Monday, 29 September 2014

Receiver files 10th Schedule of Payments

Receiver files 10th Schedule of Payments to be Made Pursuant to the 1st Interim Distribution Plan - On September 5, 2014, the Receiver filed his 10th Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 10th Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed.

To view a copy of the 10th Schedule, please click here.

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum

Thursday, 25 September 2014

Fifth Circuit affirms summary judgment against “net winners" of Stanford Ponzi scheme

In a recent opinion, the United States Court of Appeals for the Fifth Circuit held that the Texas Uniform Fraudulent Transfer Act allows a receiver to clawback interest payments made to investors under a Ponzi scheme. Beginning in the 1990s, a network of entities created by R. Allen Stanford sold certificates of deposit to investors through the Stanford International Bank, Ltd., promising extraordinarily high rates of return. In a classic Ponzi scheme, Stanford used later investors’ money to pay prior investors their promised returns. The scheme ultimately collapsed, Stanford and CFO James Davis were imprisoned, and the SEC brought suit against Stanford, his agents, and the Stanford entities, alleging federal securities law violations.

 The court-appointed receiver over the Stanford entities brought multiple actions under the Texas Uniform Fraudulent Transfer Act (“TUFTA”) to recover funds paid to investors who purchased certificates of deposit as part of the Ponzi scheme and received back their principal, as well as purported interest on the principal. The Receiver moved for summary judgment on its TUFTA claims against the investor-defendants (described by the court as “net winners” of the scheme), arguing that the payments made to the net winners were fraudulent transfers not made in exchange for reasonably equivalent value. The United States District Court for the Northern District of Texas granted the Receiver’s motions for summary judgment and ordered the investor-defendants to return funds paid in excess of their original investments.

 The investor-defendants filed an interlocutory appeal to the Fifth Circuit, which swiftly rejected each of their arguments and affirmed partial summary judgment in favor of the Receiver. The investor-defendants first argued that the district court’s choice of law analysis was fundamentally flawed and that Antigua law rather than Texas law should apply. The Fifth Circuit concluded the district court correctly applied Texas law, as the scheme was centered in, and operated out of, Houston, Texas, and Texas has a substantial interest in the application of its fraudulent transfer laws because the Receiver, many of the Stanford entities, and some of the defrauded creditors and net winners are in Texas. The court also rejected the argument that the Receiver lacked standing to bring claims under TUFTA, concluding that the Stanford entities, through the Receiver, may recover assets or funds that the entities’ principals fraudulently diverted to third parties without receiving reasonably equivalent value. The court further rejected the investor-defendants’ statute of limitations argument because the suits were filed less than one year after the fraudulent transfer was, or reasonably could have been, discovered (measured from the date of the CFO’s guilty plea). In addition, the court determined that IRA accounts containing net winnings to which the investors had no legal right could not be sheltered as assets.

 On the merits of the district court’s grant of summary judgment, the Fifth Circuit first addressed whether TUFTA’s element of fraudulent intent was satisfied. Fraudulent transfer requires that the debtor transferor make the transfer with actual intent to defraud the debtor’s creditors, and in the Fifth Circuit, such intent may be established by proving that a transferor operated as a Ponzi scheme. Here, it was well-established that the Stanford entities were operated as a Ponzi scheme, thereby establishing fraudulent intent.

 Next, the court addressed the investor-defendants’ argument that they should be permitted to keep their contractually-guaranteed interest payments for which they asserted they paid reasonably equivalent value. Under TUFTA, a transfer is not voidable against a person who took in good faith and for reasonably equivalent value. Value is given if, in exchange for the transfer, an antecedent debt is secured or satisfied. Here, the CDs issued by Stanford were void and unenforceable, invalidating any contractual claim to interest; thus, the court concluded the investors failed to provide any value for the interest payments that they received. The court explained that, in the context of a Ponzi scheme such as Stanford, each payment of interest to an investor (made possible by a later investor’s deposit) decreases the net worth of the entity operating the scheme. Accordingly, the district court’s grant of partial summary judgment in favor of the Receiver on its TUFTA claims was affirmed. Notably, the Fifth Circuit agreed with the district court’s conclusion that the investors did give reasonably equivalent value to the extent that they received back their principal because they have actionable claims for fraud and restitution. Thus, in contrast to the interest payments, the principal payments were payments of an antecedent debt.

Join the Debate here:

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum

KLS Update to Stanford Further Action Clients


225R Concord Avenue 
Cambridge, MA 02138 

Telephone (857) 829-3041 
Facsimile (617) 864-1125 

September 24, 2014 

By Email Only 

Re: Update to Stanford Further Action Clients

Dear Stanford Further Actions Client:

Re: ItalBank URGENT – Authorization Form Required 

Many of you have received notification from the Liquidator regarding setting up an account with “ItalBank” to receive distributions. We have confirmed with the liquidator that YOU DO NOT NEED TO SET UP AN ITALBANK ACCOUNT IF YOU HAVE SIGNED THE ENCLOSED AUTHORIZATION FORM.

If you have signed and returned the enclosed authorization form, KLS will be able to directly send your distributions to you.

If you have any questions, please do not hesitate to contact us directly.

Very truly yours,

Gaytri D. Kachroo
Principal, Kachroo Legal Services, P.C.

The authorization form can be downloaded from HERE.

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum

Tuesday, 23 September 2014

Antigua Land Portfolio Brings $60M

Chinese firm YIDA purchased 
1,522 acres of developable land in 
Antigua, on the mainland and on
three adjacent islands.
ANTIGUA—CBRE has completed the sale of developable land along the northeastern coast of Antigua. The portfolio is comprised of approximately 987 acres on the mainland, plus three adjacent islands for a combined total of approximately 1,522 acres.

 Marketed as part of the Stanford International Bank dissolution, the land was acquired by YIDA International Investment Antigua Limited for US $60 million.

 The Chinese firm plans to create “Singulari,” a multi-billion dollar mixed-use project including a golf resort, several five-star hotels, a horse track and residences stretching from the Crump Peninsula to Guiana Island.

 “This transaction is an economic game changer and represents a tremendous opportunity to elevate Antigua’s position as a major Caribbean destination,” said Jeff Woolson, the managing director of CBRE’s Golf & Resort Group. “Singulari will be the largest resort development in the Caribbean since Baha Mar in the Bahamas”.

 CBRE’s United States-based Golf & Resort Group teamed with the Caribbean office of UK-based real estate advisory firm Smiths Gore and local agent Gilbert Boustany to collectively represent the joint liquidators of the Stanford International Bank in this transaction.

Join the Debate here:

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum

Saturday, 13 September 2014

Net Winners in Stanford Ponzi Scam Lose Appeal

Profits seen by some investors in R. Allen Stanford's Ponzi scheme may face seizure by the court-appointed receiver trying to make victims whole, the 5th Circuit ruled.

 Ralph Janvey, with Krage Janvey in Dallas, has filed more than 70 federal fraudulent-transfer suits in Dallas since his appointment. He has targeted former Stanford entities and employees, individual investors and third-party recipients of Ponzi scheme proceeds - included the Republican National Committee, the Democratic Congressional Campaign Committee, Miami Heat basketball team, the Tiger Woods Foundation, Texas A&M University, the University of Miami, the PGA Tour and the ATP Tour.

 In a partial summary judgment for Janvey early last year, U.S. District Judge David Godbey said the hundreds of "net winners" who received interest on top of their principal would still be "in far better shape" after paying back the interest than most other Stanford victims "who lost everything." 

A three-judge panel with the 5th Circuit affirmed Godbey's ruling on Thursday, concluding the net winners have no valid claim to the interest on their phony certificates of deposit (CDs).

 "Here, we conclude that there is no valid claim for interest," the 22-page opinion states. "The CDs issued by [the Stanford International Bank] are void and unenforceable. This is because '[t]o allow and [investor] to enforce his contract to recover promised returns in excess of his undertaking would be to further the debtors' fraudulent scheme at the expense of other [investors].'"

 Any recovery would be paid out of money "rightfully belonging" to the other victims of the Ponzi scheme, not from the Stanford entities' own assets "because they had no assets they could legitimately call their own," Judge Patrick Higginbotham wrote for a three-member panel in New Orleans.

 The appeals court also affirmed that principal payments made to the net winners are off-limits to Janvey and not subject to fraudulent-transfer claims.

 "Unlike interest payments, it is undisputed that the principal payments were payments of an antecedent debt, namely fraud claims at the investor-defendants have as victims of the Stanford Ponzi scheme," Higginbotham wrote.

 Net winners who tried to shelter their profit in individual retirement accounts that are exempted by the Texas Property Code are also not entitled to an exemption, the court found.

 "As we recently explained, to claim this exemption, a defendant 'must establish that she has a legal right to the funds in the IRA,'" the opinion states. "The investor-defendants have offered no evidence to the district court that they have a legal right to the funds despite those funds being the product of a fraudulent transfer. The district court did not err in denying this exemption."

 Janvey could not be reached for comment Thursday evening.

Read more here:

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum

Friday, 12 September 2014

Stanford Investors Want SEC Negligence Claims Revived

Investors in Robert Allen Stanford's $7 billion Ponzi scheme asked the Eleventh Circuit to reinstate their class negligence claims against the U.S. Securities and Exchange Commission, arguing that the agency failed in its statutory duty to properly report the massive scheme.

 The investors' attorney Gaytri Kachroo of Kachroo Legal Services PC told an Eleventh Circuit panel that the SEC has a nondiscretionary duty mandated by Congress to immediately notify the Securities Investor Protection Corp. if it learns that a broker-dealer is in financial difficulty. 

The SEC's Dallas-Fort Worth, Texas, office conducted several investigations of the Stanford Group between 1997 and 2004, and concluded that the Stanford Group was a Ponzi scheme but failed to report the investigations to SIPC, according to court documents.

 This mandatory duty to notify SIPC should not fall under the misrepresentation and discretionary function exceptions of the Federal Tort Claims Act, Kachroo said. Otherwise, the FTCA fails in its legislative objective, she said.

Read the full article here:

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum

Saturday, 6 September 2014

UPDATE 1-U.S. SEC won't appeal ruling against Stanford's Ponzi victims

The U.S. Securities and Exchange Commission will not appeal a recent court decision that thousands of victims of financier Allen Stanford's Ponzi scheme were ineligible under federal law to file claims to recoup their losses, an SEC spokesman said on Friday.

 On July 18, a federal appeals court in Washington rejected the SEC's bid to force the Securities Investor Protection Corp (SIPC) to start paying an estimated 7,800 former customers of Stanford Group Co.

 The court concluded that these victims did not qualify as "customers" eligible for compensation by SIPC, which liquidates failed brokerages. It upheld a July 2012 ruling by a federal district judge.

 SEC spokesman John Nester on Friday said in an email that the regulatory agency decided "after very careful deliberation" not to pursue the case further.

 He also said the SEC remains committed to Stanford's victims, and will work with the Stanford firm's receiver, the U.S. Department of Justice and others to maximize recoveries.

 Stanford, 64, is serving a 110-year prison term following his March 2012 conviction for running an estimated $7.2 billion fraud.

 The scheme was centered on bilking investors with fraudulent certificates of deposit issued by his Antigua-based Stanford International Bank.

 Angela Shaw Kogutt, founder of the Stanford Victims Coalition, called the SEC decision "a complete injustice" to Stanford victims.

 "Unfortunately, Stanford victims have no private right of action against SIPC," she said in an email. "The Commission has caved to an organization it is supposed to oversee."

 The case had been the first time the SEC had sued to force SIPC to start a court-supervised liquidation.

 While the SIPC has handled other big liquidations, including that of Bernard Madoff's former firm, it contended that Stanford's customers did not qualify for help because the Antigua bank was not a member of SIPC, unlike Texas-based Stanford Group.

 In ruling for SIPC, Circuit Judge Sri Srinivasan had written for the appeals court that "we fully agree" with the district court judge, who expressed that he had been "'truly sympathetic to the plight' of the victims." (Editing by Meredith Mazzilli and Jonathan Oatis)

Read more here:

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum

Will SIPC's Brokerage Insurance Scam Help Allen Stanford Walk?

If you experience an insured loss and the insurance company doesn’t pay, you know you’ve been scammed. As I’ve discussed in a series of columns posted at, SIPC (the Securities Investor Protection Corporation) is running an enormous scam in claiming to insure our brokerage accounts against fraud. SIPC’s refusal to pay the legitimate claims of most Madoff victims and all Stanford victims makes this abundantly clear.

 Even worse, SIPC is placing all brokerage account holders at enormous additional risk by standing ready to sue them if they earn a return on their investments and spend the proceeds. In fact, thanks to precedents SIPC established in the Madoff case, SIPC can declare the loss of your securities to be the result of a Ponzi scheme and sue you for up to every dollar you withdrew in the up to six years prior to the fraud’s discovery!

 Reread that last sentence. It is saying that if you have made money investing with a broker, directly or indirectly, say through your IRA, you can not safely spend (or, indeed, withdraw and reinvest) your assets for up to six years from the time you’ve withdrawn them! But it is even worse than this. When you withdraw money from your IRA, you have to pay up to 40 percent in taxes. You can be sued for the amount you pay the IRS in taxes as well!

Read the full article here:

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum

Wednesday, 3 September 2014

SEC Says Stanford's Criminal Conduct Charges 'Slanderous'

By David McAfee

The U.S. Securities and Exchange Commission on Wednesday urged a Texas federal judge to reject convicted Ponzi schemer Robert Allen Stanford’s call to appoint a special prosecutor and advise the court of criminal conduct by a court-appointed officer, calling his allegations “slanderous, sensational and unsupported.”
 The SEC says Stanford — who allegedly led a massive $7 billion Ponzi scheme by selling billions of dollars in self-styled certificates of deposit, promising return rates exceeding those offered by most banks — is falsely accusing the receiver and others of criminal conduct. Receiver Ralph Janvey was appointed to oversee Stanford International Bank Ltd. and its affiliated entities in February 2009, according to court documents.

 "Over the course of two weeks, Stanford filed three motions, which do nothing but make slanderous, sensational and unsupported allegations against the receiver, the Department of Justice, the commission and a circuit judge for the U.S. Court of Appeals for the Fifth Circuit," attorneys for the SEC wrote in their opposition brief. "Baldly accusing the court-appointed receiver of engaging in criminal conduct, Stanford appears to allege that the receiver’s actions, in collusion with the commission and the DOJ, prevented him from defending against the criminal action and resulted in his wrongful prosecution and conviction." 

Wednesday’s motion by the SEC marks the most recent development in the long-running case. The SEC said Stanford’s complaints about the criminal proceeding are “not relevant to this civil action” and should be addressed, if at all, on appeal of his criminal conviction.

 Janvey also responded to Stanford’s miscellaneous motions, including his bids for a temporary restraining order and an asset freeze, on Wednesday. Janvey said most of Stanford’s "frivolous pleadings" have previously been litigated.

 "There is no legal or factual basis either for the rambling and repetitive assertions contained in Stanford’s filings or for his requested relief," counsel for Janvey wrote in the response brief. "For all of these reasons, Stanford’s motions should be denied."

 The parties’ responses come more than a year after a Texas federal judge ruled in the commission’s favor, ordering Stanford to pay $6.76 billion for claims related to his alleged $7 billion securities fraud plot.

 U.S. District Judge David C. Godbey ordered Stanford to pay $6.76 billion to the SEC, a sum that includes the $5.9 billion the agency was originally looking for, plus $861 million interest. The ruling also rejected Stanford’s earlier argument that he should be able to continue challenging the validity of the civil case, which is based on information from his criminal conviction, because he claims he didn’t get a full and fair opportunity to defend himself at trial.

 The judge said the SEC was entitled to summary judgment because both the criminal and civil cases involve the same facts, which had already been litigated in the government’s favor during Stanford’s criminal proceedings.

 Stanford was sentenced in March 2012 to 110 years in prison after being convicted on charges he misappropriated billions of dollars in investor funds, including some $1.6 billion he allegedly moved to a personal account.

 All told, Stanford and his Houston-based company misused and misappropriated about $7 billion in certificates of deposit purchased by investors and administered by Stanford International Bank, according to the prosecutors.

 The SEC went after him too, filing a suit in the Northern District of Texas basing its arguments on information from Stanford’s criminal conviction.

 The SEC is represented by B. David Fraser and David B. Reece of the SEC.

 Receiver Ralph S. Janvey is represented by Kevin M. Sadler, Scott D. Powers, David T. Arlington and Timothy S. Durst of Baker Botts LLP.

 Robert Allen Stanford is representing himself.

 The case is Securities and Exchange Commission v. Stanford International Bank Ltd. et al., case number 3:09-cv-00298, in the United States District Court for the Northern District of Texas, Dallas Division.

Read more here:

For a full and open debate on the Stanford receivership visit the Stanford International Victims Group - SIVG official Forum