Letter to the Editor, Caribbean360
August 22, 2011
Dear Sir or madam,
A story published in the August 18, 2011, edition of Caribbean360, “Investors question Antigua Stanford liquidators” makes several erroneous and unfortunate statements that only mislead and confuse victims of SIB’s failure.
I am a creditor of the Stanford International Bank (SIB), being a holder of Certificates of Deposit (CDs). As such I have one focus – what is the best way to maximize the estate of SIB and what is the best way to maximize the distribution of funds to the creditors. To this end, I have become a member of the Antiguan Liquidators’ Creditors Committee, and I can assure you it is our mission to assist the Joint Liquidators in expeditiously recovering victims’ assets in a process that is equitable and transparent.
Unfortunately, the article published on August 18 appears bent on upsetting and confusing victims. So please let me begin by setting some of the record straight.
First, the current liquidators, Marcus Wide and Hugh Dickson, both of Grant Thornton, were appointed only on May 12, 2011, by the High Court of Antigua. They replaced Nigel Hamilton- Smith and Peter Wastell of Vantis, who were removed by the Court. (Wide and Dickson were not nominated by the Government, or any of its agencies, but were the deliberate choice of victims). It is common knowledge that Vantis, the previous liquidators, owes the court and the estate an accounting of the claim for $18 million fees and expenses, and that a hearing will occur in October, 2011. These fees may be challenged by the estate, but that cannot be known until the accounting is presented to the court.
Second, let us not lose sight of the fact that SIB was an Antigua corporation, now in bankruptcy, and that Antiguan laws rule on Antigua bankruptcies. It is also a fact that 99.9% of the creditors of SIB are the holders of CDs in SIB. The Hon. Mr. Justice Mario Michel of the High Court in Antigua appointed Mr. Wide and Mr. Dickson liquidators of SIB, charged them with the collection of all assets of SIB, and the eventual distribution of the assets to the creditors. To also be clear, note that the Eastern Caribbean Supreme Court circuit, of which the Antiguan High Court is a part, is, like the US Courts, independent of government, and its authority to make this appointment, and therefore the authority of the Liquidators, has already been recognized by the Courts in Switzerland and the UK, countries where there are significant assets. While still on the issue of authority, let’s note that beyond the High Court there is the Eastern Caribbean Court of Appeal, with a final right of appeal to the British Privy Counsel (formerly known as the House of Lords), whose authority and competence is respected around the world.
Whereas the US courts have been recognized as the prosecutors of the SEC’s case against R. Allen Stanford and his assets, this does not, and can not, include authority for the bankruptcy of SIB.
Third, the extensive expertise of Grant Thornton, Mr. Wide, and Mr. Dickson, in the matter of liquidation, bankruptcies, and fraud, is well documented. Please refer to their bios in the website http://www.sibliquidation.com for more information. I will vouch that that they are very open and very conscious about their role in working for the creditors.
Fourth, Mr. Wide and Mr. Dickson, as required by the Order appointing them, delivered a report on Aug. 15, 2011, to the Court in Antigua that presents a detailed accounting of their work and accomplishments in the first 90 days of their mandate, and an outline of their planned recovery efforts. The report has been circulated to victims groups, provided to both the US Receiver and the US investors committee and posted on the liquidators’ website under “reports”.
In this very lucid report, which is highly recommend for immediate reading by any and all interested parties, the liquidators mention how both they and the previous liquidators have been handicapped by the U.S. Department of Justice, Ralph Janvey, the court-appointed receiver in the U.S., and now the Stanford Investors Committee, in attaining the maximum asset retrieval for the victims of the SIB bankruptcy. Included are issues where funds are frozen and not being managed, and where it appears that funds may be appropriated by the DOJ, which took “the position that criminal asset forfeiture has priority over the rights of officeholders or their estates” in order to uphold their freeze of assets in the UK and Switzerland. These issues have to be a major concern for all CD creditors.
The report also documents where an associate of R. Allen Stanford is attempting to sell off assets, at deeply discounted prices, bought with proceeds of the SIB CDs, for personal use by Mr. Stanford. The U.S. courts, without proper jurisdictional authority, have been powerless to claim these assets for the SIB estate. The operating expenses funds requested from, and granted by, the UK courts, will be used to recover these assets, estimated at $70 million or more, for all creditors.
In the first 90 days, along with the court order freezing the $70 million of Stanford- controlled assets in Antigua, the liquidators have started an action against Mr. Stanford personally, entered into an agreement to sell a Stanford-owned buildings worth $4.5 million, and identified numerous other claims that belong to the liquidation estate that can be pursued for the benefit of victims.
Fifth, in spite of the August 18th letter claim that “the Stanford Investors Committee has asked Grant Thornton to agree to a cooperation protocol between the two proceedings,” such a protocol was one of the first issues dealt with co-operatively with the U.S. receiver, who the liquidators have been in discussion with. At the present time it appears to be scuttled by the Stanford Investors Committee, which has interjected with a demand for a protocol of their own design which we on the advising committee fear is only to maximize the committee’s projected fees that they are charging to the estate via the U.S. courts.
Sixth, Angela Shaw questions “why a liquidator would have to litigate to secure Stanford-owned properties in Antigua. That litigation shouldn’t be necessary.” Unfortunately, litigation is the only means that in the common law system, which the U.S. shares with Antigua, to take these assets away from those who currently hold them. While frustrating it is unavoidable.
Our Antiguan Liquidators’ Creditors Committee of seven is composed of six victims from different countries representative of the location of victims, and a seventh person was asked by a group of victims in Mexico to participate. The Committee, which has met no fewer than five times since its creation six weeks ago, is single minded; recover what rightfully belongs to the victims of Stanford International Bank in the maximum amounts possible, as soon as possible, and distribute the proceeds to the creditors. We have no other stake in the game, and we receive no compensation other than our share of what the creditors receive.
The story published August 18 in Caribbean360 has offered little to help our efforts. Rather, it pits one group against the other, creating a deadlock that only one person could enjoy – Allen Stanford. For the benefit of the creditors, this has to end.
Eric Cohen
Nassau, Bahamas
Tuesday 30 August 2011
Saturday 27 August 2011
Ex-McCarter Lawyer a Key Figure in New Madoff Film
Posted by Brian Baxter
Two years ago Gaytri Kachroo was chair of McCarter & English's international practice. She resigned from the firm in July 2009 as a result of conflicts related to several cases she was pursing on her own probing the $20 billion Ponzi scheme perpartrated by Bernard Madoff.
Now, Kachroo can be seen on film relentlessly pursuing that goal in Chasing Madoff, a documentary about Harry Markopolos and his team, known as the Fox Hounds, and their quest to get someone, anyone, to listen to Markopolos's long-held concerns about Bernard L. Madoff Investment Securities.
Kachroo, who serves as an associate producer on the film, began working with Markopolos in 2005 after the two met at a meeting hosted by the U.S. Chamber of Commerce in Cambridge, Mass. The meeting came around the same time that Markopolos, a former options trader turned financial fraud investigator, wrote a 19-page memo to the SEC titled "The World's Largest Hedge Fund is a Fraud."
Kachroo soon joined the Fox Hound team assembled by Markopolos. Other members of the self-appointed financial truth squad—which collected evidence on the Madoff enterprise and used it to implore the SEC to implement necessary regulatory changes—include research analyst Neil Chelo, hedge fund manager Frank Casey, and former financial journalist Michael Ocrant.
Since joining the Markopolos team, Kachroo has helped prepare the whistle-blower for testimony before Congress, advised the Fox Hound on a report compiled by the SEC inspector general that recommended revisions to the regulator's mandate and the adoption of new whistle-blower protections, and brokered book and movie deals for Markopolos. The book and movie rights were not very lucrative, Markopolos told The New York Times, but brought much-needed attention to the issue of regulatory reform and whistle-blower rights.
In October 2009, Kachroo opened her own firm, Boston-based Kachroo Legal Services, where she employs three attorneys, one of whom is John Ray III, a former senior litigation associate at Ropes & Gray now suing the firm for discrimination.
Kachroo currently represents dozens of Madoff victims in lawsuits seeking compensation for investment losses and also serves as vice chair of a global alliance of 50 law firms representing former Madoff investors. She also represents a group of clients seeking to be reimbursed for investments made with R. Allen Stanford, another former financier alleged to have run a $7 billion Ponzi scheme.
Chasing Madoff opened Friday in New York.
Two years ago Gaytri Kachroo was chair of McCarter & English's international practice. She resigned from the firm in July 2009 as a result of conflicts related to several cases she was pursing on her own probing the $20 billion Ponzi scheme perpartrated by Bernard Madoff.
Now, Kachroo can be seen on film relentlessly pursuing that goal in Chasing Madoff, a documentary about Harry Markopolos and his team, known as the Fox Hounds, and their quest to get someone, anyone, to listen to Markopolos's long-held concerns about Bernard L. Madoff Investment Securities.
Kachroo, who serves as an associate producer on the film, began working with Markopolos in 2005 after the two met at a meeting hosted by the U.S. Chamber of Commerce in Cambridge, Mass. The meeting came around the same time that Markopolos, a former options trader turned financial fraud investigator, wrote a 19-page memo to the SEC titled "The World's Largest Hedge Fund is a Fraud."
Kachroo soon joined the Fox Hound team assembled by Markopolos. Other members of the self-appointed financial truth squad—which collected evidence on the Madoff enterprise and used it to implore the SEC to implement necessary regulatory changes—include research analyst Neil Chelo, hedge fund manager Frank Casey, and former financial journalist Michael Ocrant.
Since joining the Markopolos team, Kachroo has helped prepare the whistle-blower for testimony before Congress, advised the Fox Hound on a report compiled by the SEC inspector general that recommended revisions to the regulator's mandate and the adoption of new whistle-blower protections, and brokered book and movie deals for Markopolos. The book and movie rights were not very lucrative, Markopolos told The New York Times, but brought much-needed attention to the issue of regulatory reform and whistle-blower rights.
In October 2009, Kachroo opened her own firm, Boston-based Kachroo Legal Services, where she employs three attorneys, one of whom is John Ray III, a former senior litigation associate at Ropes & Gray now suing the firm for discrimination.
Kachroo currently represents dozens of Madoff victims in lawsuits seeking compensation for investment losses and also serves as vice chair of a global alliance of 50 law firms representing former Madoff investors. She also represents a group of clients seeking to be reimbursed for investments made with R. Allen Stanford, another former financier alleged to have run a $7 billion Ponzi scheme.
Chasing Madoff opened Friday in New York.
Thursday 18 August 2011
S.E.C. Files Were Illegally Destroyed, Lawyer Says
August 17, 2011
By EDWARD WYATT - New York Times
An enforcement lawyer at the Securities and Exchange Commission says that the agency illegally destroyed files and documents related to thousands of early-stage investigations over the last 20 years, according to information released Wednesday by Congressional investigators.
The destroyed files comprise records of at least 9,000 preliminary inquiries into matters involving notorious individuals like Bernard L. Madoff, as well as several major Wall Street firms that later were the subject of scrutiny after the 2008 financial crisis, including Goldman Sachs, Lehman Brothers, Citigroup and Bank of America.
The S.E.C. is the very agency that is charged with making sure that Wall Street firms retain records of their own activities, and has brought numerous enforcement cases against firms for failing to do so.
The agency's records were routinely destroyed under an S.E.C. policy, since changed, that called for the disposal of records of a preliminary inquiry that was closed if it did not get upgraded to a formal investigation, according to Congressional records and people involved in inquiries into the matter. The agency believes that both the original policy and the new rules comply with federal document-retention laws.
John Nester, an S.E.C. spokesman, said that while the agency was not required to retain all documents, it changed its policy last year regarding destruction of files for "matters under investigation," the category of initial inquiry by the S.E.C.'s enforcement division that is the subject of the current scrutiny.
Changes were made to the S.E.C. policy after questions about the document destruction were raised in early 2010 by Darcy Flynn. Mr. Flynn, an employee of the S.E.C.'s enforcement division for 13 years, began a new job in January 2010 helping to manage the disposition of records for the division. Mr. Flynn, who continues to work at the S.E.C., has sought protection under federal whistle-blower laws.
The document disposal, which was first reported by Rolling Stone magazine on Wednesday, is the subject of inquiries by the Senate Judiciary Committee; the National Archives and Records Administration, which oversees laws governing federal agency records; and the inspector general of the S.E.C., according to the records and to people involved in the investigations.
In addition to whether the document disposal violated federal laws about government records, officials are concerned that the S.E.C. policy might have hindered later investigations into the same people or companies or covered up wrongdoing.
"These records may contain critical information that could be extremely useful in piecing together complex cases, even if not immediately pursued," Senator Charles E. Grassley, an Iowa Republican who is the ranking member on the Senate Judiciary Committee, wrote in a letter to the S.E.C. on Wednesday.
Mr. Nester declined to comment on Mr. Grassley's letter or on a letter to Mr. Grassley from a lawyer for Mr. Flynn that laid out the allegations in detail.
H. David Kotz, the S.E.C. inspector general, said that he was investigating the issue and hoped to complete a report by the end of September. A spokesman for the National Archives did not respond to requests for comment late Wednesday afternoon.
The National Archives wrote to the S.E.C. last year, saying that it "appears that there has been an unauthorized disposal of federal records," and asked for further information, according to Mr. Flynn's chronology.
Mr. Flynn said that S.E.C. officials discussed whether to lie about the document destruction because they might be open to criminal liability. Unlawful and willful destruction of federal records is punishable by up to three years in prison.
The S.E.C. replied to the National Archives in a letter, saying that it was "not aware of any specific instances of the destruction of records" that should have been retained. It added that it "cannot say with certainty that no such documents have been destroyed over the past seventeen years."
The letter from Mr. Flynn's lawyer said that the old document destruction policy gave S.E.C. officials assurance that if they closed an inquiry without upgrading it to a formal investigation, there would be no record of their actions.
It is common for S.E.C. employees to leave the agency for the private sector and then begin representing clients before the agency. Mr. Flynn contends that the practice increases the likelihood that S.E.C. investigators could do undetected favors for former colleagues and their clients by quashing investigations.
Whether that revolving door led to the closing of an investigation in 2001 involving Deutsche Bank and the destruction of the files is part of the investigation by the S.E.C.'s inspector general.
By EDWARD WYATT - New York Times
An enforcement lawyer at the Securities and Exchange Commission says that the agency illegally destroyed files and documents related to thousands of early-stage investigations over the last 20 years, according to information released Wednesday by Congressional investigators.
The destroyed files comprise records of at least 9,000 preliminary inquiries into matters involving notorious individuals like Bernard L. Madoff, as well as several major Wall Street firms that later were the subject of scrutiny after the 2008 financial crisis, including Goldman Sachs, Lehman Brothers, Citigroup and Bank of America.
The S.E.C. is the very agency that is charged with making sure that Wall Street firms retain records of their own activities, and has brought numerous enforcement cases against firms for failing to do so.
The agency's records were routinely destroyed under an S.E.C. policy, since changed, that called for the disposal of records of a preliminary inquiry that was closed if it did not get upgraded to a formal investigation, according to Congressional records and people involved in inquiries into the matter. The agency believes that both the original policy and the new rules comply with federal document-retention laws.
John Nester, an S.E.C. spokesman, said that while the agency was not required to retain all documents, it changed its policy last year regarding destruction of files for "matters under investigation," the category of initial inquiry by the S.E.C.'s enforcement division that is the subject of the current scrutiny.
Changes were made to the S.E.C. policy after questions about the document destruction were raised in early 2010 by Darcy Flynn. Mr. Flynn, an employee of the S.E.C.'s enforcement division for 13 years, began a new job in January 2010 helping to manage the disposition of records for the division. Mr. Flynn, who continues to work at the S.E.C., has sought protection under federal whistle-blower laws.
The document disposal, which was first reported by Rolling Stone magazine on Wednesday, is the subject of inquiries by the Senate Judiciary Committee; the National Archives and Records Administration, which oversees laws governing federal agency records; and the inspector general of the S.E.C., according to the records and to people involved in the investigations.
In addition to whether the document disposal violated federal laws about government records, officials are concerned that the S.E.C. policy might have hindered later investigations into the same people or companies or covered up wrongdoing.
"These records may contain critical information that could be extremely useful in piecing together complex cases, even if not immediately pursued," Senator Charles E. Grassley, an Iowa Republican who is the ranking member on the Senate Judiciary Committee, wrote in a letter to the S.E.C. on Wednesday.
Mr. Nester declined to comment on Mr. Grassley's letter or on a letter to Mr. Grassley from a lawyer for Mr. Flynn that laid out the allegations in detail.
H. David Kotz, the S.E.C. inspector general, said that he was investigating the issue and hoped to complete a report by the end of September. A spokesman for the National Archives did not respond to requests for comment late Wednesday afternoon.
The National Archives wrote to the S.E.C. last year, saying that it "appears that there has been an unauthorized disposal of federal records," and asked for further information, according to Mr. Flynn's chronology.
Mr. Flynn said that S.E.C. officials discussed whether to lie about the document destruction because they might be open to criminal liability. Unlawful and willful destruction of federal records is punishable by up to three years in prison.
The S.E.C. replied to the National Archives in a letter, saying that it was "not aware of any specific instances of the destruction of records" that should have been retained. It added that it "cannot say with certainty that no such documents have been destroyed over the past seventeen years."
The letter from Mr. Flynn's lawyer said that the old document destruction policy gave S.E.C. officials assurance that if they closed an inquiry without upgrading it to a formal investigation, there would be no record of their actions.
It is common for S.E.C. employees to leave the agency for the private sector and then begin representing clients before the agency. Mr. Flynn contends that the practice increases the likelihood that S.E.C. investigators could do undetected favors for former colleagues and their clients by quashing investigations.
Whether that revolving door led to the closing of an investigation in 2001 involving Deutsche Bank and the destruction of the files is part of the investigation by the S.E.C.'s inspector general.
Wednesday 17 August 2011
CONSOLIDATED REPLY TO RESPONSES BY SECURITIES AND EXCHANGE COMMISSION, RECEIVER, EXAMINER AND OFFICIAL STANFORD INVESTORS COMMITTEE
CONSOLIDATED REPLY TO RESPONSES BY SECURITIES AND EXCHANGE COMMISSION, RECEIVER, EXAMINER AND OFFICIAL STANFORD INVESTORS COMMITTEE TO KLS STANFORD VICTIMS’ MOTION TO INTERVENE AND FOR APPOINTMENT TO THE OFFICIAL STANFORD INVESTOR COMMITTEE
Intervention Reply (Filed Ver. With Exhibits)
Intervention Reply (Filed Ver. With Exhibits)
Saturday 13 August 2011
Questions from International Investors to Grant-Thornton
Now that Grant Thornton have had the opportunity to settle into their new position as Joint Liquidators in Antigua, I have sent them the following questions regarding matters that have been asked before but have received no answers. I am sure that Grant Thornton intend to keep us informed and will be interested to see if they address that matters I have outlined for their attention. Here are the questions I have sent them:
Dear Mr Wide, Mr Dickson and Committee members,
Now that you have had time to assess the situation regarding SIB and now have access to some money to start taking long needed action to try and sort out the mess that has been left in Antigua, I have a few questions that I would like to put before you on behalf of the Investors. These are points that have been raised by many investors over the past two and a half years but to date we have not had anyone we could find that was willing or able to answer.
In view of the openness with which you want to conduct your dealings with SIB I am hoping that you can throw some light on these matters.
1) How much money is in Switzerland, there have been rumours that it is as much as $1Billion US, can you give us some idea if this is true
2) What are you going to do about SDC?
3) Are you going to file against Andria Stolker to try and regain control of the properties in Antigua which I understand she is trying to quietly market, and will you
be able to claw back the money she has made so far with the deals and rental of properties she has engaged in since SIB was closed?
4) How do you propose to market the assets in Antigua, including Maiden Island and Guiana Island?
5) Do you intend challenging the Caribbean banks over BOA? No money has been paid to the receivership for the bank which clearly had a market value, will you be looking at making the “new owners” accountable for BOA’s value?
6) Do you have access to the last set of accounts and valuation of BOA?
7) Are there any plans to take action against HSBC for their role as a correspondent bank?
8) There are Treaties between Antigua and the UK and Antigua and Germany regarding the protection of investors. Do you have any plans to speak to the Antigua/UK/German governments to try get them honoured/enforced?
9) We know that in the months prior to SIB being closed down by the SEC there was a run on the bank (according to reports) to the tune of $2billionUS. Do you have any plans to try and claw back that money for the benefit of all investors?
10) Finally, can you let the Investors know what your position (thoughts) is regarding the US receiver and the US committee. While we all appreciate that you have to have some cooperation with Janvey and the committee, the general consensus is that Janvey is any deals that would allow Janvey to get his hands on any money you are seeking would be equivalent to throwing money away.
I would appreciate these matters being brought up and discussed at the next committee meeting and giving the Investors some clear light as to the direction you are looking at taking.
I would like to wish you and the committee good luck in this very difficult and complicated matter and offer my full support in any way I can be of assistance. The Investors are watching carefully to see how matters are being dealt with, I trust you will listen to our concerns and be as open as possible with us and keep us informed about what is happening on a regular basis.
Yours sincerely
Dear Mr Wide, Mr Dickson and Committee members,
Now that you have had time to assess the situation regarding SIB and now have access to some money to start taking long needed action to try and sort out the mess that has been left in Antigua, I have a few questions that I would like to put before you on behalf of the Investors. These are points that have been raised by many investors over the past two and a half years but to date we have not had anyone we could find that was willing or able to answer.
In view of the openness with which you want to conduct your dealings with SIB I am hoping that you can throw some light on these matters.
1) How much money is in Switzerland, there have been rumours that it is as much as $1Billion US, can you give us some idea if this is true
2) What are you going to do about SDC?
3) Are you going to file against Andria Stolker to try and regain control of the properties in Antigua which I understand she is trying to quietly market, and will you
be able to claw back the money she has made so far with the deals and rental of properties she has engaged in since SIB was closed?
4) How do you propose to market the assets in Antigua, including Maiden Island and Guiana Island?
5) Do you intend challenging the Caribbean banks over BOA? No money has been paid to the receivership for the bank which clearly had a market value, will you be looking at making the “new owners” accountable for BOA’s value?
6) Do you have access to the last set of accounts and valuation of BOA?
7) Are there any plans to take action against HSBC for their role as a correspondent bank?
8) There are Treaties between Antigua and the UK and Antigua and Germany regarding the protection of investors. Do you have any plans to speak to the Antigua/UK/German governments to try get them honoured/enforced?
9) We know that in the months prior to SIB being closed down by the SEC there was a run on the bank (according to reports) to the tune of $2billionUS. Do you have any plans to try and claw back that money for the benefit of all investors?
10) Finally, can you let the Investors know what your position (thoughts) is regarding the US receiver and the US committee. While we all appreciate that you have to have some cooperation with Janvey and the committee, the general consensus is that Janvey is any deals that would allow Janvey to get his hands on any money you are seeking would be equivalent to throwing money away.
I would appreciate these matters being brought up and discussed at the next committee meeting and giving the Investors some clear light as to the direction you are looking at taking.
I would like to wish you and the committee good luck in this very difficult and complicated matter and offer my full support in any way I can be of assistance. The Investors are watching carefully to see how matters are being dealt with, I trust you will listen to our concerns and be as open as possible with us and keep us informed about what is happening on a regular basis.
Yours sincerely
Tuesday 9 August 2011
LG wins high-profile role on Stanford Bank liquidation
By Suzi Ring - legalweek.com
LG has won a high-profile role to advise the newly-appointed liquidators of Stanford International Bank (SIB) following its 2009 collapse amid a billion-dollar fraud scandal.
The UK law firm is acting for accountancy firm Grant Thornton, which was appointed to handle the liquidation in May after former liquidator Vantis was removed in June last year.
SIB founder Allen Stanford (pictured) is currently in prison awaiting trial after being charged in 2009 with defrauding investors with a $7bn (£4.3bn) Ponzi scheme run out of the bank.
LG is advising on all UK matters concerning SIB’s assets in London, including the $110m (£68m) of assets currently restrained by the Serious Fraud Office on behalf of the US Department of Justice.
LG senior partner Andrew Witts said: “We are delighted to be retained by Grant Thornton in this matter. It is clearly an important case, which raises potentially interesting issues of law on priority over the SIB assets in London, which are currently the subject of a restraint order.”
SIB collapsed in 2009 after Stanford, Stanford Financial Group chief financial officer James Davis and chief investment officer Laura Pendergest-Holt were subject to fraud charges relating to an alleged Ponzi scheme thought to have affected tens of thousands of depositors worldwide.
Vantis, which was formerly advised by CMS Cameron McKenna, was removed as the liquidator of SIB last year by an Antiguan court before later going into administration.
LG has won a high-profile role to advise the newly-appointed liquidators of Stanford International Bank (SIB) following its 2009 collapse amid a billion-dollar fraud scandal.
The UK law firm is acting for accountancy firm Grant Thornton, which was appointed to handle the liquidation in May after former liquidator Vantis was removed in June last year.
SIB founder Allen Stanford (pictured) is currently in prison awaiting trial after being charged in 2009 with defrauding investors with a $7bn (£4.3bn) Ponzi scheme run out of the bank.
LG is advising on all UK matters concerning SIB’s assets in London, including the $110m (£68m) of assets currently restrained by the Serious Fraud Office on behalf of the US Department of Justice.
LG senior partner Andrew Witts said: “We are delighted to be retained by Grant Thornton in this matter. It is clearly an important case, which raises potentially interesting issues of law on priority over the SIB assets in London, which are currently the subject of a restraint order.”
SIB collapsed in 2009 after Stanford, Stanford Financial Group chief financial officer James Davis and chief investment officer Laura Pendergest-Holt were subject to fraud charges relating to an alleged Ponzi scheme thought to have affected tens of thousands of depositors worldwide.
Vantis, which was formerly advised by CMS Cameron McKenna, was removed as the liquidator of SIB last year by an Antiguan court before later going into administration.
Friday 5 August 2011
Stanford liquidators to access $20m of assets
By Jane Croft in London - ft.com
Grant Thornton, the liquidators of Allen Stanford’s business empire, will be permitted to draw down up to $20m of the $100m of assets currently frozen in London, a judge has ruled.
Mrs Justice Gloster, sitting at London’s Central Criminal Court, ruled that the liquidators of Antigua-based Stanford International Bank can use the funds to launch legal action against third parties and to market and sell property assets once owned by the cricket-loving tycoon, who has been accused of orchestrating a multibillion-dollar fraud, which he denies.
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Initially some $5m of the assets, which are partly tied up in London hedge fund accounts, will be drawn down by the liquidators, who can access up to $20m of funds in total.
Grant Thornton, which came on board as liquidator to SIB in May, has already received approval from an ad hoc creditors’ committee for its action plan aimed at helping realise value from Antiguan assets for the victims of the alleged Ponzi scheme.
Marcus Wide, joint liquidator, told the Financial Times that part of the funds would be used to launch litigation to help secure $70m of value from properties in Antigua – including the headquarters of SIB – which are currently frozen by a court order.
“We will also do a property survey of the real estate and get expert advice on it and we will also be filing legal claims against third parties before we run out of time,” he said
Mr Wide added that funds would also be spent on minor development of certain assets – such as finishing a port facility that is 95 per cent complete and building a road across Pelican Island, an Antiguan island, which could help push up its market value.
The liquidators have argued in a recent letter to creditors that the additional funds would help unlock underlying value in the real estate as it would enable sales over a period of time rather than in a quick sale.
The London court was told this week by Grant Thornton – which is being advised by law firm Lawrence Graham – that if the judge did not approve the application, they were considering alternative financing from a hedge fund to pursue the action plan.
The application made this week in the London courts was fiercely opposed by lawyers for the UK’s Serious Fraud Office acting on behalf of the Department of Justice, which believes the money should ultimately be repatriated to the US.
Mr Stanford’s trial was postponed in January in order to allow him to wean himself off a cocktail of anti-anxiety drugs. His knighthood was revoked after criminal charges were filed.
Grant Thornton, the liquidators of Allen Stanford’s business empire, will be permitted to draw down up to $20m of the $100m of assets currently frozen in London, a judge has ruled.
Mrs Justice Gloster, sitting at London’s Central Criminal Court, ruled that the liquidators of Antigua-based Stanford International Bank can use the funds to launch legal action against third parties and to market and sell property assets once owned by the cricket-loving tycoon, who has been accused of orchestrating a multibillion-dollar fraud, which he denies.
Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/02a782d4-be9f-11e0-ab21-00144feabdc0.html#ixzz1U9uLdoOr
Initially some $5m of the assets, which are partly tied up in London hedge fund accounts, will be drawn down by the liquidators, who can access up to $20m of funds in total.
Grant Thornton, which came on board as liquidator to SIB in May, has already received approval from an ad hoc creditors’ committee for its action plan aimed at helping realise value from Antiguan assets for the victims of the alleged Ponzi scheme.
Marcus Wide, joint liquidator, told the Financial Times that part of the funds would be used to launch litigation to help secure $70m of value from properties in Antigua – including the headquarters of SIB – which are currently frozen by a court order.
“We will also do a property survey of the real estate and get expert advice on it and we will also be filing legal claims against third parties before we run out of time,” he said
Mr Wide added that funds would also be spent on minor development of certain assets – such as finishing a port facility that is 95 per cent complete and building a road across Pelican Island, an Antiguan island, which could help push up its market value.
The liquidators have argued in a recent letter to creditors that the additional funds would help unlock underlying value in the real estate as it would enable sales over a period of time rather than in a quick sale.
The London court was told this week by Grant Thornton – which is being advised by law firm Lawrence Graham – that if the judge did not approve the application, they were considering alternative financing from a hedge fund to pursue the action plan.
The application made this week in the London courts was fiercely opposed by lawyers for the UK’s Serious Fraud Office acting on behalf of the Department of Justice, which believes the money should ultimately be repatriated to the US.
Mr Stanford’s trial was postponed in January in order to allow him to wean himself off a cocktail of anti-anxiety drugs. His knighthood was revoked after criminal charges were filed.
Thursday 4 August 2011
Stanford liquidators apply to use assets
By Jane Croft ft.com
The liquidators of Allen Stanford’s business empire have made an application for $20m to be released from an estimated $100m of assets frozen in the UK so they can help recover other assets for victims of the alleged Ponzi scheme.
Grant Thornton, the liquidators of Antigua-based Stanford International Bank, made the application to London’s Central Criminal Court. The court heard that the liquidators would make use of the funds for lawsuits and to help manage and market property assets in the West Indies.
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The application was opposed by lawyers for the UK Serious Fraud Office on behalf of the US Department of Justice which says the money should ultimately be repatriated to the US. The assets, mostly invested in hedge funds, were frozen after an earlier Court of Appeal ruling.
Mr Stanford was accused in 2009 of orchestrating a multibillion-dollar fraud, which he denies. His trial was postponed in January to allow him to be treated for his addiction to anti-anxiety drugs. His knighthood was revoked after criminal charges were filed.
At the height of his success, he had a significant presence in Antigua. He was the island’s largest private employer, and the institution at the heart of the alleged Ponzi scheme – Stanford International Bank – was domiciled in the capital, St John’s.
Andrew Bodnar, acting for the liquidators, told the court on Wednesday they wanted permission to draw down $5m initially and then potentially further sums up to a maximum of $20m.
Mr Bodnar told the court that “it would be very different if I was asking for the entirety of the London assets”, and added he was asking “that the money is made available to ensure the liquidators do not run out of funding in pursuit of these assets”.
He told the court that the liquidators were newly appointed and had put forward a new action plan which had been approved by the creditors’ committee.
The court heard the liquidators, who have asked for a speedy decision on the issue, were also looking at the alternative of finance from a hedge fund to cover the legal claim and were facing an imminent decision on whether to sign up to this alternative.
Andrew Mitchell QC, acting for the SFO on behalf of the DoJ, told the court the DoJ had made it clear that it wanted the $100m of assets ultimately to be repatriated to the US.
“For every cent that’s released it’s one cent less for the victims – that’s the problem,” he told the court.
The liquidators of Allen Stanford’s business empire have made an application for $20m to be released from an estimated $100m of assets frozen in the UK so they can help recover other assets for victims of the alleged Ponzi scheme.
Grant Thornton, the liquidators of Antigua-based Stanford International Bank, made the application to London’s Central Criminal Court. The court heard that the liquidators would make use of the funds for lawsuits and to help manage and market property assets in the West Indies.
Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/4e36e06a-bde0-11e0-ab9f-00144feabdc0.html#ixzz1U3WPVgpT
The application was opposed by lawyers for the UK Serious Fraud Office on behalf of the US Department of Justice which says the money should ultimately be repatriated to the US. The assets, mostly invested in hedge funds, were frozen after an earlier Court of Appeal ruling.
Mr Stanford was accused in 2009 of orchestrating a multibillion-dollar fraud, which he denies. His trial was postponed in January to allow him to be treated for his addiction to anti-anxiety drugs. His knighthood was revoked after criminal charges were filed.
At the height of his success, he had a significant presence in Antigua. He was the island’s largest private employer, and the institution at the heart of the alleged Ponzi scheme – Stanford International Bank – was domiciled in the capital, St John’s.
Andrew Bodnar, acting for the liquidators, told the court on Wednesday they wanted permission to draw down $5m initially and then potentially further sums up to a maximum of $20m.
Mr Bodnar told the court that “it would be very different if I was asking for the entirety of the London assets”, and added he was asking “that the money is made available to ensure the liquidators do not run out of funding in pursuit of these assets”.
He told the court that the liquidators were newly appointed and had put forward a new action plan which had been approved by the creditors’ committee.
The court heard the liquidators, who have asked for a speedy decision on the issue, were also looking at the alternative of finance from a hedge fund to cover the legal claim and were facing an imminent decision on whether to sign up to this alternative.
Andrew Mitchell QC, acting for the SFO on behalf of the DoJ, told the court the DoJ had made it clear that it wanted the $100m of assets ultimately to be repatriated to the US.
“For every cent that’s released it’s one cent less for the victims – that’s the problem,” he told the court.
Tuesday 2 August 2011
Both parties scheme for Ponzi cash
By Jim McElhatton - The Washington Post
The fundraising arms for Democratic and Republican members of Congress don’t agree on much, except when it comes to all the big donations they’ve gotten over the years from jailed financier R. Allen Stanford.
In recent days, the Democratic Senatorial Campaign Committee (DSCC), the National Republican Congressional Committee (NRCC) and other party organizations appealed a court order to return more than $1.7 million combined they received that were tied to Mr. Stanford’s alleged multibillion-dollar bilking of thousands of investors. He’s in jail awaiting trial on charges of running a Ponzi scheme while a court-appointed receiver tries to recoup money for investors.
The appeals come a month after a federal judge in Texas ordered the organizations to return the money. But in a recent court filing, attorneys for the DSCC and the Democratic Congressional Campaign Committee, which owe more than $1.2 million combined, asked for a stay before having to turn over the money. They want to post bond or a letter of credit pending an appeal.
Meanwhile, in a separate set of court papers, attorneys for the NRCC, the Republican Senatorial Campaign Committee and Republican National Committee filed a notice to appeal the ruling, too.
“After thoroughly reviewing the court’s decision and the relevant law, and in light of an important change in the precedent on which the court relied, we believe we have an excellent chance of success,” said Kirsten Kukowski, spokeswoman for the RNC.
The combined legal efforts of the political parties show the lengths political committees mdash; Democrat and Republican alike — will go to protect party coffers with control of Congress and the White House up for grabs in 2012.
“Stanford aimed most of his campaign contributions to congressional leaders and party bosses, and eventually started giving heavily to presidential candidates as well, which coincided with the weakening of offshore disclosure and tax regulations that directly benefited Stanford’s shady business,” said Craig Holman, legislative representative for the D.C.-based watchdog group Public Citizen.
“Like other campaign contributions tainted by scandal, candidates and the party committees should try to show that they personally have not been influenced by the money and turn Stanford contributions over to charity,” he said.
Federal law allows campaign committees to part with donations in several ways. They can return contributions, donate them to charity or send the money to the U.S. Treasury.
But Ralph Janvey, receiver in the Stanford case, wants the money returned to investors. In addition to taking the major-party fundraising committees to court, the receiver previously sent letters to dozens of other politicians who received Stanford money over the years. More than a year later, he’s still waiting.
According to the most recent accounting last month, politicians have returned $132,500, with nearly $1.8 million still not yet returned, though most of that is still in the hands of the party fundraising groups fighting in court.
Aside from the political committees, Rep. Charles B. Rangel, New York Democrat, appears to be the biggest beneficiary of Stanford cash among those who have yet to return donations. The Rangel Victory Fund received $25,000 from Mr. Stanford, his associates and businesses, money that Mr. Janvey says is directly tied to the Ponzi scheme.
Other beneficiaries include the New Jersey Democratic State Committee and Rep. Pete Sessions, Texas Republican, with $10,000 each. Rep. Gregory Meeks, New York Democrat, received $6,600.
Phone and email messages left with the members of Congress were not returned, nor was a message left with the New Jersey Democratic State Committee.
Among dozens of politicians who have returned the contributions are Sen. Richard C. Shelby, Alabama Republican, who sent back $14,000; former Sen. Christopher J. Dodd, Connecticut Democrat, who returned $27,500 from his presidential and Senate campaigns; and Sen. Harry Reid, Nevada Democrat, who returned $8,000.
In court documents, attorneys for the major-party committees put forth several arguments for why they should be allowed to keep the contributions, including arguing that the lawsuits seeking the return of the money weren’t filed on time.
U.S. District Judge David Godbey disagreed, noting in a 61-page ruling that the committees “fail to create a fact issue concerning the Ponzi scheme’s existence or the contributions’ source and make no attempt to show that the contributions were made in exchange for consideration of reasonably equivalent value.”
The judge ordered the Democratic Senatorial Campaign Committee to return $1,037,347; the NRCC, $260,291; the Democratic Congressional Campaign Committee, $218,273; the National Republican Senatorial Committee, $90,960; and the Republican National Committee, $140,241.
Kevin Sadler, attorney for Mr. Janvey, said in an email that the ruling represented an important victory for the receivership and thousands of victims of the Ponzi scheme.
“As important as this decision is, there remain hundreds of other defendants, individuals, companies and organizations, which, like these political committees, received hundreds of millions of dollars of investor funds diverted by Allen Stanford and his fraud scheme,” Mr. Sadler said.
“Such funds rightfully belong only to the receiver, whose duty it is to recover these funds and use them to compensate the victims of the Stanford fraud.”
Mr. Stanford’s trial recently was postponed from September to January. He has pleaded not guilty to charges of bilking investors of about $7 billion.
The fundraising arms for Democratic and Republican members of Congress don’t agree on much, except when it comes to all the big donations they’ve gotten over the years from jailed financier R. Allen Stanford.
In recent days, the Democratic Senatorial Campaign Committee (DSCC), the National Republican Congressional Committee (NRCC) and other party organizations appealed a court order to return more than $1.7 million combined they received that were tied to Mr. Stanford’s alleged multibillion-dollar bilking of thousands of investors. He’s in jail awaiting trial on charges of running a Ponzi scheme while a court-appointed receiver tries to recoup money for investors.
The appeals come a month after a federal judge in Texas ordered the organizations to return the money. But in a recent court filing, attorneys for the DSCC and the Democratic Congressional Campaign Committee, which owe more than $1.2 million combined, asked for a stay before having to turn over the money. They want to post bond or a letter of credit pending an appeal.
Meanwhile, in a separate set of court papers, attorneys for the NRCC, the Republican Senatorial Campaign Committee and Republican National Committee filed a notice to appeal the ruling, too.
“After thoroughly reviewing the court’s decision and the relevant law, and in light of an important change in the precedent on which the court relied, we believe we have an excellent chance of success,” said Kirsten Kukowski, spokeswoman for the RNC.
The combined legal efforts of the political parties show the lengths political committees mdash; Democrat and Republican alike — will go to protect party coffers with control of Congress and the White House up for grabs in 2012.
“Stanford aimed most of his campaign contributions to congressional leaders and party bosses, and eventually started giving heavily to presidential candidates as well, which coincided with the weakening of offshore disclosure and tax regulations that directly benefited Stanford’s shady business,” said Craig Holman, legislative representative for the D.C.-based watchdog group Public Citizen.
“Like other campaign contributions tainted by scandal, candidates and the party committees should try to show that they personally have not been influenced by the money and turn Stanford contributions over to charity,” he said.
Federal law allows campaign committees to part with donations in several ways. They can return contributions, donate them to charity or send the money to the U.S. Treasury.
But Ralph Janvey, receiver in the Stanford case, wants the money returned to investors. In addition to taking the major-party fundraising committees to court, the receiver previously sent letters to dozens of other politicians who received Stanford money over the years. More than a year later, he’s still waiting.
According to the most recent accounting last month, politicians have returned $132,500, with nearly $1.8 million still not yet returned, though most of that is still in the hands of the party fundraising groups fighting in court.
Aside from the political committees, Rep. Charles B. Rangel, New York Democrat, appears to be the biggest beneficiary of Stanford cash among those who have yet to return donations. The Rangel Victory Fund received $25,000 from Mr. Stanford, his associates and businesses, money that Mr. Janvey says is directly tied to the Ponzi scheme.
Other beneficiaries include the New Jersey Democratic State Committee and Rep. Pete Sessions, Texas Republican, with $10,000 each. Rep. Gregory Meeks, New York Democrat, received $6,600.
Phone and email messages left with the members of Congress were not returned, nor was a message left with the New Jersey Democratic State Committee.
Among dozens of politicians who have returned the contributions are Sen. Richard C. Shelby, Alabama Republican, who sent back $14,000; former Sen. Christopher J. Dodd, Connecticut Democrat, who returned $27,500 from his presidential and Senate campaigns; and Sen. Harry Reid, Nevada Democrat, who returned $8,000.
In court documents, attorneys for the major-party committees put forth several arguments for why they should be allowed to keep the contributions, including arguing that the lawsuits seeking the return of the money weren’t filed on time.
U.S. District Judge David Godbey disagreed, noting in a 61-page ruling that the committees “fail to create a fact issue concerning the Ponzi scheme’s existence or the contributions’ source and make no attempt to show that the contributions were made in exchange for consideration of reasonably equivalent value.”
The judge ordered the Democratic Senatorial Campaign Committee to return $1,037,347; the NRCC, $260,291; the Democratic Congressional Campaign Committee, $218,273; the National Republican Senatorial Committee, $90,960; and the Republican National Committee, $140,241.
Kevin Sadler, attorney for Mr. Janvey, said in an email that the ruling represented an important victory for the receivership and thousands of victims of the Ponzi scheme.
“As important as this decision is, there remain hundreds of other defendants, individuals, companies and organizations, which, like these political committees, received hundreds of millions of dollars of investor funds diverted by Allen Stanford and his fraud scheme,” Mr. Sadler said.
“Such funds rightfully belong only to the receiver, whose duty it is to recover these funds and use them to compensate the victims of the Stanford fraud.”
Mr. Stanford’s trial recently was postponed from September to January. He has pleaded not guilty to charges of bilking investors of about $7 billion.
SEC Probing Stanford Receiver for Keeping $118 Million
By: Mary Thompson and Scott Cohn - CNBC
Investor complaints about the long delays and puny payouts from the receiver in charge of rounding up assets from Allen Stanford's alleged $7 billion ponzi scheme have prompted an SEC investigation of the receiver.
SEC Inspector General David Kotz confirms he is looking into whether the SEC's actions regarding oversight of the receiver has been on the up and up. In a motion filed Monday, attorneys said that of the $119.7 million recovered by the receiver, $118.2 million has gone to expenses and fees, leaving just $1.5 million for investors.
The receiver, Dallas attorney Ralph Janvey, was appointed by a federal judge at the SEC's request, after the agency sued Stanford in 2009. But more than two years later, Janvey has recovered just pennies on the dollar for Stanford investors.
"We did receive a complaint recently about Stanford receivership-related issue," Kotz told CNBC. "We have looked at it and plan to open up an inquiry or investigation with respect to allegations regarding improper conduct of SEC employees."
It is the latest in a series of Stanford-related investigations by Kotz, who earlier found SEC staffers were aware of problems at Stanford as far back as 1997.
The new investigation is apparently the result of a request by a Massachusetts law firm, Kachroo Legal Services, that has been attempting to intervene in the Stanford litigation on behalf of a handful of Stanford investors claiming "malfeasance and waste" in the receivership.
The complaint also alleges an improper relationship between Janvey and the official court-appointed Stanford investors committee, which consists of four attorneys and two individual investors. Rather than looking out for all 28,000 investors, the complaint alleges, the committee is simply generating more fees for the attorneys.
"And the potential compensation to these attorneys is enormous," the complaint says.
Janvey's attorney, Kevin Sadler, tells CNBC in a statement that Janvey has not yet heard from Kotz, "but will respond promptly and appropriately to any such request or inquiry, just as the receiver has responded to numerous requests from other government agencies" since being appointed in February of 2009.
"The allegation of an 'inside deal' between the receiver and the investors committee is patently false and completely irresponsible," the statement adds.
"Through dozens of motions, reports and fee applications filed with the court, as well as hearings held in open court, all of the receiver's activities have been transparent and open to scrutiny by the Court and other interested parties."
But attorney Gaytri Kachroo, who filed the new motion and requested the Inspector General's investigation, notes that the last time the SEC objected to a bill from Janvey was more than a year ago.
Stanford, 61, has denied wrongdoing and claims Janvey and the SEC have been dismantling a legitimate business. He is scheduled to go on trial in January on 14 criminal counts.
Investor complaints about the long delays and puny payouts from the receiver in charge of rounding up assets from Allen Stanford's alleged $7 billion ponzi scheme have prompted an SEC investigation of the receiver.
SEC Inspector General David Kotz confirms he is looking into whether the SEC's actions regarding oversight of the receiver has been on the up and up. In a motion filed Monday, attorneys said that of the $119.7 million recovered by the receiver, $118.2 million has gone to expenses and fees, leaving just $1.5 million for investors.
The receiver, Dallas attorney Ralph Janvey, was appointed by a federal judge at the SEC's request, after the agency sued Stanford in 2009. But more than two years later, Janvey has recovered just pennies on the dollar for Stanford investors.
"We did receive a complaint recently about Stanford receivership-related issue," Kotz told CNBC. "We have looked at it and plan to open up an inquiry or investigation with respect to allegations regarding improper conduct of SEC employees."
It is the latest in a series of Stanford-related investigations by Kotz, who earlier found SEC staffers were aware of problems at Stanford as far back as 1997.
The new investigation is apparently the result of a request by a Massachusetts law firm, Kachroo Legal Services, that has been attempting to intervene in the Stanford litigation on behalf of a handful of Stanford investors claiming "malfeasance and waste" in the receivership.
The complaint also alleges an improper relationship between Janvey and the official court-appointed Stanford investors committee, which consists of four attorneys and two individual investors. Rather than looking out for all 28,000 investors, the complaint alleges, the committee is simply generating more fees for the attorneys.
"And the potential compensation to these attorneys is enormous," the complaint says.
Janvey's attorney, Kevin Sadler, tells CNBC in a statement that Janvey has not yet heard from Kotz, "but will respond promptly and appropriately to any such request or inquiry, just as the receiver has responded to numerous requests from other government agencies" since being appointed in February of 2009.
"The allegation of an 'inside deal' between the receiver and the investors committee is patently false and completely irresponsible," the statement adds.
"Through dozens of motions, reports and fee applications filed with the court, as well as hearings held in open court, all of the receiver's activities have been transparent and open to scrutiny by the Court and other interested parties."
But attorney Gaytri Kachroo, who filed the new motion and requested the Inspector General's investigation, notes that the last time the SEC objected to a bill from Janvey was more than a year ago.
Stanford, 61, has denied wrongdoing and claims Janvey and the SEC have been dismantling a legitimate business. He is scheduled to go on trial in January on 14 criminal counts.