Stanford Clients to Get Back Gold Coins, Bullion, Judge Rules

R. Allen Stanford’s gold customers will regain possession of $21.2 million in coins and bullion seized 11 months ago from the company’s Houston headquarters when federal regulators raided the offices on suspicions the financier was running a $7 billion Ponzi scheme.

Investors had urged U.S. District Judge David Godbey, who is overseeing the U.S. Securities and Exchange Commission’s fraud lawsuit against Stanford in Dallas, to release their gold as prices for the metal reached an all-time high during 2009.

“Coins and bullion that have been individually marked and stored for 147 Stanford Coin and Bullion customers” will be returned to their owners, Godbey said in yesterday’s order. Gold that had been paid for in full and not delivered to another 70 customers will also be released, Godbey ruled.

Stanford, several of his top executives and three of his companies were sued by the SEC in February for allegedly paying early investors by taking money from later investors in more than $7 billion of certificates of deposit sold by Antigua-based Stanford International Bank Ltd. Regulators won a court order freezing Stanford’s corporate and personal assets until the case is resolved.

Stanford, who denies all wrongdoing, is in jail awaiting trial on 21 criminal counts that mirror the civil allegations.

Stanford’s Vault

Ralph Janvey, the court-appointed receiver marshalling Stanford’s assets to repay investors, didn’t oppose the return of coins and bullion that were stored in individually labeled boxes in Stanford’s vault. Those customers argued that Stanford held their gold as a courtesy and that the company had no ownership interest in their gold.

Godbey deferred ruling on whether the receiver should return about $500,000 in cash collected from gold customers whose orders weren’t filled. The judge ruled that Janvey needn’t hand over about $1 million in coins and bullion to customers who hadn’t finished paying for their purchases when regulators seized Stanford’s operations.

Janvey got permission to liquidate about $1.8 million in coins and bullion in the division’s unsold inventory. Gold for immediate delivery was trading at $1,122.85 an ounce yesterday.

Separately, Stanford’s criminal-defense lawyers yesterday asked the U.S. Court of Appeals in New Orleans to overturn last month’s lower-court ruling denying his request to be released on bail. Stanford is on the verge of “a complete nervous breakdown” because of his incarceration, his lawyers said.