Joint Liquidators Finalizing Claims Process to Make Distribution to Creditor-Victims

Joint Liquidators Finalizing Claims Process to Make Distribution to Creditor-Victims

Distribution in the 1% range to be completed before year-end

Antigua, September 3, 2013 – Joint Liquidators Marcus Wide and Hugh Dickson of Grant Thornton have funds to distribute and plan to do so by year’s end. The Liquidators are processing the large number of U.S. claims submitted to the claims process as a result of the Joint Settlement Agreement and Cross-Border Protocol for Stanford International Bank. Once the process is completed, the distribution process will begin and is expected to last a couple of months. The goal is to have the funds distributed by the end of the year.


“This has been a long and arduous process and we are pleased to fulfill our objective to bring some resolution by distributing funds to the Creditor-Victims,” said Wide.
Further information on the status of the Joint Liquidators’ efforts and process will be posted on the Joint Liquidators’ official website at www.sibliquidation.com.

Read More: http://sivg.org.ag/topic186.html

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org.ag/

Answers to Questions Regarding the Certification Forms & Distribution

I Have now received the following information relating to the questions asked about how to complete the Certification Forms. 

A complete response to our questions can be found at the following link. 

http://www.stanfordfinancialclaims.com/Home/FAQ

Here are the answers to the most frequently asked questions...I hope this helps you all.

Regards, Kate 


4.If I have filed a claim with the Antiguan Joint Liquidators, do I have to disclose that on my Certification Form?

Yes. Claimants who filed claims with the Antiguan Joint Liquidators should indicate that on their Certification Forms, as doing so will assist both the U.S. Receiver and the Antiguan Joint Liquidators in their effort to harmonize their claims processes.


5.What lawsuits or claims are claimants required to list in response to the Certification Form?

In response to section 1(b) of the Certification Form, claimants should identify any lawsuits, arbitration proceedings, or other formal claims they have filed seeking to recover SIB CD losses, even if those lawsuits, proceedings, or claims are currently stayed.

Claimants need not list potential or prospective claims that they may assert against a third party if that claim has not yet been filed or asserted.


6.Are claimants required to identify lawsuits or claims that have been filed by others on the claimants’ behalf?

Claimants should list only those lawsuits, proceedings, or claims that the claimants (or their counsel) have filed individually against one or more third parties seeking to recover SIB CD losses.

Claimants are not expected to know, and need not list, the various lawsuits that have been filed by the Receiver, the Official Stanford Investors Committee, or as putative class actions.

With respect to putative class actions, a claimant who has been named in a class action as a “class representative” plaintiff should list that lawsuit in response to paragraph 1(b) of the Certification Form.

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org.ag/

Stanford Victims Will Benefit From $300M Settlement

In a huge step forward for R. Allen Stanford’s cheated investors and creditors, a settlement aims to break the logjam over who is entitled to $300 million worth of frozen assets around the world.

When Stanford’s Ponzi scheme was exposed in 2009 and his business went under, it spawned a global hunt for his many assets to repay his investors and creditors. But those involved in the search—U.S. government agencies, a U.S.-court appointed receiver and the liquidators of Stanford’s Antiguan bank—fought in courts across the world over who controlled the various assets.

The settlement, announced last week and subject to the approval of several courts in the coming weeks, will resolve the years-long battle. It will also speed efforts to return money to those who invested in certificates of deposit issued by Stanford International Bank, a scheme through which Stanford ultimately cheated investors out of $7 billion. Stanford used investors’ cash to further the fraud and fund a lavish lifestyle in which he accumulated real estate, yachts and other assets around the world.

The U.S. receiver warned in court papers that if the settlement isn’t approved, “millions of dollars in assets that could otherwise be distributed to the victims of the Stanford Ponzi scheme will remain tied up in the courts.”

Some of the specific deal terms include handing over $44 million of assets frozen in the U.K. to the Antiguan liquidators, which they’ll distribute to victims in that court proceeding. The liquidators will get another $36 million from the U.K. to fund their continued search for more assets.

More than $132.5 million that was found in Switzerland and $23 million in Canada will be forfeited to the U.S. Department of Justice, which will allow that to be distributed through the U.S. receivership. Antiguan victims will get another $60.5 million from Switzerland.

The settlement doesn’t allow the distribution of any of the $300 million in frozen assets to be paid to two government creditors, the Internal Revenue Service and Antiguan government.

The settlement is subject to the approval of the U.S. District Court in Dallas, the Antiguan court and London’s Central Criminal Court.

Convicted last year of fraud, conspiracy and other criminal charges, Stanford is now serving a 110-year prison sentence. He has insisted he did nothing wrong and has appealed his conviction and sentence.

For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum

110 years for Allen Stanford

ABOUT THE AUTHOR: Tim Prudhoe TEP is a Partner and Barrister at Kobre & Kim LLP


On 14 June 2012, financier and cricket mogul Allen Stanford was sentenced to 110 years in jail, having been convicted on 13 of 14 charges against him arising from his involvement in a USD7 billion Ponzi scheme.

While the legal saga is far from over, financial realities may spell a US victory. The recent US decision on (or, more specifically, against) the application for, in effect, primacy of the Antiguan liquidation in respect of Stanford International Bank (SIB) goes a long way towards making the assets of all Stanford entities available to all creditors of those entities, including the US Internal Revenue Service (the IRS). Excluding any reversal on appeal, the adverse implications for the (many) victims of the Stanford Ponzi scheme run through SIB are certain to be dire.

It is a depressing, post-Madoff world where a fraudulent scheme as large as USD7 billion seems barely newsworthy. However, the Stanford saga, and in particular the recent decision for Chapter 15 recognition of the Antiguan liquidation as the main insolvency proceedings, continues to have significant implications for cross-border insolvency, with a particular focus on international financial centres (so-called offshore tax havens).

The Stanford US receivership (note, not bankruptcy) decision of 30 July 2012¹ deals with many issues, including determination of the centre of main interest (COMI) for a company involved in cross-border insolvency proceedings. It found in favour of the US receiver, dismissing the Antiguan attempt for ‘main proceedings’ status, and instead granting it ‘foreign non-main proceedings’ (i.e. ancillary) status. Notice of the Antiguan liquidators’ appeal against that decision was filed on 7 August 2012.

110-year sentence
The jury trial in Houston (US v Stanford 09-cr-342, US District Court, Southern District of Texas) lasted six weeks, with Stanford’s lawyers arguing that the scheme was the design of his Chief Financial Officer and requesting a mere 44-month sentence. In contrast, US Department of Justice prosecutors recommended the statutory maximum of 230 years, stating ‘[it]will not get anyone their money back but on sleepless nights they will know that [Stanford] got the maximum’. During his 40-minute statement in court Stanford denied culpability, saying ‘I’m not here to ask for sympathy or forgiveness or to throw myself at your mercy… I did not run a Ponzi scheme. I didn’t defraud anybody.’ The presiding judge, David Hittner, described Stanford’s actions as ‘egregious criminal frauds’, while one victim spokeswoman, Angela Shaw of the Stanford Victims Coalition, stated that Stanford ‘stole more than millions… he stole our lives as we knew them’. Stanford’s sentence is 40 years shorter than that handed down to Bernard Madoff, whose Ponzi scheme was estimated at USD17.3 billion. However, Shaw stated that Stanford’s conduct was worse than that of Madoff because he preyed on middle-class rather than wealthy investors.

From the perspective of extracting value for the many victims, the real battle over where the insolvency proceedings should be heard is still being played out. The Antiguan liquidators have already managed to halt efforts by the US Department of Justice (DoJ) to repatriate tens of millions of dollars of frozen Stanford assets to the US from the UK, Canada and Switzerland. The oral hearing on the Chapter 15 application made to the US courts by the Antiguan liquidators for recognition of Antigua as the foreign main proceeding took place in early December 2011. The adverse effect of a protracted wait for a decision was such that on 23 July 2012 a formal court pleading was actually filed solely to ask the Court for a decision². Subject to the pending appeal, this decision will be key to the future direction of the Stanford saga as we move past the fate of Stanford himself.

Procedural history of the SIB insolvency

Of the many steps in the complicated procedural background to the insolvency, the following are particularly noteworthy:

• 16 February 2009: the US Securities and Exchange Commission (SEC) applied successfully to the Northern District Court of Texas for an order appointing a US receiver over the assets of SIB and Stanford.
• April 2009: two orders issued by the UK High Court froze all SIB assets held in the UK following an application by the Serious Fraud Office, acting on behalf of the DoJ. The US was granted a similar restraint order for around USD140 million of assets held in Switzerland.
• 15 April 2009: the Court of Antigua granted an order for the liquidation of SIB and for the appointment of Mr Wastell and Mr Hamilton-Smith as its joint liquidators. This order meant that all of the assets of SIB, wherever situated, were vested in the Antiguan joint liquidators.
• 22 April 2009: the Antiguan liquidators applied to the High Court in England under Article 15 of the Model Law for an order for recognition of the Antiguan liquidation of SIB as the ‘foreign main proceeding’.
• 8 May 2009: the US receiver also applied to the English High Court for recognition of the US receivership of SIB.
• June 2009: the competing recognition applications of the Antiguan joint liquidators and the US receiver were heard by Lewison J. He accepted the application of the Antiguan liquidators and dismissed that of the US receiver.
• 25 February 2010: the English Court of Appeal3 held that the US receiver was not a ‘foreign proceeding’ within the meaning of that expression as defined in Article 2(1) of the Model Law (and that the Antiguan liquidation was a foreign proceeding). It held that SIB’s COMI was Antigua.
• 12 May 2011: the High Court of Justice for Antigua and Barbuda appointed Marcus Wide and Hugh Dickson of Grant Thornton as the new liquidators for SIB (the Antiguan liquidators).
• 5 December 2011: the Antiguan liquidators applied to the US District Court seeking recognition of a foreign main proceeding.
• 16 January 2012: Gloster J, in the Central Criminal Court in London, upheld the restraint order but ruled that the Antiguan liquidators should be granted a USD20 million line of credit from the assets to help fund the liquidation and realisations.
• 23–25 January 2012: SIB applied to the UK Supreme Court for permission to appeal the freezing order. The respondent applied for permission to cross-appeal in respect of the decision of the Court of Appeal to quash the original order.
• 15 February 2012: the UK Supreme Court granted permission to appeal. Judgment on the freezing order is unlikely to be given before 2013.
• 10 April 2012: the same Texas judge hearing the recognition application by the Antiguan liquidators issued a request for evidence (a letter of request) to the English Court, the basis for which was to completely ignore the current primacy of the Antiguan liquidation.
• 3 July 2012: Judge Robert Wilkins for the US District Court for the District of Columbia ruled against the SEC, which wanted the Securities Investor Protection Corp (SIPC) to start liquidation proceedings for the victims4. The SIPC previously handled high-profile liquidations such as Madoff’s Ponzi scheme but here maintained that it did not have jurisdiction over Stanford’s offshore bank. Although the Texas-based brokerage Stanford Group Company was a SIPC member, SIB was not. The judge agreed and found that the SEC did not meet its legal burden of showing why the SIPC should be compelled to act. The SEC has 60 days to decide whether or not to appeal the judge’s ruling; the agency is said to be ‘reviewing the decision’.

Statutory framework for cross-border insolvency

The legal framework within the US for recognition of cross-border insolvency is Chapter 15 of the Bankruptcy Code, which is based on the UNCITRAL Model Law. It came into force in 2005 and has been successfully invoked many times, especially since the financial crisis of 2008 (Fairfield Sentry, BVI and New York; Millennium Global Emerging Credit Master Fund, Bermuda and New York).

Under Chapter 15, an application can be made for insolvency proceedings in another jurisdiction to be recognised as a ‘foreign proceeding’ in the US. Section 101(23) of the Bankruptcy Code defines a foreign proceeding as ‘a collective judicial or administrative proceeding in a foreign country… under a law relating to insolvency… in which… the assets and affairs of the debtor are subject to control or supervision by a foreign court for the purpose of… liquidation’. Section 1517(b) provides that a foreign proceeding ‘shall be recognised… if it is pending in the country where the debtor has the center of its main interests; [n.b. which was refused in the decision of 30 July 2012] or… if the debtor has an establishment within the meaning of section 1502 in the foreign country where the proceeding is pending’. This second scenario (foreign non-main) was the limited recognition granted in the 30 July 2012 order.

The fight between the US court-appointed receiver and the Antiguan liquidators over which jurisdiction has the main insolvency proceedings will now continue on appeal. Unless that appeal succeeds, the Antiguan liquidators will not be able to assume the rights of a US bankruptcy trustee in US courts.

The decision of the Texas Court covers 60 pages, of which 46 are devoted to the discussion of ‘foreign main’ versus ‘foreign non-main’. From page 16 onwards there is a helpful review of the following:

• The right to sue and be sued in US courts, as well as the authority to apply directly to the US courts for other relief (such as stays, injunctions, examine witnesses) is an automatic result of recognition as ‘foreign main’, but not automatically for ‘foreign non-main’ proceedings.
• The Antiguan Stanford proceeding had the necessary ‘collective’, judicial, foreign and insolvency nature by which to satisfy the Chapter 15 test.
• The test – at least from the US perspective – for COMI is widely cast.

COMI

In general terms, the English position is a rebuttable presumption that the COMI will match the jurisdiction of the company’s registered office. Again in general terms, the position under US Chapter 15 is more expansive, with the registered office having only evidential value, and control and management of assets carrying much more weight.

As is well known, this issue was previously examined in the Stanford English High Court decision⁵ and then by the English Court of Appeal⁶, with both courts ultimately holding that the COMI was Antigua rather than the US. The courts also held that the Antiguan proceeding was the ‘foreign main proceeding’. Although this gave the Antiguan liquidators rights to SIB’s assets, these rights were quickly blocked by the restraint order granted in favour of the DoJ. Both the DoJ (via its agent the Serious Fraud Office) and the Antiguan liquidators appealed to the Supreme Court and the judgment is still pending (although the Antiguan liquidators were granted a USD20 million loan from the SIB assets to fund their proceedings). It will be interesting to see what the Supreme Court’s interpretation of the COMI test will be.

The term COMI has not been defined in any of the legislation governing cross-border insolvency: the UK Cross Border Insolvency Regulations 2006, the Model Law, the relevant provisions of the EU Insolvency Regulation (the Regulations) or the US Bankruptcy Code. The presumption under Article 16 of the Regulations that a company’s registered office is its COMI is often called into question if a company’s operations are handled elsewhere. In the case of the UK Stanford litigation, it was found that this presumption could not be rebutted. The registered office of SIB, its headquarters, accounting departments, human resources departments and 88 of the bank’s 93 employees were all based in Antigua and were subject to Antiguan regulation. Most of the bank’s senior managers resided in the US or the US Virgin Islands and board meetings were usually held by telephone. The bank’s network had a global reach; its investors were not purely US based, and assets were held in the US, the UK, Switzerland and Canada.

Proliferating corporate fictions would protect sinister characters such as Ponzi schemers who may target offshore jurisdictions to run their fraudulent empires

While awaiting a ruling in Texas on the Chapter 15 recognition application, the Antiguan liquidators filed, in support of their position, a decision on the issue of COMI on 3 July 2012. This was the decision of 25 June 2012 to uphold the Bankruptcy Court’s ruling in In Re Millennium Global Emerging Credit Master Fund Ltd, 11 CIV 7865-LBS, which affirmed that: ‘(i) each debtor has a “center of main interest”; (ii) that the “center of main interest” is discerned objectively; and (iii) that the debtor’s recognition as a foreign main proceeding was not manifestly contrary to the public policy of the United States.’ In the Millennium case the Court held that it is the petitioner’s burden to show that the debtor’s COMI is the location of the foreign proceedings or, alternatively, that the debtor has an establishment in that place.

A favourable decision in Texas would have been a real game changer for the Antiguan liquidators, granting control over the funds already frozen in UK and Switzerland.

The Texas Court’s reasoning on COMI

First, the Court was prepared to apply the ‘corporate disregard’ doctrine (i.e. to step around the issue of separate corporate personality) to the (many) Stanford entities, and did so on the basis of the acknowledged fraud. It therefore applied COMI analysis to the aggregated Stanford entities and in doing so applied ‘federal principal place of business’ doctrines:

‘It is axiomatic that a corporation is a legal entity existing separate and apart from the persons composing it and entities related to it. However, courts equally accept that they should disregard the corporate form where that form was the means to a subversive end.’ (Page 20 of the judgment.)

‘… disallowing corporate disregard doctrines would proliferate recognition of foreign proceedings that have no real or rightful interest in liquidating the real estate. Proliferating corporate fictions in the Chapter 15 context would also protect sinister characters such as Ponzi schemers who may target offshore jurisdictions to run their fraudulent empires.’ (Page 23 of the judgment.)

Judge Golbey was careful to cite authority for this approach in not only the 5th Circuit of Appeals (i.e. the one encompassing Texas) but also the 1st, 7th, 9th and 11th Circuits as well. The absence of consolidated financials among the various Stanford entities was rejected as insignificant on the basis that the financial statements were manufactured or altered fraudulently anyway.

Secondly, the presumption as to registered office equating to COMI was taken as (i) rebutted by the US receiver and (ii) insufficiently proved as being Antigua. The COMI analysis to be extracted is as follows:

1. Important that the COMI is ascertainable to third parties: insolvency is a foreseeable risk and a debtor’s potential creditors must be able to calculate permissible risk.
2. COMI determination is based on the debtor’s administration, management and operations, along with whether reasonable and ordinary third parties can discern where the debtor is conducting these various functions.
3. The test (at least in the US context) is analogous to the ‘principal place of business analysis’ or ‘nerve centre’ test7, and the registered office might give (at best) insight.
4. The factual findings against the Antiguan liquidators were (p50 of the judgment):
5. SIB was only nominally headquartered in Antigua.
6. SIB’s major activities, certificates of deposit sales and fund investment took place outside Antigua, and a substantial number of the aggregated Stanford entities were headquartered outside Antigua.
7. The senior management of the aggregated Stanford entities based outside of Antigua (and in the US).hThe primary assets of the Stanford entities were held outside Antigua.
8. Most of the investor victims/creditors reside outside Antigua.jThe Texas Court is the jurisdiction locus (i.e. hub) of the Stanford entities.
9. The nerve centre of the Stanford entities is in the US.

Runner-up prize for Antigua: ‘foreign non-main proceeding’

This was not sought in the petition and did not have to be. A favourable finding on ‘foreign non-main proceedings’ from the US perspective requires a ‘local place of business’ in that jurisdiction, and this was found in respect of Antigua:

Physical structures there.578 Antiguan clients: 31 individual and 547 trust and corporate entities (2 per cent of total SIB customers and 4 per cent of total monies invested) 3 SIB employees carried out functions in relation to three types of accounts, credit cards, loan facilities, letters of credit, letters of guarantee and private banking services.4 SIB issued loans to the Antiguan government.

This equated to ‘a measurable amount of local business in Antigua sufficient to have an establishment there’ (p53 of the judgment)
.
Recognition in this much more limited way (i.e. as an ancillary proceeding, lacking primacy, real power and any practical abilities other than a recognised basis by which to seek US court relief) did not come without heavy criticisms of the Antiguan liquidators for the following (p54 onwards in the judgment)
:

1. The prior liquidators’ behaviour in Canada in terms of destroying computer records;
2. Efforts to unseat the US receiver as recognised foreign representative in Canada;
3. Challenges to DoJ criminal seizures in Canada, the UK and Switzerland;
4. The preference for a US bankruptcy rather than the current receivership (criticised by the US Court as the basis for delay and disruption).

On the basis of these criticisms only limited relief was granted to the Antiguan liquidators, for example the taking of evidence: ‘[t]his limited relief facilitates the Joint Liquidators’ US discovery needs related to the Antiguan liquidation’. This was made conditional on the following:

1. The Antiguan liquidators making available to the US receiver and the US Securities and Exchange Commission (SEC) any and all records the Antiguan liquidators have;
2. The Antiguan liquidators attempting (by ‘best efforts’) to allow the US receiver reciprocal rights in the Antiguan courts;
3. The Antiguan liquidators not disrupting the efforts of the US receiver or the SEC;
4. The Antiguan liquidators not duplicating their efforts;
5. The Antiguan liquidators not initiating US court actions, but instead consulting with the US receiver and attempting to adopt a common claims and distribution process for victims.

Further, the US Court was not troubled by the fact that permission for any of these requirements would be necessary in the Antiguan context:

‘To the extent that the Joint Liquidators require a court order from Antigua to comply with the above conditions, the Court leaves it up to the Joint Liquidators to attempt to obtain one. This Court will not modify its conditions simply because the Joint Liquidators are unable to secure the authority to comply.’

The Antiguan liquidators could be forgiven for feeling somewhat shell-shocked, and it will be interesting to see the reaction of the Antiguan Court on the necessary application(s).

Location of the assets and next steps, pending the outcome of the appeal by the Antiguan liquidators

It is believed that SIB has around USD8 billion in assets located all over the world, with 92 per cent of these assets yet to be traced. This sum is made up of 30,000 depositors in 100 different countries. 15.74 per cent of these depositors are US nationals, representing 22.21 per cent of the actual investments. Depositors from Latin America represent 71.17 per cent of total depositors and 58.56 per cent of investments. Before the decision of 30 July 2012, it was thought that these figures speak for themselves on this issue of whether it is accurate for insolvency proceedings to be carried out in the US and whether dealings with victims of the scheme should be characterised as necessarily US-centric.

On the part of the Antiguan liquidators, their latest ‘Communication to Creditors’ (dated 20 July 2012) reveals their perspective on the proceedings and requests patience from the investors:

‘The question to ask yourself is, “Do I want a small return at some future date, when the appeal process undertaken by Stanford in the US has run its course?” or “Do I want an earlier distribution recognizing that a small part will be invested to significantly increase my ultimate recovery?”’

Those questions now appear irrelevant in light of the recent Texas decision. The more pertinent question is now whether there will be any assets left to distribute now that the creditor pool has been aggregated by the US Court.

1. Northern District Court of Texas (Dallas) Civil Action 3:09-CV-00721-N (Judge Godbey), 30 July 2012
2. ‘The lack of a ruling is causing severe prejudice to the [Antiguan joint liquidators]. Among other things, the absence of a ruling is:
3. Re Stanford International Bank Ltd (In Liquidation) [2010] EWCA Civ 137
4. SEC v Stanford International Bank Ltd and Others, Civil Action No 3:09–CV–0298–N
5. In Re Stanford International Bank Ltd [2009] EWHC 1441 (Ch)
6. In Re Stanford International Bank [2010] EWCA Civ 137
7. Which itself was subject to recent (2010) review in the US Supreme Court decision of Hertz Corp v Friend, 130 S Ct 1181, 1192

Statement from Grant Thornton

Dear SIB Depositor:

We noted with great interest the 110 year sentence given to Robert Allen Stanford yesterday. While this sentence does not begin to make up for the pain and suffering that you have experienced, we are confident that justice has been served at least in that regard. We remain committed, as the Joint Liquidators of the Stanford International Bank, to run the Estate as efficiently and effectively as possible. We are working hard to marshal and liquidate assets and pursue claims on your behalf. Our goal is to make a prompt and fair interim distribution to you as soon as possible and hopefully by as early as September 30 of this year if we can convince the US Department of Justice to drop their freeze on the funds in Europe and Canada.
As always, please direct your questions to us at: stanford.claims.support@uk.gt.com.

Marcus Wide and Hugh Dickson, SIB Joint Liquidators

Control over ex-tycoon Stanford's assets at issue

By JUAN A. LOZANO, Associated Press 

HOUSTON (AP) — As former Texas tycoon R. Allen Stanford's criminal case gets ready to wind down with his sentencing Thursday for a $7 billion Ponzi scheme, the battle for control of his remaining assets around the globe still hasn't been settled.

Investors are hoping to get back some of the money that was taken from them, but those leading the efforts are at odds over who should control Stanford's frozen bank accounts and properties. They've even duplicated efforts to go after certain assets.

The legal battle over the assets has frustrated investors, who are still waiting for a payout more than three years after Stanford's businesses were shut down.

"There are people who have died while waiting for a distribution of the assets, people whose families have been left with nothing, people basically living on donations," said Luis Lopez Duran, a Venezuelan attorney who lost money in the scheme.

Prosecutors say Stanford used the money from investors who bought certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua to fund a string of failed businesses, bribe regulators and pay for his lavish lifestyle. Stanford was convicted in March on 13 of 14 fraud-related counts and could spend the rest of his life behind bars.

Stanford's financial empire once spanned from the U.S. to Latin America and the Caribbean. An Antiguan court and a U.S. judge in Dallas have both appointed people to try to recover assets. The U.S. Justice Department is also undertaking its own effort.

Ralph Janvey is the receiver appointed by a federal judge in Dallas. Since 2009, he has worked to close Stanford's various companies and sell his assets, having so far collected more than $220 million.
But Janvey has also racked up more than $108 million in fees and expenses, leaving just $112 million for investors.

Kevin Sadler, an attorney for Janvey, defended these costs, saying Stanford's empire "collapsed, it left a huge mess that has required a huge (and expensive) clean up."

Meanwhile, an Antiguan court appointed liquidators who say they have recovered or could potentially recover more than $323 million in assets for investors. But about $212 million is tied up in land once owned by Stanford that has yet to be sold.

Edward Davis Jr., one of the attorneys for the liquidators, said their process is cheaper, faster and better than the Janvey-run receivership, which he said is inefficient and too expensive.

"We are trying our very utmost to gather up assets and make claims to put money in (investors') pockets," Davis said.

The liquidators are also battling the U.S. Justice Department for control of about $330 million in frozen Stanford bank accounts in Canada, Switzerland and the United Kingdom.

In a May 3 letter, the liquidators asked the Justice Department to withdraw its claim. Davis said the liquidators are worried a large portion of these funds would not go to investors but instead be used to pay for U.S. receivership costs and claims by the Internal Revenue Service against Stanford.

In a June 4 response, Frederick Reynolds, a deputy chief with the Justice Department, suggested U.S. officials as well as Janvey and the liquidators meet to try to settle their differences.

"Continued litigation among the parties will only ensure that the total amount of money available for distribution to Stanford victims will be depleted by costs and fees incurred by the Receiver and the Joint Liquidators," he wrote.

The liquidators have said such a meeting would do no good. The Justice Department has since said if it gets control of the $330 million, it will use the Janvey-run receivership to distribute those funds to victims.

Investors, meanwhile, are divided over who should be in charge.

Richard Watson, a British citizen who lives in Antigua and lost much of his life savings, believes the liquidators should handle everything.

"Our worry is that those funds will find their way to the DOJ, from the DOJ they will go to the U.S. receiver and they will be squandered in attorney's fees. And the creditors won't see one cent," he said.

Regardless, whatever is ultimately recovered will be only a fraction of what investors lost. More could be recouped through lawsuits, but that could take years.
Investors have until Sept. 1 to make a claim with the U.S. receivership. The liquidators do not have a deadline.

Allen Stanford’s Receiver Fights Investors Over Pay Increase

By Andrew Harris and Tom Korosec - Apr 4, 2012 LinkedIn Google +1 0

R. Allen Stanford’s court appointed receiver asked a U.S. judge to increase the amount of money he and his team of professionals can get for marshaling and liquidating the financier’s assets.

Dallas lawyer Ralph Janvey and his counsel made the request of U.S. District Judge David Godbey in Dallas in a hearing today. Stanford’s defrauded investors, who haven’t been repaid any of the $7 billion owed to them, opposed the motion.

Janvey’s outside counsel, Kevin Sadler, argued today that the receiver’s team has been working at the same pay rates since 2009. He also said investors might have as much as $1 billion more to recover if the U.S. Securities and Exchange Commission sued Stanford sooner than February 2009.

“When all you are left with is litigation, it’s the most difficult thing to turn into cash,” he told the judge.

A federal jury last month found Stanford, 62, guilty of lying to people who bought certificates of deposit issued by his Antigua bank about what he was doing with their money and with what oversight. He’s scheduled to be sentenced on June 14.

Janvey, whom Godbey appointed in February 2009 -- four months before Stanford was indicted -- and his outside professionals, including Baker Botts LLP (1143L), have been paid more than $52 million. That sum doesn’t include a court-imposed $16 million hold-back.

Billing Discount
Between February 2009 and Oct. 31, 2011, the receivership accrued $211.1 million in cash and assets, while spending $102.4 million on litigation, wind-down costs, professional fees and other expenses.

Janvey and Sadler on March 9 asked Godbey to reduce the hold-back from 20 percent to 10 percent. They also asked the court to allow them to reduce their billing discount from 20 percent to 10 percent.

“By way of comparison,” Sadler said in the March 9 submission, “the law firms representing the trustees in similarly complex fraud/insolvency matters -- the Madoff and MF Global (MFGLQ) cases -- are performing their work at only a 10 percent discount on rates that are significantly higher than the rates that are being charged for this matter.”

Sadler was referring to the $20 billion Bernard L. Madoff investor fraud in New York and to the bankruptcy of MF Global Holdings Inc., parent of commodities broker MF Global Inc. Outside counsel in each instance are discounting their fees by 10 percent, Janvey’s lawyer said.

Hourly Rates
Sadler said his regular hourly rate has been trimmed to $555 from $750, while Janvey -- who regularly charges his clients $500 an hour -- has been billing $340 an hour on the Stanford case and then discounting that by 20 percent.

Madoff trustee Irving Picard, a partner in Cleveland-based Baker Hostetler LLP (1155L), bills $765 an hour. Skadden Arps (1112L), the New York firm acting as counsel for MF Global trustee James Giddens, charges as much as $1,095 an hour, Sadler said.

Differences between the Dallas and New York markets may explain hourly rate variance, the attorney said. They don’t justify a difference in the discount rate, he said.

On March 16, the receivership also asked Godbey for an order establishing a claims bar-date, a step toward establishing a claims-payment process.

If a claims process is established, the receiver would have “$55-to-$65 million” to distribute by the end of this year, Sadler said today.

‘I Have Sympathy’
Godbey told the lawyers he has received letters from investors aggrieved about the fee issue.

“Unsurprisingly, they say, they haven’t received a nickel and Mr. Janvey gets a raise,” the judge said, later adding, “I have sympathy for their frustration.”

“The investors, who have not received any money to date, would be in opposition to a change in rate at this point,” David Kitner, an attorney representing a court-sanctioned investors’ committee, told the judge today.

David Reece, a lawyer for the SEC, told Godbey he disagreed with Sadler’s view of the agency’s actions and that the government opposes an increase in receivership compensation.

“The commission believes the current rates are reasonable given the amount of funds available,” Reece said.

Godbey rejected as irrelevant Sadler’s argument about the timing of the SEC enforcement action. He also said he was inclined to agree with court-appointed investor advocate John Little, who said he supported the professional fee increase and a reduction in the percentage held back by the court because younger lawyers working on the case had more skill and acumen now than when they started in 2009.

Godbey didn’t issue a ruling today.

The judge said he would hold a hearing before the end of April on starting a process to identify investor claims.

Administrators at War

Rights to Stanford assets disputed in UK courts Grant Thornton fights to unfreeze $110m of Texan's London operation

Mark Leftly Sunday 05 February 2012

A titanic transatlantic battle over the British remnants of the banking empire once headed by the disgraced Texan financier Allen Stanford is being fought out in the UK criminal and supreme courts.

The US Department of Justice is looking to seize $110m of Antigua-based Stanford International Bank assets in London, which have been identified by administrator Grant Thornton. The DoJ believes that the proceeds are the result of Mr Stanford's alleged $7bn Ponzi scheme, for which he is currently standing trial in Texas (see box), and so should be repatriated to a US-appointed administrator under criminal forfeiture rules.

Grant Thornton, which was appointed by Antiguan authorities, believes that it should have the right to take control of the assets and then pass them back to creditors, more than 20,000 of whom are victims of alleged fraud, as it sees fit. At present, the $110m is frozen, even though those assets are among the very few that have been identified and recovered around the world.


US receiver Ralph Janvey and Grant Thornton are, in effect, competing over which country should be considered the legal centre for the liquidation and, therefore, who has rights over the assets. Grant Thornton appears to have gained the upper hand following a series of recent rulings in British courts, though the DoJ is still fighting its corner.

The assets were frozen after the Serious Fraud Office, which acts for the DoJ in the UK as part of a reciprocal agreement, successfully argued in 2009 that they should not be touched by the Grant Thornton. The US gained a similar restraint order for around $140m of assets held in Switzerland.
However, last August, Mrs Justice Gloster, sitting in the Central Criminal Court in London, ruled that Grant Thornton should be granted a $20m line of credit from the assets to help fund its costs.

On 16 January, Justice Gloster set out her reasons for making that order.
She said: "It appeared to me that a funding order providing for a credit line of $20m provided an appropriate and proportionate balance between the reasonable needs of the joint liquidators [Grant Thornton's Marcus Wide and Hugh Dickson] to have access to the funds, in order to maximise recoveries in the liquidation, on the one hand, and the interests of the DoJ on the other to have the restrained assets preserved."

At the end of January, Grant Thornton's legal firm, Lawrence Graham, asked the Supreme Court for permission to fight the freezing order. This was granted, but with the backlog of cases at the Supreme Court the case is unlikely to be heard until 2013.

Crucially, the court did not rule out Grant Thornton being able to have the appeal heard by Justice Gloster in the junior criminal court. It is understood that the administrator and its lawyers have now asked whether she will hear an application to set aside the restraint order, which, if successful, would give Grant Thornton control of the $110m.

A SFO spokesman said: "We continue to act on behalf of the Department of Justice, through what is known as mutual legal assistance, in attempting to repatriate money for the worldwide victims of the Stanford collapse."

Even if this is resolved, billions of dollars are still to be identified and recovered. Some argue that they were lost to funding Mr Stanford's notoriously lavish lifestyle: he is best known in the UK for backing an outlandish $20m, winner-takes-all cricket match in 2008, which England lost to a Caribbean team called the Stanford Superstars

Stanford Investors Endure ‘Living Hell’ on Eve of Fraud Trial

By Andrew Harris and Laurel Brubaker Calkins

Jan. 20 (Bloomberg) -- R. Allen Stanford’s investors, after waiting three years to see the Texas financier go to trial on charges of leading a $7 billion fraud, must hold on even longer before learning when they will get some of their money back.

Stanford’s customers have received nothing since the U.S. Securities and Exchange Commission closed his businesses in February 2009.

Stanford, accused of misleading people who bought certificates of deposit from his Antigua-based bank, spent their money on bad investments, sports sponsorships and a lavish lifestyle that included yachts, a fleet of jets, mansions and a private Caribbean island, U.S. prosecutors said. Jury selection in his criminal trial is scheduled to start Jan. 23 in federal court in Houston. Stanford, who denies any wrongdoing, faces as long as 20 years in prison if convicted.

“It’s not fair that we have to be put through this living hell,” said Blaine Smith of Louisiana, who claims to have lost $1 million in life savings invested with Stanford.

A court-appointed receiver for Stanford Group Co. has spent at least $103 million on litigation, wind-down costs and other expenses, while collecting less than $212 million in cash and material assets since the SEC sued Stanford in February 2009.

The expenditures include fees and expenses for the primary outside law firm used by Ralph Janvey, the receiver. Janvey has asked court permission to pay Houston-based Baker Botts LLP $21.3 million for work done from Feb. 17, 2009, to Sept. 30, 2011, according to court records.

Other Cases

Unlike Stanford, repayment processes have moved forward for claimants in the Bernard L. Madoff fraud case and the bankruptcy of MF Global Holdings Ltd., the parent of commodities broker MF Global Inc.

Madoff’s court-appointed liquidator, Irving Picard, has recovered $8.7 billion of the estimated $17 billion lost and has distributed $325.5 million to victims, according to his website. Madoff’s fraud ended when he was arrested in December 2008.

Customers of New York-based MF Global, which collapsed in October, have already received $3.8 billion of the $6.5 billion they claim, according to that firm’s liquidation trustee, James Giddens.

An attorney for Janvey said last week that it’s too soon to say when investors may see some of the money.

“I know that’s frustrating,” said Janvey’s lawyer Kevin Sadler, a Baker Botts partner. “Investors want to know when and how much.”

Sadler and Janvey in November, under pressure by U.S. District Judge David Godbey in Dallas to start compensating investors, sought court permission to set up an investor repayment plan and establish a claim filing cut-off date.

Lack of Certainty

Sadler estimated that Stanford investors are owed about $5 billion in principal. Lack of certainty as to the total value of allowed claims and the amount of money available to pay them make putting a dollar value or even a ratio on the repayment rate impossible at this time, Sadler said.

On Nov. 11, the receiver submitted to Godbey a report stating it had $114.5 million in cash on hand and $96.6 million in other assets as of Oct. 31.

The largest known pot of Stanford assets is the financier’s foreign accounts, which are largely beyond Janvey’s reach.

Control of the $335 million to $350 million in European accounts was awarded by U.K. and Swiss courts to Stanford International Bank Ltd. liquidators appointed by an Antiguan branch of the Eastern Caribbean Supreme Court.

Edward Davis, the liquidators’ Miami lawyer, said in a phone interview this month that Stanford’s almost 22,000 global depositors could be paid as soon as the second quarter of this year.

Small Amounts

His clients, Marcus Wide and Hugh Dickson, accountants in the global accounting firm Grant Thornton, on Jan. 18 announced the creation of claim-filing forms. Wide and Dickson were appointed to liquidate Stanford’s bank after the tribunal’s original choice, London-based Vantis Plc, collapsed. Wide is managing director of Grant Thornton (British Virgin Islands) Ltd. on Tortola and Dickson is a partner in Grant Thornton U.K. LLP, according to the Stanford bank liquidation website.

At current recovery levels, investors would receive about 10 percent of their money, more if the liquidators are able to invest small amounts of recovered funds to make it easier to sell some Stanford properties, Davis said.

To stop asset recovery and rehabilitation efforts to pay investors now, Davis said, “would be a horrible failure for the victims.”

Control of Assets

Wide and Dickson, using $20 million from frozen Stanford accounts advanced by a London court last year to fund their operations, have spent about $7.2 million to recover $148 million in cash and assets, Davis said.

His clients are fighting with Janvey for control of assets in the U.K., Switzerland and Canada.

They’re also sparring before Godbey, who last month heard arguments over whether Houston or Antigua should be declared the true “center of interest” of Stanford’s operations, which will determine which receiver gets control of the estate. An attempt to resolve that dispute through mediation failed.

“I’m sad to hear the mediation didn’t work,” the judge told the attorneys then. “I’m sadder that the money going to this to pay lawyers is not going to compensate the victims.”

In separate interviews, Sadler and Davis declined to specify the reasons for the lack of comity between their clients.

‘Exploring Ways’

“We are still exploring ways in which we can reach an overall cooperative protocol,” and a means for avoiding duplicative efforts, Sadler said. “We have not reached that yet.”

“We tried to have a dialogue. We’ve gotten nowhere,” said Davis, “nowhere near a palatable deal.”

J. Samuel Tenenbaum, a Northwestern University law professor in Chicago, has been following the Madoff, Stanford and MF Global cases. He also directs the school’s Investor Protection Center, which assists those with limited income or small claims who are unable to obtain legal counsel.

Madoff’s fraud, he said, was easier to unwind because the stolen money remained within a defined circle of people where it could be identified and recovered.

“With Stanford, it’s more complicated,” said the professor, who is also affiliated with the Chicago firm Chuhak & Tecson. “He blew through the money. He either lost it or he spent it.”

Coordinated Response

In such cases, a coordinated global response is needed because otherwise recovery costs increase, Tenenbaum said.

“There should be one overall receiver for Allen Stanford,” he said.

The U.S. Securities Investor Protection Corp., or SIPC, had previously taken the position that the Stanford investors weren’t covered by its enabling Securities Investor Protection Act. SIPC committed to pay Madoff claimants almost $800 million, according to Picard’s website.

SIPC said in July that it would reconsider and make a final decision in September. That month passed without a ruling.

On Dec. 13, the SEC sued SIPC, seeking another path to aid the victims’ recovery. The SEC asked a federal judge in Washington for an order forcing the agency to create a claims process for Stanford’s alleged victims. A hearing is scheduled for Jan. 24.

Postponed Retirement

Meanwhile, Stanford investor Blaine Smith, a custom-home builder, lost the house he built for himself in a foreclosure. His wife has postponed her retirement.

He searches for odd jobs and writes increasingly desperate e-mails to regulators and politicians he hopes can talk Stanford’s receiver into dropping clawback lawsuits against the investors, or persuade SIPC to cover his losses.

“We can’t take any more abuse,” 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). The receivership jurisdiction case is In re Stanford International Bank Ltd., 3:09-cv-00721, U.S. District Court, Northern District of Texas (Dallas).

STANDFORD INTERNATIONAL BANK JOINT LIQUIDATORS ANNOUNCE CLAIMS PROCESS

Claims Process in Place for Fraud Victims

ANTIGUA-January 18, 2012-- The Joint Liquidators of Stanford International Bank released details of their initiation of the formal claims process to set the amount of claims of all creditors of the Bank. The formal claims process is essential to facilitate distribution to the creditors of which over 99.9% are depositor victims. All creditors of Stanford International Bank, Limited (“SIB”) must complete and submit a claim form if they wish to receive any distributions that may be made in the future. This includes those creditors that may have previously registered their claims with the former Joint Liquidators. All details, including copies of the claims form and other relevant information, can be found at www.sibliquidation.com/claims-administration in both English and Spanish.

The Joint Liquidators are moving forward to put in place the formal process for claims administration in the hopes that either SIB's funds presently held in the UK, Canada and Switzerland become available or a sale of the SIB lands in Antigua is concluded. "Today we can't say that either is imminent," said Joint Liquidator Hugh Dickson of Grant Thornton, "but we continue pushing forward on both fronts as hard as we can to make distribution to depositor victims. We do, however, urge all creditors to lodge their claim as quickly as possible to allow for the possibility of an interim distribution.”

Any questions with respect to completing the claims form can be sent to stanford.claims.support@uk.gt.com. Additionally, the Joint Liquidators are in the process of establishing a dedicated phone number that creditors can call with their questions regarding the claims process. The number will be posted to the liquidation website once it is in place.

Stanford Receivers Vie in U.S. Court for Control of Assets

By Andrew Harris and Laurel Brubaker Calkins

(Updates with comment from lawyer for Antiguan-appointed receiver in sixth paragraph.)

U.S. and Antiguan-appointed receivers for R. Allen Stanford’s holdings vied in court for control of his assets as investors await payment for losses in his alleged $7 billion fraud scheme.

U.S. District Judge David Godbey in Dallas today is hearing evidence and arguments from attorneys for Ralph Janvey -- whom he appointed almost three years ago to marshal and liquidate Stanford’s business and personal holdings -- and from lawyers for executives of the global auditing firm Grant Thornton chosen by an Antiguan court for the same task.

At the heart of Stanford’s alleged fraud are certificates of deposit sold by his Antigua-based Stanford International Bank Ltd. to about 28,000 investors. That makes the island nation the legal center of interest, the two Grant Thornton receivers contend. Janvey’s lawyer, Kevin Sadler, disagreed.

“The last thing this receivership needs, the last thing that investors need, is two liquidators of the bank here in the U.S.,” Sadler told Godbey. “It duplicates work that has already been done.”

The claims and distributions could be coordinated between the U.S. and Antiguan receivers, said Gregory Grossman, lawyer for the Grant Thornton liquidators. “For reasons that have been mystifying to me, we have been unable to reach a joint protocol.”

“I’m sad to hear the mediation didn’t work,” Godbey told the attorneys. “I’m sadder that the money going to this to pay lawyers is not going to compensate the victims.”

The U.S. Securities and Exchange Commission in February 2009 sued Stanford, alleging that he and his employees lied about the CDs, telling investors the proceeds were invested in safe, liquid assets.

Lavish Spending
In reality, the SEC said, Stanford was spending that money to fund illiquid real estate ventures, a life of wealth and the operation of more than 130 companies, including his Houston- based broker dealer, Stanford Group Co. Later-arriving investors’ money was allegedly being used to pay off earlier investors.

The financier, who had been knighted by the government of Antigua and Barbuda, has been jailed as a flight risk since his June 2009 indictment by a U.S. grand jury in Houston. Among the allegations is a claim he bribed an Antiguan banking regulator to ignore irregularities.

Trial Jan. 23?
Stanford, who maintains his innocence, is scheduled to be tried on Jan. 23. At a hearing this week in Houston, defense lawyers and U.S. prosecutors are asking a judge to determine his mental fitness to stand trial. Stanford says he suffered severe memory loss in a jailhouse beating. Prosecutors say he’s faking.

“Only 20 per cent of Stanford’s victims are Americans,” Edward Davis, one of the attorneys for Grant Thornton executives Marcus Wide and Hugh Dickson, said in a phone interview before today’s hearing. “This was not a U.S.-centric fraud, although there were U.S.-centred parts. This was an offshore fraud.”

Dickson and Wide are seeking global control of Stanford’s assets, he said, with no role for the U.S. receiver.

“It’s not like they found a bunch of new money,” Sadler said before the hearing. “What are they going to do that will put new money in the investors’ pockets?”

Janvey has recovered more than $114 million in cash and $96 million in assets while spending about $102 million winding up Stanford’s operations and pursuing litigation, according to a report submitted to Godbey last month.

Amounts Recovered
The Grant Thornton receivers said in a Dec. 7 online briefing to investors said they recovered $3.2 million in Panama, obtained a freeze on real estate holdings worth $70 million and were working to recover $9 million in assets in Columbia.

“Our costs will be significantly lower with significantly higher assets,” said Davis, of Miami-based Astigarraga Davis Mullins & Grossman PA.

Antiguan law requires his clients to set up an investor distribution system, even if it duplicates the one that Janvey establishes, Davis said.

The Antiguan estate will be able to distribute more than $300 million of Stanford’s European bank funds, which are claimed by both receivers, Davis said. Custody of the funds, now frozen at the request of the U.S. Justice Department, were awarded to Antiguan control by U.K. and Swiss courts, as well as proceeds realized from the sale of Stanford’s considerable Antiguan real estate and resort properties, he said.

Getting and Spending
Stanford’s Antiguan bank “generated the money” through its CD sales, Davis said. He called the financier’s U.S. operations “the companies that spent the money.”

Opposing the Antiguan receivership’s bid for primacy, the SEC filed papers Dec. 5 with Godbey, arguing that the Stanford Ponzi scheme was Houston-born.

“The evidence is overwhelming that Stanford’s fraud (and, in fact, Stanford International Bank even if viewed in isolation) was orchestrated from the United States,” attorneys for the agency said.

Janvey and Dallas lawyer John J. Little, appointed by Godbey to advocate for investors, agreed. In a court filing last week, they said the centre of interest in the Stanford case ought to remain in the U.S.

“It is clear that the entire Stanford enterprise, including SIB, was run from the United States,” they said.

So far, those claiming they lost money with Stanford have received no pay-out.

At Victims’ Expense
“Millions of dollars have been spent litigating these jurisdictional issues -- all at the expense of the victims,” attorney Peter D. Morgenstern, a member of the Godbey-sanctioned Stanford investors’ committee, said in letter to the Justice Department last month.

The liquidation proceeding is In re Stanford International Bank Ltd., 3:09-cv-00721, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 4:09- cr-00342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 3:09-cv-00298, U.S. District Court, Northern District of Texas (Dallas).

Stanford International Bank, Ltd. (In Liquidation) - Online Presentation for the creditors/victims

"The Joint Liquidators of Stanford International Bank, Marcus Wide and Hugh Dickson of Grant Thornton, held a webinar to discuss recent accomplishments. In the two months since the last webinar, the Joint Liquidators have:


• Recovery efforts in place to seek US$9 million in Colombia

• Eastern Caribbean Amalgamated Bank building in Antigua under contract for US$4.5 million

• Uncovered evidence of “red flags” in support of claims against financial institutions

• Obtained a partial recognition in Canada and permission to sue high value targets, thus preventing the loss of rights

• Uploaded in excess of 2 Terabyte of data and commenced forensic analysis

• Traced an interest in property outside of Antigua with a value of over US$6 million

• Independent investigators and experts engaged to assist on asset recovery efforts

• Perfected claim in cooperation with Swiss Trustee to US$230 million in funds

• Intervention in Swiss criminal proceedings


Provided below is a link to the latest webinar:

http://event.onlineseminarsolutions.com/r.htm?e=381101&s=1&k=2A3109A3D79DDD225E9351E56676104E

The Joint Liquidators are available to address any of your questions on greater detail. Please let us know."

Observations on Report by Morganstern Re Stanford-Related Cases

UPDATE ON STATUS OF MORGENSTERN STANFORD-RELATED CASES; CONTINUING RECOVERY EFFORTS AND CASE DEVELOPMENTS
December 9, 2011

PM says:

Since our last update, there have been several developments that I wanted to call to your attention. This past Monday, we filed our response to the bank defendant's motions to dismiss our complaint against them. Unfortunately, we are not in a position to share the actual response with you because of confidentiality requirements imposed on us. We will continue to aggressively press ahead with this lawsuit against the banks, and have asked the Court to permit the Official Stanford Investors’ Committee (on which we serve) to join the case. The banks have an opportunity to respond, and it is unclear when the Court will consider and decide the motions. We remain confident about our cases, and believe that the claims against the banks could result in significant recoveries. Of course there remain no guarantees of success.

So you filed your response to the banks but we can’t know what that response is, well there’s a familiar story. Surely if you are filing on behalf of your clients (Stanford victims) then the clients have a right to know what you are saying? How much more time (It’s been nearly 3 years since you originally filed these actions against the banks) are you going to spend on these lawsuits before we hear something positive? And, as these are class action lawsuits (filed in Texas I believe) are they all going to be thrown out under SLUSA ? Can you also give me a reason why you feel the need to include the committee to join this case?  I am glad you are not giving any guarantees about this one as I lost all confidence in this action a long time ago.

PM says:

On a second front, the hearing on the Antiguan liquidators’ motion for Chapter 15 recognition is scheduled for December 21 in Dallas. We are actively opposing that application, as we are very concerned about the prospect of the Antiguan court and government exercising control over (i) the hundreds of millions of funds located and frozen by the Department of Justice in overseas bank accounts, and (ii) the Antiguan government gaining access to litigation recoveries that we anticipate in the future and other assets. The Antiguan government itself owes at least tens, if not hundreds of millions of dollars to the Stanford investors, has a history of being corrupt, facilitated and was complicit in this fraud, and has since even failed to extradite Leroy King to the United States to respond to the serious criminal charges pending against him. Although the U.S. legal system is certainly not perfect, we believe it to be far superior to the Antiguan alternative for maximizing investor recoveries.

 If you bothered to take any interest in the mood of Antigua, the government here and what is happening, you would (and do) know that Grant Thornton are acting completely independent from the Antigua Government. You would also know that the courts here come under English law and the appeals procedure again is laid down in English law. To date the courts in the US do not appear to be doing a very good job for the victims, hell they allowed mostly US lawyers to highjack all the positions on the committee. You also know that the Antigua government no longer have possession of any of the Stanford properties and assets and that Grant Thornton are working very hard to bring these under their control for the benefit of all victims. Talking about what the Antigua government owes to the victims, how about we look at what the US politicians owe from “donations” made by Stanford? Isn’t it about time all these politicians paid the money back? It comes to far more than Antigua ever borrowed from Stanford? Again, you talk about the Antigua government being complicit in the fraud. What about America, the CIA, the DEA, the last president, the SEC, the politicians? Compare that to one stupid Antiguan who accepted cash to keep Stanford informed about what was happening, he was a very small fish and he will be brought to justice. Let’s get things into prospective and get your own house in order before you start on Antigua. Also while we are talking about maximising the investors recovery, let’s just think for a moment about the IRS and what they are sitting waiting to take out of the Stanford estate, $260Million I believe at the last count and that can change if and when they take into account the $1.8 Billion “loan” that Stanford gave himself.

PM says:

Our opposition to the Antiguan liquidators is not an endorsement of how this case has proceeded to date. We remain very frustrated by the lack of substantial progress, and are continuing our constant efforts to speed up the cases and maximize recovery for all Stanford investors.

Grant Thornton have only been in situ for less than 6 months and have done a fantastic job, not least at keeping the investors informed about what they are doing and what is happening. They have brought together a TOTALLY INDEPENDENT VICTIM committee, which surprise, surprise is actually made up of VITIMS from around the world. They are asking the victims what their questions are and they are taking the trouble to answer those questions. Compare this to the US committee who for the most part have ignored letters and questions from the victims, have ignored their grievances, for the most part have failed to keep the victims informed, have misled the victims (I refer here to the idea and original composition of the committee we were led to believe would be formed). It’s no wonder they don’t want another (in my opinion) more professional and capable group of Liquidators (GT) coming in and spoiling their nice cosy little set-up.

PM says:

As usual, there continue to be unfounded and untrue rumors being circulated about the Investors Committee. The Committee, which we are part of, is working very hard and represents ALL Stanford investors, regardless of nationality or residence. This allegation about the Committee only serving U.S. investors, is completely untrue and unfair. This was the finding of the Court when it recently denied an attempt by the Kachroo firm to reconstruct the Committee, and denied their motion to intervene in the case.

With regard to the rumours, how are the victims supposed to feel when (see comments above) we have been ignored and to date the majority of efforts seem to have been spent trying to get SIPC for mainly US victims. The committee is made up of mainly Americans, the Political scene is working purely for the American victims, Angela Shaw sends out emails saying she will ONLY REPRESENT THE AMERICANS….der, I wonder why all the international victims doubt your sincerity about representing them? With regard to the finding of the courts regarding Kachroo’s motion to intervene,I believe this was denied on a point of law. Actions speak louder than words and the actions of the committee to date reflect the grave concerns the International Victims have about their neglect by you and the committee. If victim beleive they are not being fairly represented then clearly you have afiled to keep them informed.  It would seem that Kachroo gave you all the kick up the butt that was so badly needed.

We are continuing to move forward with our investigation of potential sources of recoveries, are in discussions (which cannot be made public) with certain significant litigation targets, and are proceeding as quickly as possible with the filed litigations seeking substantial recoveries for investors. We are also representing your interests in all of the major court proceedings.

PM says:

I expect that we will have a further report for you after the next Court hearing on December 21. I know that many of you are frustrated by our lack of personal, individual contact with you. We are trying our best to concentrate virtually all of our efforts on the lawsuits and recovery efforts which we hope will result in significant distributions to you eventually. After the hearings in December and the upcoming holidays, I do plan to schedule a trip to Mexico and other locations, at the beginning of the year, to provide an in-person update to anyone who is interested in attending. In the meantime, please keep watching for updates and monitor the examiner’s website for other Committee news.

Well you are right about us being frustrated by your lack of personal, individual contact.  There are a lot of very disillusioned victims out there. Hope you plan a trip to Antigua, I would LOVE to meet up with you…and while you are at it, please bring Ms. Shaw, I would also love to meet her…as would most of the Antigua population!!

Finally, we are all anxiously awaiting word about the commencement of Allen Stanford’s criminal trial, which remains unscheduled. We will provide you with that information as soon as possible.

Peter D. Morgenstern

Antigua liquidators on Stanford case target US$ 240 million

Caribbean360
December 8,2011

A few weeks after being accused of squandering victims’ compensation, the Antigua-based liquidators of the Stanford International Bank are defending their accomplishments.

In a public update issued via e-mail to the media this morning (December 8), joint liquidators Marcus Wide and Hugh Dickson of Grant Thornton revealed that they held a webinar for depositors, former employees and trade creditors yesterday, Wednesday, to discuss their recent accomplishments.

The joint liquidators revealed that in the two months since their last webinar, they had work toward a target of US$240.5 million in their liquidation efforts.

This included putting recovery efforts in place to seek US$9 million in Colombia; securing a US$4.5 million for the Eastern Caribbean Amalgamated Bank building in Antigua; tracing an interest in property outside of Antigua with a value of over US$6 million; and perfecting a claim in cooperation with Swiss Trustee to US$230 million in funds.

They revealed that over the past two months they had also uncovered evidence of “red flags” in support of claims against financial institutions; obtained a partial recognition in Canada and permission to sue high value targets, thus preventing the loss of rights; uploaded in excess of 2 Terabyte of data and commenced forensic analysis; engaged independent investigators and experts to assist on asset recovery efforts; and intervened in Swiss criminal proceedings.

These disclosures come weeks after a group of US based Standford fraud victims appealed to the US justice system to keep Grant Thornton and the US-based receiver away from US$330 million in frozen assets that they argued should be disbursed directly to the victims and not used to fund costly liquidation

US-Committee in opposition to Grant Thornton

Stanford International Victims find it necessary to make the courts aware of how strongly we support the recognition of Grant Thornton. We must let the court know that we have no trust or faith in Janvey and the "Official Investors Committee." If you have not yet signed the petition that will be filed with the courts and the U.S. government, please do so because there is still time. This committee speaks only for themselves and for U.S. investors, we must make the courts aware of the international investors feelings.

Notice how the committee sign themselves as the "US-Committee" speaks volumes, it appears even they acknowledge they don't represent the interests of International victims.

December 5, 2011
By the US-Committee

The Official Stanford Investors Committee (the "Investors Committee") submits this brief in opposition to the Petition for Recognition of Foreign Main Proceeding Pursuant to Chapter 15 of Bankruptcy Code (the "Petition"). The Petition was originally filed by former liquidators, Nigel Hamilton-Smith and Peter Wastell, and is now championed by Marcus Wide and Hugh Dickson (the "Joint Liquidators").

The Investors Committee respectfully urges the Court to deny the Joint Liquidators any form of recognition under Chapter 15. Any recognition of these Joint Liquidators would be "manifestly contrary to the public policy of the United States". That is so for at least four separate reasons.

First, the appointment of the Joint Liquidators (and their predecessors) was pursued and obtained in violation of this Court's Orders. Granting these Joint Liquidators any form of Chapter 15 recognition, under these circumstances, would undermine fundamental regulatory and jurisdictional policies of the United States.

Second, there are significant conflicts of interest raised by the Joint Liquidators's request for recognition as the "foreign main" proceeding. The Receivership Estate has significant claims against the Antiguan government that will likely be frustrated (or abandoned) if the Joint Liquidators achieve "foreign main" recognition. The Investors Committee believes those conflicts are exacerbated by the multiple representations that have been undertaken in this proceeding by counsel for the Joint Liquidators.

Third, the recognition sought by the Joint Liquidators should be denied because it is very much a "one-way street." The Antiguan courts have already refused to recognize this Court's Receiver, finding both that the Receiver has "no legal entitlement to standing in Antigua and Barbuda" and that this Court's Order appointing the Receiver and taking sole possession of the assets of the various Stanford entities, including SIBL, was "unenforceable."

Fourth, recognition should be denied because it has become painfully obvious that the Antiguan government and the Antiguan judicial system have no real interest in prosecuting the individuals responsible for the Stanford fraud, nor in recovering assets for the benefit of Stanford's investor-victims.

Stanford victims outside of US and Antigua want justice too

CARACAS, Venezuela, Friday September 30, 2011 – A three-person organisation has stepped up to represent over 20,000 people across 112 countries who were victimised when the ponzi scheme of former Antigua-based banker Allen Stanford collapsed over 2 years ago.

The Texas based leader of the organisation, has denounced authorities in the United States and Antigua for what they see as a deliberate disenfranchisement of Stanford victims outside of those two territories.

In a press release, The Texas based leader, stated that he had sent a letter to the new Joint Liquidators of Stanford International Bank Limited Marcus Wide and Hugh Dickson on September 18, copied to the US Receiver, his litigant attorney and to the Official Stanford Investors Committee, to express its indignation at the “dishonest handling of the Stanford Ponzi scheme in Antigua and the United States”.

“Since the SEC filed the civil lawsuit against R. Allen Stanford, his companies and related parties in February of 2009, the organisation has persistently begged the US Receiver and SIBL’s Joint Liquidators, through letters and press releases, to set aside their pettiness and economic interests in order to end the shameful game of “cat and mouse” that has wasted the Stanford victims’ patrimony in a never-ending carousel of litigation's as a result of their irrational pursuit to control the assets.

“It is unacceptable that the Courts in Antigua and the United States, in detriment to the Stanford’s victims, have allowed the Joint Liquidators and the Receiver, who were named to prevent the waste and squandering of the creditors' patrimony, to continue fighting for the assets - duplicating costs and efforts, and hindering the possibilities of a pro rata distribution of the victims’ patrimony,”.

The Texas based leader went on to accuse authorities in Antigua and the US of conspiring to allow Stanford “to keep a fraudulent financial empire alive for more than a decade”.
The organisation’s leader went on to say: “We perceive that the case has been managed with very little transparency. We are concerned that the joint liquidators and the receiver continue to be a part of the problem and not a part of the solution. Why prolong the agony of the victims for a jurisdictional battle?”

In the letter, the organisation’s members went on to beg the joint liquidators of and the US receiver to establish a cross-border insolvency cooperation protocol without any further delay.

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.

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.

Stanford International Bank liquidators seek to unfreeze funds

The newly appointed liquidators of Stanford International Bank (SIB), Marcus Wide and Hugh Dickson, announced yesterday that they hope to reach a compromise with various governments, including the US Department of Justice, to unfreeze hundreds of millions of dollars in assets in an effort to recover the billions lost by the more than 27,000 creditors of SIB.

“The estate has virtually no funds, but is saddled with obligations that exceed money on hand. Convincing government officials around the world to unfreeze the funds is a top priority,” a press release said.

“We hope to meet with the Department of Justice to understand the reasoning behind their approach and see if a compromise can be reached which will allow the estate to go forward with its own funds, and therefore maximise returns to creditors,” Dickson said.

“To have access to the bank’s own funds presently frozen by the criminal forfeiture proceedings would generate a considerable value to the estate in terms of allowing additional recovery and asset realisations to maximise recoveries,” he added.

The duo, the release said, have contacted officials from the Serious Fraud Office in the United Kingdom, the Prosecutor and Bankruptcy Trustee in Switzerland, and officers of the Attorney General of the Province of Ontario, Canada in recent weeks.

“Our objective has been to determine in the quickest time possible how the financial interests of the account holders, CD holders, and general creditors of the bank are best served,” Wide said.

“We have also been in contact with the US Department of Justice, the US Receiver, and the Creditors’ Committee for the US Receivership, with a view towards meeting with them once we have a better understanding of the issues between them and the SIB liquidation in Antigua,” the communiqué continued.

Dickson and Wide, who by order of the High Court last month replaced Nigel Hamilton-Smith and Peter Wastell as liquidators, also said they are considering the sale of real estate holdings in Antigua and are in the process of forming an advisory creditors committee, the release noted.

“These holdings are extensive and it is likely their value can be greatly enhanced if they are brought to market in an orderly manner over a period of time,” Dickson said.

Stanford International Bank Limited (In Liquidation) - Notice to Creditors/(Noticia a los a Acreedores)

English Version

Marcus Wide and Hugh Dickson of Grant Thornton Appointed New World-Wide Liquidators of Stanford International Bank Limited

Marcus Wide and Hugh Dickson of Grant Thornton were appointed as the new liquidators of Stanford International Bank Limited ("SIB") by order of the Eastern Caribbean Supreme Court at Antigua on 12 May, 2011. Mr Wide and Mr Dickson were appointed in place of the former liquidators, Nigel Hamilton-Smith and Peter Wastell.

The new liquidators and their staff are working with the former liquidators to ensure that control of SIB is transferred to the new liquidators in an orderly fashion. The new liquidators are currently working with legal counsel in the various jurisdictions to develop a business plan and budget to generate the maximum possible return to depositors through co-operation and co-ordination with other office holders where possible. It is also the intention of the new liquidators to establish a committee representative of the body of depositors to assist and provide input in the liquidation process.

All creditor enquiries should now be directed to the new liquidators via email: stanford.enquiries@uk.gt.com. The new liquidators are also in the process of establishing a website to keep creditors informed of developments in the liquidation. The website address will be: www.grant-thornton.co.uk/stanford.aspx. The new liquidators will post regular communications updating you on the status of the liquidation and recommend that creditors monitor the website for information. Please note that creditors do not need to take any further action if you have previously registered your claim via the online claims management system.

Marcus Wide and Hugh Dickson
Joint Liquidators

Versión en Español

Marcus Wide y Hugh Dickson de Grant Thornton nombrados como los nuevos liquidadores mundial de Stanford International Bank Limited.

Marcus Wide y Hugh Dickson fueron nombrados como los nuevos liquidadores de Stanford International Bank Limited (“SIB”) por una orden de la Corte Suprema del Caribe Oriental en Antigua el 12 de Mayo del 2011. Los señores Wide y Dickson fueron nombrados en lugar de los anteriores liquidadores, Nigel Hamilton-Smith y Peter Wastell.

Los nuevos liquidadores y su personal están trabajando con los anteriores liquidadores para asegurarse que el control de SIB sea transferido a los nuevos liquidadores de un modo ordenado. Los nuevos liquidadores están actualmente trabajando con abogados en varias jurisdicciones para desarrollar un plan de negocios y presupuesto para generar el máximo retorno posible a los depositantes a través de la cooperación y coordinación con otros administradores judiciales siempre y cuando sea posible. También es la intención de los nuevos liquidadores de establecer un comité que represente el conjunto de depositantes para que puedan asistir y contribuir en el proceso de liquidación.

Todas las consultas de los acreedores deben ser ahora dirigidas a los nuevos liquidadores a través de la siguiente dirección de correo electrónico: stanford.enquiries@uk.gt.com. Los nuevos liquidadores están también en el proceso de establecer un sitio en la web para mantener a los acreedores informados sobre la evolución de la liquidación. La dirección del sitio en la web será: www.grant-thornton.co.uk/stanford.aspx. Los nuevos liquidadores publicarán comunicaciones frecuentes, resumiendo sus hallazgos en la liquidación y les recomiendan a los acreedores monitorear el sitio web por información al respecto. Por favor tengan en cuenta que los acreedores no necesitan tomar ninguna acción adicional si ya registraron su reclamación a través del Sistema de Gestión de Reclamación en línea.

Marcus Wide y Hugh Dickson
Liquidadores Conj