Stanford's conviction does little to ease investors' struggle

By Loren Steffy

As U.S. District Judge David Hittner was about halfway through reading the
jury's verdict - "count seven, mail fraud, guilty; count eight, mail fraud,
guilty" - R. Allen Stanford turned to family members sitting in the
courtroom and mouthed the words "it will be OK."

It's more reassurance than Stanford's 21,000 victims have gotten.

Investors in Stanford's $7 billion fraud waited three years for this day,
when justice was finally served on the man who had cost them what for many
were life savings.

"This has been a long time coming, and it gives all of the victims a small
amount of satisfaction," said Kate Burnell-Freeman, the co-founder of the
Stanford International Victims Group. "He deserves life in prison. He has
sentenced thousands of victims to a life of hardship and poverty, and I just hope that the U.S. courts remember that."

Yet for Burnell-Freeman and the thousands of investors her group represents, the wait goes on. Any comfort from the verdict quickly gives way to the stark reality of their plight. Stanford's conviction does little to help them recover even a smidgen of their investments.

"I would have been happy to see Stanford walk if somebody that same day gave me my money back," said Burnell-Freeman, who lives in Antigua, the Caribbean nation where Stanford had his bank.

The fate of investors remains tied to two protracted court cases.

One involves the arcane rules regarding insurance coverage for U.S.
brokerage clients, who represent about a third of all Stanford investors
worldwide.

The Securities Investor Protection Corp. has argued it shouldn't have to pay for the losses, because even though Stanford's certificates of deposit were sold as securities through a SIPC-member brokerage, they were actually CDs from a foreign bank.

The Securities and Exchange Commission has filed suit to force SIPC to pay,
and the matter has been pending before a federal judge in Washington since
late last year.

Jury has work to do

Meanwhile, the Houston jurors who convicted Stanford just before lunch
reconvened Tuesday afternoon to consider whether Stanford must forfeit a
series of bank accounts spread among the U.K., Canada and Switzerland
containing an estimated $330 million.

Spread among all the investors, it's a pittance - investors will be lucky to recover a few pennies on the dollar - but the accounts represent some of the biggest pools of cash found in the three years since the collapse of
Stanford's financial empire.

The conviction ought to allow the money to be recovered for investors. The
problem is those funds also are embroiled in a jurisdictional dispute
between the U.S. Justice Department and Antiguan liquidators for Stanford's
bank.

Jurors will resume their consideration of the forfeiture issue today.

Both the U.S. government and the liquidators are attempting to return money
to investors, using different legal processes.

A court-appointed receiver in Dallas, charged with recovering assets for
investors, estimated that as of Oct. 31, including the foreign bank accounts and money that was donated to U.S. politicians that hasn't been returned, no more than about $1 billion could be recovered - less than one-seventh of the value of the fraud.

So far, the receiver hasn't returned anything to investors.

Ravaged hopes, dreams

As is so often the case in investment scams, justice comes far too late to
help those hurt most profoundly by the fraud. Stanford's conviction may
reassure investors that, at least, they weren't crazy. Their money really
was stolen, and Stanford's firm was designed to deceive them. But that
reassurance is overshadowed by the stunning reality that out of the $7
billion, only a few hundred million at best is likely to be returned to
them.

The hard-earned money of thousands became the fuel by which Stanford
propelled himself into the international jet set of swanky cricket tourneys, Caribbean islands, and private planes. The realization that their hard work was wasted on one man's greed is that wound that can't be healed by Tuesday's conviction.

"Without recovery for the Stanford victims there really cannot be any
closure," said Linda Kornswiet, an investor in Blue Bell, Pa. "The sad part
is the thousands of victims who still struggle to pay their bills, lost
their homes and also struggle to pay medical expenses. He has destroyed the
hopes and dreams of thousands of retirees."

For them, as it has for the past three years, the waiting continues.