He's been denied bail and remained in a privately run prison since his arrest in the summer of 2009. He was severely beaten by other inmates, which is why he's on medication. A judge has refused to allow him to tap his company's insurance policy for the legal defense of officers and directors, which has prevented him from mounting the sort of high-dollar defense that we saw from, say, Enron's Ken Lay and Jeff Skilling.

In the past two years, though, Stanford himself has ceased to be the story. The most amazing aspect of the Stanford saga is how little money has been recovered. As the court-appointed receiver has chased assets around the globe, he's found Stanford's accounts stunningly empty.

In an attempt to scrape together a tiny sliver of the more than $7 billion that authorities believe was lost in the Stanford case, the receiver earlier this month sued four of Stanford Financial's top officers, who haven't been named in earlier civil or criminal actions. That effort, if successful, would recover no more than $12.4 million, though the former employees will undoubtedly challenge the receiver's recovery effort. Attorneys for at least one of them told Bloomberg News their client intends to contest the receiver's claim.

While it falls under the receiver's legal responsibility, as a practical matter, I'm not sure that, spread amongst all the aggrieved Stanford investors, it's enough money to be worth the effort.

The other untapped pool for possible recoveries in a case like this is other investors, those who bought Stanford's certificates of deposit and sold them, pocketing the return, before the company unraveled.

Not like in Madoff case
The trustee tracking down assets on behalf of Bernard Madoff's investors recently scored an unexpected windfall after a Florida philanthropist who'd invested with the con artist agreed to return more than $7 billion her husband had collected as profit on Madoff investments over the years.

But that's not likely to happen in the Stanford case. A judge has already ruled that former investors who collected returns from Stanford's certificates of deposit have been allowed to keep the proceeds, according to an earlier court ruling. They, after all, bought into the alleged scam just like the other victims.

Warnings long before
To add insult to investors' losses, U.S. diplomatic cables released last week show that as far back as 2006, officials had concerns that Stanford might be involved in an international scheme of bribery and money laundering. The cables, released amid the latest flood of secret U.S. government documents from the WikiLeaks website, shows ambassadors and other officials made an effort to avoid being photographed or have other contact with Stanford.

The warnings made the rounds in diplomatic circles almost three years before the Securities and Exchange Commission accused Stanford of running a massive fraud and got a judge to appoint the receiver to recover assets for investors.

It's not clear if the State Department shared its con-cerns with other agencies, though the SEC had also been alerted to possible wrongdoing. In the ensuring years, while the agencies failed to act, Stanford's empire grew, ensnaring hundreds of new investors.

Now, those investors await Stanford's trial, seeking justice in place of restitution, because it's about all they have left.

For them, there is no medication to ease their pain.

Wednesday, 22 December 2010

WikiLeaks: Embassy Believed Financier Was Rotten

Source: CBS News

U.S. diplomats took rumors of accused Ponzi schemer R. Allen Stanford so seriously four years ago that they made sure to avoid being photographed with him.

The embassy in Barbados referenced rumors that Stanford was involved in "bribery, money-laundering and political manipulation" in a 2006 cable, nearly three years before he was accused of bilking investors out of $7 billion in a Ponzi scheme, the Guardian newspaper of London reported Monday.

The disclosure comes from the trove of secret State Department cables released to a number of news outlets by the document-dumping website WikiLeaks.

The discovery of the cable comes as Stanford's trial nears its scheduled start date of Jan. 24, 2011. A psychiatrist working for the defense found the financier incompetent to stand trial, according to a report from The Associated Press. Prosecutors asked a federal judge Monday to order Stanford to be examined again, the AP reports.

The 2006 cable reported on a meeting the U.S. ambassador in Barbados had with Stanford and the Barbados prime minister, the Guardian reported.

Officials wrote, "Allen Stanford is a controversial Texan billionaire who has made significant investments in offshore finance, aviation, and property development in Antigua and throughout the region. His companies are rumored to engage in bribery, money-laundering and political manipulation."

The cable's author made sure to note that the ambassador "managed to stay out of any one-on-one photos with Stanford" and that embassy employees were told to stay away from him, the Guardian reported.

The cable adds to reports that the government knew about Stanford well before he was charged in February 2009. After Stanford was charged, the inspector general for the Securities and Exchange Commission found that the agency had suspected since 1997 that he was running a Ponzi scheme.

How R. Allen Stanford Bribed Congress

Source:The Judiciary Report

An insightful article in the Miami New Times explored the bribery aspect of the R. Allen Stanford case. It also serves to confirm what I have stated all along, bribery is a way of life for many in the corporate world. I saw that firsthand in the Madonna case, which coincidentally happened in Miami as well, much like many elements of the Stanford case.

The R. Allen Stanford ponzi case reveals how astonishingly easy it is to bribe Congress. The FBI and SEC knew of Stanford's misconduct since the 90's and did nothing. Why? Stanford gave $5,000,000 to various Republicans and Democrats in Congress to kill a bill introduced by former president Bill Clinton A/K/A "Bubba" that would have shut fraudsters like him down. The bill was called the Financial Services Antifraud Network Act.

After the donations to Congress people, said bill addressing bank fraud was mysteriously killed in the Senate. Had it passed, Stanford's goose most likely would have been cooked.

Another thing that disgusts me about the Stanford case, is how he corrupted the judicial and arbitrary system, using his looted ponzi money, to buy influence with judges, in terrible bids at silencing employees that began blowing the whistle several years ago.

Charles Hazlett, former Stanford employee that was defrauded in court, should sue him again

Said American employees that left in separate cases several years ago or were terminated when they figured out he was running a ponzi scheme, legally tried to receive their pay and all that was owed to them, but due to corruption by Stanford, were slapped with $150,000 to $200,000 in legal fees for daring to file a claim and speak out about his wrongdoing.

Said judges and arbitrators should be brought up on fraud charges, as these people made serious, credible allegations that were 100% true and had you heeded the warnings, instead of fawningly bowing to corruption, investors all over the world wouldn't be out $8 billion dollars and America's name in the financial world would not have sustained another terrible blackeye.

Madoff, Stanford and other greedy, corrupt titans in the corporate sector, killed the American dream for many. They also killed free trade, with this crooked redistribution of wealth.

These men and women are not successes. They are thieves, frauds, crooks and liars, who should have gotten real jobs instead of stealing from everyone else who actually has one.

Success in the corporate arena is when you build a company from the ground up that provides a true service - such as American Airlines (air travel), Apple (computers), Macy's (clothes and housewares) and Marie Callender's (food) to name a few.

Stealing everyone's money under false pretenses, so you can live a lavish lifestyle makes you a failure and a fraud.

The Fall of a Titan

Even more than Bernie Madoff's tale, Allen Stanford's rise and fall is the story of the past decade in America, where greed mixed with cynical politics birthed a perfect storm for accused hucksters such as Stanford to bring the global economy to its knees. And as Stanford's story shows, the warning signs were there. They were simply ignored...

In 1999, a DEA investigation found that members of the vicious Juárez Cartel in Mexico had deposited more than $3 million in Stanford's bank to launder drug money. Stanford quickly surrendered the cartel's money to the DEA and earned praise from the agency for his quick action. But later that year, federal regulators placed Antigua on a blacklist of nations suspected of money laundering and fraud.

That same year, the Clinton administration introduced a bill to crack down on overseas banks favored by gambling rings, drug militias, and terrorists. Two months later, according to a study by consumer advocacy group Public Citizen, Stanford hired a powerhouse lobbying group to fight the bill and began donating to both major parties. He handed out $208,000 to Republican campaign committees and $145,000 to Democrats that year. Among his biggest recipients were powerful Texas lawmakers, including House Democratic Caucus Chair Martin Frost. The bill, despite passing a House committee 31-1 with strong Treasury Department backing, was allowed to die in a Senate committee.

In 2002, as Congress took up a bill called the Financial Services Antifraud Network Act, which would have strengthened U.S. regulators, Stanford upped his lobbying. That year, according to the Center for Responsive Politics — a nonprofit group that monitors campaign money — Stanford's company gave $800,000 to the Democratic Senatorial Campaign Committee — the vice chairman of which was Florida's own Sen. Bill Nelson. The senator received more of Stanford's cash than any other member of Congress, according to one study, with $45,900 donated to his campaign. Stanford, in fact, personally hosted a fundraising event for Nelson in Florida. The anti-money-laundering bill died in a Senate committee ...

In all, Stanford spent nearly $5 million lobbying Congress between 1999 and 2008 and dished out $2.4 million to federal candidates. He also sponsored dozens of free, "fact-finding" trips to Antigua and other Caribbean islands for politicians and their staffs on his fleet of jets. Records of the trips show that former Florida Rep. Katherine Harris took one such jaunt to Saint John's. Disgraced Texas Republican Tom DeLay flew 11 times on Stanford's jets, according to the Dallas Morning News...

Like Hazlett's, Basagoitia's claims were summarily dismissed, and both brokers were left to pay hundreds of thousands of dollars in back pay and attorney's fees to Stanford. Neither ever heard from the SEC regarding their accusations. And if their voices weren't loud enough for regulators, another Miami employee took his suspicions to court in 2006 and laid out in even greater detail Sir Allen's schemes....

In the filings, De Maria said he told his immediate boss in 2004 he suspected the firm was laundering South American drug money, lying to investors, running a gigantic Ponzi scheme, and paying off Antiguan and American politicians to look the other way. The company settled De Maria's case almost immediately after his lawyers got a court order that would have forced Allen Stanford to testify...

The regulatory board that heard Hazlett's and Basagoitia's testimony is sanctioned directly by the SEC, and De Maria publicly made his claims in Miami-Dade Circuit Court. Yet the wing of the government charged with rooting out bank and investment fraud did not respond to the concerns piling up around Sir Allen's operations..

Saturday, 18 December 2010

Kacheroo Letter to Colleagues

Dear Client/Affiliate/Friend of KLS:

I want to introduce Kachroo Legal Services (KLS) to you as we begin our journey of legal innovation. My legal practice has been steeped in international transactional work over the past decade of my 22 year legal career. Recently, I have received many requests from Madoff investors for legal counsel and to assist all innocent, victimized investors of the Madoff ponzi scheme as a result of my representation of my client, Harry Markopolos (often identified as the Madoff Whistleblower). Additionally, my appointment as Vice Chair of the Global Alliance on the Madoff case has allowed me to interact and deal with counsel all over the world on this case. Now, individuals and entities needing help with the identification of ethics violations or with the investigation and possible litigation of all kinds of financial fraud are seeking me out for advisory and counseling services.
My practice has always been about solving the most difficult and complex legal
situations for my clients, and doing so with an empathy and understanding that lends heart to the exercise and thereby to the solution. In this spirit, KLS will observe and assist others in observing ethical standards that may be beyond black letter law. I call this "representation with an ethic of care." KLS will recruit attorneys and staff to assist with our many litigation, transactional and government matters, who are willing to be trained in serving the client with that extra degree of empathy and understanding. We will reach beyond the ordinary boilerplate to discover and innovate solutions to "represent the client's interest" not merely to regurgitate the same language in contract and brief that has gone before. Although this means that KLS will be inventing new wheels where none exist, it does not mean that we are not aware of the wheels that exist and how to deploy them.
Please peruse and review our website thoroughly and feel free to contact us with
your questions and comments at the "contact us" page. If you are aware of and want our input, advice, counsel with regard to potential fraud of which you are aware, please complete the general fraud complaint registration form so that we can investigate briefly before getting back to you. If you are involved in any of the cases we have taken on, including the Madoff matter, please complete the specific registration form for your litigation and the general registration form. Please review the payment guide if you are using the registration portal. This may be done by a friend, relative, counsel for the investor. On the SEC litigation, there is a specific engagement letter in which a contingent fee is provided to be shared by KLS and all its affiliate firms conducting such SEC litigation.
As many of you know, I have simultaneously been working with academic, business, and law firm affiliates, including the Global Alliance on the Madoff case, on founding the International Center for Corporate and Financial Ethics and Responsibility. Watch for bulletins from the Center exhibited on our website for those that may want to get involved with the Center's educational mission for greater ethics and responsibility in the marketplace. Watch also for our upcoming blog on matters of general legal and specific Madoff interest.
We look forward to meeting and assisting you.


Best wishes, --Gaytri

Kachroo Legal services in the Media

For any investors considering whether to join-in the action against the SEC by KLS, and protect their future rights to sue the SEC, Here are a couple of articles that have been in the media relating to Dr Kachroo and the work she has already done for the Madoff Victims. I hope you find them helpful in deciding whether this action is best for you or not:

The following story “The Whistleblower’s Lawyer,” appeared in the Summer 2009 Harvard Law Bulletin.

Gaytri Kachroo S.J.D. ’02 was preparing to fly to India for business when she got a call that thrust her into the midst of one of the largest financial stories of our time. The caller was her client Harry Markopolos, an independent fraud investigator who, in the ensuing 24 hours, would go from being an unknown Chicken Little to a national hero.

Markopolos had spent almost 10 years trying to convince federal regulators that the Wall Street wonder Bernard Madoff was running the largest Ponzi scheme in U.S. history—a $65 billion investment fraud that would spell financial ruin for thousands of individuals, charitable organizations and investment groups.

When he called Kachroo on the night of Dec. 11, Markopolos told her that Madoff had just confessed and that The Wall Street Journal would be breaking the story in the morning edition. He wanted her to advise and represent him.

It was quite a request, given that until that moment, Kachroo knew next to nothing about her client’s investigation of the Madoff affair and had no experience with the press. A transactional lawyer who now specializes in emerging markets in India and Southeast Asia, she had been representing Markopolos since he began his fraud investigation business in 2004, and she had developed a strong bond with him based on their shared belief that you don’t have to compromise your ideals to succeed.

When the story broke on Dec. 12, her client was flooded with requests from media around the world.

“I was a little overwhelmed initially,” said Kachroo, a partner at McCarter & English in Boston. “We were deluged with calls from CBS, ABC, NBC, CNN, The Wall Street Journal, and I was on the phone daily from Pune [India] with congressional counsel and SEC Inspector General David Kotz. I had to get up to speed in a hurry.”

Kachroo knew that all of their preparation in the coming weeks was leading up to the moment when Markopolos would testify before Congress. She worked with him on what names he could include without exposing himself to liability and pressed him on what he knew for certain from his own evidence as opposed to what he assumed based on information from others.

“I was asking Harry constantly what he really knew, not just what he thought, and I asked him to base his opinions solely on that,” Kachroo said. “This provided testimony that was palpably Harry’s own and something the public could identify with.”

The media were smitten by the image of Markopolos as a modern-day Cassandra, hounding federal regulators for nearly a decade to consider his evidence that Madoff was a fraud. Despite numerous letters from Markopolos culminating in a detailed 21-page memo in 2005, the U.S. Securities and Exchange Commission had ignored his warnings. Consequently, a scam that totaled about $7 billion when Markopolos first uncovered it in 1999 was allowed to grow to more than nine times that size.

According to Kachroo, the Madoff debacle is not an isolated occurrence, but a symptom of overwhelming flaws that plague our regulatory system.

“This is not a story about one rogue investor,” she said. “It’s a symbol for the systematic failure that we are experiencing in our financial systems. It’s about how we need to change the rules and the roles people play so this never happens again.”

On Feb. 4, Kachroo sat at her client’s side through four hours of congressional testimony in which he presented the House Financial Services subcommittee with his evidence against Madoff, his blistering criticism of the SEC and a series of specific suggestions on how to reform the nation’s financial regulatory system.

“Government has coddled, accepted and ignored white-collar crime for too long,” he told Congress. “It is time the nation woke up and realized that it’s not the armed robbers or drug dealers who cause the most economic harm; it’s the white-collar criminals living in the most expensive homes who have the most impressive resumes who harm us the most. They steal our pensions, bankrupt our companies and destroy thousands of jobs, ruining countless lives.”

Since her client’s testimony, the international financial crisis has occupied more of Kachroo’s professional focus.

She and Markopolos met with the new chairwoman of the SEC, Mary Shapiro, in mid-March to discuss her client’s recommendations for reforming the beleaguered regulatory agency.

The previous month, Kachroo was named vice chairwoman of the newly formed Global Law Firm Alliance, a coalition of 45 firms from 25 nations dedicated to assisting the estimated 3 million victims of the Madoff scam. Because of the complexities involved in adjudicating a worldwide financial fraud, the alliance has proposed the creation of an International Financial Court. Kachroo coordinated meetings with members of Congress and the White House and oversaw the draft proposal and its incorporation into the agendas for the European Union Summit in April and a G-20 meeting in September.

She has also been asked to represent, before Congress and the Securities Investor Protection Corp., a large national coalition of investors in Ponzi schemes, including Madoff’s and several others.

Lawyer for Madoff Whistleblower Launches Own FirmPosted by Brian Baxter

The longtime lawyer for Harry Markopolos, the forensic accountant who tried to warn the SEC about Bernie Madoff, is starting over.

Gaytri Kachroo stepped down from her position as international practice chair at McCarter & English three months ago because of potential conflicts over her work representing victims of Madoff's massive Ponzi scheme.

Last week, Kachroo hung out her own shingle in Kachroo Legal Services. At the moment, the firm is a one-lawyer shop based in Cambridge, Mass.

But the 47-year-old Kachroo has big plans.

Kachroo is focusing most of her attention on a global settlement for all Madoff victims (Kachroo prefers the term "innocent investors" to victims). Her proposal, she says, will provide a cohesive solution for Madoff claimants--Kachroo herself represents about 600--by forging alliances with other firms.

"I'm working on [forming] a consortium of firms in New York, Washington, and Boston," says Kachroo, who declined to publicly name the firms because she doesn't yet have signed agreements from all of them.

Since the Madoff fraud came to light, Kachroo has sought to leverage her connection as counsel to its chief whistleblower. She serves as vice chair of a global alliance of 50 firms representing Madoff investors, and has joined in its call for the creation of an international financial court.

Kachroo also assisted in collecting affidavits that were used for an internal investigation conducted by the SEC's inspector general. The investigation ultimately led to a 457-page report released last month detailing how Madoff systematically deceived the regulator for decades.

It's the SEC that Kachroo has in her sights.

She says the regulator must accept responsibility for its past failures by sponsoring a government-backed global Madoff settlement that will send a positive message to investors worldwide. (Kachroo commends current senior SEC officials for implementing changes to the way the agency operates.)

Taxpayers won't be responsible for funding an SEC-sponsored settlement, Kachroo says. Instead the money will come from a list of financial institutions identified by her and a team of affiliated firms.

"I don't want to go near the word 'bailout,'" she says. "The SEC was not the only agency or institution responsible--it shares responsibility with other financial institutions, many of whom have been bailed out. But they're still deep-pocketed and there's no reason for them not to come forward and settle their claims."

By partnering with the government as a group, Kachroo believes more financial institutions will be incentivized to come forward. The SEC or some other special government task force or commission can administer claims, she says.

It's a tall order for any firm, let alone a start-up, but Kachroo says she's already taken steps towards her goal. The technology behind a registration system for Madoff victims on her firm's Web site is worth nearly $4 million, she says. The money was "provided more or less pro bono" by a sympathetic IT company.

That system will enable Kachroo and those working with her to present the SEC with a comprehensive list of victim names and, as such, emphasize the potential for litigation against the agency, Kachroo says. She hopes to use her growing network of firms to enlist between 100,000 and 1 million investors--"the numbers are key," she adds--for a global settlement.

Kachroo Legal Services might be a one-person firm today, but it's namesake is ready to start hiring immediately.

"It's a big campaign that we're launching here and it's not going to be a one-person job," Kachroo says. "I'm getting outstanding resumes."

She hopes to soon hire one lawyer with six years of SEC experience, something she jokingly notes Markopolos would probably scoff at. A corporate lawyer by trade, Kachroo has a particular need for litigators experienced in fraud and securities cases. (Kachroo, who used to head McCarter's India initiatives, also hopes to add another corporate lawyer to assist with transactional work.)

Start-up capital for her new firm is coming partly from large groups of clients, both domestic and international, who are paying her to investigate and pursue claims against the SEC and certain financial institutions.

Kachroo's efforts to unify various investor groups has also been met with a positive response, she says, adding that the firms she hopes to affiliate with will also share some of the financial burden in order to get her campaign going.

And her star client is also branching out. Markopolos is writing a memoir and plans for a documentary are also in the works. The whistleblower and his team that spent nine years investigating Madoff will work closely with Kachroo's new firm.

Wednesday, 15 December 2010


Before reading the following Blog posts it is important to point out to you all that Gaytri has been advised that the Stanford Case against the SEC is the strongest case there has been against them, and that she has also been told that our case stands the best chance of succeeding: although there is no guarantee.

The fact that you put your money into SIB through the bank in Antigua does not preclude you from joining this action, both David Brent and myself also went directly to SIB in Antigua and this does not affect our status for being eligible to join this action. This is open to ALL victims from ANYWHERE in the world regardless of where or how they invested their money with Stanford.

Although the official deadline for joining the action is 16th February 2011, that is the date Gaytri has to deliver the lawsuit to the SEC. She will need to prepare all the individual files on each claimant and supply the SEC with the names and amounts for each claimant, so we should be thinking of our deadline as the End of January in order for her to get everything together.

As David Brent has said, this is the best chance we have of recovery (in our opinion) and even if we are already signed up with Morgenstern and Blue or any other lawyer,, Gaytri is the only one dealing with this particular action so if you want to be included you will need to register with her. Again she has spoken to the lawyers on the committee and they have said they are not interested in taking on any more actions as they have their hands full with the work they are already pursuing. They will assist her with information (to a certain extent) but we have one chance at this and after speaking to her I feel positive about the outcome. David and I have asked PM repeatedly about taking action against the SEC and he has not replied in a positive manner, as I have already said he has his hands full with the cases he is already working on. He knows about this action and being signed up with him does not preclude you from joining this action, I am also signed with PM on the other cases.

Gaytri knows that many of us only have the statement from Vantis and she is prepared to accept this as proof of our accounts with SIB. With regard to SIPC cover, we have to separate this in our minds from any other action, this is separate and we are going after the SEC because they failed to do what they were supposed to do. If we get bogged down in what others are doing we will miss this window of opportunity. That is not to say that we will not still be working on trying to make sure that SIPC cover for the few does not mean the majority paying, we are still trying to get some answer on that one.

Although this is a sort of class action it is quite different from the normal class action in that any lawsuits against the SEC has to contain all the names and details of each claimant, together with a total amount that the lawsuit is seeking, that is why we each have to register and make a claim with Gaytri. Time is of the essence here and as David Brent has said we feel this is the best chance of recouping our losses. Contact the offices of Gaytri Katroo with your details and any question you may have. David and I will do our best to answer as many queries as possible, but read all the documents and then decide individually if you wish to go ahead and register. We also want to reach out to as many victims as possible with this opportunity so if you know anyone who does not read the forum can you inform them about what we are doing.


A month ago we asked the Investors Committee if they were prepared to sue the SEC if investors so decided.

We have still not received a written reply but received a verbal response that they were "continuing to review the situation."

Meanwhile the clock is ticking on the statute of limitations, and unless a claim is made against the SEC before February 16th 2011, we will all be barred from claiming against them. Forever.

Since then, WendyAnne, WCCI, Patron1, Jaime, and I, have been searching for a new lawyer to sue the SEC on our behalf.

On November 11th 2010, Dr Gaytri Kachroo, of Kachroo Legal Services, in Cambridge, Massachusetts, filed a class-action against the SEC on behalf of the Madoff victims.

Of the three class-actions against the SEC on behalf of the Madoff victims, we believe this has the best chance of succeeding (one of these actions has been brought in Luxembourg by an investment fund and is of no relevance to us).

Over the last few weeks we have had lengthy discussions with Dr. Kachroo, and have held several conference calls in order to determine the process forward.

On behalf of all the other investors who have put in a great deal of effort in such a short space of time I am very pleased to announce that Dr Kachroo has agreed to sue the SEC on behalf of the Stanford victims.

The suit is for the benefit of all the victims who sign-up, whether domestic (US) or International, and we shall all have equal status.

Copies of Kachroo Legal Services letter of engagement together with a brief statement will follow, together with questions and answers from our last conference call.

Jaime has also made submissions which no doubt he will also be posting.

Before reading through all the documentation, I would like to highlight a few very important points:

1. As this is an action against the US Government, it can not be a class-action in the normal sense. Only the investors who have joined-in and claimed under the suit will be included. No other victims will be able to join-in later.

2. After the statute of limitations expires (which we believe will be on February 16th 2011), unless investors have already registered and their claims have been submitted, they will be barred from suing the US Government and the SEC.

3. Kachroo Legal Services have to prepare a separate claim for each investor who decides to join the class, in advance of filing of the class-action. This will obviously take some time, and clearly time is of the essence. We should each decide whether to sign-up sooner rather than later.

4. The fees are explained in KLS letter of engagement, but in brief; there is a registration fee, on a sliding scale from $500 to $1500 per investor, commensurate with the level of investment, with no limit to the number of accounts per investor. This registration fee is to finance the cost of the class-action. There will also be a contingency fee of 15%, plus reasonable expenses, due from the recovery, if the class-action is successful.

I do not want to mislead anybody. This will be a tough case. There will be a motion to dismiss by the US Government, on the grounds of sovereign immunity, that will first have to be overcome before we can even start to tackle the SEC.

I have had several discussions now with Dr Kachroo and I have found her very moral and righteous, someone who I believe will fight for all the victims.

Dr Kachroo believes the Stanford victims have a better chance of winning against the SEC than the Madoff victims, and so do I.

Personally I would hate to be left out if this case is successful, but you must each make your own decisions whether to participate in this action or not.

This is the website of Kachroo Legal Services:

If I can be of any further assistance to any investors please post your concerns, or send either WendyAnne or myself a PM (In this case, PM means Private-Message). We will try to answer all questions to the best we can. Time is of the essence.

Kachroo Legal Services - Statement To The Stanford Investors

Investors defrauded by the Stanford Ponzi Scheme

We recommend that all Stanford investors file a U.S. Securities and Exchange Commission (SEC) administrative claim under the Federal Tort Claims Act (FTCA) through Kachroo Legal Services, P.C. (KLS) as soon as possible and no later than February 16, 2011. Due to the statute of limitations KLS will prepare to file the class action suit within six (6) months after that date. It is recommended that investors submit their information to KLS well before this deadline to ensure their claims are timely processed. KLS will file a class action lawsuit against the SEC (similar to a normal class action but in this instance only for those investors for whom KLS has filed an SEC administrative claim). Only those clients who have filed an SEC administrative claim under the FTCA will be represented in the KLS class action. All investors would be represented by our class action, both domestic U.S. investors and international investors around the world affected by the SEC’s actions and omissions.
We anticipate filing thousands of claims (as there are over 20,000 investors into the Stanford Ponzi Scheme), so to ensure your claim is handled promptly, you should file as soon as possible.
We will help you by processing and filing your FTCA claim with the SEC. In addition, KLS will file a lawsuit against the SEC on behalf of everyone who has filed FTCA claims by the deadline.
All investors must sign the KLS engagement letter attached herewith in English or in Spanish. The cost for both the SEC administrative claim work and the lawsuit will be as follows per investor:
For investors who have invested less than $100,000 USD total through all their accounts - $500;
For investors who have invested between $100,000 USD and $1million USD - $1000;
For investors who have invested more than $1million USD through all their accounts - $1500.
This will be the only cost per investor for all such legal services other than a contingency fee of $15% of the recovery obtained by KLS as well as reasonable costs and expenses of the litigation.

Why Choose KLS?
1. Dr. Kachroo, Principal of KLS, is also Vice-Chairman of the Global Alliance, a civil society whose members hip consists of 5000 attorneys from around the world.

2. KLS has experience working closely with the SEC and their offices. We are currently in discussions with the SEC to establish the Madoff Task Force and develop an alternative dispute resolution mechanism to settle cases against implicated financial institutions.

3. As a part of the Markopolos team, Dr. Kachroo represented the whistleblower that first discovered the Madoff fraud and exposed the SEC. From this experience, she has gained better insight into the possible legal recourses for Madoff victims. Due to our involvement in the various SEC investigations into ponzi schemes including the Stanford Ponzi Scheme, we have first-hand knowledge of the SEC’s involvement and the OIG’s report to succeed in a potential litigation.

4. With our track record of helping Madoff victims and our wealth of experience in this matter, we are confident that our litigation strategy under the Federal Tort Claims Act (FTCA) has the highest likelihood of obtaining a recovery from the U.S. Government.

5. So far neither plaintiffs nor attorneys for plaintiffs have obtained specific information that supports more than the negligence of the SEC in its investigation. KLS believes it is critical to a successful action against the SEC that further information, which it is optimally positioned to obtain, and which it is currently researching is unveiled as to the conduct of SEC investigations in this case.

6. Confidentiality. The class action will provide some level of anonymity in any action we take. We will attempt to limit discovery to the named plaintiffs only.
Benefits of KLS Proposal
Joining the class action through the SEC administrative claim is a low cost and highly efficient method of litigating to recover your losses.
The more investors that join through this process, the greater the pressure exerted on the SEC to reach an equitable settlement.
You will receive regular updates of our progress and on other related legal actions.
KLS Update on Current Situation in US Courts
There are two cases currently pending that involve Federal Tort Claims Act (“FTCA”) claims against the SEC for its handling of the Madoff Ponzi scheme. The first was filed in the United States District Court for the Southern District of New York on October 14, 2009. See Phyllis Molchatsky, et al. v. United States, case no. 1:09-cv-08697 (LTS). Briefing on the Motion to Dismiss for lack of jurisdiction was completed on June 11, 2010.[1]
The second case was filed in the United States District Court for the Central District of California on December 10, 2009. See Dichter-Mad Family Partners, LLP, et al. v. United States of America, et al., case no. 09-9061. On April 20, 2010, the Court granted Defendant’s Motion to Dismiss for lack of jurisdiction, but provided that “Plaintiffs may file an amended complaint containing new allegations that are reasonably aimed at satisfying Plaintiffs burden as described in this Order.”
These second plaintiffs filed an Amended Complaint on May 17, 2010 (re-filed on May 20, 2010) on the basis of a submission of ‘a document that contains or identifies the mandatory duties that SEC employees failed to follow in their investigations and failures to investigate Madoff’. These plaintiffs were specifically ‘informed by an SEC employee that this document contains mandatory conduct guidelines, duties and policies for SEC employees and it is entitled “The SEC Policies, Procedures and Administrative Regulations.”
In addition with regard to class issues: In June 2009, the District Court for the Eastern District of Louisiana issued an opinion in the Katrina Canal Breaches Consolidated Litigation allowing plaintiffs’ claims under the Federal Tort Claims Act (“FTCA”) to proceed as a class action. The court held that “a class action can be alleged under the FTCA as long as the administrative claim requirements are fulfilled.” In re Katrina Canal Breaches Consolidated Litigation, 2009 U.S. Dist. LEXIS 48837, 265 (E.D.La.). Thus, we would be able to proceed as class action (subject to certification) for all investors who timely file their claims against the Securities Exchange Commission (“SEC”) within the two year period, i.e., by February 16, 2011.
The FTCA provides that the government entity against whom the claim is made (here, the SEC) has six months to respond to the administrative claim. The claimant’s right to sue in court vests once the claimant receives the SEC’s denial of the administrative claim, or six months after the administrative claim is filed, if the SEC fails to respond. Thus, we would define the class to include those investors who (i) file a claim within the two year period and (ii) either receive a denial from the SEC or do not receive a response from the SEC within the six month period.

Concluding Thoughts
The time window for you to join this lawsuit is limited due to the statute of limitations. We are offering a cost effective and efficient method for you to file your claim so that you will benefit from any positive settlement.
We urge all of you to notify other investors to get in touch with us without delay so that we may get all claims in by February 16, 2011.
We shall advance all expenses including but not limited to any expenses incurred by you related to depositions or any other legal proceedings we advise you to attend, including travel expenses.
The sole contingent fee upon which we shall be compensated from the Recovery shall be in the amount awarded by settlement or a judgment of a Court of law. We are seeking a contingency of 15% of the recovery plus reasonable expenses.

Please contact KLS at or by phone at:
Dr. G. Kachroo : +1 617-864-0755
for further information about KLS, please go to

Tuesday, 14 December 2010

US Widens Stanford Probe to brokers

US securities regulators have broadened their investigation into the alleged $8bn Ponzi scheme run by Allen Stanford, the Texan billionaire, to include brokerage executives who invested their clients’ money in Stanford International Bank products.

The Securities and Exchange Commission has notified Danny Bogar, former president of Stanford International Bank’s brokerage operations, and several brokers in recent months that it intends to file civil fraud charges against them in connection with the probe, according to lawyers involved in the case and a regulatory filing. The SEC declined to comment.

The move marks an expansion of the government’s probe beyond the top officers of the bank to include the army of brokers who attracted millions of dollars from investors....

Tom Taylor, a lawyer for Mr Bogar, confirmed that his client had received a Wells notice, the process the SEC uses to notify individuals that they may face civil charges. Mr Taylor said his client had no knowledge of the alleged fraud.

Mr Taylor added that he had met SEC investigators to plead his client’s case. “He certainly wasn’t privy to what was going on [at the bank],” Mr Taylor said. Mr Bogar is a brother-in-law of Mr Davis.

Patrick Cruickshank, a broker who worked in Stanford’s Austin, Texas, office from 2006 until 2009, also received a Wells notice, according to an update to his record filed with the Financial Industry Regulatory Authority the brokerage industry’s regulator. The SEC said it planned to sue him on civil charges of securities fraud and aiding the Stanford fraud, according to the filing.

A lawyer for Mr Cruickshank said his client “has done nothing wrong” and “was a victim of the Stanford fraud”.

He would say that wouldn’t he!

Brokers Face Charges

US authorities have told several brokers that they intend to file civil charges against them over the alleged $8bn Ponzi scheme at Allen Stanford's banking group

US regulators have widened their investigation into the alleged fraud at Allen Stanford's banking group, and are now looking at brokers who worked with the bank as well as the bank's top executives.

The Financial Times reported this morning that the Securities and Exchange Commission had notified several brokers, as well as the head of Stanford International Bank's brokerage operations, that it intends to file civil fraud charges against them.

Investigators allege that Stanford's banking operation was in fact an $8bn (£5bn) Ponzi scheme – an investment in which returns to investors are funded either through their own payments or through those of subsequent investors rather than any genuine investment returns.

The FT said that Danny Bogar, head of SIB's brokerage operations, had been notified of the SEC's move by means of a Wells notice, a process used to alert individuals that they might face civil charges. Bogar's lawyer said his client knew nothing about the alleged fraud.

Patrick Cruickshank, a broker who worked in Stanford's office in Austin, Texas from 2006 to 2009, also received a Wells notice, the paper said, citing US regulatory filings. His lawyer said Cruickshank had "done nothing wrong" and "was a victim of the Stanford fraud".

Until now only Stanford, four senior executives at the bank and an Antiguan regulator had been charged in connection with the scheme.

Stanford, who has been held in custody since his arrest in June 2009, denies the allegations. His trial is due to begin in January, although defence lawyers argued last week that the businessman was too heavily medicated to prepare for the proceedings.

Former chief financial officer James Davis has pleaded guilty and is co-operating with the probe. Others accused have denied wrongdoing.

Sunday, 5 December 2010

Trustee Sues HSBC Over Cash Sent to Madoff

At long last people are realising the part HSBC played as a correspondent bank in both the Madoff and the Stanford ponzi schemes. Let us all hope HSBC are held to account for their failure to practice due diligence when dealing with Madoff and Stanford, it is HSBC who should pay for their failure NOT the VICTIMS!The trustee seeking assets for victims of Bernard L. Madoff’s global Ponzi scheme filed a lawsuit on Sunday seeking $9 billion from a roster of defendants headed by HSBC, the London-based financial giant with hedge fund clients that fed piles of cash into the enormous fraud.

The lawsuit is the third multibillion-dollar complaint the Madoff trustee, Irving H. Picard, has filed against major financial institutions in the last two weeks. It almost certainly will not be the last.

Under federal bankruptcy law, the trustee must file all his recovery claims within two years of the initial bankruptcy filing. That did not occur until Dec. 15, 2008, but the bankruptcy court has defined the filing date as Dec. 11, 2008, the day of Mr. Madoff’s arrest.

That gives Mr. Picard until midnight on Saturday either to sue to recover cash withdrawn from Madoff accounts before the Ponzi scheme collapsed or to seek punitive damages from anyone involved in those withdrawals.

The large banks the trustee has sued — the Swiss-based UBS, JPMorgan Chase in New York, and now HSBC in London — were not alone in providing services or marketing products related to the Madoff fraud. For example, several other global banks sold investment vehicles that tracked Mr. Madoff’s performance, and some smaller banks provided services to “feeder funds” that channeled investments into Mr. Madoff’s funds.

It is unclear how many of those other entities may be in Mr. Picard’s sights. With the deadline approaching, Mr. Picard said in a recent report to the bankruptcy court that he “anticipates that he will file extensive additional litigation in the coming weeks.” Some complaints may be filed in foreign jurisdictions. The trustee has law firms working for him in Europe, Gibraltar, Canada, Bermuda and the Caribbean to help untangle connections between Mr. Madoff and “foreign individuals, feeder funds and international banking institutions,” he said in the court filing.

The latest lawsuit contends that the Madoff’s fraud “could not have been accomplished or perpetuated unless the HSBC defendants agreed to look the other way and to pretend that they were ensuring the existence of assets and trades when, in fact, they did no such thing.”

It asserts that HSBC and a dozen of its subsidiaries “aided, enabled and sustained” Mr. Madoff’s fraud in two important ways: by lending the bank’s prestige and performing services for hedge funds that raised money for Mr. Madoff; and by developing complex derivative products that provided additional sources of cash for the Ponzi scheme.

A dozen hedge funds, nearly two dozen European money-management businesses and 13 individuals were included as defendants in the 170-page complaint.

Among them were Sonja Kohn, the prominent Viennese financier who had ties to some of the largest Madoff feeder funds, and UniCredit, the Italian holding company whose Bank Austria unit was a partner with Ms. Kohn in her flagship company, Bank Medici.

Representatives of the defendants in Europe could not be reached for comment Sunday evening.

But in vigorous defenses against similar lawsuits filed by investors, lawyers for the HSBC units, the UniCredit subsidiaries and the Bank Medici defendants have all consistently denied that their clients had any knowledge of the Madoff fraud or were responsible in any way for not detecting it before its collapse.

To outsider investors, the “labyrinth” created by the hedge funds, managers and HSBC subsidiaries named as defendants looked like “a formidable system of checks and balances,” said Oren J. Warshavsky, a partner at Baker & Hostetler, the trustee’s law firm. “Yet the purpose of this complex architecture was just the opposite,” he said, “to avoid scrutiny and generate more fees.”

The trustee’s HSBC claim, filed electronically in United States District Court in Manhattan, is the largest, surpassing a $7.2 billion demand filed against the estate of Jeffry Picower, a longtime Madoff investor who died last year.

By the end of September, Mr. Picard had filed 19 lawsuits seeking to recover a total of $15.5 billion from members of Mr. Madoff’s immediate family, longtime individual investors such as Mr. Picower, and major feeder funds, including those operated by the Fairfield Greenwich Group and J. Ezra Merkin, a prominent Wall Street investment manager.

Mr. Picard’s recent lawsuits against JPMorgan, UBS and HSBC have added $17.4 billion to the amount he is claiming on behalf of victims, for a total of more than $32 billion.

That amount, which includes demands for punitive damages, is 50 percent more than the $20 billion he has estimated as the actual cash losses in the fraud, but he is not assured of recovering all the money he is seeking.

JPMorgan, UBS and HSBC have already vowed that they will fight the trustee’s claims in court and those battles could take years.

The total shown on investor account statements on the eve of the fraud’s collapse was nearly $65 billion, the sum of fictional paper profits that had accumulated in some accounts for decades. Mr. Picard has recovered approximately $1.5 billion through asset sales and out-of-court settlements.

Mr. Madoff is serving 150 years in prison after pleading guilty to orchestrating the fraud.

Wednesday, 1 December 2010


Since our last report, we have been busy pursuing recoveries on your behalf. Following is an update on recent developments in the Stanford case, and a discussion of major events that we expect in the coming days.

While the pace of the civil litigation is slower than any of us would like, this is unfortunately typical of all large, complex litigation in the United States. This case is particularly complicated by the parallel criminal proceedings and the international component, including the location of assets outside the United States and the involvement of foreign governments. We are, though, encouraged by recent developments, which have positioned us well to continue our vigorous prosecution of claims on your behalf and to fight for the maximum possible recoveries. While we cannot yet predict the amount of money that our efforts are likely to yield, we can assure you that we are continuing our efforts on all legal fronts, and we are moving closer to our goals of identifying all potential defendants who may be liable for participating in or aiding the Stanford fraud, and to obtaining settlements or judgments to compensate you for your losses.
Claims Process - There is not yet any deadline for you to file claims with the court-appointed receivers in either Texas or in Antigua, although there is a procedure for filing claims in the Antiguan proceeding (you may do so by going to the website at: We are beginning to work (through the Investors Committee) with the Receiver appointed by the court in Texas (the "Receiver") to establish an efficient claims process that will facilitate the submission and adjudication of claims and the distribution of recovered assets. We will alert you immediately when you will be able to submit claims in the U.S. Receivership, and explain to you at that time how to do so.
Investor Committee - As you know, our firm was instrumental in the establishment of an official Stanford Investors Committee to represent the interests of Stanford CD holders in the receivership case and other legal proceedings involving the Stanford companies. Peter Morgenstern serves as one of the members of the committee. The Investors Committee meets telephonically at least once a week, and with the Receiver and his professionals (attorneys, financial advisors, and others) in person at least on a monthly basis.
As contemplated under the Court's order establishing the Investors Committee, the Committee is working cooperatively with the Receiver to review and analyze millions of pages of documents that might support the pursuit of lawsuits against third parties that could benefit Stanford investors. We expect that our review of those documents not only will lead to the filing of new claims on your behalf against as-yet unidentified third-party defendants, but will also significantly bolster our claims against the defendants that we have already sued, including the banks (HSBC, Toronto Dominion Bank, Bank of Houston, Trustmark, and SG Private Banking), Antigua, and the Eastern Caribbean Central Bank.
The establishment of the Investors Committee, and specifically the requirement that the Receiver make documents and other information available to the Investors Committee, should be a great benefit to investors. As such information becomes available to us, we will likely gain a more complete picture of who assisted Stanford in the perpetration of this fraud, how it was accomplished, and identify additional targets for litigation.
The Antigua Litigation - As you know, we filed a class action complaint against the Government of Antigua alleging that it aided and participated in the Stanford fraud, and that it misappropriated Stanford assets without paying compensation to Stanford's victims. We also filed a separate complaint against Antigua, the Eastern Caribbean Central Bank, and the banks that purported to take control of the Bank of Antigua, a Stanford-owned financial institution that was seized without the payment of any compensation to Stanford's victims, whose money was used to establish and fund that bank.
While Antigua long evaded the service of legal papers, we have recently reached an agreement under which Antigua will respond to both civil actions no later than December 1, 2010. We expect that Antigua will argue that it is not subject to the jurisdiction of the United States District Court for the Southern District of Texas, and that it will also argue that it is shielded from liability by the doctrine of "sovereign immunity." We believe that both of those arguments are unfounded, and we will oppose Antigua's anticipated motions to dismiss the civil claims against it.
On a related matter, you may recall that Leroy King, the former head of Antigua's Financial Services Regulatory Commission, was indicted by a federal grand jury in Texas, and is awaiting extradition to the United States. King continues to fight extradition, but we believe that his status will be resolved in the coming months. If and when he is extradited to the United States, we believe that the prosecution against him will result in the disclosure of additional information concerning Antigua's complicity in, and active assistance to, the Stanford fraud. We therefore are continuing to closely monitor developments regarding King's extradition and prosecution.
The Bank Litigation - As you know, last year we commenced litigation against Toronto-Dominion Bank, Trustmark National Bank, Bank of Houston, HSBC Bank PLC, and SG Private Banking (Suisse) S.A. (Societe Generale) alleging that those financial institutions assisted Stanford's fraud, and are legally responsible to the investors for damages incurred as a result. The banks have responded by filing motions to dismiss our complaint on a variety of theories.
Recently, we reluctantly requested that the court stay the civil case against the banks until the conclusion of Allen Stanford's criminal trial. We made this request because a tremendous amount of information concerning the perpetration of the fraud remains under the exclusive control of the prosecutors. Among other things, the prosecutors have (as is typical in all such cases) prohibited access to key witnesses until after they testify at the criminal trial. Much of the key information and testimony supporting the government's case against Allen Stanford is likely to be revealed for the first time at his criminal trial. We expect that a great deal of that evidence will concern the ways the banks that we have sued facilitated the Stanford fraud. For that reason, we believe that we will be in a stronger position to prosecute the claims against the banks after the government presents its case at Mr. Stanford's criminal trial.
All of the bank defendants have opposed our request to stay the case until the conclusion of Allen Stanford's criminal trial. The court has not yet ruled on the motion, but it may do so at any time.
The Dual Receiverships - Unfortunately, the status of the two receiverships (one in Texas, one in Antigua) remains unsettled. As you all know, the courts in Dallas, Texas and Antigua each appointed a separate receiver to collect and distribute Stanford's assets to creditors and investors. For more than a year, the two receivers were litigating around the world, at great cost and expense to you, to determine which receiver should control the proceedings and the limited assets available for distribution. We always believed that this competition was unnecessary and tremendously wasteful.
Before our last update, the receivers jointly sought court approval in Dallas for a "resolution" of their disputes, which would have had the effect merely of perpetuating the dual receivership structure. We did not believe that this structure or the proposed resolution was in the best interests of investors, and we filed a formal objection with the Court. Thereafter, a court in Antigua removed the Antiguan liquidators from their positions, and their firm, Vantis, itself entered into administration proceedings. Hamilton-Smith and Wastell remain the Antiguan liquidators pending further court proceedings and appeals, but they have resigned from Vantis.
The status of the Antiguan liquidators is still uncertain, as is the status of their proposed agreement to perpetuate the dual-receivership structure. We will keep you advised of any new developments and will continue to take appropriate steps to advance your interests.
The Criminal Case - Allen Stanford's criminal trial is scheduled to begin in late January. We expect that the trial will last weeks or months. The documents, testimony, and other information that becomes available at the trial should be tremendously helpful to our efforts to recover settlements and judgments on your behalf.
Political Efforts - We continue to work on political efforts aimed at helping all Stanford investors. Since our last update, Peter Morgenstern has made several more trips to Washington, D.C. to meet with staff members at the U.S. Securities and Exchange Commission, the State Department, Members of Congress, Senators, and their aides, and we are continuing to gain support from U.S. officials for Stanford victims. While the political process is slow and complicated, we are encouraged that Stanford victims are being heard in Washington and that our efforts to obtain relief through the political process will continue.
Other Claims and Actions - We are continuing to investigate and analyze the viability of additional potential legal claims and causes of action to recover funds for your benefit. We have identified a number of potential targets, but because of the preliminary nature of our investigation, and the need not to reveal our strategy to the potential defendants, it is not prudent for us to identify those potential claims or defendants in a widely-distributed client update such as this one. We assure you, however, that we are continuing to pursue all possible sources of recovery as quickly as possible. Peter D. Morgenstern