Stanford Bank Records Fight Belongs Under Hague, Judge Says

R. Allen Stanford’s court-appointed receiver should pursue Swiss banking records he says are held by a unit of Paris-based Societe Generale through the Hague Convention and not U.S. courts, a federal judge ruled.

U.S. District Judge David Godbey in Dallas today rejected court-appointed receiver Ralph Janvey’s request for an order compelling a Lausanne, Switzerland-based unit of the Paris bank to produce its records of any accounts held by Stanford personally or through one of his businesses since Jan. 1, 2000.

“If the Swiss authorities agree with this court that the receiver is simply seeking production of his own banking records, then the receiver may easily obtain what he needs,” Godbey said in the ruling.

Stanford is civilly and criminally accused by the U.S. of leading a $7 billion investment-fraud scheme through the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. He has denied any wrongdoing.

The financier allegedly routed more than $100 million in investor funds through the Swiss bank accounts, Janvey told the judge in Feb. 22 court papers. The judge heard arguments on the issue Feb. 28.

Responding to the receiver’s demand, Societe Generale lawyers told the court their client is bound by Swiss banking secrecy laws, the violation of which could result in their being prosecuted.

Punishment Threat

“The threat of criminal punishment is real, including the possibility of imprisonment,” SocGen lawyer Noelle Reed, an attorney with New York’s Skadden Arps Slate Meagher & Flom LLP, said in a Feb. 28 court filing.

“Swiss residents cannot avoid these laws simply by turning information over to their American counterparts to be ‘produced’ in this country,” Reed said.

Reed didn’t immediately return an e-mail seeking comment today.

Janvey’s subpoena had been served on a Societe Generale office in Miami last year. The receiver was appointed after the U.S. Securities and Exchange Commission filed a civil enforcement action against Stanford in February 2009.

If Janvey doesn’t get the records, he “may renew his request” in federal court in Dallas, Godbey said.

The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston).