Believe it or not Bernie Madoff’s phony monthly trading reports listed trades on days the market was closed, or at prices that were far off the market or in volumes that simply never existed. Yet, Madoff’s scam continued for 36 years, from 1972 until 2008, as the SEC was incapable of discovering the truth, and Madoff’s clients never read their phoney monthly statements, since through bull and bear markets Madoff always turned in profits that were not real. And shocking as it may seem, the SEC knew that Stanford was a fraud early on in 1998, but chose not to prosecute as the securities he sold were short term notes of a foreign bank supposedly yielding 12% and were not shares of stock. Imagine the stupidity of that pusillanimous decision. What a bunch of wimps!
Such were the most shocking revelations at a Boston College Conference on the Madoff and Stanford Cases ” The Legacy of Mr. Ponzi,” that the American College of Bankruptcy organized last Friday, at which I was a speaker on the Madoff crimes. I emphasized the lackadaisical performance by the Securities and Exchange Commission as the key absurdity of allowing these crimes to damage so many naive investors who wanted to believe against all past investment history that Madoff’s year-in,year-out returns of 9%-10% and Stanford’s offer of a 12% coupon on his bank’s notes could somehow be a rational expectation by small investors entrusting these two con men with most of their valuable savings. By comparison, Mr. Ponzi was put out of business in a very short time long before there was even an SEC existing. So much for the securities regulatory process where scams are concerned. It is a travesty of justice.
Clearly, the SEC should have had the smarts and the will to put Madoff and Stanford out of business before they were able to do so much harm. The fact that the SEC was inadequate to the challenge should give legislators the motivation to order a review of the agency’s leadership, manpower, and its statutory powers. It appears that the political connections of Madoff and the political contributions by Stanford may well have dulled or dented the investigations into their chicanery and kept the cops off the beat. Especially, as in the case of Madoff, the recent conviction of 5 employees together with the conviction of Madoff’s brother and other high-level employees reveals clearly the conspiracy pretty well included between 15 and 20 people. Stanford’s behavior involved an offshore bank in the Caribbean and so must not have been seen as so crucial to the SEC. It’s ability to make securities criminal cases is far overshadowed by the Justice Department.
After 6 years of progress, Irving H. Picard, the Trustee for the Liquidation of Bernard L. Madoff Investments Securities, has been able to pay the innocent Madoff investors back 56% of the money they lost. With any luck in another 155 claims for $6 billion more payments, Picard is hopeful of returning 100% to those legitimate Madoff losers. “ My goal is 100%”, he said before a crowd of over 100 students and bankruptcy experts at Boston College Law School in Newton, Mass. on Friday. He has spent $980 million in legal and administrative fees to collect $9.8 billion so far. By comparison the Stanford fundraising is only about $240 million, while the costs have been $120 million or 50% of receipts. Picard revealed for the first time that fabricated backdated trades for Madoff’s sons(one committed suicide) in Apple common shares that threw off paper profits of $6.5 million suggests that they “should have known” the enterprise was a scam.
(Reuters) - A U.S. senator questioned a candidate for the Commodity Futures Trading Commission over a decision that left victims of the Allen Stanford fraud out of pocket, raising a hurdle she must jump to get the job.
In a letter on Friday, Louisiana Republican David Vitter asked Sharon Bowen - who has been nominated by President Barack Obama to join the derivatives regulator - a series of 10 questions about her role in the decision.
Bowen is the acting head of the Securities Investor Protection Corporation (SIPC), the body that seeks to recoup money for investors if their broker goes under.
SIPC holds there is no basis in law to refund people who lost money in the $7 billion Ponzi scheme set up by Allen Stanford, who is serving a 110-year jail sentence.
The Securities and Exchange Commission (SEC) lost a court case in which it contested that decision, though an appeal in the case is still pending. A group of 14 senators and fraud victims are supporting the SEC's legal fight.
"It seems that SIPC continues to prioritize protecting its Wall Street members by hiring lawyers to fight the SEC in court rather than protect investors," Vitter said in his letter.
SIPC, created under the Securities Investor Protection Act (SIPA), is funded by Wall Street firms.
Vitter also asked whether SIPC had received any outside funding for its legal defense, whether its decision had been influenced by the banks, and wanted to know whether Bowen had received any gifts while at SIPC.
Bowen and two other nominees to the five-strong CFTC met little pushback in a Senate committee at a confirmation hearing on March 6, but it is no surprise that the Stanford scandal is coming to haunt Bowen. Thad Cochran, the highest-ranking Republican on the Committee, mentioned the scandal during the meeting, though he did not pursue the issue.
The agency - down to just two Commissioners, one Democrat and one Republican - is facing a leadership vacuum just as it is implementing some of the most fundamental reforms of financial markets after the 2007-09 credit meltdown.
In accordance with the Court’s May 30, 2013 Order Approving Receiver's Interim Distribution Plan, the Receiver has filed the following schedules of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. This page will be periodically updated with additional schedules that are filed on a rolling basis as responses to Certification Notices are received and processed.
GENEVA — The office of Switzerland’s attorney general says its criminal investigation into former Texas tycoon R. Allen Stanford’s massive Ponzi scheme has concluded that some of the victims’ money was laundered in Swiss accounts.
The office says the investigation since Feb. 2009 is completed and all of the assets remaining in Switzerland will be returned to fraud victims.
It said Monday that Stanford Group (Suisse) AG was fined 1 million Swiss francs ($1.1 million) and ordered to pay between 6 million and 9 million francs in claims. It has provided American authorities with banking documents and hearing transcripts for use in U.S. criminal proceedings.
The U.S. Supreme Court ruled last month that Stanford’s victims can go forward with class-action lawsuits against those that allegedly aided the $7.2 billion fraud.
Antigua St. John's - The joint liquidators of the Stanford International Bank Ltd (SIBL) obtained authorisation from the Antiguan court to take back funds from holders of certificates of deposit (CDs).
According to a release, most of the victims are from Venezuela, other countries in Latin America, and the United States. They sent a letter asking for the return of money withdrawn from their accounts during the six months prior to the collapse of the SIBL, and demanded a response within 120 days of receipt of the letter.
According to the release, “families who had their life savings deposited at SIBL, were completely unaware of any problems the bank was having. There were no red flags or suspicious circumstances known to the depositors, who continued doing business with SIBL during its regular commercial operations until the bank closed its doors in 2009. It is a fact that the majority of depositors only became aware of trouble at SIBL when the SEC seized Stanford Financial Group on February 17, 2009.”
Covisal’s director said, “The withdrawals made from their savings during the six months prior to the closing of SIBL’s operations, were not ‘Preferential Payments,’ but legitimate withdrawals of part of the principal invested by the rightful owners of the money. These withdrawals were made rightfully and in good faith. Families withdrew part of their invested principal regularly to pay for living expenses, medical treatments, relatives in need, down payments, business expenses, etc.”
Families lost their livelihood in Stanford’s fraud; many sold their homes and what other assets they had left in order to survive for the past five years. The majority of depositors at SIBL are common people, families who worked very hard for 30-40 years to save money for their retirement, for a college fund for their children or grandchildren, and to have savings available for a medical emergency, among other things. Since the closing of SIBL in 2009, victims of the fraud have been living in dire straits; the Stanford fiasco destroyed their lives.
According to court records, the bank’s run might have happened the week of February 9, 2009 at the earliest.
According to the release, “If the management of SIBL permitted the redemption of CDs in the six months leading up to February 23, 2009, it was most likely their Preferred Customers who withdrew their money plus interest - unfairly prejudicial against all CD creditors and depositors at SIBL.”
The joint liquidators sent a summary of receipts and payments that shows receipts of $108.8 M as of December 31, 2013. Of this amount, $95.1 M was part of the $100 million that UK authorities confiscated following a request from the US Department of Justice on April 2009. The liquidators so far have spent $58.6 M. The release questioned, “Why are the expenses so vague and lacking in supportive evidence? What honest and transparent legal entity is providing oversight of the liquidation’s affairs? The real accomplishment of the Joint Liquidators seems to be in giving themselves ‘Preferential Payments’.”
The Open Letter from COViSAL to the Antiguan Court and the Joint Liquidators can be read here
Victims of the massive Allen Stanford Ponzi scheme got a rare bit of good news Thursday. Some $18 million in Stanford funds that had been parked in Canada was returned to the U.S. for distribution to investors.
But the payment is tiny in comparison to the $5 billion in actual losses from the scam, and the court-appointed receiver who has spent the past five years searching for Stanford's billions tells CNBC it is unlikely investors will ever recover much because for the most part, "the money is gone."
"I think about the victims every day," Dallas attorney Ralph Janvey told CNBC in an exclusive interview, his first since being appointed five years ago.
"They believed what they were told. And I will say publicly I don't think the victims should be blamed for anything," Janvey said. "They made an investment based on what they were told. What they were told was wrong and it was fraud."
A federal judge placed Stanford's global financial empire in receivership—and under Janvey's control—after the Securities and Exchange Commission filed suit in 2009. The suit accused Stanford of running "a fraud of shocking magnitude" based on bogus certificates of deposit.
Stanford's brokers sold the CDs—issued by his offshore bank in Antigua and Barbuda—to investors around the world. But a federal jury found in 2012 that most of the funds went to support Stanford's lavish lifestyle. Stanford is serving a 110-year prison sentence, and appealing his conviction on 13 criminal counts.
Comparisons to Madoff Ponzi scheme
Since taking over as receiver, Janvey has been searching the world for assets as well as enduring frequent comparisons to the much more successful recovery effort in the Bernard Madoff Ponzi scheme.
"I don't minimize the Madoff fraud and I don't want to minimize the Madoff tragedy," Janvey said. "But Stanford was much more complicated."
That is reflected in the fact that while Janvey's counterpart in the Madoff case—trustee Irving Picard—has said investors could eventually recoup all of their principal. Janvey says the best case scenario for Stanford investors is "pennies on the dollar."
So far, Stanford's 28,000 victims—more than 10 times the number of victims in the Madoff case—have received next to nothing. Janvey received court approval last year to begin making his first distribution to clients. The $55 million being paid out amounts to less than one penny on the dollar.
To date, Janvey says, he has recovered only about $263 million. But nearly half of that—around $120 million—has been eaten up by expenses including $57 million just to wind down Stanford's global operations including 130 companies and 3,000 employees in 30 countries. Janvey says the money, including fees for him and a team of experts, "had to be spent" because of the complexity of the fraud.
"Stanford was spending $33 million a month on expenses," Janvey said. "We had to shut that down. It's also going to litigation; with the goal being what we spend is to bring money back into receivership to distribute to the victims."
Who Kept Allen Stanford's Money?
Janvey has filed dozens of lawsuits seeking more than $680 million from banks, law firms, politicians and charities that benefited from Stanford's largess. For the most part, they have been unwilling to give any of the money back.
"We had to sue the Democratic and Republican committees to get back over a million dollars.That shouldn't happen," Janvey said.
It took a federal appeals court ruling last year to get the campaign contributions returned, after the committees challenged Janvey's standing to claw back the money.
"Stanford had no right to give the money for political contributions, and they had no right to give it away," Janvey said. "We have other politicians who still have money who haven't given it to us yet."
They include President Barack Obama's 2008 presidential campaign, which received $4,600, according to court filings, and Senate Minority Leader Mitch McConnell, R-Ky., who received $2,500. Janvey said the amounts are too small to justify the cost of litigation.
"Another example is the University of Miami," Janvey said. "They got $6 million to do a study of fish and coral in Antigua. That did not help the victims. That money should come back to the receivership estate so it can be distributed to the victims."
A university spokeswoman declined to comment.
Stanford's Ponzi scheme: Who was Allen Stanford?
anvey is also a party in suits against five banks that did business with Stanford, alleging they knew or should have known about the fraud.
"They were on notice and they did nothing about it. And they enabled that fraud to go on for years and years and years," he said.
The cases are similar to allegations against Madoff's primary banker—JPMorgan Chase—which earlier this year agreed to pay more than $2 billion to head off criminal charges. But Stanford's banks, HSBC, Societe Generale, Toronto Dominion, Trustmark and Bank of Houston, have all moved to dismiss the allegations. Janvey said the Justice Department should be investigating Stanford's banks the way it did with Madoff's.
"I would encourage the government to look at the banks," Janvey said. "We are here to assist them if they want our assistance."
Further frustrating Janvey's efforts is the fact that the Securities Investor Protection Corporation (SIPC) has refused to provide coverage to Stanford victims—another contrast to the Madoff case, where the SIPC has not only paid victims but also covered the trustee's expenses.
Money hidden offshore?
Stanford's deep political connections as well as rumors—mostly cultivated by him—that he worked as a government informant have led to speculation he may have some money hidden offshore. But Janvey says that is not the case.
"And we've looked. It's one of the things we did in the early days of the receivership. It doesn't exist," he said. "We've traced the money. The money is gone. And that's very frustrating for the victims, I understand that. But the money was gone before we came in."
Janvey says the money that was not redeemed by Stanford investors "went to his spending."
"He had to buy the reputation that he—quote—'earned,' and he used victims' money to get there."
Some $208 million is frozen in Swiss banks, with about two-thirds of the money to go into the receivership controlled by Janvey, and the rest to go to court-appointed liquidators in Antigua. But much of that money is contingent on Stanford's criminal appeal. Stanford, who is representing himself, recently filed a motion from prison asking for another six months to file his initial brief.
Janvey estimates it will take another five years of litigation before he has exhausted his recovery efforts.
Since the scandal broke in 2009, 67 Stanford clients have died.
On 20 January 2014, the agreement reached by the Joint Liquidators (“JLs”) of Stanford International Bank (“SIB”) and ItalBank International, Inc. (“ItalBank”) to act as distribution agent for the dividend payments of SIB to its creditors was announced. As a first step in this process, we need to collect the payment preferences of creditors.
Through ItalBank, you can choose to receive payments by bank transfer to an account in your name, your Trust name or your company name. We will not make payments to third parties, but rather, only to the same name in which accounts were held with SIB. The JLs will also offer the option of U.S. dollar checks to the same name registered in the accounts with SIB and mailed to the mailing address listed on your proof of debt form.
For those with trust accounts who wish for the settlors to be paid rather than the Trust, please contact stanford.enquires@uk.gt.com for a Deed of Revocation Order, to revoke the trust.
If you would prefer to open a new account, we gladly invite you to become a client of ItalBank.
Once you have reviewed our information please choose one of the following options:
I wish to receive my payments in an account in my name or the name of my company, in a bank located in the United States of America. Click Here to Download Form.
I wish to receive my payments in an account in my name or the name of my company, in a bank located in one of the countries of the European Union. *All payments will be made in U.S. dollars. Click Here to Download Form.
I wish to receive my payments in an account in my name or the name of my company, in a bank located in another country (excluding the U.S. or the European Union). Click Here to Download Form.
Payment Instructions (Wire) Click Here to Download.
Payment Instructions (Checks) Click Here to Download.
I would like to open an Individual Account in ItalBank.
I would like to open a Commercial Account in ItalBank.
I would like to receive a check in USD, to my proof of debt mailing address.
ItalBank International Information:
ItalBank International is registered in the Commonwealth of Puerto Rico since 2008 and holds a license issued by the Office of the Commissioner of Financial Institutions of Puerto Rico (OCFI) to operate as an International Banking Entity (IBE), under the “International Banking Center Law” and subject to all applicable federal banking laws and regulations of the United States. ItalBank is a financial institution focused on the Latin American market. Its headquarters are located in San Juan, Puerto Rico. ItalBank serves Latin American clients who want to protect their savings, having them deposited in a U.S. bank, while enjoying first class banking services.
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ItalBank offers personal and companies current accounts, certificates of deposit (CD´s), international credit cards, trade and investment finance.
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Our services include online banking, through which customers can access their balances, transaction history, make requests to transfer of funds and access the “Cash Management” module in the case of companies. All our personal accounts include a free MasterCard debit card and have no monthly limit international bank transfers.
To learn more, we include a presentation and we also invite you to visit our website at http://www.italbank.com
Stanford International Bank Limited - in Liquidation ("the Company") Re: Notice of Declaration
The Joint Liquidators are now in a position to make a first interim distribution in the amount of $0.01 on the dollar. CD holders with claims allowed below EC$20,000 (US$7,407.40) will be paid out in full in accordance with section 289 of the International Business Corporations Act.
If you received a preference payment, for which you will have been notified separately, your distribution will be held back until the Court makes a final determination.
Please see the below summary of the receipts and payments covering the period of the liquidation to 31
December 2013 from which you will see that the total amount to be immediately distributed is
US$33,262,396 with a further US$16,989,510 being held back pending resolution by the Court of the
preference issue.
The balance in hand of US$15,344,780 is retained for future costs, fees and expenses of the liquidation, including employee and vendor claims. We expect to pay a further dividend in the future. However, the quantum and timing at this stage is unknown due to the uncertainty of future realisations.
Yours sincerely
For and on behalf of Stanford International Bank Limited
Marcus Wide and Hugh Dickson
Joint Liquidators
STANFORD INTERNATIONAL BANK LIMITED (IN LIQUIDATION)
Receipts and payments statement account
As of 31 Dec 2013
Receipts (USD)
Balance received from former Liquidators NIL
UK recoveries 95,111,096
3rd Party Funding (Hamilton) 5,001,000
ECAB building sale process 4,537,037
HSBC , Panama 3,275,228
Rental receipt (ECAB building) 255,556
Settled legal claims 249,930
Settlement on pricing error 230,710
Other receipts 167,225
---------------- 108,827,782
Less: Cost Awarded for removal of former liquidators (3,185,338)
---------------
Total Receipts 105,642,444
Payments
Liquidators fees & expenses 7,446,658
Co-lead legal advisors fees and expenses 10,745,246
Other legal advisors fees and expenses 12,687,197
Other advisors fees 1,722,896
Other operational expenses 7,443,761 ---------------- Total Payments 40,045,758
----------------
---------------- Balance on Hand 65,596,686 ==========
Represented by:
Preference Payment holdback 16,989,510
1st Distribution to Investors 33,262,396
Balance carried forward 15,344,780 ---------------- 65,596,686 =========
To join the debate click here.
For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/
