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