Grant Thornton Seek Deal with U.S. Receiver

By Pascal Fletcher


The liquidators of accused Ponzi schemer Allen Stanford’s bank in Antigua are seeking to cut a deal with a U.S. receiver to recover assets for thousands of fraud victims and end a legal turf war entangling the process.

More than 12,000 claimants say they were bilked by the $7 billion scam U.S. prosecutors allege was masterminded by the flamboyant Texas one-time billionaire and sports entrepreneur, whose business empire stretched to the Caribbean and Europe. Arrested in 2009, he denies wrongdoing and is awaiting trial.

Many of his victims have complained that wrangling over jurisdiction between the liquidators appointed by an Antiguan court and the U.S. receiver has hindered the already complex and difficult task of recovering assets from the web of Stanford’s businesses and bank accounts across the world.

“It’s an extraordinarily complex process,” Hugh Dickson, one of two liquidators appointed by the Eastern Caribbean Supreme Court in May, told Reuters in a phone interview.

Dickson and colleague Marcus Wide were appointed as liquidators for Antigua-based Stanford International Bank (SIB) which issued the certificates of deposit at the heart of the alleged Ponzi scheme. They replaced two previous liquidators.

Dickson said talks were underway in Dallas with the U.S. receivership team involved in the U.S. Securities and Exchange Commission’s (SEC) civil fraud case against Stanford.

“It’s about working out the best way of maximizing the size of the cake, rather than how the existing cake is cut into slices,” he said. The aim of the discussions was “avoiding unnecessary and unproductive clashes” over Stanford’s assets.

Dickson and Wide were proposing a common claims process for recovery of assets linked to SIB, and would also look to cooperate with the U.S. receiver in recovery-related litigation cases. Calls to the phone and office of the U.S. receiver, Ralph Janvey, were not immediately returned.
So far, Stanford’s victims have faced slow progress in efforts to claw back the hundreds of millions they entrusted to the jet-set businessman, who lived a lavish Caribbean lifestyle and gained news headlines with generous cricket sponsorship.

Dickson said his predecessors as liquidators had only recovered about $300,000 in Britain and Antigua, while the SEC receivership had achieved asset recoveries of more than $200 million, but had incurred costs of over $100 million and had not started to distribute the surplus.

“TIME AND MONEY”
On a hour-long online “Webinar” with victims this week, Dickson and Wide faced hundreds of questions, many asking “When will we get our money back?” and “Why is it taking so long?”

“If you’re a victim here, you placed a deposit with a bank that you were told was flush with money, was a robust financial institution, and it’s very difficult to understand why your money is not readily available,” he said.

“When you’re dealing with a fraud, where effectively someone has stolen money and tried to hide it away, it’s not always immediately obvious as well where the assets even are, you have to actively look for them and fight for them to get them back, and that takes time and money,” Dickson said.

But he said he and Wide had made “considerable” advances in the last few months.

He cited $3.2 million in cash recovered from Panama and a further just over $4 million expected to be recovered from the sale of a Bank of Antigua building owned by Stanford.

In addition, the liquidators had managed to gain access to up to $20 million in UK funds to be used to pay for the fees and costs of the liquidation and recovery activities.

“On top of that, we have obtained freezing orders against a group of Stanford-related entities in Antigua that hold assets that we feel are the proceeds of crime,” Dickson said.

These consisted of real estate and property worth about $70 million, as well as land held by subsidiaries of the SIB thought to be worth as much as $250 million.

The liquidators were following leads on further assets held in Latin America and other jurisdictions, and were considering litigation against other third parties, Dickson said.

U.S. CRIMINAL PROBE
Dickson said there was also around $250 million in Swiss and UK bank accounts, in cash and financial instruments. But these assets had been frozen under a criminal investigation order initiated by the U.S. Department of Justice (DOJ).

French bank Societe Generale said last month it was cooperating with the DOJ investigation after the Wall Street Journal reported the probe involved an account held by Stanford with SG Private Banking (Suisse) SA, a Societe Generale subsidiary.

Dickson declined to confirm which banks were involved, but said the liquidators had met with the Department of Justice and the Swiss and UK authorities to discuss the issues.

“We want to persuade the Department of Justice to withdraw their efforts to recover the money,” Dickson said, adding the liquidators had requested this because they felt their own process for dealing with the funds and distributing them to victims would be faster and more transparent than the DOJ one.

A Justice Department spokeswoman declined comment, citing a gag order imposed on the criminal case against Stanford.

“The DOJ keeps referring to this as repatriation, but the money doesn’t necessarily originate from the U.S. in the first place,” Dickson said.
He added that according to the liquidators’ records of the creditor base for recovery purposes, the U.S. interest only amounted to 15 percent of the total, and might be much less once ownership of U.S. investment vehicles was factored in.