R. Allen Stanford’s court-appointed receiver persuaded a U.S. judge to block the accused Ponzi scheme mastermind’s bid to access insurance funds to pay his lawyers at a hearing today in London Chancery court.
Ralph Janvey, who was placed in charge of Stanford’s financial empire, told a Dallas judge the Texas financier is trying “a blatant attempt to end run this court” by asking the U.K. court to order the insurer to pay over Janvey’s objections. U.S. District Judge David Godbey yesterday ordered Stanford to withdraw his petition from the London court.
“It appears that Stanford is purporting to seek relief before another tribunal relating to the policies,” Godbey wrote in an order posted on his court’s Web site. “Such actions by Stanford both violate the terms of this court’s prior orders, as well as threaten to interfere with this court’s jurisdiction over the policies.”
Janvey has been fighting Stanford’s efforts to unlock frozen assets or access his Lloyd’s of London liability insurance to hire lawyers to defend against civil and criminal allegations he swindled investors of more than $7 billion through bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.
‘Very Unfortunate’
“The court’s order is entirely appropriate,” Janvey said yesterday in a statement issued by his spokeswoman, Kristie Blumenschein. “It is very unfortunate that Mr. Stanford and his attorneys continue to engage in conduct which needlessly increases the costs of litigation to the receivership.”
Stanford, 59, who denies any wrongdoing, is in jail in Texas awaiting trial on 21 felony charges that mirror civil fraud claims filed by the U.S. Securities and Exchange Commission. He is recovering from a Sept. 24 fight with another inmate that left him with a concussion, two black eyes and a broken nose, said Kent Schaffer, Stanford’s criminal-defense lawyer.
“He was beaten up,” Schaffer said. “I don’t know what the circumstances are that led to the fight or why they kept him in the hospital until Sunday morning.”
Yesterday, U.S. District Judge David Hittner, who is presiding over Stanford’s criminal case in Houston, granted the defendant’s request for a transfer from a private Texas jail to a federal facility closer to his lawyers in downtown Houston.
Sworn Statements
Janvey filed copies of sworn statements that Stanford’s lawyers submitted last week to the British court, seeking an emergency hearing in London to force the receiver to stop interfering with payment by Lloyd’s of some fees to Stanford’s lawyers under the liability policy. Janvey claims the bulk of the policy coverage should be reserved for his use to defend Stanford’s companies against claims.
British lawyer Simon Peter Kamstra, in a statement dated Sept. 23, told the British court that the SEC and the U.K.’s Serious Fraud Office have no objection to Stanford obtaining legal defense funds through the Lloyd’s policy. The SEC, which has opposed letting Stanford access frozen funds to hire attorneys, hasn’t taken a position on Stanford’s access to insurance proceeds in papers filed with the Dallas judge.
Stanford faces “at least 49 separate United States proceedings,” as well as lawsuits in Switzerland, Israel, Panama, Venezuela, Mexico, Canada, Malaysia and Singapore, Kamstra said in his statement to the British court. Because Stanford hasn’t been represented by lawyers at most of these proceedings, judgments are being entered against him in several cases, Kamstra said.
Stanford was assigned to the federal public defender’s office in Houston two weeks ago by the judge overseeing his criminal case when the financier couldn’t say he had access to any funds for his defense. Kamstra mentioned that to the U.K. court, too.
Frozen Funds
Godbey has rejected Stanford’s requests for at least $10 million in frozen funds unless he can prove the money isn’t tainted by fraud. Godbey hasn’t ruled on requests over who can access Lloyds’ coverage that could be worth $90 million. More than 60 former employees of Stanford Financial Group, including its founder, have asked to draw on the policy.
Stanford’s British lawyers asked the U.K. court to order Janvey to drop his objections to Lloyd’s paying Stanford’s attorneys and to stop interfering with the payments.
Some Lloyd’s of London underwriters joined Janvey’s request to block Stanford’s attempt to obtain insurance coverage through the U.K. court proceeding today, according to documents filed yesterday in federal court in Dallas.
‘Threatening’ Letter
The underwriters said Stanford’s civil lawyers had sent them a Sept. 22 letter “threatening” legal action if they didn’t begin to pay Stanford’s legal bills immediately. Their lawyer, Daniel Lane of Akin, Gump, Strauss, Hauer & Feld LLP asked Godbey to rule on the issue “so the underwriters will not risk entry of competing and inconsistent orders” from the British court.
Hittner signed an unrelated order yesterday regarding Stanford’s legal team. He blocked Schaffer and the federal public defender’s Houston office from representing the financier on any appellate issue that arose before they were appointed as Stanford’s taxpayer-funded defense counsel on Sept. 16.
Schaffer said in a phone interview that the order will keep him from asking a full panel of judges at the U.S. Court of Appeals in New Orleans to review Hittner’s June 30 order denying Stanford bail on the grounds he might flee. A three-judge appellate panel already denied Stanford’s request to have the bail denial overturned, and his request for en-banc review must be filed at the New Orleans court by Oct. 8, Schaffer said.
Robert Luskin and Christina Sarchio, attorneys with Washington-based Patton Boggs LLP who filed an earlier appeal for Stanford on the bail issue, didn’t immediately return calls or e-mails seeking comment on whether they will continue working for the jailed financier.
Tuesday 29 September 2009
Sir Allen Stanford moved to another prison after a brawl
The renegade financier Sir Allen Stanford, awaiting trial in Texas on $7bn (£4.4bn) fraud charges, is being moved to a different jail by US authorities after he suffered two black eyes, a broken nose and concussion in a fracas with a fellow inmate. Stanford, who bankrolled Twenty20 cricket tournaments, had complained repeatedly about conditions at the Joe Corley Detention Centre, a private facility in the town of Conroe where he shared a cell with ten others. After representations by lawyers, a judge ordered authorities to move him to a federal detention centre in central Houston, saying this will make it easier for the former billionaire to meet with counsel in preparation for his trial Stanford's lawyer, Kent Schaffer, said the only way to communicate with Stanford had been to hold up documents to a window and shout through two-inch thick glass. Schaffer gave few details of the fight in which Stanford was injured, other than to say: "The reality is violence happens in any jail."
Saturday 26 September 2009
Stanford in hospital after jail altercation
Allen Stanford, who is in jail awaiting trial on charges related to an alleged $7 billion fraud, was taken to a Texas hospital after a fight with another inmate, a deputy U.S. Marshal confirmed on Friday.
Stanford, 59, was injured in a fight on Thursday morning and needed medical attention, the deputy said.
He will be kept in the hospital overnight returned to the jail on Saturday, Houston television station KPRC-TV reported.
The deputy declined to provide details of the extent of Stanford's injuries.
A phone call to Stanford's lawyer was not immediately returned.
Stanford has been in a federal detention facility 40 miles north of Houston since his arrest in June. He is accused of running a Ponzi scheme targeting clients of his offshore bank in Antigua.
Stanford, 59, was injured in a fight on Thursday morning and needed medical attention, the deputy said.
He will be kept in the hospital overnight returned to the jail on Saturday, Houston television station KPRC-TV reported.
The deputy declined to provide details of the extent of Stanford's injuries.
A phone call to Stanford's lawyer was not immediately returned.
Stanford has been in a federal detention facility 40 miles north of Houston since his arrest in June. He is accused of running a Ponzi scheme targeting clients of his offshore bank in Antigua.
Stanford Seeks Reversal of Two Court Orders to Sell Assets
R. Allen Stanford, accused by the U.S. of leading a $7 billion fraud scheme, is seeking reversal of two court rulings allowing a receiver to sell assets from the Texas financier’s private equity portfolio.
Stanford’s attorneys yesterday filed papers with the federal court in Dallas signaling their intent to appeal trial court Judge David Godbey’s Aug. 25 rulings enabling the receiver to sell Stanford’s stakes in a Houston luxury hotel development and two Israeli development funds.
The U.S. Securities and Exchange Commission sued Stanford in February, claiming he and two business associates led a “massive” fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd.
The Dallas court then appointed attorney Ralph Janvey as receiver for Stanford’s businesses, authorizing him to marshal the financier’s assets to repay investors. Janvey in July asked the court to approve his sale of the private equity holdings.
The receiver asked for, and received, permission to liquidate Stanford’s shares in Midway CC Hotel Partners LP for $2.7 million plus the assumption of obligations of Stanford Venture Capital Holdings Inc., which the receiver said included a pending $4.5 million capital call.
Janvey also obtained Godbey’s permission to sell for $4.1 million of Stanford’s $14.3 million stake in the Israeli development funds to avoid $2.5 million in past-due capital calls and another $61 million in future commitments.
‘Not Prudent’
Attorneys for the financier opposed the sale plans, arguing they weren’t in the best interests of the receivership estate.
“Liquidating the investments now, while they remain immature and/or are showing negative returns, is not financially prudent,” Ruth Brewer Schuster, Stanford’s civil lawyer, said in a July 24 court filing opposing the sale of the Israeli funds.
“We believe the appeal is without merit,” Kristie Blumenschein, a spokeswoman for Janvey, said in an e-mailed response to questions.
Stanford, who has also been indicted on criminal fraud charges, has denied all allegations of wrongdoing. He is being held without bail pending a trial which could be more than one year away.
The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas
Stanford’s attorneys yesterday filed papers with the federal court in Dallas signaling their intent to appeal trial court Judge David Godbey’s Aug. 25 rulings enabling the receiver to sell Stanford’s stakes in a Houston luxury hotel development and two Israeli development funds.
The U.S. Securities and Exchange Commission sued Stanford in February, claiming he and two business associates led a “massive” fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd.
The Dallas court then appointed attorney Ralph Janvey as receiver for Stanford’s businesses, authorizing him to marshal the financier’s assets to repay investors. Janvey in July asked the court to approve his sale of the private equity holdings.
The receiver asked for, and received, permission to liquidate Stanford’s shares in Midway CC Hotel Partners LP for $2.7 million plus the assumption of obligations of Stanford Venture Capital Holdings Inc., which the receiver said included a pending $4.5 million capital call.
Janvey also obtained Godbey’s permission to sell for $4.1 million of Stanford’s $14.3 million stake in the Israeli development funds to avoid $2.5 million in past-due capital calls and another $61 million in future commitments.
‘Not Prudent’
Attorneys for the financier opposed the sale plans, arguing they weren’t in the best interests of the receivership estate.
“Liquidating the investments now, while they remain immature and/or are showing negative returns, is not financially prudent,” Ruth Brewer Schuster, Stanford’s civil lawyer, said in a July 24 court filing opposing the sale of the Israeli funds.
“We believe the appeal is without merit,” Kristie Blumenschein, a spokeswoman for Janvey, said in an e-mailed response to questions.
Stanford, who has also been indicted on criminal fraud charges, has denied all allegations of wrongdoing. He is being held without bail pending a trial which could be more than one year away.
The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas
Friday 25 September 2009
Receiver wants to sell Allen Stanford's yacht
The receiver in charge of Allen Stanford's assets has asked a federal judge for permission to sell the alleged swindler's luxurious 112-foot motor yacht, the Sea Eagle.
Ralph Janvey, the receiver in the case, filed a motion late on Tuesday asking U.S. District Judge David Godbey in Dallas to approve the sale of the vessel, which is currently listed for $6.5 million at a marina in Fort Lauderdale, Florida. here
Stanford bought the boat for $3.9 million in 1998 and invested "substantial sums" to renovate it. Costs included reducing the number of state rooms, replacing the teak interior with mahogany and putting in a new galley kitchen, according to the yacht broker and court papers.
The receiver has one bid for $2.5 million from an investor in Dubai who has agreed to take the vessel "as is," but higher bids would be accepted if the sale process were approved by the judge, court papers said.
Stanford, 59, whose fortune was estimated at $2.2 billion by Forbes magazine in 2008, is accused of masterminding a $7 billion scheme involving fraudulent certificates of deposit issued by his offshore bank in Antigua.
Janvey wants to sell the vessel because it is very expensive to maintain.
"The yacht requires a 24/7 crew aboard for insurance qualification, continuous air conditioning and water service and costs the receiver over $25,000 per month just to keep it in dock," the motion said.
In August, Janvey filed a motion seeking approval to sell Stanford's smaller 50-foot yacht, the Little Eagle, to a buyer from Oklahoma for $150,000.
Godbey has not ruled on either motion.
Before the U.S. government seized his assets in February, Stanford lived an opulent lifestyle. He frequently flew all over the world in his private jets and owned luxury homes in Texas, Florida and the Caribbean.
Ralph Janvey, the receiver in the case, filed a motion late on Tuesday asking U.S. District Judge David Godbey in Dallas to approve the sale of the vessel, which is currently listed for $6.5 million at a marina in Fort Lauderdale, Florida. here
Stanford bought the boat for $3.9 million in 1998 and invested "substantial sums" to renovate it. Costs included reducing the number of state rooms, replacing the teak interior with mahogany and putting in a new galley kitchen, according to the yacht broker and court papers.
The receiver has one bid for $2.5 million from an investor in Dubai who has agreed to take the vessel "as is," but higher bids would be accepted if the sale process were approved by the judge, court papers said.
Stanford, 59, whose fortune was estimated at $2.2 billion by Forbes magazine in 2008, is accused of masterminding a $7 billion scheme involving fraudulent certificates of deposit issued by his offshore bank in Antigua.
Janvey wants to sell the vessel because it is very expensive to maintain.
"The yacht requires a 24/7 crew aboard for insurance qualification, continuous air conditioning and water service and costs the receiver over $25,000 per month just to keep it in dock," the motion said.
In August, Janvey filed a motion seeking approval to sell Stanford's smaller 50-foot yacht, the Little Eagle, to a buyer from Oklahoma for $150,000.
Godbey has not ruled on either motion.
Before the U.S. government seized his assets in February, Stanford lived an opulent lifestyle. He frequently flew all over the world in his private jets and owned luxury homes in Texas, Florida and the Caribbean.
Thursday 17 September 2009
Billionaire Stanford Gets Public Defender In Fraud Case
R. Allen Stanford, the Texas financier accused of running a $7 billion investor fraud, will be represented by the federal public defender's office in his criminal case because he has no money to hire an attorney.
Kent Schaffer, a private-practice lawyer in Houston who attended Tuesday's hearing at that city's federal courthouse, said afterward he will work with the public defender's office on Stanford's case.
Stanford, who denies all wrongdoing, was brought to court in shackles from jail, where he is being held until trial on charges he bilked investors in a "massive" Ponzi scheme involving certificates of deposit at Antigua-based Stanford International Bank. The head of the Stanford Financial Group was ranked the 205th-richest American in 2008 by Forbes magazine, which estimated his net worth at $2 billion.
Regulators and investors have fought attempts to unlock legal defense funds from Stanford's seized assets, which were frozen by court order on Feb. 17 when the U.S. Securities and Exchange Commission accused him of investor fraud. Stanford is also being denied access to his company's liability insurance policy, after the court-appointed receiver claimed those funds may be needed to defend Stanford's companies against lawsuits.
Stanford's previous attorney, Dick DeGuerin, has estimated it will cost more than $20 million and take a year to prepare for a trial that could last six months. Stanford faces spending the rest of his life in prison if convicted of the most serious of 21 felony counts against him.
Kent Schaffer, a private-practice lawyer in Houston who attended Tuesday's hearing at that city's federal courthouse, said afterward he will work with the public defender's office on Stanford's case.
Stanford, who denies all wrongdoing, was brought to court in shackles from jail, where he is being held until trial on charges he bilked investors in a "massive" Ponzi scheme involving certificates of deposit at Antigua-based Stanford International Bank. The head of the Stanford Financial Group was ranked the 205th-richest American in 2008 by Forbes magazine, which estimated his net worth at $2 billion.
Regulators and investors have fought attempts to unlock legal defense funds from Stanford's seized assets, which were frozen by court order on Feb. 17 when the U.S. Securities and Exchange Commission accused him of investor fraud. Stanford is also being denied access to his company's liability insurance policy, after the court-appointed receiver claimed those funds may be needed to defend Stanford's companies against lawsuits.
Stanford's previous attorney, Dick DeGuerin, has estimated it will cost more than $20 million and take a year to prepare for a trial that could last six months. Stanford faces spending the rest of his life in prison if convicted of the most serious of 21 felony counts against him.
Tuesday 15 September 2009
Canadian court recognizes Stanford's U.S. receiver
A court in Canada ruled that the U.S. receiver in charge of alleged swindler Allen Stanford's estate should have control of the firm's Canadian assets, a blow to the Antiguan liquidators who sought them.
Nigel Hamilton-Smith, one of the Antiguan liquidators, said in a statement on Monday that they will appeal the decision that was handed down by the Montreal Superior Court verbally on Friday.
Ralph Janvey, the U.S. receiver in the case, and the Antiguan liquidators have been battling over control of the assets of Stanford International Bank Ltd, the offshore bank that prosecutors say is at the center an alleged $7 billion fraud.
"We are gratified that the Quebec court has recognized the legitimacy of the U.S. court's order and my authority under the order," Janvey said in a statement. "We look forward to proceeding to assure that funds held by Stanford International Bank Ltd and other entities in the Stanford Financial Group are made available for a fair and equitable distribution to the victims."
Allen Stanford and others faces civil and criminal fraud charges related to an alleged Ponzi scheme. Prosecutors say Stanford used proceeds from the sale of fraudulent certificates of deposit issued by his Caribbean bank to fund his luxurious lifestyle.
Nigel Hamilton-Smith, one of the Antiguan liquidators, said in a statement on Monday that they will appeal the decision that was handed down by the Montreal Superior Court verbally on Friday.
Ralph Janvey, the U.S. receiver in the case, and the Antiguan liquidators have been battling over control of the assets of Stanford International Bank Ltd, the offshore bank that prosecutors say is at the center an alleged $7 billion fraud.
"We are gratified that the Quebec court has recognized the legitimacy of the U.S. court's order and my authority under the order," Janvey said in a statement. "We look forward to proceeding to assure that funds held by Stanford International Bank Ltd and other entities in the Stanford Financial Group are made available for a fair and equitable distribution to the victims."
Allen Stanford and others faces civil and criminal fraud charges related to an alleged Ponzi scheme. Prosecutors say Stanford used proceeds from the sale of fraudulent certificates of deposit issued by his Caribbean bank to fund his luxurious lifestyle.
Sunday 13 September 2009
No guarantee of insurance for Stanford execs
Lloyd's of London said a federal judge should not allocate the proceeds of a directors and officers insurance policy for accused swindler Allen Stanford and other executives because they have no guarantee of coverage, according to a court filing on Friday.
A number of Stanford executives, including Stanford and former Chief Investment Officer Laura Pendergest-Holt, have filed claims against the policy issued by Lloyd's.
Stanford and Pendergest-Holt had their assets frozen in February when the U.S. Securities and Exchange Commission filed civil fraud charges, alleging a "massive" Ponzi scheme.
The asset freeze has left the executives unable to pay their defense lawyers, they have said in numerous court filings.
Lloyd's initially agreed to reimburse some "reasonable and necessary legal expenses," for Pendergest-Holt, but Ralph Janvey, the receiver in the case, argued proceeds are assets of the Stanford estate.
He threatened to hold Lloyd's in contempt of court if they made payments to the Stanford executives, court papers show.
In response, lawyers for Pendergest-Holt filed a motion asking U.S. District Judge David Godbey in Dallas, who is overseeing the civil fraud case, to clarify whether the insurance proceeds should go to the receiver.
If the court determines the policy proceeds were assets of the estate, then the funds should be allocated to pay defense costs in accordance with the insurance policy, Pendergest- Holt's motion, said.
But Janvey has also asked the judge to allocate the majority of the insurance proceeds to the receivership.
"While there is an urgent need for this court to address the issue of whether the policies' proceeds are assets of the receivership estate, the court cannot and should not allocate proceeds or rule on who is entitled to coverage under the policies because underwriters do not concede that claims submitted by Holt or the receiver are covered," lawyers said in a filing.
Claims resulting from "money laundering, and from dishonest, fraudulent, or criminal acts, are excluded from coverage, Lloyd's said in court papers.
Stanford and Pendergest-Holt are charged with fraud, conspiracy and obstruction in a 21-count criminal indictment. Prosecutors say they and others duped investors through the sale of $7 billion in fraudulent certificates of deposit.
Both have denied wrongdoing.
Jeffrey Tillotson, a lawyer for Pendergest-Holt said it was clear his client is covered by the Lloyd's policy and he welcomes the involvement of insurance carrier in the matter.
At a court hearing in Dallas on Thursday, Judge Godbey said consideration of the matter was near the top of his list
The civil fraud cases is filed in federal court in Dallas under 3:09-cv-00298-N Securities and Exchange Commission v. Stanford International Bank Ltd et al.
A number of Stanford executives, including Stanford and former Chief Investment Officer Laura Pendergest-Holt, have filed claims against the policy issued by Lloyd's.
Stanford and Pendergest-Holt had their assets frozen in February when the U.S. Securities and Exchange Commission filed civil fraud charges, alleging a "massive" Ponzi scheme.
The asset freeze has left the executives unable to pay their defense lawyers, they have said in numerous court filings.
Lloyd's initially agreed to reimburse some "reasonable and necessary legal expenses," for Pendergest-Holt, but Ralph Janvey, the receiver in the case, argued proceeds are assets of the Stanford estate.
He threatened to hold Lloyd's in contempt of court if they made payments to the Stanford executives, court papers show.
In response, lawyers for Pendergest-Holt filed a motion asking U.S. District Judge David Godbey in Dallas, who is overseeing the civil fraud case, to clarify whether the insurance proceeds should go to the receiver.
If the court determines the policy proceeds were assets of the estate, then the funds should be allocated to pay defense costs in accordance with the insurance policy, Pendergest- Holt's motion, said.
But Janvey has also asked the judge to allocate the majority of the insurance proceeds to the receivership.
"While there is an urgent need for this court to address the issue of whether the policies' proceeds are assets of the receivership estate, the court cannot and should not allocate proceeds or rule on who is entitled to coverage under the policies because underwriters do not concede that claims submitted by Holt or the receiver are covered," lawyers said in a filing.
Claims resulting from "money laundering, and from dishonest, fraudulent, or criminal acts, are excluded from coverage, Lloyd's said in court papers.
Stanford and Pendergest-Holt are charged with fraud, conspiracy and obstruction in a 21-count criminal indictment. Prosecutors say they and others duped investors through the sale of $7 billion in fraudulent certificates of deposit.
Both have denied wrongdoing.
Jeffrey Tillotson, a lawyer for Pendergest-Holt said it was clear his client is covered by the Lloyd's policy and he welcomes the involvement of insurance carrier in the matter.
At a court hearing in Dallas on Thursday, Judge Godbey said consideration of the matter was near the top of his list
The civil fraud cases is filed in federal court in Dallas under 3:09-cv-00298-N Securities and Exchange Commission v. Stanford International Bank Ltd et al.
Former agent goes to court on Stanford-related charge
A former top federal drug agent appeared handcuffed in a Fort Lauderdale, Fla., federal court today, a day after he was indicted on charges related to the Stanford Financial Group fraud case.
Thomas Raffanello, who was Stanford Financial's global security director, is accused of conspiracy, destroying records and impeding a probe by the U.S. Securities and Exchange Commission into the operations of Stanford Financial, founded by Texas native R. Allen Stanford—who also faces criminal charges.
Raffanello is the former head of the U.S. Drug Enforcement Administration's Miami office.
Magistrate Robin Rosenbaum set bail at $100,000 and set Raffanello's arraignment for next Friday. .
Raffanello, 61, is the second Stanford executive to be charged in Florida by prosecutors and federal securities regulators who accuse Stanford and others of bilking investors out of more than $7 billion through a scheme involving bogus certificates of deposit.
Thursday's three-count indictment accuses Raffanello, 61, and Bruce Perraud, 42, of helping to shred documents at Stanford Financial's office in Fort Lauderdale. Their lawyers have said the men only destroyed documents after giving investigators electronic duplicates.
R. Allen Stanford, who also denies wrongdoing, is being held without bail in a Conroe jail awaiting trial on a 19-count indictment by a federal grand jury in Houston. That indictment also named three other company executives and a banking regulator in the Caribbean island nation of Antigua and Barbuda.
Another company executive was charged separately, pleaded guilty and is cooperating with prosecutors.
Thomas Raffanello, who was Stanford Financial's global security director, is accused of conspiracy, destroying records and impeding a probe by the U.S. Securities and Exchange Commission into the operations of Stanford Financial, founded by Texas native R. Allen Stanford—who also faces criminal charges.
Raffanello is the former head of the U.S. Drug Enforcement Administration's Miami office.
Magistrate Robin Rosenbaum set bail at $100,000 and set Raffanello's arraignment for next Friday. .
Raffanello, 61, is the second Stanford executive to be charged in Florida by prosecutors and federal securities regulators who accuse Stanford and others of bilking investors out of more than $7 billion through a scheme involving bogus certificates of deposit.
Thursday's three-count indictment accuses Raffanello, 61, and Bruce Perraud, 42, of helping to shred documents at Stanford Financial's office in Fort Lauderdale. Their lawyers have said the men only destroyed documents after giving investigators electronic duplicates.
R. Allen Stanford, who also denies wrongdoing, is being held without bail in a Conroe jail awaiting trial on a 19-count indictment by a federal grand jury in Houston. That indictment also named three other company executives and a banking regulator in the Caribbean island nation of Antigua and Barbuda.
Another company executive was charged separately, pleaded guilty and is cooperating with prosecutors.
Saturday 5 September 2009
Toronto-Dominion Sued Over Stanford Investments
Toronto-Dominion Bank, Canada’s second-biggest bank, was accused in a lawsuit of negligence and knowing assistance for allegedly helping R. Allen Stanford, who is accused of swindling investors of more than $7 billion, the National Post reported.
The lawsuit, filed in Ontario Superior Court Aug. 26 by Bennett Jones LLP, seeks C$17 million ($15.5 million) for five Canadian investors who say Toronto-Dominion’s role as a correspondent bank increased the credibility of Stanford’s investments, the Post said. The investors claim they lost money in certificates of deposits based on recommendations made by a financial adviser who worked for the Stanford Group of companies, the Post said.
Toronto-Dominion conducted its business in an “appropriate and lawful manner,” Susan Webb, a spokeswoman at the bank, told the newspaper.
Stanford, who faces 21 criminal charges, denies all wrongdoing tied to what the government says was a scheme to pay early investors “improbable if not impossible” returns with funds taken from later investors in Antiguan certificates of deposit. He is being held without bail until he can go on trial.
The lawsuit, filed in Ontario Superior Court Aug. 26 by Bennett Jones LLP, seeks C$17 million ($15.5 million) for five Canadian investors who say Toronto-Dominion’s role as a correspondent bank increased the credibility of Stanford’s investments, the Post said. The investors claim they lost money in certificates of deposits based on recommendations made by a financial adviser who worked for the Stanford Group of companies, the Post said.
Toronto-Dominion conducted its business in an “appropriate and lawful manner,” Susan Webb, a spokeswoman at the bank, told the newspaper.
Stanford, who faces 21 criminal charges, denies all wrongdoing tied to what the government says was a scheme to pay early investors “improbable if not impossible” returns with funds taken from later investors in Antiguan certificates of deposit. He is being held without bail until he can go on trial.
Stanford exec faces heat from mentor's plea deal
James Davis and Laura Pendergest-Holt became friends after they met at church when she was a teenager in a small town. He mentored her and helped get her a job that paid $1 million a year. Now his evidence could put her behind bars for a long time.
Pendergest-Holt, who was chief investment officer in alleged swindler Allen Stanford's financial group, is a target for prosecutors in the $7 billion fraud case.
Davis, Stanford Financial Group's former chief financial officer, has been cooperating with the government for six months. On August 27, he pleaded guilty to fraud, conspiracy and obstruction of justice, and he signed a plea deal with prosecutors that puts Pendergest-Holt in a very tight spot.
Pendergest-Holt has pleaded not guilty to 21 felony counts of fraud, conspiracy and obstruction. Her criminal defense lawyer said previously that she will fight the charges at trial. The 36-year-old faces the possibility of life in prison -- a maximum penalty of 375 years -- if convicted on the charges.
Few female executives have ever faced such a litany of charges in a white-collar case.
"Typically what happens in a federal criminal action is the first people who cooperate get the best deal," Ken Springer, a former FBI agent and president of consulting firm Corporate Resolutions Inc.
Pendergest-Holt would have to have a very good defense to justify battling the charges in a post-Bernard Madoff era where juries and judges will likely take a harsher view of white-collar criminals, Springer and others said.
"If she had come around four months ago when she first got arrested, that would have been the time to cooperate because she could have delivered Davis," Springer said.
Pendergest-Holt is free on a $300,000 bond. Her criminal defense lawyer did not respond to requests for comment.
DEVIL IN DETAILS
The plea agreement with Davis details Pendergest-Holt's alleged involvement in a scam where Stanford clients were said to be duped into believing their investments were safe.
Instead, U.S. prosecutors said the funds were put into an illiquid pool of real estate and private equity investments, a fact they say Pendergest-Holt sought to hide from investors and research analysts who worked for her.
From 2005 through at least February 2009, Stanford, Pendergest-Holt and Davis attended investor conferences "where they would falsely tout the assets and earnings" of the offshore bank's assets and earnings, the plea deal said.
She is also accused of lying to investigators from the U.S. Securities and Exchange Commission. At the direction of Davis, Pendergest-Holt falsely told the SEC that she did not know about the offshore bank's alleged bogus assets, the plea agreement said.
Pendergest-Holt was also named to the offshore bank's investment committee in 2005, and "held herself out to investors" and others as managing the bank's entire investment portfolio, according to the June 18 indictment.
Davis' plea agreement contains an unusual amount of new information about the government's case that may signal the prosecutors' next move, said Gurbir Grewal, an attorney at Howrey LLP and former federal prosecutor.
"I think what they are trying to do is encourage a plea or have people come in and cut a deal," Grewal said.
The government has Stanford in their sights and will be eager to line up people to testify against him, so any new information from Pendergest-Holt, if she decided to cooperate, will likely be welcomed.
"If she has another piece of this case that Davis doesn't have, it might help," Corporate Solutions' Springer, said, adding that she could already be helping the government.
At first, after civil fraud charges were filed in February, Pendergest-Holt cooperated with the SEC.
But several days later, she was suddenly arrested in the lobby of Stanford Financial Group's Houston headquarters and stopped her cooperation, her lawyer said in court hearings.
BALDWYN CONNECTION
Davis, 60, and Pendergest-Holt met in a church in Baldwyn, Mississippi. At the time she was a teenager, but the pair remained close and years later Davis and Stanford hired her out of graduate school in 1997 as a research analyst.
Pendergest-Holt zoomed through the ranks at Stanford Financial Group and last held the job of chief investment officer, a job that paid her about $1 million per year in salary and bonus.
Davis was her direct supervisor, so his cooperation with the government sets up an uncomfortable showdown between the two small-town neighbors.
"It puts her in a difficult position to move forward," Howrey's Grewal said. "Here you have a mentor that is going to be requested to provide additional details about her conduct."
David Finn, Davis' attorney, said after a court hearing in July that his client agreed to cooperate because he felt very guilty. The attorney added that Davis was driven by greed.
"He had a heavy heart the very first time I met him," Finn told reporters outside federal court in Houston. "Ultimately he knew he did wrong," he said, adding that the evidence in the case was "overwhelming."
Pendergest-Holt, who was chief investment officer in alleged swindler Allen Stanford's financial group, is a target for prosecutors in the $7 billion fraud case.
Davis, Stanford Financial Group's former chief financial officer, has been cooperating with the government for six months. On August 27, he pleaded guilty to fraud, conspiracy and obstruction of justice, and he signed a plea deal with prosecutors that puts Pendergest-Holt in a very tight spot.
Pendergest-Holt has pleaded not guilty to 21 felony counts of fraud, conspiracy and obstruction. Her criminal defense lawyer said previously that she will fight the charges at trial. The 36-year-old faces the possibility of life in prison -- a maximum penalty of 375 years -- if convicted on the charges.
Few female executives have ever faced such a litany of charges in a white-collar case.
"Typically what happens in a federal criminal action is the first people who cooperate get the best deal," Ken Springer, a former FBI agent and president of consulting firm Corporate Resolutions Inc.
Pendergest-Holt would have to have a very good defense to justify battling the charges in a post-Bernard Madoff era where juries and judges will likely take a harsher view of white-collar criminals, Springer and others said.
"If she had come around four months ago when she first got arrested, that would have been the time to cooperate because she could have delivered Davis," Springer said.
Pendergest-Holt is free on a $300,000 bond. Her criminal defense lawyer did not respond to requests for comment.
DEVIL IN DETAILS
The plea agreement with Davis details Pendergest-Holt's alleged involvement in a scam where Stanford clients were said to be duped into believing their investments were safe.
Instead, U.S. prosecutors said the funds were put into an illiquid pool of real estate and private equity investments, a fact they say Pendergest-Holt sought to hide from investors and research analysts who worked for her.
From 2005 through at least February 2009, Stanford, Pendergest-Holt and Davis attended investor conferences "where they would falsely tout the assets and earnings" of the offshore bank's assets and earnings, the plea deal said.
She is also accused of lying to investigators from the U.S. Securities and Exchange Commission. At the direction of Davis, Pendergest-Holt falsely told the SEC that she did not know about the offshore bank's alleged bogus assets, the plea agreement said.
Pendergest-Holt was also named to the offshore bank's investment committee in 2005, and "held herself out to investors" and others as managing the bank's entire investment portfolio, according to the June 18 indictment.
Davis' plea agreement contains an unusual amount of new information about the government's case that may signal the prosecutors' next move, said Gurbir Grewal, an attorney at Howrey LLP and former federal prosecutor.
"I think what they are trying to do is encourage a plea or have people come in and cut a deal," Grewal said.
The government has Stanford in their sights and will be eager to line up people to testify against him, so any new information from Pendergest-Holt, if she decided to cooperate, will likely be welcomed.
"If she has another piece of this case that Davis doesn't have, it might help," Corporate Solutions' Springer, said, adding that she could already be helping the government.
At first, after civil fraud charges were filed in February, Pendergest-Holt cooperated with the SEC.
But several days later, she was suddenly arrested in the lobby of Stanford Financial Group's Houston headquarters and stopped her cooperation, her lawyer said in court hearings.
BALDWYN CONNECTION
Davis, 60, and Pendergest-Holt met in a church in Baldwyn, Mississippi. At the time she was a teenager, but the pair remained close and years later Davis and Stanford hired her out of graduate school in 1997 as a research analyst.
Pendergest-Holt zoomed through the ranks at Stanford Financial Group and last held the job of chief investment officer, a job that paid her about $1 million per year in salary and bonus.
Davis was her direct supervisor, so his cooperation with the government sets up an uncomfortable showdown between the two small-town neighbors.
"It puts her in a difficult position to move forward," Howrey's Grewal said. "Here you have a mentor that is going to be requested to provide additional details about her conduct."
David Finn, Davis' attorney, said after a court hearing in July that his client agreed to cooperate because he felt very guilty. The attorney added that Davis was driven by greed.
"He had a heavy heart the very first time I met him," Finn told reporters outside federal court in Houston. "Ultimately he knew he did wrong," he said, adding that the evidence in the case was "overwhelming."
Vegas casino sues Stanford over big gambling debt
A swanky casino on the Las Vegas strip is suing accused swindler Allen Stanford for repayment of a gambling debt of more than a quarter million dollars, according to court papers.
Bellagio LLC seeks to recover the $258,480 debt Stanford accrued in January 2009 plus 18 percent interest, according to the lawsuit filed in state court in Nevada on Tuesday.
Stanford is accused of running an alleged $7 billion Ponzi scheme that regulators described as "massive." The fraud centered on certificates of deposit (CDs) issued by the firm's offshore bank in Antigua, prosecutors said.
Stanford used proceeds from the CDs to fund a lavish lifestyle that included a fleet of private jets and luxury homes in Texas, Miami and the Caribbean, according to U.S. prosecutors.
Stanford's girlfriend paid for the trip to Las Vegas as a birthday treat for the Texas financier, Dick DeGuerin, Stanford's attorney told a bond hearing in July.
In February, Stanford's assets were seized by a court-appointed receiver after the U.S. Securities and Exchange Commission filed civil fraud charges.
Stanford, who also faces a 21-count criminal indictment, has said that the asset freeze has left him broke. He has denied any wrongdoing.
Gambling markers, which are similar to lines of credit, signed by Stanford were deposited by Bellagio and returned unpaid by Mellon United National Bank in Miami, according to the lawsuit.
DeGuerin was not immediately available for a comment on the lawsuit.
Early on Wednesday morning, Stanford had elective surgery to repair an aneurysm in his leg, a representative in DeGuerin's office said. He had been hospitalized for five days for heart tests but is back in a jail forty miles north of Houston until his trial.
Bellagio LLC seeks to recover the $258,480 debt Stanford accrued in January 2009 plus 18 percent interest, according to the lawsuit filed in state court in Nevada on Tuesday.
Stanford is accused of running an alleged $7 billion Ponzi scheme that regulators described as "massive." The fraud centered on certificates of deposit (CDs) issued by the firm's offshore bank in Antigua, prosecutors said.
Stanford used proceeds from the CDs to fund a lavish lifestyle that included a fleet of private jets and luxury homes in Texas, Miami and the Caribbean, according to U.S. prosecutors.
Stanford's girlfriend paid for the trip to Las Vegas as a birthday treat for the Texas financier, Dick DeGuerin, Stanford's attorney told a bond hearing in July.
In February, Stanford's assets were seized by a court-appointed receiver after the U.S. Securities and Exchange Commission filed civil fraud charges.
Stanford, who also faces a 21-count criminal indictment, has said that the asset freeze has left him broke. He has denied any wrongdoing.
Gambling markers, which are similar to lines of credit, signed by Stanford were deposited by Bellagio and returned unpaid by Mellon United National Bank in Miami, according to the lawsuit.
DeGuerin was not immediately available for a comment on the lawsuit.
Early on Wednesday morning, Stanford had elective surgery to repair an aneurysm in his leg, a representative in DeGuerin's office said. He had been hospitalized for five days for heart tests but is back in a jail forty miles north of Houston until his trial.