Grant Thornton - Advisory of Objections

Stanford - Advisory of Objections

Stanford Investors Seek Liquidators' Pact on Claims Process

By Andrew Harris and Tom Korosec on April 26, 2012

A group of Stanford International Bank Ltd. depositors asked a U.S. judge to order the receiver he appointed and rival bank liquidators selected by a Caribbean court to collaborate on a process to pay victims of R. Allen Stanford's $7 billion fraud scheme.

The depositors and other creditors of the Houston-based Stanford Group Co. securities firm filed their request today with U.S. District Judge David Godbey.

The judge yesterday described as "mind boggling" the continuing dispute between Dallas lawyer Ralph Janvey, whom Godbey appointed in February 2009 to collect and liquidate Stanford assets to pay off creditors, and the two Grant Thornton accountants asked to do comparable work by the Eastern Caribbean Supreme Court for Antigua and Barbuda.

 "Something is terribly wrong here," the Stanford depositors and creditors told Godbey in today's filing. "This simply should not have been that hard."

A federal jury in Houston in March convicted Stanford, 62, of leading a international banking fraud scheme centered on the sale of certificates of deposit by his Antigua-based bank. He is scheduled to be sentenced on June 14.  

Janvey's Request

Godbey yesterday declined to immediately grant Janvey's request that he set a deadline for the filing of claims by Stanford's fraud victims. The receiver was appointed after the U.S. Securities and Exchange Commission filed suit against Stanford and his bank.

 "I'm not saying that I want it to be a fixed price contract," the judge said, adding that he sought assurance "we are not going to spend another $50 million."

Janvey's outside counsel, Kevin Sadler of Houston-based Baker Botts LLP, told the court he would file a cost estimate within two days.

The Janvey and Grant Thornton receivers have spent about $150 million in their global efforts to recover Stanford assets, according to the creditors' filing today. They haven't agreed on a unified plan for processing victim claims and payments.

'Round and Round'

 "We've gone round and round and have not come up with anything that's acceptable," Joseph Wielebinski, a lawyer for the Antiguan liquidators, said in court yesterday, relaying his clients' objections to the setting of a claims bar date.

 "Nobody is more sensitive to that issue than the receiver," Sadler told Godbey. "We are very anxious to start the process."

"Unfortunately," the Stanford creditors said in their filing, "it appears that it will take firm and unambiguous action by the court to right this ship.

" The creditors said they seek a court-ordered day-long session involving representatives of the Janvey receivership, the Antiguan liquidators and victims' advocates.

"In the event an agreement is not reached, movants respectfully move the court to fashion a single claims process," they said.

Miami attorney Edward H. Davis, who represents the Grant Thornton liquidators, didn't reply to an e-mailed request for comment.

 'Very Unfortunate'

Sadler, in a telephone interview, called the filing by creditors' lawyer Stephen Malouf "very unfortunate and very ill-timed."

 "He just doesn't know how much time the receiver, the SEC, the creditors committee and the examiner have spent negotiating with the Antiguans," Sadler said. The parties have had "innumerable meetings," in the past year, making what he described as a "considerable effort to reach some kind of an agreement."

Sadler said the Antiguans maintain they are the only legally authorized liquidators of the Stanford bank and as such, "they want to be in control of everything." It has been impossible to dislodge them from that position, he said.

Almost $3.5 billion in claims have already been submitted to the Janvey receivership without a formal claims process in place, Sadler said.

"You have to have a claims process in place before you can distribute one dime," he said.

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

Obama returning cash from one accused Ponzi schemer, keeping money from bundler who helped another

Published: 12:49 PM 04/26/2012 By Matthew Boyle - The Daily Caller

President Barack Obama's re-election campaign plans to return campaign donations to alleged Ponzi-schemer Shervin Neman, but is keeping money from a bundler who helped convicted Ponzi-schemer R. Allen Stanford and other alleged financial criminals get tax breaks.

Neman is under investigation by the Securities and Exchange Commission and is accused of running a $7.54 million Ponzi scheme. According to public records, he gave the maximum allowable $35,800 to Obama's re-election campaign and another $30,800 to the Democratic National Committee.

 An unnamed Obama campaign official told Politico Wednesday that the president plans to return the money to Neman. "With 1.8 million donors thus far, we constantly review those contributions for issues," the unnamed Obama campaign official said. "In this particular case, we will be refunding the contributions and have placed the funds in escrow until a trusteeship or other appropriate place to return these funds is established given the interests of the investors."

Despite his rhetoric railing against them, Obama has a history of taking campaign contributions from alleged and convicted financial criminals - and people connected to them. The Obama campaign also has a history of returning money in some cases. For instance, the Obama campaign took money from people connected to former New Jersey Gov. Jon Corzine's MF Global collapse. Obama actually removed bundler Ron Klein for his connections to Corzine's financial activity.

But, the campaign continues to remain silent when it comes to its U.S. Virgin Islands bundler Marjorie Rawls Roberts - who helps her wealthy clients navigate offshore tax loopholes in the territory. Roberts, who has pledged to raise between $100,000 and $200,000 for Obama's 2012 campaign, has helped people like Stanford, who was convicted of running a $7 billion Ponzi scheme, and alleged financial criminals from the National Rural Utilities Cooperative Finance Corporation, with their applications for tax breaks.

DNC spokesman Brad Woodhouse and Obama campaign spokesman Ben LaBolt haven't returned The Daily Caller's numerous requests for comment on Roberts. Even so, her political toxicity may have reached critical mass in recent weeks as DNC chairwoman Rep. Debbie Wasserman Schultz canceled a scheduled fundraiser in the U.S. Virgin Islands at the last minute after TheDC revealed the bundler's ties to convicted and alleged financial criminals.

STANFORD UPDATE RE MOTION TO DISMISS

Dear KLS-Stanford Clients:

As you know, we filed the class action lawsuit against the United States government for its role in ignoring the Stanford Ponzi scheme and allowing the fraud to proceed unchecked for years. In response, the United States moved to dismiss the complaint on jurisdictional grounds. The United States is arguing that the government is immune from suit based on a statute that exempts it from liability for certain discretionary actions. The government claims that it has discretion over the methods by which it investigates and regulates the securities industry, and so it is immune from prosecution relating to its investigation and regulation of the Stanford entities. Indeed, the government has successfully used this argument to obtain the dismissal of a related Stanford case, as well as multiple similar cases against the government relating to the Madoff Ponzi scheme. However, our complaint does not allege liability on the basis of discretionary actions. Rather, our complaint alleges that the government failed to adhere to specific, mandatory requirements over which it had no discretion to ignore. This argument is fully explained and explored in our opposition to the motion to dismiss which we filed on Friday.
Attached is a copy of the government’s motion to dismiss and our opposition. The government will now have an opportunity to file a brief in reply to our opposition, and then the Court will rule on the motion. We are optimistic that the Court will rule in our favor, but are prepared to immediately appeal should the Court grant the motion to dismiss. We will provide another update as soon as the Court rules on the motion. If you have any questions, please do not hesitate to contact us.

Sincerely,
The KLS-Stanford Team

Stanford Receiver Battles With State Politicians for Return of Millions in Campaign Contributions

Bruce Carton April 19, 2012 

The often-criticized efforts of the court-appointed receiver in the Allen Stanford case to recover all possible funds for victims has taken a quirky turn in Stanford's home state of Texas. The Houston Chronicle reports that prior to his arrest, Stanford was a major political donor in the state, who along with his employees gave nearly $2.4 million to politicians in both parties since 2001. The receiver wants the politicians to return these "ill-gotten" campaign contributions for the benefit of the victims of Stanford's Ponzi scheme, but is running into significant resistance.

The Chronicle reports that some of the recipients of these contributions such as Texas Republican Sens. Kay Bailey Hutchison and John Cornyn previously gave the contributions they received from Stanford to charity when they learned of the scandal. Kevin Sadler, a lawyer for the receiver, told the Chronicle that giving the money to charity was a "meaningless act"

that will not stop the receiver from trying to recoup those funds from the politicians. "The fact they gave money away to some other charity doesn't mean they're not in possession of money that doesn't belong to them," Sadler said.

To date, four Texas lawmakers have elected to return the contribution received from Stanford to the receiver as demanded. Many more have not complied, including "five national party committees, one Texas-based PAC, both Texas senators and six Texas representatives...." The receiver has now filed lawsuits against five political party committees demanding the return of the contributions. According to the Chronicle, a court ruled last year that the committees must repay the contributions, plus attorney's fees. The committees' appeal of the ruling will reportedly be argued on May 1.

Narco-Banker: The Allen Stanford Story

Posted on April 13, 2012 by Daniel Hopsicker

With his recent conviction on 13 counts of money laundering—ensuring that a man who once lived in a $57 million mansion with a moat will be doing his entertaining behind bars for a very long time—the Allen Stanford scandal would seem to be all but over. But Allen Stanford’s Ponzi scandal is ending before the most important question about the scandal has even been asked…

How did a gym owner filing bankruptcy in Texas happen to wake up a year later owning an offshore bank?

In 1982, Allen Stanford was the bankrupt owner of a bankrupt chain of athletic clubs in Waco Texas. In his personal bankruptcy filing he listed $13.6 million in debt against less than $200,000 in assets.

Paul Holt,  a businessman in Waco Texas, watched as Stanford’s sketchy business career was getting underway. “I knew about Stanford’s failed health club in Waco, Texas, because that’s where I live, and I was there when it happened,” Holt told Vanity Fair in 2010.

“Then one day I go online and out of the corner of my eye I see this headline: ‘Allen Stanford, Caribbean Banking King, in $8 billion Scandal.’”

“And I’m going, whoa! How does somebody go from bankrupting a Total Fitness Center to becoming a knight in the Caribbean?”

Whoa, indeed.

State-Sponsored Crime: Effective, Simple, Safe Allen Stanford’s startling transition from bankrupt Texas grifter to star money launderer is a vivid snapshot which authorities don’t want anyone examining too closely… a Polaroid capturing the collapse of the rule of law in the United States of America during the Iran Contra-inspired cocaine epidemic of the 1980’s.

According to news accounts, the government’s tepid response to Allen Stanford’s continuing criminal enterprise began in the late 1990’s.

Not so. Stanford was fingered as a criminal as far back as 1989, when George Bush the Elder was in the White House, "Back to the Future II" was in theatres, and tanks were rolling through Tiananmen Square. 

So the real villains in the scandal of Allen Stanford and his $8 billion Ponzi scheme are the people who prevented his prosecution for two full decades. And many of them have yet to be publicly named, let alone punished.

 The Stanford scandal produced the usual tepid admissions of wrongdoing by government Agencies charged with guarding America from crooks and drifters.Many saw criminal negligence in the government’s inaction.

The SEC knew all about Stanford’s criminal fraud back in 1996, for example, a full decade before taking even baby steps to end it.

This disclosure prompted some public handwringing, but not much else. And the results of the official investigations into Stanford’s big score were less than inconclusive…

In a civil proceeding, one former SEC administrator paid a $50,000 fine for crimes that would send an ordinary citizen to jail for a decade.

And the long-time head of the DEA in Miami—a Stanford “security” officials caught red-handed after Stanford’s indictment in an orgy of file-shredding that would have done Oliver North and Fawn Hall proud—was acquitted in an extraordinary extrajudicial move by a Federal judge who snatched the case

from the hands of a jury deliberating a verdict. 

In such cases, one wonders: why bother with the expense of a trial? Tea Party advocates should have been outraged.  But perhaps they were all on vacation.

Get out of jail passes all around!

A little history lesson offers some big clues.

The Caribbean island of Montserrat was ‘discovered’ by Christopher Columbus in 1493. A volcanic eruption in 2003 rendered the island all but uninhabitable.

Somewhere in between those two dates came Allen Stanford, who opened a bank on the island in 1985. It was his first.

Stanford’s bank was chartered by a fraudster from Beverly Hills named Jerome Schneider, author of an early entry in the booming field of helping the parasitic rich avoid paying  taxes. It was called “Hiding Your Money."

Schneider also hosted "offshore wealth summits" in places like Cancun, attended by congressmen and other public figures, according to the Los Angeles Times.

Schneider set up about 800 offshore banks in 15 years, and was a  “thorn in the side of federal banking authorities and the Internal Revenue Service for years,” according to the LA Times.

But if he was a thorn in their side, you couldn't tell. They never did anything about him. Nothing.

To anyone who has felt the full force of the government come down over unpaid parking tickets or a minor moving violation, this must seem strange.

What such people need to understand is that selective prosecution is not the exception in the U.S. It’s the rule.

Chase, Morgan, Stanford, DuPont

Frequently, the names of Schneider-chartered banks were similar to those of well-known domestic banks, with words like "Chase" or "Morgan" in their titles.

Schneider must have seen Stanford, already an inveterate liar, as manna from the gods. Soon he was boasting of his family ties with the founder of Stanford University in Palo Alto, Leland Stanford, a tie the University has taken pains to refute. 

Schneider’s most famous client before Stanford was a fraudster from La Jolla, a city which, given its small size turns out fraudsters with astonishing regularity, was a man named J David Dominelli.

Dominelli’s claim to fame, oddly enough, is that before Allen Stanford, Bernie Madoff and Art Nadel came along, he was America’s biggest Ponzi All-Star. When he went down, so did a number of Republican politicians in San Diego  like Roger Hedgecock, the city’s long-time mayor.

When the scandal grew too big to ignore, the island of Montserrat shut down most of the phony banks. One oft-cited closure featured the prestigious-sounding Zurich Overseas Bank, which operated out of a tavern in

the island’s capital, Plymouth.

“Almost every bank in Montserrat was operated illegally,” says David Marchant, editor of OffshoreAlert, a newsletter covering offshore banking.

“The fact that Stanford had a banking license in Montserrat is all you needed to know about his credibility. It wasn’t like most of the banks were good and you had a few bad eggs. The only reason you opened a bank in Montserrat was to commit fraud.”

Allen Stanford, lucky fellow, emerged unscathed, if not unnoticed. He moved his bank to Antigua, then a British Crown Colony.

They didn't call them the go-go 80's for nothing So, just what was going on in 1985 that made starting an American-owned no-questions-asked bank in the Caribbean such a sure thing?

The answer is obvious to everyone… except American authorities, who never asked the question… save for a few brave souls, quickly hounded out of the government or moved to jobs watering plants in the office.

 But someone from Scotland Yard was apparently paying attention,  detective Paul Marston, who in 1989 targeted Stanford’s bank, which had already grown into one of the Caribbean’s largest.

Where were all Stanford’s deposits coming from? Marston didn’t have to wonder long to find the answer.  Colombian drug money was flooding into banks across the region, and there were persistent rumours that this was the source of Stanford’s growth.

Marston called in an expert from the U.S. Government’s Office of the Comptroller of the Currency. “The O.C.C. guy went down there, stood across from the Stanford office for maybe several hours, came back and said, ‘Yep, that’s a money-laundering operation,’” recalled an agent involved in the operation.

“So Marston goes, ‘How can you tell from just standing across the street?’ And the guy goes, ‘I’m telling you, it is.’

“Then, a little later, we got fairly detailed intelligence that they were indeed laundering for major Colombian drug traffickers.”

"We own it. You can always count on Florida" Montserrat authorities finally revoked Stanford’s license, in May 1991.

This cut no ice with banking officials in Florida, however. Despite objections from the state's chief banking counsel, Florida regulators allowed Stanford to open a Miami office and transfer significant amounts of

money outside the US… with no government oversight.

This is one of countless pieces of damning evidence, clues, absolute indications, sure signs, tell-tale tip-offs, unmistakable signs, and, yes, smoking guns illustrating Allen Stanford’s favoured position as an

officially-sanctioned drug money launderer.

As, in other words, an American Drug Lord.

Anyone wanting to know why the US Government is roundly despised in so many places around the world need look no further:

Christopher Sandrolini, chargé d'affaires at the US Embassy in Barbados, recently lectured a meeting of Caribbean heads of state in Barbados on how they could become crime-busters—just  like us!— if only they tried hard enough.

“The Stanford case should serve as a warning to small societies in the Caribbean,” he said. “Given the region’s vulnerability to criminals, Caribbean nation’s cannot afford to relax their vigilance and laws.”

Stanford's swindled victims want his political donations

Convicted financier has given millions to GOP, Democrats

By Emily Wilkin, Houston Chronicle

WASHINGTON - Before his arrest, convicted swindler R. Allen Stanford was a

prodigious political donor, a billionaire financier who along with his

employees had given nearly $2.4 million to both Democrats and Republicans

since 2001.

But Stanford's victims and the court-appointed receiver assigned to recover

money stolen by Stanford are demanding politicians return the money to them

- claiming the funds are ill-gotten gains in the form of campaign

contributions.

The result has been a complex legal battle that pits politicians - including

eight members of the Texas congressional delegation - against some of their

constituents in an unusual matchup that has both sides crying foul.

"At every turn, someone is there to in some way limit or reduce the recovery

for Stanford victims, "There are so many facts of this case, and none are

working to the advantage of the victim."

Stanford was convicted on 13 counts of fraud earlier this year after running

a $7 billion Ponzi scheme for decades.

As is the custom when politicians discover that a donor is enmeshed in

scandal, many of the recipients - such as Texas Republican Sens. Kay Bailey

Hutchison and John Cornyn - gave their Stanford donations to charity.

The court-appointed receiver working to get back the funds has sent letters

to all recipients of political contributions from Stanford and his company's

political action committee asking them to return the donations. The list of

those yet to repay, according to the receiver, includes five national party

committees, one Texas-based PAC, both Texas senators and six Texas

representatives - Pete Sessions of Dallas, Pete Olson of Sugar Land, Kevin

Brady of The Woodlands, Lamar Smith of San Antonio, Sam Johnson of Plano and

Joe Barton of Ennis.

Committees Sued

The situation has gotten so contentious that the receiver, Ralph S. Janvey,

sued five political party committees, both Democratic and Republican, to

recover Stanford's contributions plus legal fees. The committees allege that

the fees are too high.

Brian Walsh, a spokesman for the National Republican Senatorial Committee,

said that his committee, which received about $83,000 from Stanford, "has

made a good faith effort to resolve this issue."

"Unfortunately, those efforts were rejected by attorneys for the receiver

who appear more focused on lining their own pockets than ensuring Allen

Stanford's victims receive some justice," said Walsh.

Request 'appropriate'

Kevin Sadler, the lead lawyer for the court-appointed receiver working to

get back the funds, said the receiver believes the request is "appropriate

given the size, the scope and the complexity and the difficulty of work he

and his professional team is undertaking."

The battle has left everyone dissatisfied.

"(The fees) have been excessive, I believe," the Stanford victim said. "But

the court has said they've been fair."

All but Brady and Olson said they had made charitable donations equal to the

amounts Stanford gave to their campaigns, and Olson's office maintains that

he also returned all of Stanford's contributions to the receiver.

Sadler said lawmakers giving the money to charity was a "meaningless act."

"The fact they gave money away to some other charity doesn't mean they're

not in possession of money that doesn't belong to them," Sadler said.

Melanie Sloan, director of Citizens for Responsibility and Ethics, a

Washington-based watchdog group, said the case is a complicated for

politicians.

"I think they thought they would be doing the right thing (by donating to

charity)," Sloan said. "It doesn't matter what's correct or not. It matters

what the political ads will say."

None of the representatives and senators responded to questions about why

they chose to give the funds to charity rather than the victims, with the

exception of Cornyn, who said it was his standard procedure in these

instances to donate the funds to charity.

"It's personally kind of insensitive, If you are going to return money, give

it to the victims that it came from. If we had wanted to make a donation to

charity, we would have done that."

Transfer a tough sell

But it's been a tougher sell to get lawmakers to transfer the donations to

the victims' fund. According to the receiver, four Texas lawmakers - Rep.

Randy Neugebauer, R-Lubbock; Rep. Lloyd Doggett, D-Austin; Rep. Mike McCaul,

R-Austin; and Rep. Charles A. Gonzalez, D-San Antonio - have sent the

receiver donations given by Stanford.

Olson, a Republican from Sugar Land, has paid back $3,300 of the $5,300 he

received from Stanford, according to the receiver. However, an Olson

spokesperson said the $3,300 was all he and his campaign were given by

Stanford.

A Texas district court determined last June that the committees have to

repay all contributions plus attorney's fees, but the committees have

appealed the decision. It will be argued in appeals circuit court May 1.

Obama bundler helps convicted, alleged financial criminals secure Virgin Islands tax breaks

By Matthew Boyle - The Daily Caller

Marjorie Rawls Roberts, who has pledged to raise between $100,000 and

$200,000 for President Obama's 2012 campaign, has faced heat in recent

months after news reports confirmed that she helps her wealthy clients

navigate the kinds of offshore tax benefits the president has publicly

criticized. And now The Daily Caller has learned exactly who some of those

wealthy clients are.

Roberts helped recently convicted $7 billion Ponzi schemer R. Allen Stanford

with his application for tax benefits from the U.S. Virgin Islands Economic

Development Corporation. Those benefits permit recipients to avoid paying

some - or all - of their taxes, as long as they live in the U.S. territory

for the majority of a given tax year and fulfil certain financial and

development obligations to the local economy.

The Virgin Islands Daily News reported that Stanford applied for those tax

breaks in 2006, and that the territory's current governor, Democrat John de

Jongh, approved the application after taking office in 2007.

Stanford, who was convicted of defrauding 30,000 of his investors with bogus

investments in his Antiguan bank while living a lavish lifestyle from the

spoils of his scheme, owes hundreds of millions in back taxes. In early

2009, the Associated Press reported that the federal government placed four

tax liens against Stanford, totalling about $212 million, between 2007 and

2008.

Attorney General Eric Holder praised Stanford's conviction during a March

2012 Senate Appropriations Subcommittee hearing. "Just this week, we secured

a conviction against the former board of directors' chairman for an

international bank [Stanford Financial Group], orchestrating a $7 billion

investment fraud scheme," Holder said in his testimony.

Even so, the Obama re-election campaign continues to accept bundled

donations from the tax attorney who helped Stanford navigate the Virgin

Islands' tax loopholes.