Stanford victims outside of US and Antigua want justice too

CARACAS, Venezuela, Friday September 30, 2011 – A three-person organisation has stepped up to represent over 20,000 people across 112 countries who were victimised when the ponzi scheme of former Antigua-based banker Allen Stanford collapsed over 2 years ago.

The Texas based leader of the organisation, has denounced authorities in the United States and Antigua for what they see as a deliberate disenfranchisement of Stanford victims outside of those two territories.

In a press release, The Texas based leader, stated that he had sent a letter to the new Joint Liquidators of Stanford International Bank Limited Marcus Wide and Hugh Dickson on September 18, copied to the US Receiver, his litigant attorney and to the Official Stanford Investors Committee, to express its indignation at the “dishonest handling of the Stanford Ponzi scheme in Antigua and the United States”.

“Since the SEC filed the civil lawsuit against R. Allen Stanford, his companies and related parties in February of 2009, the organisation has persistently begged the US Receiver and SIBL’s Joint Liquidators, through letters and press releases, to set aside their pettiness and economic interests in order to end the shameful game of “cat and mouse” that has wasted the Stanford victims’ patrimony in a never-ending carousel of litigation's as a result of their irrational pursuit to control the assets.

“It is unacceptable that the Courts in Antigua and the United States, in detriment to the Stanford’s victims, have allowed the Joint Liquidators and the Receiver, who were named to prevent the waste and squandering of the creditors' patrimony, to continue fighting for the assets - duplicating costs and efforts, and hindering the possibilities of a pro rata distribution of the victims’ patrimony,”.

The Texas based leader went on to accuse authorities in Antigua and the US of conspiring to allow Stanford “to keep a fraudulent financial empire alive for more than a decade”.
The organisation’s leader went on to say: “We perceive that the case has been managed with very little transparency. We are concerned that the joint liquidators and the receiver continue to be a part of the problem and not a part of the solution. Why prolong the agony of the victims for a jurisdictional battle?”

In the letter, the organisation’s members went on to beg the joint liquidators of and the US receiver to establish a cross-border insolvency cooperation protocol without any further delay.

Victims angry at delay

Agency undecided on helping with Stanford losses

Gerard Shields
Advocate Washington bureau

WASHINGTON — Louisiana victims allegedly bilked of their savings by Texas financier Robert Allen Stanford are getting increasingly frustrated by the delay of an agency deciding whether they can recoup some of their losses.

The Securities Investor Protection Corp. announced earlier in the year that it would decide by Sept. 15 on whether to make about 1,800 Louisiana investors — mostly from Baton Rouge, Lafayette and Covington — eligible to receive at least part of their savings back.

The agency that stands as the U.S. investors’ first line of defense is two weeks late in meeting its deadline.

And those who sank money into Stanford’s operation are getting increasingly nervous.

“Everyone is just desperately watching it,” said Jean Anne Mayhall, founder of the Louisiana Stanford Victims Group.

SIPC chairman Orlan Johnson said the organization needs more time because of the complex issues in the Stanford case.

Stanford stands accused of bilking investors of $7.2 billion, including $1 billion in Louisiana, charges he denies.

“We fully appreciate the gravity of this matter and remain committed to reviewing it thoroughly and with all deliberate speed,” Johnson said in a statement.

That isn’t soothing investors such as Pete Verbois, a 66-year-old former Exxon Mobil worker who lost about $650,000 with Stanford. Even if SIPC makes a decision, it will be awhile before any victims receive their money, Verbois said.

“It’s going to be a lot of red tape before they cut a check,” said Verbois, of St. Francisville. “It’s pretty frustrating.”

In June, the U.S. Securities and Exchange Commission determined that victims of Stanford should be eligible to recoup some of their losses from the SIPC’s special fund created by Congress. The SEC has threatened to sue SIPC if it decides otherwise.

The SIPC fund is replenished by member financial institutions. Federal law allows for each victim to receive up to $500,000 of their losses.

A source of frustration among the Stanford investors is that SIPC paid back $732.6 million to victims of convicted Wall Street swindler Bernard Madoff, Mayhall said.

SIPC has denied paying Stanford victims, saying that unlike in the Madoff case, investors actually received certificates of deposit, even though they eventually lost their money when the CDs became worthless.

“We have had to fight every step of the way for over two years to be granted the same coverage that Madoff victims received in two weeks,” Mayhall said.

Mayhall said she contacted SIPC, which meets four times a year, and was told that its next scheduled meeting is in December. She said an agency representative told her that the organization will make a decision before then.

U.S. Rep. Bill Cassidy, R-Baton Rouge, isn’t surprised by the SIPC delay, he said. The case is complex, with investors living as far away as South America, he said.

It took months for the SEC to make its determination too, Cassidy said.

“We all want the decision to be made yesterday,” Cassidy said. “On the other hand, it’s a pretty complicated case. It’s not to excuse it, it’s just to understand it.”

PAAWS Appeal for Donations to save Animal Sanctuary

Dear friends of PAAWS,                                                                                        September 2011

We hope you can take the time to read this mail and hopefully reply by return to the big question we ask below. PAAWS future depends on it.
Your answers will be presented at our emergency meeting on Sunday October 2nd at the Hideout at 3:30 p.m.

The big question is :
Do you feel there is continued need for a no kill shelter (PAAWS) in Antigua?

PAAWS are heading for a crisis. Our appeals for help in October last year when our numbers rose to 60, and again in February this year were answered by a few wonderful caring individuals, but sadly not nearly enough to give PAAWS a future. The past has shown that the shelter cannot cope without one paid helper, and even though we have just stopped taking in animals for now, we cannot see our way clear of homing the 32 we have at present, any time soon. This is the first year in PAAWS 16 years of life that we are just not homing enough of our rescues, and donations and memberships are way down. We have helped close to 1000 animals during our 7 years at the Parham shelter, it would be heartbreaking if we could not continue. We have funds for only eight more weeks

Cedar, July 2011 Cedar September 2011

PAAWS faces an avalanche of calls about abandoned, abused and neglected animals; our dwindling resources restrict our ability to respond.

Some members of the PAAWS management board are doing all they can to volunteer their own time and resources. Sadly this is not enough. After 16 years of continued efforts and development we pray that we can keep our heads above water in this turbulent sea of decline.

What will YOUR decision be: We CONTINUE or We CLOSE.

PAAWS REALLY WANTS TO CONTINUE CARING FOR THESE POOR CREATURES, BUT CAN ONLY DO THIS WITH THE REGULAR HELP OF A CARING COMMUNITY.

R.S.V.P. nedden@candw.ag Tel :Nora or Bill Nedden at 268 460 3667. MEMBERSHIP FORM SENT SEPARATELY


Please us send your decision.
Donations or membership fees by check payable to PAAWS,
Box 1839, St John’s, Antigua. Can also be dropped off at the shelter, or our head office at the Hideout.


Kindest regards,
PAAWS Management Committee.

Membership Application Email GBP

David Becker was the Securities and Exchange Commission's top lawyer, but he could not keep Bernie Madoff away from his own mother

By AL LEWIS

When she died in 2004, she left Mr. Becker and his siblings an estate that included a $2 million Madoff account. His father had made the investment, originally. Didn't his parents ever get a fake statement in the mail and say, "Hey, this is great. Maybe we should show our son, the securities lawyer?"

Mr. Becker's parents died not knowing how the investment would turn out. Mr. Becker's brother liquidated the account in 2005 to pay estate taxes, also not knowing.

Mr. Becker informed his boss, SEC Chairman Mary Schapiro, and the SEC's ethics office, after Mr. Madoff finally confessed to running the world's greatest Ponzi scheme right under the SEC's nose. Oh, he was some character -- taking money from a regulator's mom. But Mr. Becker's colleagues at the SEC told him not to worry about it.

Mr. Becker went right on dealing with Madoff matters, influencing such questions as how much victims should receive in compensation from the Securities Investor Protection Corp. and whether Congress should limit clawback lawsuits in Ponzi schemes.

Nobody said anything about his mom's Madoff loot.

"It simply did not occur to me then that his mother's account, closed years ago, could present a financial conflict of interest," Ms. Schapiro told Congress last week.

This is the sentence that Ms. Schapiro should have used to start off her resignation speech.

Despite her vast regulatory experience and legal training, she doesn't seem to have any idea what happens after a Ponzi scheme implodes: A bankruptcy trustee sues everyone who ever took a fictitious profit so that the money can be divided up fairly among all the victims.

The SEC, which preaches disclosure, never said a word until, inevitably, Mr. Becker was hit with a clawback lawsuit. Turns out $1.5 million of the $2 million in his parents' account were fictitious profits, according to SEC Inspector General David Korz, who has turned the matter over to the Justice Department to see whether criminal conflict-of-interest laws were violated.

"I thought it doubtful that the trustee would institute a clawback action against me," Mr. Becker told Congress last week.

Mr. Becker has already left the SEC. So this is the sentence where he should have begun his announcement to resign from the practice of law. All those Madoff victims, out all that money, and they were never going to knock on his door for the $1.5 million? Hey, stop paying the bank while you're at it, Mr. Becker. Maybe they won't foreclose on your home.

"For those who think I acted in my financial interest, I would point out that I took a pay cut of over 90% to return to the SEC," Mr. Becker told Congress. "I ... forfeited millions of dollars to serve my country."

Cue the John Philip Sousa music here. Mr. Becker should have taken the millions he could have earned in private practice and left the country alone.

The SEC's job is to root out deadly conflicts of interest in America's corporations. But Mr. Becker and Ms. Schapiro couldn't smell them in their own office.

Stanford investors insurance coverage source of internal SEC dispute

Loren Steffy
Chron.com

The Securities and Exchange Commission’s change of heart with regard to the long-suffering investors of Allen Stanford is now a little more clear.

Earlier this week, the SEC’s inspector general released his latest report, this one focusing on potential conflicts of interest involving David Becker, the commission’s former general counsel and senior policy director. Becker was involved in the SEC’s case to liquidate Bernard Madoff’s investment firm under the Securities Investor Protection Act, a 1970s law that created an industry-funded insurance program for investors who lost money through broker fraud. Becker, it was later reported, had inherited some “fictitious profits” from a Madoff account that had belonged to his mother and that was liquidated after her death.

The rules for coverage under SIPA, which is administered through the Securities Investor Protection Corp., are very specific. Becker supported the idea that Madoff investors were covered, but he opposed the idea in the Stanford case, according to the report.

Becker himself took a different approach when he analyzed SIPA coverage issue for investors in the multi-billion Ponzi scheme ofR. Allen Stanford from the approach described above in the Madoff Liquidation. After the SEC brought a civil enforcement action against Stanford and three ofhis companies, the President and CEO of SIPC sent a letter to the receiver appointed for the Stanford matter indicating that, based on the facts as set forth by the receiver, there was no basis for SIPC to initiate a proceeding under SIPA with respect to Stanford investors. Becker testified that he became involved initially in the SEC’s considerations about SIPC coverage with respect to Stanford investors, and his opinion as to the matter “was that SIPA, the statute, did not cover the Stanford situation,” noting that although “it didn’t make sense that it would not cover something like Stanford, but cover Madoff, … the law is the law.” By contrast, in the Madoff Liquidation, Becker considered a variety of approaches for determining net equity in order to, as Becker testified, “take the position which got the most money [to] injured investors consistent with the law.”

Becker’s opposition to SIPC coverage for Stanford investors may be the reason that the SEC appeared to support SIPC’s position that clients of Stanford’s brokerage weren’t covered, even though Stanford’s brokerage, a SIPC member, peddled the bogus certificates of deposit at the heart of the alleged Ponzi scheme.

After Becker left, the SEC changed its mind on the idea of SIPC coverage, saying many of Stanford’s U.S. investors should be covered under the law. SIPC’s board is still considering the SEC’s decisions, and its expected to announce its own decision this month.

Here’s the full inspector general’s report.

Oig-560 Madoff v Stanford Sipc

Allen Stanford claims amnesia, and it seems contagious

Source: Loren Steffy
Chron.com

R. Allen Stanford, accused of running a $7 billion Ponzi scheme from offices in Houston and the Caribbean island of Antigua, apparently has a new defense tactic: amnesia.

Stanford has been held without bail since his arrest in 2009. He was later beaten in prison by another inmate, then became addicted to pain killers as part of his recovery. His trial has been delayed while he is weaned off the medication, but it was expected to begin in the spring.

Standford now claims he can’t remember anything prior to his 2009 arrest, according to the Wall Street Journal. It’s an awfully convenient medical condition, but it’s hardly unique in the Stanford case.

The Texas Department of Banking, for example, also seems to have some memory loss. Back in May, I wrote about how state banking regulators, who granted Stanford’s request to establish a trust company here in 2001, had entered into an unusual arrangement with Antiguan authorities that enabled them to review the books of Stanford’s bank in Antigua.

In the more than two years since Stanford’s financial empire collapsed, investigators have complained about a lack of cooperation from Antiguan authorities, especially when it comes to details of Stanford’s bank. It’s not clear, I wrote in May, if Texas authorities ever received or even requested financial information from Stanford’s Antiguan bank.

When I asked a lawyer for the banking commission about it, she confirmed the agreement but said I would need to file an open records request if I wanted to know more. So I did.

Under the state’s open records law, I was supposed to get a response in 10 days. I didn’t, so I sent another message reminding them of the deadline. Still nothing. Finally, late last week, I got an answer — four months after my initial request.

In it, a lawyer for the banking department claims it didn’t receive my request until Sept. 13, but added that “it appears from the date noted on the request that the delivery of the request was delayed.”

The information I got back doesn’t answer the fundamental question of whether the banking department ever acted on its information-sharing agreement, or what information it received. An accompanying attorney general’s opinion found that the financial information would be considered confidential under the information-sharing pact between Texas and Antigua.

Neither the AG’s opinion nor the banking department, though, has answered the more basic question: did they ever invoke the agreement?

The trust agreement was supposed to protect investors, but it appears the state’s banking regulators, after much fanfare in establishing it, never actually used it, or if they did, they missed the warning signs. Then again, maybe delivery of the information was “delayed.”

Here’s the response to my request:

FOI Response

Here’s the documents it generated, most of which discuss the creation of the trust company and the information-sharing pact with Antigua:

Stanford TAB Documents

Records Show Meeks Sought Favours for Pal from "Ponzi" Tycoon

By ISABEL VINCENT and MELISSA KLEIN

The e-mail was flagged “Importance: High.” A top executive at the Stanford Financial Group wanted an answer.

“Have we an update on Antigua?” demanded Lionel C. Johnson, a senior VP.

“Greg Meeks and Ed Ahmad have both called again this afternoon inquiring about the status of Ahmad’s VIP-box invitations.”

The Feb. 19, 2008, e-mail, obtained by The Post, was addressed to Yolanda Suarez, chief counsel for the company run by now-disgraced billionaire banker Allen Stanford. It and other insistent messages during that period show Queens Rep. Gregory Meeks was determined to get his pal, Edul Ahmad, invited to a Caribbean cricket match so he could meet another Meeks buddy, Stanford.

The urgent pleas were made a year after Ahmad handed Meeks $40,000.

Stanford would also throw cash at the congressman a few months later -- hosting a lavish fund-raiser in St. Croix in July 2008, complete with Cristal champagne and caviar, that raised at least $13,800 for Meeks’ campaign committee.

Now the circle of friends threatens to become a circle of felons.

Stanford, 61, is awaiting trial on charges he engineered a $7 billion Ponzi scheme. Ahmad, 43, was indicted this summer in New York, accused of falsifying $50 million in loan applications. And Meeks, 57, is under investigation by the House Committee on Standards of Official Conduct for the $40,000 Ahmad payment and is at the center of a separate federal probe for his role in a Queens nonprofit that allegedly stiffed Hurricane Katrina victims.

Meeks, an eight-term congressman, has a penchant for hobnobbing with shady characters and had few qualms about accepting their cash -- or doing them favors.

Stanford, a flamboyant businessman from Texas who once ran a bodybuilding gym in Waco, took over the family financial business. He also started his own bank in 1985 on the island of Montserrat and later moved his operations to Antigua. Forbes ranked him as the 205th-richest American in 2008, with an estimated worth of $2.2 billion.

Meeks’ relationship with Stanford dates back to at least 2003, when the congressman and his wife traveled to Antigua and Barbados on a junket sponsored by the Inter-American Economic Council, a Washington, DC, nonprofit backed by Stanford. It would be the first of many trips to sunny climes that Meeks and his wife, Simone-Marie, would take on the nonprofit’s dime.

Meeks sits on both the House’s Financial Services and Foreign Affairs committees and belonged to the Caribbean Caucus, an informal group of lawmakers Stanford sought to woo.

The economic development of the Caribbean, and the US Virgin Islands in particular, has been Congressman Meeks’ focus for over a decade,” Johnson, an executive in charge of government affairs at Stanford Group, wrote in an e-mail exhorting company employees to attend the July 2008 fund-raiser. Ticket prices began at $1,000 for the soirée at Stanford’s hilltop compound in St. Croix.

Eighty guests dined on lobster, caviar and foie gras and sipped Cristal and Mondavi Opus 1, a Napa Valley red that retails for $200 a bottle. An organizer of the party said the cost of the catering alone topped $25,000.

But, records show, the Meeks campaign reimbursed Stanford for only $3,591.

Stanford company employees donated $7,200, and Stanford himself gave $4,600. The company’s PAC kicked in another $2,000. The total take for the fund-raiser appears to be $34,000, according to campaign finance records.

The Texas receiver for the victims of Stanford’s alleged Ponzi scheme is seeking to claw back the $6,600 donated by Stanford and the company’s PAC, along with money Stanford gave to other pols, including Harlem Rep. Charles Rangel.

“Representative Meeks has not returned any of the money requested. The receiver asked Representative Meeks to join the dozens of other politicians and political committees who have returned their Stanford-related contributions,” said Kevin Sadler, the attorney for the receiver.

Sadler said he is in talks with Rangel’s lawyer to return the money, which included $8,300 to the Rangel campaign and $2,500 to his National Leadership PAC. Both Meeks and Rangel have said in the past that they gave the donations to charity.

In 2006, Stanford called in a chit for his generosity, asking Meeks to use his influence with Venezuelan President Hugo Chavez. The billionaire wanted Meeks to tell Chavez to begin a criminal investigation into a whistleblower at Stanford’s Venezuelan bank.

Meeks allegedly was heard on a speakerphone telling Stanford he would intervene with Chavez, according to the Miami Herald.

Meeks was soon in Venezuela visiting Chavez, ostensibly to thank him for providing cheap home heating oil to Americans. A year later, the whistleblower was arrested.

While Meeks was meeting with Chavez, there were already grave concerns among US government officials about Stanford’s reputation. The US ambassador to Barbados attended a “Legends of Cricket” breakfast along with Stanford in Bridgetown and tried to avoid being photographed in public with him.

“His companies are rumored to engage in bribery, money-laundering and political manipulation,” read a May 2006 diplomatic cable about the breakfast meeting, released last month by WikiLeaks.

When Stanford was knighted in Antigua in 2006, the title was so controversial that the country’s prime minister called the honor “most unfortunate.”

Stanford was indicted in June 2009 on charges of perpetrating a $7 billion fraud by selling certificates of deposit that promised inflated rates of return. He is currently being held at a medical center in the feds’ Butner, NC, prison, the same lockup holding Ponzi king Bernie Madoff. Stanford was declared incompetent to stand trial in January because of an addiction to prescription medication, but he is expected to be re-evaluated.

Meeks refused to answer any questions about his relationship with Stanford, or why he agreed to introduce Ahmad to the billionaire.

Both men have an interest in cricket. Stanford owned a cricket team and stadium, and Ahmad sponsored his own cricket competition in New York.

Meeks and Ahmad are longtime friends. The congressman held after-hours meetings with the real-estate broker at his Queens district office, and Ahmad boasted that he had his own personal political representation.

Meeks claims the $40,000 he pocketed from Ahmad was a loan, but a House ethics panel said it appeared to be a gift. Meeks paid back the money in 2010, but only after federal investigators questioned Ahmad about it.

Like Stanford, Ahmad’s businesses were long dogged by allegations of scandal, including predatory lending and forged documentation. State authorities launched five probes into his real-estate operations between 2006 and 2008.

Ahmad, who is currently out on $2.5 million bail and prohibited from traveling to his native Guyana, faces up to 30 years in prison. The government has said that additional charges or more defendants are likely in his case.

Kings of Queens

Allen Stanford

Texas billionaire in jail awaiting trial on charges he ran an $7 billion Ponzi scheme. Accused of selling certificates of deposit promising improbably high interest rates. Big-time political donor, whose nonprofit Inter-American Economic Council hosted Caribbean junkets for members of Congress, including Meeks. Held a 2008 St. Croix fund-raiser for Meeks.

Congressman Gregory Meeks

An eight-term Democratic congressman representing Queens, Meeks is the subject of a House ethics probe for accepting a $40,000 payment from Queens businessman Edul Ahmad in 2007. Also under federal investigation for his role in a Queens charity. Arranged for Ahmad to meet banker Allen Stanford, for whom Meeks did favors, including personally lobbying Venezuelan President Hugo Chavez.

Edul Ahmad

Queens real-estate broker and catering hall owner indicted on charges of mortgage fraud. Accused of falsifying $50 million in loan applications. Currently out on $2.5 million bail. Denied permission by the feds to travel to his native Guyana. Longtime friend of Meeks. Sought introduction Stanford through Meeks.

Stanford's Victims Still Waiting For SEC Decision on SIPC COver

Scott Cohn
Senior Correspondent, CNBC

The Securities Investor Protection Corporation, the agency that insures U.S. brokerage accounts, said it is still deciding whether to reverse an earlier decision to deny coverage to tens of thousands of investors in Allen Stanford's alleged $7 billion Ponzi scheme.

SIPC had promised a decision this week, after the Securities and Exchange Commission earlier this year threatened a lawsuit if SIPC continued to deny the coverage.

The SIPC board has been meeting since Thursday, but in a statement Friday, Chairman Orlan Johnson said the board "is continuing its careful review of the many and complex issues in the Stanford case."

As a result, some 30,000 investors remain in limbo. A court-appointed receiver who has been rounding up assets since Stanford's financial empire was shut down in early 2009 has so far recovered just pennies on the dollar. For many investors, the SIPC coverage represents their only hope of recovering much of anything.

"It is very disappointing to have even further delays in recovering the life savings of thousands of middle class retirees after waiting more than two and a half years for the protections Congress intended for SIPC to provide," said Angela Shaw of the Stanford Victims Coalition in a statement e-mailed to CNBC.

The agency initially refused to cover the Stanford accounts because the certificates of deposit at the heart of the alleged scam were drawn on Stanford's offshore bank in Antigua. But the investors, and eventually the SEC, argued the CDs were sold by Stanford's registered broker-dealer in the U.S.

In June, the SEC, under heavy pressure from investors and members of Congress, called on the SIPC board to reverse its decision, and threatened to sue SIPC in federal court if it refused.

"Credible evidence shows that Stanford structured the various entities in his financial empire...for the principal, if not the sole, purpose of carrying out a single fraudulent Ponzi scheme," SEC staffers wrote, meaning there was no distinction between Stanford's Indian bank and his U.S. broker dealer.

In response, SIPC promised its board would decide at its September 15 meeting whether to reverse itself.

In today's statement, SIPC chairman said, "We fully appreciate the gravity of this matter and remain committed to reviewing it thoroughly and with all deliberate speed."

An SIPC spokesperson would not say how soon a decision would be made.

Allen Stanford’s Amnesia: Haven’t We Seen This Soap Opera Before?

By Shira Ovide

We read with interest our colleague Michael Rothfeld’s story about the amnesia suffered by convicted Ponzi schemer R. Allen Stanford. He now claims he can’t remember anything that happened prior to his 2009 arrest.

It’s been nagging us. We couldn’t quite remember: Where had we seen this before? (Pause for the joke to set in. Theeere you go.)

Yes, the ol’ “I cannot recall, Senator” line has been held out by troubled defendants before, and not just in the plot lines of daytime soap operas.

In 1990, former Guinness chairman and CEO Ernest Saunders was convicted with three others for a scheme to prop up the company’s stock price during a 1986 takeover battle for liquor company Distillers Co. –maker of Tanqueray gins and Johnnie Walker Scotch.

But shortly after his five-year conviction was set, the 55-year-old Saunders said he was in the early stages of dementia. Saunders was freed on parole after serving just 10 months.

After he was released, however, Saunders recovered enough to return to the business world. He said his memory problems and other symptoms were caused by anti-depressants he took in jail.

The British press referred to the Saunders affair as the “alcoholic Dallas.” Given Allen Stanford’s penchant for cricket, maybe we’ll call his sudden memory deficiency the “forgetful wicket.”

Swiss Bank Under Investigation‏

By MICHAEL ROTHFELD

The Justice Department is investigating whether French bank Société Générale SA helped facilitate Texas financier R. Allen Stanford's alleged $7 billion Ponzi scheme by ignoring suspicious transactions, people familiar with the matter said.

At issue is a Swiss bank account held by one of Mr. Stanford's companies at SG Private Banking (Suisse) SA, a Société Générale subsidiary, that was allegedly funded with investors' money and used to make payments into Mr. Stanford's personal accounts and for bribes to his Antiguan auditor. Prosecutors in the criminal probe are examining whether Société Générale failed to follow due diligence procedures or to ask questions about irregular banking activity, the people familiar with the matter said.

Mr. Stanford, 61 years old, was accused by federal prosecutors and the Securities and Exchange Commission in 2009 of fabricating high returns to lure investors around the world to buy about $7 billion worth of certificates of deposit from Stanford International Bank Ltd. in Antigua, the island where he was knighted.

"Sir Allen," as he was sometimes known, spent millions to travel by private jet, sponsor cricket matches, and buy real estate in the Caribbean and elsewhere. He has pleaded not guilty to charges of fraud, conspiracy and obstruction in Texas.

In a court filing in Mr. Stanford's criminal case last year, federal prosecutors wrote that he "secretly funnelled more than $100 million of investors' money through his numbered Société Générale account in Switzerland to his personal bank accounts for the payment of bribes and lavish personal expenditures."

That the bank is a focus of prosecutors' interest hasn't previously been disclosed.

SG Private Banking (Suisse) "has received requests for documents and other information" related to Mr. Stanford from the Justice Department, a Société Générale spokesman said in a statement. He said the bank is cooperating but will not comment further because it is an on-going investigation.

R. Allen Stanford at the federal courthouse in Houston in April 2010.

If the Justice Department concludes that the bank turned a blind eye to potential criminal activity, that could be a basis for a prosecution under the federal anti-money laundering statute, the Bank Secrecy Act, or other conspiracy or fraud charges, lawyers not involved in the case said. A Justice Department spokeswoman declined to comment. However, defense lawyers say it would be highly unusual to criminally prosecute a bank for facilitating a fraud based on the failures of its employees to uncover it. "At that level, prosecutions are reserved for the bad actor, unless you are prepared to say that the bank has a systemic problem and is corrupt at its core," said Robert W. Ray, a white collar defense lawyer at Pryor Cashman LLP.

People familiar with the matter said the focus for prosecutors is trying Mr. Stanford and any action against the bank is likely to wait until after the proceedings involving Mr. Stanford are finished. His case has been on hold as aA judge is expected to determine in the coming months whether he is competent to stand trial.

The probe shows that after more than two years investigators are still trying to unravel the global fraud allegedly carried out by Mr. Stanford and his associates. Mr. Stanford's companies utilized accounts at several Swiss banks, according to court documents and people familiar with the matter.

The investor money that prosecutors allege was siphoned off by Mr. Stanford for bribes and other purposes through Société Générale related to an SG Private Banking account numbered 108731 in the name of Stanford Financial Group, a parent entity for the many Stanford companies. The Swiss account was allegedly funded with investor money transferred from Stanford International Bank accounts, according to the people familiar with the situation and records filed in court.

Prosecutors have said that 108731 was a "secret account" because it wasn't included in the Stanford corporate accounting system, and because only Mr. Stanford and his chief financial officer, James Davis, had access to it. The account was overseen by Blaise Friedli, an SG Private Banking executive vice president in Lausanne, Switzerland, who Mr. Stanford named to his company's "international advisory board," according to a corporate newsletter filed in court.

A former lawyer for Mr. Stanford, Dick DeGuerin, said at a 2009 hearing that 108731 was "not a secret bank account," and that records would show funds didn't go to Mr. Stanford, "but were used within the Stanford companies." Mr. Davis has pleaded guilty to criminal charges and is cooperating with authorities. Mr. Friedli didn't respond to requests for comment.

Some of the investor money in the 108731 account was used for allegedly illegal transactions, prosecutors have said in filings and in court. Mr. Stanford also used investor funds in the 108731 account as collateral for a $95 million loan Société Générale gave him around 2004, according to people familiar with the situation. Money from the loan was allegedly spent on bribes and transferred into Mr. Stanford's personal accounts, the people familiar with the matter said.

In December 2008, as his alleged scheme began to fall apart amid investor redemptions, Mr. Stanford's company authorized the bank to take the funds that were used as collateral out of the 108731 account to repay the loan, the people said.

Prosecutors are investigating whether Société Générale did proper due diligence on the loan to Mr. Stanford and how it was spent, and why the bank didn't identify or report that investor money was being used for suspicious transactions, the people said.

A lawyer for Mr. Stanford, Ali Fazel, declined to discuss the case or the Société Générale accounts, citing a gag order. "We disagree with the government's theory of the case and we are looking forward to the trial to be able to show that," Mr. Fazel said.

Mr. Davis regularly corresponded with Mr. Friedli, making written requests for wire transfers of millions of dollars to Mr. Stanford's personal accounts, and payments of up to $125,000 to the Antiguan auditor's accounts in London and the British Virgin Islands, court filings show. Prosecutors have said in court filings that the payments to the auditor were bribes.

A phone number for the auditor, CAS Hewlett & Co., has been disconnected. The owner of the company, Charles Hewlett, died in 2009.

Stanford Says He Has Lost His Memory

By MICHAEL ROTHFELD

R. Allen Stanford, who has gone through a carousel of defense lawyers, an addiction to medication and a jailhouse beating, is now complaining of another malady, a person familiar with the matter says: amnesia.

The former Texas financier says he cannot remember events prior to his arrest in June 2009, the person said.

U.S. District Judge David Hittner in Texas ordered in January that Mr. Stanford be weaned off anti-anxiety medication and anti-depressants at the recommendation of psychiatrists. The judge declared Mr. Stanford unable then to help defend himself against charges of masterminding a $7 billion Ponzi scheme.

Doctors are expected soon to report back on Mr. Stanford's condition. The judge will decide if the trial can go forward in January. Mr. Stanford's lawyer declined to comment.

Roy Lubit, a forensic psychiatrist in New York not involved in the case, said medication and withdrawal are unlikely to cause memory loss. "If it's being cut back at a reasonable pace, that shouldn't stop them from being competent," he said.

Dr. Lubit and Colin Koransky, a forensic psychiatrist in California, both said a head injury—Mr. Stanford suffered one in the beating—could cause amnesia for recent events but is unlikely to affect older memories.

Houston investors dispute Stanford Ponzi scheme claims

Christine Hall
Houston Business Journal

Stanley, Frank and Rose LLP has filed a response disputing the Stanford Financial Group receivership’s claim that the company was running a Ponzi scheme.

The Houston law firm’s response to the motion for summary judgment was filed in the U.S. District Court for the Northern District of Texas, Dallas Division on behalf of eight defendants who were investors with Stanford.

The Stanford receiver, Dallas attorney Ralph Janvey, has asked the court to make a determination that the Stanford companies were running a Ponzi scheme before any criminal or civil trials have been conducted, the response said.

Janvey has sued a number of investors seeking return of certain proceeds they received from their investment in certificates of deposit that he has claimed were part of the Ponzi.

According to the Houston firm’s filing, Janvey bases his claim on analysis of company assets by forensic accountant, Karyl Van Tassel. Van Tassel claims the Stanford companies “were insolvent” because the assets were less than the liabilities, concluding Stanford operated a Ponzi scheme, the filing said. The Houston defendants are disputing her claims.

The response alleges that Van Tassel did not provide evidence as to how she came to her conclusion. and claims she ignored evidence that Stanford had always been a legitimate business.

“Indeed, she admits that she has not reviewed any balance sheets for the Stanford companies nor interviewed any employees relating to the period of 1986-1999,” the filing states. “As a result, there is a fact issue as to when (if ever) the Ponzi scheme began.”

The defendants claim that timing of the Ponzi “is important as there is no basis for returning interest if a Ponzi scheme arose after the funds were paid,” the filing said.

R. Allen Stanford is awaiting trial, scheduled for next year, for his part in the alleged scheme.

Statement from Dr Kachroo Regarding SLUSA Ruling by Judge Godbey

From Kachroo Legal Services:
9th September 2011

Last week, Judge Godbey ruled that a particular federal statute precludes many, if not all, of the class action lawsuits filed against certain financial institutions sued in connection with the Stanford Ponzi scheme. This will result in the dismissal of the majority of class actions filed by the Investor Committee and the Receiver. This will not, however, preclude a class action lawsuit against the SEC or affect any individual Stanford-related lawsuits that were not brought as a class action. There is a maximum number of plaintiffs that can now bring an action under state law claims, even separately.

The particular statute at issue is the Securities Litigation Uniform Standards Act (“SLUSA”). SLUSA generally bars any class action lawsuit which is based on state law (not federal law) and involves allegations of misrepresentations in connection with the purchase or sale of securities. Although there was a lengthy debate over whether the Stanford Ponzi scheme involved the purchase or sale of “securities,” as defined by SLUSA, the Court ultimately ruled that even though the SIB issued CDs were not “securities,” the SLUSA preclusion applies for either of two reasons. First, SLUSA applies because investors were defrauded in connection with the purchase or sale of what they believed were securities. Second, SLUSA also applies because many investors sold securities in order to purchase the SIB CDs. Under either scenario, the Court ruled that SLUSA precludes class actions against such financial institutions which are based on state law. Because the majority of class actions filed by the Investor Committee and the Receiver are based on state law, these lawsuits will be dismissed with prejudice.

However, a class action lawsuit against the SEC is not the type of action precluded by SLUSA because it does not involve allegations of misrepresentations by the SEC in connection with the purchase or sale of securities. There is a chance if there is enough support for the same that Kachroo Legal Services, will contemplate an appropriate way to take measures against the financial institution (s) implicated in the Stanford debacle. If you have questions about this lawsuit or about seeking legal representation, you may contact Gaytri Kachroo directly, who is also handing the class action against the SEC on behalf of all investors.

Dr. Gaytri D. Kachroo
PRINCIPAL
KLS-Kachroo Legal Services, P.C.
219 Concord Ave.
Cambridge, MA 02138
Direct: 1-617-864-0755
Facsimile: 1-617-864-1125
Mobile: 774-232-2865

Statement from the Stanford Investors Committee

STANFORD INVESTORS COMMITTEE

SEC vs. Stanford International Bank, Ltd., et al (No. 09-298)

United States District Court, Northern District of Texas

STATEMENT IN RESPONSE TO U.S. DISTRICT COURT’S DECISION

ON APPLICABILITY OF SECURITIES LITIGATION UNIFORM

STANDARDS ACT IN CLASS-ACTION LAWSUITS

On August 31, 2010, United States District Court Judge David Godbey issued an opinion potentially precluding the victims of the alleged Stanford Financial Group Ponzi scheme fraud from pursuing class-action lawsuits against third-party aiders and abettors under state law. While the opinion issued by the District Court is limited to the Louisiana lawsuit, "Roland v. Green" ("the Roland case"), the potential impact on other class-action lawsuits already pending on behalf of Stanford investors is significant.

In the District Court’s order, Judge Godbey held that the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”) applies to the Stanford case, forcing the investor victims to either collectively sue third-party aiders and abettors under federal law or face dismissal.

But because federal law does not presently allow investors to sue for damages resulting from a third party's aiding and abetting in securities frauds like the Stanford Ponzi scheme, more favorable state law causes of action, such as those available under Texas Securities Act, have been applied in other cases to allow investors to recover losses.

Judge Godbey's decision appears to eliminate that alternative.

"It's difficult to imagine Congress intended for SLUSA to be used to outright deny defrauded investors their ability to sue aiders and abettors and co-conspirators of a Ponzi scheme" said attorney Edward C. Snyder, a member of the Stanford Investors Committee and one of the lawyers prosecuting some of the Stanford class actions. "The Investors Committee is concerned that the net result of the Court's decision in the Roland case may create a procedural and administrative nightmare for the Court, particularly if hundreds of individual lawsuits are filed as a consequence.”

“There are more than 20,000 Stanford victims, all of whom will demand their day in court. The class-action mechanism was created to streamline cases of this magnitude. We are disappointed in the decision, and hope to be able to address this issue further with the Court" said Snyder.

SLUSA Ruling Re SIB CDs

I have posted below the recent ruling by Judge Godbey that the Stanford class action lawsuit against the sate of Louisiana is barred by the Securities Litigation Uniform Standards Act of 1998 [SLUSA]. His ruling is so broadly written that it is likely it may be used to terminate most of the other Stanford US class action lawsuits. No doubt there will be a vigorous appeal as the US attorneys who have filed all these lawsuits stand to gain hundreds of millions of dollars in contingency fees.

As more than two years have now passed since the demise of Stanford Financial Group it begs the obvious question why all these attorneys did not consider this scenario before collecting vast sums in retainers from the Stanford Victims.

For any Stanford victim who may not be entirely satisfied with their choice of attorney, in case you are not already aware, you also have a choice, and that is to take your representation elsewhere. All you need do is to request your attorney transfer your file, and your retainer, to any other attorney of your choice. The choice is yours.

Slusa Ruling Re Sib Cds