Democratic lobbyist and former Texas Lieutenant Gov. Ben Barnes has been slapped with a $5 million lawsuit over lobbying and consulting services he provided to R. Allen Stanford, the indicted financier accused of running a multibillion-dollar Ponzi scheme.
The suit was filed on Mar. 15 by Ralph Janvey, the receiver appointed by the court to recoup the investors’ losses. It alleges that Barnes raked in millions doing consulting and lobbying work for Stanford’s fraudulent investment empire since 2005. Stanford is accused of bilking tens of thousands of investors out of nearly $8 billion, in one of the largest phony investment schemes of all time.
Barnes’s attorney, Jay Madrid, said that the lawsuit was baseless because his client was unaware that Stanford’s businesses were illegitimate at the time the services were provided. "This lawsuit is without merit and creates a dangerous precedent for service providers in all fields," said Madrid in a written statement. "This is particularly true of those who deal in good faith with entities that have all the characteristics of legitimate enterprises but who after-the-fact become subject to receiverships, bankruptcies or similar business failings."
But the lawyer for the court-appointed receiver said that that argument does not absolve Barnes of responsibility. "In a fraudulent transfer action, lack of knowledge of the fraud is not a defense," attorney Kevin Sadler told the NLPC over email. He said that Barnes must prove that he was both unaware of the fraud and that the services he provided to Stanford were equivalent in value to the fees he collected.
"Barnes will not be able to establish the affirmative defense of objective good faith and reasonably equivalent value. His services left creditors of the Stanford entities with nothing of value," wrote Sadler.
The lawsuit alleges that in many cases Barnes’s company "performed services [for Stanford] that simply furthered the Ponzi scheme." This work reportedly included consulting Stanford on how to reduce his personal federal income taxes through the Virgin Islands tax incentive laws and providing investment advice. The lawsuit also says that marketing work done by Barnes for Stanford’s businesses "had the unfortunate effect of attracting new victims to [Stanford’s] fraudulent investment scheme."
Barnes, a heavy-hitter in Democratic political circles, is no stranger to financial scandals. While serving as Texas Lt. Gov. the early 1970s, allegations that Barnes and other state politicians accepted bribes for political favors surfaced in an incident known as the Sharpstown scandal. Barnes was never charged, but the episode helped contribute to his exit from career politics.
Now a successful lobbyist, Barnes is still very much involved in the political arena. Last September, he hosted a Democratic Congressional Campaign Committee fundraiser for House Speaker Nancy Pelosi (D-CA) at his home in Austin, TX. Barnes and his wife have given $249,800 in political contributions in 2010, with 100 percent of those contributions going toward Democratic candidates, according to Open Secrets.
Showing posts with label Ben Barnes. Show all posts
Showing posts with label Ben Barnes. Show all posts
Thursday, 25 March 2010
Thursday, 18 March 2010
Stanford Receiver Sues Lobbyist Barnes for $5 Million
Ralph Janvey, the receiver for R. Allen Stanford’s businesses, sued former Texas Lieutenant Governor Ben Barnes to recover consulting and lobbying fees he got from the indicted financier during the past five years.
Janvey seeks a court order requiring Barnes to return more than $5 million that he was paid by Stanford or his companies from 2005 to 2009, when the U.S. Securities and Exchange Commission accused Stanford of leading a $7 billion investment fraud. Janvey said the funds should be used to repay investors allegedly defrauded through bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.
Barnes “did not perform services of reasonably equivalent value in exchange for those payments, and in many instances performed services that simply furthered the Ponzi scheme,” Kevin Sadler, Janvey’s lawyer, said in a complaint filed March 15 in Dallas federal court.
Janvey said Barnes’s payments constituted fraudulent transfers. Payments to the lobbyist, who has offices in Austin, Texas and Washington, were made with “funds taken from unwitting CD investors” at a time when Stanford’s businesses were technically insolvent, Janvey said.
‘Dangerous Precedent’
“This lawsuit is without merit and creates a dangerous precedent for service providers in all fields,” Jay Madrid, a lawyer for Barnes, said today in an e-mailed statement. “Like dozens of other professionals, we provided services to Stanford Financial Group under the belief that it was just what it appeared to be -- a robust, vibrant international business.”
Stanford, who is in jail awaiting trial on related criminal charges, denies any wrongdoing.
Janvey said Barnes’s firm received a total of $5 million for lobbying and consulting that included such varied tasks as advising Stanford on tax law in the U.S. Virgin Islands and consulting for Stanford’s annual “20/20” cricket tournament in Antigua.
Barnes also advised Stanford on contributions to U.S. politicians, many of whom have been asked by Janvey to return donations they received from Stanford. Barnes also consulted on Stanford investments including Caribbean airlines, alternative energy and development plans for a private Antiguan island, Janvey said.
Barnes, 71, rose rapidly through Texas politics under the patronage of U.S. President Lyndon B. Johnson and former Texas Governor John Connally. Barnes served as the Texas Legislature’s Speaker of the House from 1965 to 1969 and as the state’s lieutenant governor from 1969 to 1973.
Janvey seeks a court order requiring Barnes to return more than $5 million that he was paid by Stanford or his companies from 2005 to 2009, when the U.S. Securities and Exchange Commission accused Stanford of leading a $7 billion investment fraud. Janvey said the funds should be used to repay investors allegedly defrauded through bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.
Barnes “did not perform services of reasonably equivalent value in exchange for those payments, and in many instances performed services that simply furthered the Ponzi scheme,” Kevin Sadler, Janvey’s lawyer, said in a complaint filed March 15 in Dallas federal court.
Janvey said Barnes’s payments constituted fraudulent transfers. Payments to the lobbyist, who has offices in Austin, Texas and Washington, were made with “funds taken from unwitting CD investors” at a time when Stanford’s businesses were technically insolvent, Janvey said.
‘Dangerous Precedent’
“This lawsuit is without merit and creates a dangerous precedent for service providers in all fields,” Jay Madrid, a lawyer for Barnes, said today in an e-mailed statement. “Like dozens of other professionals, we provided services to Stanford Financial Group under the belief that it was just what it appeared to be -- a robust, vibrant international business.”
Stanford, who is in jail awaiting trial on related criminal charges, denies any wrongdoing.
Janvey said Barnes’s firm received a total of $5 million for lobbying and consulting that included such varied tasks as advising Stanford on tax law in the U.S. Virgin Islands and consulting for Stanford’s annual “20/20” cricket tournament in Antigua.
Barnes also advised Stanford on contributions to U.S. politicians, many of whom have been asked by Janvey to return donations they received from Stanford. Barnes also consulted on Stanford investments including Caribbean airlines, alternative energy and development plans for a private Antiguan island, Janvey said.
Barnes, 71, rose rapidly through Texas politics under the patronage of U.S. President Lyndon B. Johnson and former Texas Governor John Connally. Barnes served as the Texas Legislature’s Speaker of the House from 1965 to 1969 and as the state’s lieutenant governor from 1969 to 1973.