Grant Thornton Press Release
Newly formed creditors’ committee is working closely with liquidators, but fears recovery efforts could stall if money isn’t released soon
ANTIGUA-July 13, 2011– Liquidators of Stanford International Bank announced today that its newly formed Advisory Creditors’ Committee is backing a proposal to urge the U.S. Department of Justice and the United Kingdom’s Serious Fraud Office to unfreeze critical funding to the estate immediately.
The Creditors’ Committee, which is currently made up of victims from six countries, says recovery efforts for over 21,000 creditors with $7.2 billion in claims will stall to the detriment of the estate unless money is released from the bank’s own accounts that have been frozen at the instigation of the DoJ for more than two years.
“The biggest single issue that we have facing us today is funding,” said Marcus Wide, who was appointed in May as liquidator of Stanford International Bank along with Hugh Dickson. “We have been in negotiations with the Department of Justice and Serious Fraud Office asking them to act quickly and release the money. At present we are optimistic as both DoJ and SFO have shown that they understand the nature of the difficulties facing our estate, and the potential impact on victims.Unfortunately the frozen assets have lost value while frozen and we fear they could continue to decline in value the longer they remain frozen. And more importantly the estate is presently without the money it needs to gather in and protect other assets to which the victims are entitled, and to fund the legal actions that can generate further recoveries for victims.”
“The Justice Department has frozen, at a cost to creditors, these funds which would otherwise have been handed over to the estate,” added Mr. Dickson. “It is the creditors’ money and it is unfortunate that it is not available to protect the creditors’ interests and generate additional recoveries in a situation which is otherwise rather bleak.” Approximately 99.7% of all 21,000 creditors of the Bank are holders of CDs that were victimized in R. Allen Stanford’s apparent fraud, according to the Liquidators.
The six-member Creditors’ Committee held its second meeting on July 7, 2011, and unanimously approved arrangements for alternate financing from commercial funders proposed by the Joint Liquidators urging the Antiguan Court to approve of that plan as well, so that the estate can do its job, although at greater cost to creditors, in the event that a portion of the frozen funds are not released. The High Court in Antigua has since approved the funding package in principle.
“This has been a trying time for all creditors and we have no time to lose in the recovery of our funds,” said Eric Cohen, a member of the Creditors’ Committee. “We all feel the sting of Stanford International Bank’s collapse, but we have faith in the approach Mr. Wide and Mr. Dickson are taking, and are pledging them our full support.”
Alexander Fundora, another member of the Creditors’ Committee and founder of a Miami, Fla.-based home health care company that lost $2.5 million in the Stanford scheme, said it is “hard to understand why the DoJ wants to retain control of our money and for it to expect the victims to absorb the expense of the commercial funding arrangements, when the bank’s own funds should be available at no cost. We urge the DoJ to release the funds immediately.”
Stanford International Bank failed in 2009 after top executives R. Allen Stanford, James M. Davis, and Laura Pendergest-Holt executed a massive Ponzi scheme misappropriating billions of dollars of investor funds, according to U.S. prosecutors.
Mr. Dickson and Mr. Wide, who are employed by Grant Thornton, a global audit, tax and advisory firm, were appointed liquidators on May 12, 2011, replacing Nigel Hamilton-Smith and Peter Wastell by order of the High Court of Antigua.
By creating a Creditors’ Committee, the new liquidators are working to have an ongoing dialogue with creditors and to create a creditor-driven estate, something that didn’t exist under the prior administration.
“We will consult with creditors in the early stages as often as we can,” Dickson said. “At the end of the day it is their money. It is important that we have access to the insights, opinions and support of the people who we serve.”
Members of the Creditors’ Committee include Mr. Fundora, United States; Mr. Cohen, Canada; Ricardo Del Valle, Panama; Luis Lopez, Venezuela; Attorney Patrick Kelly of Minneapolis (for a group of Mexican creditors who lost $66 million), and a Swiss member. A seventh creditor, Mr Richard Watson of Antigua has recently been invited from a number of applicants to join the Committee. The Committee will meet regularly and will weigh in on major decisions.
“We have gathered a group of knowledgeable individuals who are geographically diverse and represent both large and small creditors,” Mr. Wide said. “We are convinced that working with the creditors will expedite the process of recovering assets.”
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Thursday 28 July 2011
Tuesday 26 July 2011
SIPC Says It Need Not Reimburse Stanford Victims; SEC Disagrees
By John Sullivan, AdvisorOne
Dispute centers on meaning of 'theft' versus 'fraud.' SIPC to decide on next move by mid-September.
Call it splitting hairs, but at least one entity designed to protect investors from theft is sticking by its ruling against reimbursing the victims of money manager Allen Stanford. The key word is "theft," and Bloomberg reports the Securities Investor Protection Corp. (SIPC) alleges Stanford committed fraud, not theft, and therefore SIPC has no liability for damages.
Stanford, chairman of the now defunct Stanford Financial Group, based in Houston, was charged on Feb. 17, 2009 by the SEC with fraud and other violations of U.S. securities laws for an alleged $8 billion Pozi scheme that involved supposedly "safe" certificates of deposit.
SIPC maintains the circumstances specific to the Stanford case mean "that the law doesn’t provide for payouts to investors." The SEC’s staff initially agreed, but on June 15, the SEC informed SIPC that the “Stanford matter was appropriate for a proceeding under the Securities Investor Protection Act,” or SIPA.
The Bloomberg report says "the SEC told SIPC to start a process that could give as much as $500,000 to each qualified Stanford investor. The agency further surprised SIPC by threatening to sue if it didn’t carry out the plan."
SIPC said that said it expects its board to announce “on or about September 15, 2011 its decision about the referral from the SEC, and SIPC President and CEO Stephen Harbeck said that SIPC has “already started conferring with the SEC and the Stanford receiver regarding the SEC's referral in the Stanford matter.”
The SEC’s action “'is highly unusual,' SIPC’s Harbeck told the news service.
Bloomberg adds "Harbeck has said publicly that he doesn’t think the Stanford investors are eligible for repayments. SIPC is supposed to aid investors when their securities are stolen or go missing at a brokerage. Stanford’s customers still have possession of their securities, he said, and fraud by itself isn’t covered."
For people who lost money through the Stanford scheme, “it is very difficult to explain the difference between theft and fraud,” Harbeck said, according to Bloomberg.
Dispute centers on meaning of 'theft' versus 'fraud.' SIPC to decide on next move by mid-September.
Call it splitting hairs, but at least one entity designed to protect investors from theft is sticking by its ruling against reimbursing the victims of money manager Allen Stanford. The key word is "theft," and Bloomberg reports the Securities Investor Protection Corp. (SIPC) alleges Stanford committed fraud, not theft, and therefore SIPC has no liability for damages.
Stanford, chairman of the now defunct Stanford Financial Group, based in Houston, was charged on Feb. 17, 2009 by the SEC with fraud and other violations of U.S. securities laws for an alleged $8 billion Pozi scheme that involved supposedly "safe" certificates of deposit.
SIPC maintains the circumstances specific to the Stanford case mean "that the law doesn’t provide for payouts to investors." The SEC’s staff initially agreed, but on June 15, the SEC informed SIPC that the “Stanford matter was appropriate for a proceeding under the Securities Investor Protection Act,” or SIPA.
The Bloomberg report says "the SEC told SIPC to start a process that could give as much as $500,000 to each qualified Stanford investor. The agency further surprised SIPC by threatening to sue if it didn’t carry out the plan."
SIPC said that said it expects its board to announce “on or about September 15, 2011 its decision about the referral from the SEC, and SIPC President and CEO Stephen Harbeck said that SIPC has “already started conferring with the SEC and the Stanford receiver regarding the SEC's referral in the Stanford matter.”
The SEC’s action “'is highly unusual,' SIPC’s Harbeck told the news service.
Bloomberg adds "Harbeck has said publicly that he doesn’t think the Stanford investors are eligible for repayments. SIPC is supposed to aid investors when their securities are stolen or go missing at a brokerage. Stanford’s customers still have possession of their securities, he said, and fraud by itself isn’t covered."
For people who lost money through the Stanford scheme, “it is very difficult to explain the difference between theft and fraud,” Harbeck said, according to Bloomberg.
Sunday 24 July 2011
SEC Watchdog Probes Agency’s Oversight of Stanford Receiver
By Joshua Gallu - Bllomberg
The U.S. Securities and Exchange Commission’s internal watchdog is investigating the agency’s dealings with the man hired to recover funds for victims of R. Allen Stanford’s alleged fraud amid claims the court-appointed receiver has taken too much money for himself.
Inspector General H. David Kotz said today he is reviewing the SEC’s oversight of the receiver, Ralph Janvey, after getting a complaint that the bulk of recovered funds has been used to cover legal bills.
Janvey was appointed in 2009 after the SEC sued Stanford and a federal grand jury indicted him on 21 criminal counts alleging that he used his Houston-based Stanford Financial Group and an Antigua-based banking unit to defraud clients through the sale of certificates of deposit. Stanford, who has denied the allegations, is being held without bail while awaiting trial.
Kachroo Legal Services P.C. of Cambridge, Massachusetts, released a statement yesterday accusing Janvey of “malfeasance and waste” in his management of collected assets and claiming there was an “inside deal” between Janvey and the Stanford investor committee to approve high fees.
Kevin Sadler, Janvey’s attorney, said that the allegations are “patently false and completely irresponsible.” Janvey, who hasn’t been contacted by Kotz, will respond “promptly and appropriately” to any request, Sadler said in a statement.
SEC spokesman Kevin Callahan declined to comment.
Stanford investors and lawmakers have pressed the SEC for more than two years demanding more help in recouping money lost in the alleged fraud. Last month, the SEC said some investors should be eligible for payouts from the Securities Investor Protection Corp., an industry-backed fund that protects customers when a brokerage fails.
The U.S. Securities and Exchange Commission’s internal watchdog is investigating the agency’s dealings with the man hired to recover funds for victims of R. Allen Stanford’s alleged fraud amid claims the court-appointed receiver has taken too much money for himself.
Inspector General H. David Kotz said today he is reviewing the SEC’s oversight of the receiver, Ralph Janvey, after getting a complaint that the bulk of recovered funds has been used to cover legal bills.
Janvey was appointed in 2009 after the SEC sued Stanford and a federal grand jury indicted him on 21 criminal counts alleging that he used his Houston-based Stanford Financial Group and an Antigua-based banking unit to defraud clients through the sale of certificates of deposit. Stanford, who has denied the allegations, is being held without bail while awaiting trial.
Kachroo Legal Services P.C. of Cambridge, Massachusetts, released a statement yesterday accusing Janvey of “malfeasance and waste” in his management of collected assets and claiming there was an “inside deal” between Janvey and the Stanford investor committee to approve high fees.
Kevin Sadler, Janvey’s attorney, said that the allegations are “patently false and completely irresponsible.” Janvey, who hasn’t been contacted by Kotz, will respond “promptly and appropriately” to any request, Sadler said in a statement.
SEC spokesman Kevin Callahan declined to comment.
Stanford investors and lawmakers have pressed the SEC for more than two years demanding more help in recouping money lost in the alleged fraud. Last month, the SEC said some investors should be eligible for payouts from the Securities Investor Protection Corp., an industry-backed fund that protects customers when a brokerage fails.
Friday 22 July 2011
SEC INSPECTOR GENERAL TO INVESTIGATE STANFORD TEXAS RECEIVERSHIP
KLS Press Release & Motion to Intervene
We have learned today that SEC Inspector General David Kotz will begin an investigation of the Texas Receivership of Allen Stanford, pursuant to a request by Kachroo Legal Services, P.C.
The request by Kachroo Legal Services, P.C. to initiate an investigation attached the recently filed Motion to Intervene and Declaration based on the malfeasance and waste of the receivership which to date has consumed all collected assets, $120 million. The motion also details an inside deal between the Receiver and the Official Stanford Investor Committee which
provided a pre-approved 25% percent contingency fee to attorneys on the Committee who have not objected to any of the Receiver's fees. This is despite their role of holding the receivership accountable and on track and their right to raise and be heard on any issue in the Receivership proceedings.
The Inspector General will likely investigate the SEC's failure to appropriately oversee this Receivership. The last objection concerning overbilling by the Receiver Ralph Janvey filed by the SEC was over one and one-half years ago.
For further information please contact Kachroo Legal Services, P.C. at (617) 864-0755 or email wlugo@kachroolegal.com. For further information about Kachroo Legal Services, P.C., please review our website www.kachroolegal.com.
KLS Stanford Victims Motion to Intervene
We have learned today that SEC Inspector General David Kotz will begin an investigation of the Texas Receivership of Allen Stanford, pursuant to a request by Kachroo Legal Services, P.C.
The request by Kachroo Legal Services, P.C. to initiate an investigation attached the recently filed Motion to Intervene and Declaration based on the malfeasance and waste of the receivership which to date has consumed all collected assets, $120 million. The motion also details an inside deal between the Receiver and the Official Stanford Investor Committee which
provided a pre-approved 25% percent contingency fee to attorneys on the Committee who have not objected to any of the Receiver's fees. This is despite their role of holding the receivership accountable and on track and their right to raise and be heard on any issue in the Receivership proceedings.
The Inspector General will likely investigate the SEC's failure to appropriately oversee this Receivership. The last objection concerning overbilling by the Receiver Ralph Janvey filed by the SEC was over one and one-half years ago.
For further information please contact Kachroo Legal Services, P.C. at (617) 864-0755 or email wlugo@kachroolegal.com. For further information about Kachroo Legal Services, P.C., please review our website www.kachroolegal.com.
KLS Stanford Victims Motion to Intervene
Thursday 14 July 2011
Stanford Investors Committee Reacts to Victim's Claims
Caribbean 360
Stanford Investors Committee reacts to victims' claims
It denies overseeing what the victims claims are excessive fees being charged by the receiver overseeing the gathering of assets to repay investors.
TEXAS, United States, Monday July 11, 2011 – The man who leads the committee set up last August to protect the interests of investors who lost money in Allen Stanford's alleged fraud has responded to some of the criticism leveled at the body in a motion filed in court last week.
In the court document filed by Kachroo Legal Services (KLS), the investors allege that court-appointed receiver Ralph Janvey had used up the majority of the money recovered on expenses.
It also said the Official Stanford Investors Committee, which was set up after a judge granted a request by the victims to give them a say in the recovery of assets, was among those not "acting as a check on the excessive fees and expenses compared to the minimal recovery, challenging the contingency fee arrangement, the operation of the receivership, and otherwise voicing concern over the ineffectiveness of this receivership”.
But in a statement made after the filing of the motion, Head of the Committee John Little - the Dallas attorney who also serves as a liaison between the court, the receiver and the creditors - said that "while the Committee does work in conjunction with the receiver's counsel and other professionals, it is not authorized to review the receiver's fees as KLS mistakenly alleges".
"The Official Stanford Investors Committee is absolutely committed to recovering the highest rate of return possible for Stanford's victims regardless of citizenship or nationality," added the court-appointed examiner.
As for the motion's other allegations and request that four Stanford investors represented by KLS be permitted to intervene and be appointed to serve on the Committee, Little has decided not to address that in the media.
He said the Committee would discuss the motion and respond appropriately via the court.
Little noted, though, that the seven members of the Committee were specifically chosen to represent the cross-section of the 20,000 victims of the US$7 billion alleged Ponzi scheme and that the Committee's members have been actively engaged in a broad range of activities on behalf of the victims, including substantial litigation against third parties and working with the U.S. government authorities overseeing the civil and criminal proceedings.
Along with Janvey and Little, the Committee comprises Ed Snyder, Ed Valdespino and Jaime Pinto Tabini, attorneys for Stanford investors in Mexico, Latin America and Peru respectively; Dr. John Wade, a customer of Stanford Trust Company; and Angela Shaw, a Stanford International Bank CD investor and director and founder of the Stanford Victims Coalition.
Stanford Investors Committee reacts to victims' claims
It denies overseeing what the victims claims are excessive fees being charged by the receiver overseeing the gathering of assets to repay investors.
TEXAS, United States, Monday July 11, 2011 – The man who leads the committee set up last August to protect the interests of investors who lost money in Allen Stanford's alleged fraud has responded to some of the criticism leveled at the body in a motion filed in court last week.
In the court document filed by Kachroo Legal Services (KLS), the investors allege that court-appointed receiver Ralph Janvey had used up the majority of the money recovered on expenses.
It also said the Official Stanford Investors Committee, which was set up after a judge granted a request by the victims to give them a say in the recovery of assets, was among those not "acting as a check on the excessive fees and expenses compared to the minimal recovery, challenging the contingency fee arrangement, the operation of the receivership, and otherwise voicing concern over the ineffectiveness of this receivership”.
But in a statement made after the filing of the motion, Head of the Committee John Little - the Dallas attorney who also serves as a liaison between the court, the receiver and the creditors - said that "while the Committee does work in conjunction with the receiver's counsel and other professionals, it is not authorized to review the receiver's fees as KLS mistakenly alleges".
"The Official Stanford Investors Committee is absolutely committed to recovering the highest rate of return possible for Stanford's victims regardless of citizenship or nationality," added the court-appointed examiner.
As for the motion's other allegations and request that four Stanford investors represented by KLS be permitted to intervene and be appointed to serve on the Committee, Little has decided not to address that in the media.
He said the Committee would discuss the motion and respond appropriately via the court.
Little noted, though, that the seven members of the Committee were specifically chosen to represent the cross-section of the 20,000 victims of the US$7 billion alleged Ponzi scheme and that the Committee's members have been actively engaged in a broad range of activities on behalf of the victims, including substantial litigation against third parties and working with the U.S. government authorities overseeing the civil and criminal proceedings.
Along with Janvey and Little, the Committee comprises Ed Snyder, Ed Valdespino and Jaime Pinto Tabini, attorneys for Stanford investors in Mexico, Latin America and Peru respectively; Dr. John Wade, a customer of Stanford Trust Company; and Angela Shaw, a Stanford International Bank CD investor and director and founder of the Stanford Victims Coalition.
Thursday 7 July 2011
Friday 1 July 2011
SIPC to Announce Stanford Liquidation Decision in Mid-September
WASHINGTON, July 1, 2011 /PRNewswire-USNewswire/ -- The Securities Investor Protection Corporation ("SIPC"), which maintains a special reserve fund mandated by Congress to protect the customers of insolvent brokerage firms, said today that it expects its Board of Directors to announce on or about September 15, 2011 its decision about the referral provided by the U.S. Securities and Exchange Commission ("SEC") with respect to the Stanford Group Company, operated by Robert Allen Stanford.
On February 17, 2009, the SEC filed an action in the U.S. District Court for the Northern District of Texas alleging that Stanford orchestrated an $8 billion fraud based on false promises of guaranteed returns related to certificates of deposit ("CDs") issued by the Antiguan-based Stanford International Bank ("SIB"). The SEC's Complaint alleged that SIB sold approximately $7.2 billion of CDs to investors by promising returns that were "improbable, if not impossible." See: Â Complaint, SEC v. Stanford International Bank, Ltd., et al., Case No. 3:09-CV-0298-N (N.D. Tex. filed February 17, 2009).
In response to the SEC's request for emergency relief, the Court immediately issued a temporary restraining order, froze the defendants' assets, and appointed a receiver to marshal those assets. Â The SEC filed a second amended complaint on June 19, 2009, alleging that Stanford conducted a Ponzi scheme.
SIPC President and CEO Stephen Harbeck said that SIPC has already started conferring with the SEC and the Stanford receiver regarding the SEC's referral in the Stanford matter.
The SEC's referral on June 15, 2011 was the first time the SEC had informed SIPC of the possibility that the Stanford matter was appropriate for a proceeding under the Securities Investor Protection Act ("SIPA").
ABOUT SIPC
The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customers cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.
The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities custodied with the broker for up to a maximum of $500,000 per customer. Â This figure includes a maximum of $250,000 on claims for cash. From the time Congress created it in 1970 through December 2010, SIPC has advanced $ 1.6 billion in order to make possible the recovery of $ 109.3 billion in assets for an estimated 739,000 investors.
On February 17, 2009, the SEC filed an action in the U.S. District Court for the Northern District of Texas alleging that Stanford orchestrated an $8 billion fraud based on false promises of guaranteed returns related to certificates of deposit ("CDs") issued by the Antiguan-based Stanford International Bank ("SIB"). The SEC's Complaint alleged that SIB sold approximately $7.2 billion of CDs to investors by promising returns that were "improbable, if not impossible." See: Â Complaint, SEC v. Stanford International Bank, Ltd., et al., Case No. 3:09-CV-0298-N (N.D. Tex. filed February 17, 2009).
In response to the SEC's request for emergency relief, the Court immediately issued a temporary restraining order, froze the defendants' assets, and appointed a receiver to marshal those assets. Â The SEC filed a second amended complaint on June 19, 2009, alleging that Stanford conducted a Ponzi scheme.
SIPC President and CEO Stephen Harbeck said that SIPC has already started conferring with the SEC and the Stanford receiver regarding the SEC's referral in the Stanford matter.
The SEC's referral on June 15, 2011 was the first time the SEC had informed SIPC of the possibility that the Stanford matter was appropriate for a proceeding under the Securities Investor Protection Act ("SIPA").
ABOUT SIPC
The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customers cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.
The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities custodied with the broker for up to a maximum of $500,000 per customer. Â This figure includes a maximum of $250,000 on claims for cash. From the time Congress created it in 1970 through December 2010, SIPC has advanced $ 1.6 billion in order to make possible the recovery of $ 109.3 billion in assets for an estimated 739,000 investors.