More than 300 former employees of R. Allen Stanford — including some who worked in Austin — benefited substantially from their relationship with the financier, according to the court-appointed receiver in charge of recovering money for investors who were victims of Stanford's alleged $7 billion Ponzi scheme.
Now the receiver is seeking the return of bonuses those employees made selling certificates of deposits for Stanford.
The former employees, including financial advisers and managing directors, had "big commissions and other compensation relating to the sale of CDs" as incentives, receiver Ralph Janvey said in a filing this month in U.S. District Court in Dallas.
"When Stanford paid CD proceeds to former Stanford employees, he did no more than take money out of investors' pockets and put it into the hands of the former Stanford employees," according to the filing. "For the more than 20,000 investors who have thus far received little or nothing from their investment in Stanford CDs, money recovered from wherever it resides today is likely the only money they will ever receive in restitution."
The money, Janvey said, was in the form of loans, quarterly bonuses and other compensation paid to brokers. He estimated that they totaled more than $217 million.
Stanford has denied any wrongdoing and is in jail in Houston, charged by the U.S. Department of Justice with multiple counts of fraud.
Some former Stanford employees who worked in his firm's Austin office are named in Janvey's new filing.
According to Janvey's court claim, they include Patrick Cruickshank, who made $2.9 million in bonuses and other compensation for selling the CDs; Ray Deragon, who made $1.15 million; Nigel Bowman, who made $922,000; Shawn Morgan, who made $425,000; and Carol McCann, who made more than $441,000.
Bradley Foster, a Dallas attorney representing Cruickshank and Bowman, didn't return a call for comment. Michael Stanley, a Houston attorney who is representing Deragon, McCann and Morgan, said that none of his clients has been charged with a crime and that they had no inclination of any wrongdoing at Stanford's company.
"My view is, they are innocent employees," Stanley said. "If there was a fraud going on, they didn't know anything about it."
Janvey is being "very aggressive" in his attempt to seize bonus money from former Stanford employees, Stanley said.
"There's no difference in saying the utility company should pay back the light bills or the landlord should pay back the rent, because in some way it can be traced to investors' funds," Stanley said. "We don't think that's a legitimate legal claim."
But Angela Shaw, a Dallas resident and Stanford investor who lost $2 million, called that comparison "laughable." Financial advisers have a fiduciary duty to check things like the underlying investment portfolio, said Shaw, who founded the nonprofit advocacy group Stanford Victims Coalition.
"They're basically saying, 'We were salespeople; we didn't have any other responsibility to you,' " she said. " 'We were just selling what we were told to sell.' If my doctor was held to the same standard, a lot of us would be dead right now."
Shaw said her family lost $4.5 million.
"They are professionals in their field for a reason, and that's what we trusted as their clients," she said.
In previous court filings, Janvey said he expected to recover $1.5 billion to return to investors.
But that was before he lost a court ruling last week in his effort to get money back from some of those investors. Janvey had argued that investors who had redeemed their CDs in the weeks before authorities moved against Stanford essentially had been paid with money stolen from other investors.
But the 5th U.S. Circuit Court of Appeals in New Orleans ruled that Janvey had no right to sue those and said the money, which has been frozen by a lower court's order since February, should be released. The ruling included some $275 million in proceeds.
A receivership spokesperson declined to give an updated estimate Wednesday on how much Janvey expects to return to investors.
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