Two years after the Securities and Exchange Commission (SEC) accused the Stanford Financial Group of running a $7 billion global Ponzi scheme, only about $188 million has been recovered for investors—or about two-and-a-half cents on the dollar—according to a new report by the attorneys who are rounding up the assets.
The report, filed in federal court on behalf of court-appointed receiver Ralph Janvey, identifies hundreds of millions of dollars more in pending claims, but still not nearly enough to make Stanford's 28,000 investors whole.
What's more, the report notes, "the amount that the Receiver is ultimately able to collect from the defendants is uncertain and in all probability will be less than the amount claimed."
The SEC sued Stanford and its multi-billionaire founder R. Allen Stanford on February 16, 2009, alleging a massive fraud involving bogus certificates of deposit sold by Stanford's offshore bank in Antigua. A federal judge in Dallas froze all Stanford's assets, as well as the savings of thousands of Stanford investors, and appointed Janvey of the Dallas law firm Krage & Janvey as receiver.
The Justice Department followed in June of that year with criminal charges against Stanford, several former executives and an Antiguan regulator. The criminal cases are effectively on hold after a judge in Houston ruled Stanford is currently not competent to stand trial.
In the meantime, the asset recovery process continues, and Janvey's report suggests it is going slowly. The largest source of cash, more than $30 million, has come from the liquidation of Stanford's private equity investments. Another $6 million has come from the sale of real estate, and $5 million has come from the sale of Stanford's yachts and airplanes.
The report notes that Janvey has filed another $595 million in claims against various defendants, but does not express much optimism that that amount of money will be recovered.
"Asset recovery litigation is difficult, protracted and expensive," the report says. Besides, some of those claims are against Stanford investors themselves.
Janvey is pursuing some $211 million in "clawback" claims from investors who withdrew more from their Stanford accounts than they invested. In addition, he has sued more than 300 former employees seeking the return of their bonuses and CD proceeds.
Other claims highlight Stanford's major presence in the worlds of politics and sports.
Janvey is demanding the return of $1.6 million in political contributions that Stanford made to the Democratic and Republican Senate and Congressional campaign committees. The committees have moved to dismiss the case on procedural grounds, and the report notes that thus far, only $111,700 in political contributions have been returned.
Janvey is also demanding the return of $5 million in fees paid to prominent Texas lobbyist Ben Barnes. Barnes and his firm have moved to dismiss the case, arguing that Stanford appeared to be legitimate at the time Barnes did business with him.
IMG has not yet responded to the suit. Janvey is seeking another $12.9 million in a separate suit filed last week against the PGA Tour, which, so far, has not responded. Yet another suit, filed last month, seeks $1.3 million from the NBA's Miami Heat, which has yet to file a response.
Wednesday's two-year anniversary is the deadline for civil claims in the case under the statute of limitations, and sources expect a flurry of claims and counterclaims in the coming days.
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