The court-appointed receiver for R. Allen Stanford’s businesses asked permission to sell the indicted financier’s stakes in a Houston television station, a pair of glossy horse-industry magazines, a boutique bank in the U.S. Virgin Islands and a publicly traded precious-metals firm.
Ralph Janvey’s private-equity advisers have found three buyers willing to pay a total of $6.1 million for Stanford’s holdings in the separate companies, all of which are experiencing financial difficulty, according to Janvey.
The Park Hill Group, which is marketing Stanford’s private- equity portfolio for Janvey, “concluded that these offers represent the highest dollar value available for the receivership estate,” Kevin Sadler, Janvey’s lawyer, said in court papers filed yesterday in federal court in Dallas.
Sadler said prospective investors have refused to inject direly needed capital into the businesses as long as Stanford remains an investor.
Stanford, who denies any wrongdoing, has protested Janvey’s sale of his assets and investments before he has the chance to defend himself at trial. The financier is scheduled to be tried in January on 21 criminal counts that he led a $7 billion investment fraud involving certificates of deposit sold by Antigua-based Stanford International Bank Ltd.
Parallel Allegations
He also faces parallel civil fraud allegations from the U.S. Securities and Exchange Commission. Stanford’s personal and corporate assets were placed under Janvey’s control when the SEC sued him and several associates in February 2009.
“I think it is odd the government is collecting millions of dollars for these assets, when they say he was running a Ponzi scheme,” Christina Sarchio, Stanford’s civil-defense lawyer, said yesterday in a phone interview. “If it’s a Ponzi scheme, there’s supposed to be nothing there.”
Sarchio has filed multiple motions seeking to block Janvey’s sales of Stanford’s assets, without success to date.
“It’s remarkable that the government continues to sell off assets in a case where there’s been no finding of fraud by Mr. Stanford,” Sarchio said. “What happens at the end of the day, if Mr. Stanford is found not guilty and not liable? Allen Stanford himself is suffering, but it’s the investors’ money, so they’re getting short-changed as well.”
Janvey asked the judge overseeing Stanford’s SEC case for permission to sell Stanford’s Houston-based USFR Media Group to a unit of the Goodman Group, which is the largest equity shareholder in the Western-lifestyle media group. Goodman has agreed to pay $2 million cash to the receivership and invest $2 million in working capital into the media properties.
UHF Station
USFR’s largest holding is a full-power independent UHF television station in Houston, known as Channel 55, which Stanford bought for $31.5 million in late 2006. The company also owns two glossy magazines for horse enthusiasts -- “Cowboys & Indians” and “Western & English Today” -- and a video production division formed last year to make TV ads, infomercials and promotional videos.
During 2008 and the first nine months of 2009, the media group’s operating losses exceeded $14 million, Janvey said. At yearend 2009, it had about $1.1 million in overdue payables and risked insolvency without an immediate cash infusion, Janvey said.
Janvey has also located a buyer for Stanford’s 8 percent share of Merchants Commercial Bank, a one-branch bank in St. Thomas, U.S. Virgin Islands, that he co-founded with a $1.1 million investment in 2006. An unidentified existing investor in the bank has agreed to pay $536,250 for the stake in MCB, whose portfolio consists primarily of local real estate loans.
Property Values
Sadler said property values in the U.S. Virgin Islands have plunged, causing a 700 percent increase in the number of non- performing loans on the bank’s books. As of yearend 2009, 6.6 percent of MCB’s total loans, or $4.6 million, were considered non-performing. That sum is “materially higher than the comparable ratio range of 1 percent to 3 percent found at large and regional banks in the United States,” Sadler said.
DGSE Cos., a precious-metals and jewelry company based in Dallas, agreed to pay Janvey $3.6 million for Stanford’s stake in the firm and its subsidiary. Sadler said Stanford holds about 30 percent of DGSE’s shares, which are listed on the American Stock Exchange, as well as $10.5 million in secured and unsecured debt by DGSE’s rare coin unit, Superior Galleries of Woodland Hills, California.
Superior Unit
The Superior unit has lost almost $20 million in the past eight years, according to court papers, and DGSE had threatened to liquidate the business unless Janvey approved the sale.
“Stanford’s investment is likely to be rendered worthless in the event of liquidation,” Sadler said in the filing.
Kristie Blumenschein, Janvey’s law partner and spokeswoman, didn’t immediately return a call for comment on the proposed sales.
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