A U.S. appeals panel had tough questions on Monday for the receiver in Allen Stanford's civil fraud case, who is suing to recover proceeds from several hundred investors in the firm's offshore bank.
Stanford, 59, faces civil and criminal charges for masterminding an alleged $7 billion Ponzi scheme centered on fraudulent certificates of deposit issued by Stanford International Bank Ltd in Antigua.
At issue is whether receiver Ralph Janvey has a right to pursue "clawback" claims for principal from Stanford clients who redeemed their certificates of deposit (CDs) in the weeks before civil fraud charges were filed and the firm's assets were seized and customer accounts frozen.
Janvey has said the clients named in his lawsuit unfairly cashed out and were paid with money stolen from other Stanford clients.
"All of these people were paid with someone else's money," Kevin Sadler, an attorney representing Janvey, told the appeals panel.
U.S. District Court Judge David Godbey in Dallas ruled in July that Janvey only has a right to sue the investors for the interest on their certificates of deposit and not the principal, so the matter was sent to the Fifth Circuit Court of Appeals in New Orleans.
But the three-judge panel in New Orleans took issue with some of the case law Janvey used to support his appeal and questioned why the receiver, rather than the plaintiff in the case -- the U.S. Securities and Exchange Commission -- was suing the investors.
"What gives you statutory authority to sue people the SEC did not?" Senior Judge Will Garwood asked. "It seem to me that the plaintiff or defendant ought to be the ones ... Frankly, in a sense, you're nobody. You are neither one."
The SEC has also objected to Janvey's lawsuit, saying it would wrongly penalize the victims of a fraud.
Michael Quilling, a lawyer representing the investors, told the appeals panel his clients, who have had their accounts frozen since February, have suffered enough.
"This has been nine months," Quilling told the court. "These investors need their money now. Retirees, many of them, have been getting their interest for eight years. They can't get their principal. They are victims."
About $275 million in funds are being held in accounts at Bank of New York Mellon Corp's Pershing LLC, JP Morgan Chase & Co and SEI Investments Co.
Showing posts with label Appellate court. Show all posts
Showing posts with label Appellate court. Show all posts
Tuesday, 3 November 2009
Wednesday, 28 October 2009
Stanford Ailing, but in court
R. Allen Stanford appeared ill during a court appearance Wednesday as lawyers discussed possible trial dates for him and others accused of running a $7 billion fraud.
Stanford was thinner than in previous appearances. He spit blood into a water cup while sitting in court. Senior U.S. District Judge David Hittner asked Stanford if he needed attention, but he said he was all right.
“It's some sort of illness, we're not sure what,” said his lawyer, Kent Schaffer . He said his client speaks to no one but prison guards and his lawyers, and it's taking an emotional and physical toll.
Stanford has had surgery for an aneurysm in his leg since he was jailed and was hospitalized after a fight with another inmate. He is being held without bail as a possible flight risk because of international connections and ability to get funds.
Schaffer complained about Stanford's treatment in the downtown Houston Federal Detention Center, saying he's held in solitary confinement, isn't getting adequate medical attention and can't see or phone his family.
A spokesman for the federal Bureau of Prisons could not be reached for comment on that claim.
Stanford, a Texas native who has lived mostly in the Caribbean for many years, founded Houston-based Stanford Financial Group. He faces 21 counts of conspiracy, fraud, bribery and obstruction of justice.
He and co-defendants are accused of cheating investors who bought certificates of deposit issued by Stanford International Bank on the Caribbean island of Antigua, and sold through Stanford Financial Group companies.
Three of Stanford's codefendants are free on bail and wore street clothes for Wednesday's court hearing, while their ex-boss sat nearby shackled and in green jail clothes.
Lawyers on both sides estimated the trial could take four months. Prosecutor Gregg Costa asked for a trial date no later than next October.
Research time a concern
But defense lawyers said they haven't had time to dig into the government's 5 million pages of documents and need weeks before they even know when they can be prepared for trial.
Mike Sokolow, the public defender appointed to handle Stanford's case, officially withdrew Wednesday. Schaffer, a private lawyer also appointed, said he will stay on now that a Dallas judge overseeing a civil fraud case against Stanford and others has said an insurer can pay for their defense.
Others likely covered
Stanford's criminal co-defendants who appeared in court Wednesday — former Stanford company executives Laura Holt, Gilbert Lopez and Mark Kuhrt — also should be covered by the company insurance policy.
Costa said the fifth defendant, Leroy King, a bank regulator in Antigua, is under house arrest there and the government hopes he will be extradited in time to participate in the trial.
Stanford was thinner than in previous appearances. He spit blood into a water cup while sitting in court. Senior U.S. District Judge David Hittner asked Stanford if he needed attention, but he said he was all right.
“It's some sort of illness, we're not sure what,” said his lawyer, Kent Schaffer . He said his client speaks to no one but prison guards and his lawyers, and it's taking an emotional and physical toll.
Stanford has had surgery for an aneurysm in his leg since he was jailed and was hospitalized after a fight with another inmate. He is being held without bail as a possible flight risk because of international connections and ability to get funds.
Schaffer complained about Stanford's treatment in the downtown Houston Federal Detention Center, saying he's held in solitary confinement, isn't getting adequate medical attention and can't see or phone his family.
A spokesman for the federal Bureau of Prisons could not be reached for comment on that claim.
Stanford, a Texas native who has lived mostly in the Caribbean for many years, founded Houston-based Stanford Financial Group. He faces 21 counts of conspiracy, fraud, bribery and obstruction of justice.
He and co-defendants are accused of cheating investors who bought certificates of deposit issued by Stanford International Bank on the Caribbean island of Antigua, and sold through Stanford Financial Group companies.
Three of Stanford's codefendants are free on bail and wore street clothes for Wednesday's court hearing, while their ex-boss sat nearby shackled and in green jail clothes.
Lawyers on both sides estimated the trial could take four months. Prosecutor Gregg Costa asked for a trial date no later than next October.
Research time a concern
But defense lawyers said they haven't had time to dig into the government's 5 million pages of documents and need weeks before they even know when they can be prepared for trial.
Mike Sokolow, the public defender appointed to handle Stanford's case, officially withdrew Wednesday. Schaffer, a private lawyer also appointed, said he will stay on now that a Dallas judge overseeing a civil fraud case against Stanford and others has said an insurer can pay for their defense.
Others likely covered
Stanford's criminal co-defendants who appeared in court Wednesday — former Stanford company executives Laura Holt, Gilbert Lopez and Mark Kuhrt — also should be covered by the company insurance policy.
Costa said the fifth defendant, Leroy King, a bank regulator in Antigua, is under house arrest there and the government hopes he will be extradited in time to participate in the trial.
Saturday, 26 September 2009
Stanford Seeks Reversal of Two Court Orders to Sell Assets
R. Allen Stanford, accused by the U.S. of leading a $7 billion fraud scheme, is seeking reversal of two court rulings allowing a receiver to sell assets from the Texas financier’s private equity portfolio.
Stanford’s attorneys yesterday filed papers with the federal court in Dallas signaling their intent to appeal trial court Judge David Godbey’s Aug. 25 rulings enabling the receiver to sell Stanford’s stakes in a Houston luxury hotel development and two Israeli development funds.
The U.S. Securities and Exchange Commission sued Stanford in February, claiming he and two business associates led a “massive” fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd.
The Dallas court then appointed attorney Ralph Janvey as receiver for Stanford’s businesses, authorizing him to marshal the financier’s assets to repay investors. Janvey in July asked the court to approve his sale of the private equity holdings.
The receiver asked for, and received, permission to liquidate Stanford’s shares in Midway CC Hotel Partners LP for $2.7 million plus the assumption of obligations of Stanford Venture Capital Holdings Inc., which the receiver said included a pending $4.5 million capital call.
Janvey also obtained Godbey’s permission to sell for $4.1 million of Stanford’s $14.3 million stake in the Israeli development funds to avoid $2.5 million in past-due capital calls and another $61 million in future commitments.
‘Not Prudent’
Attorneys for the financier opposed the sale plans, arguing they weren’t in the best interests of the receivership estate.
“Liquidating the investments now, while they remain immature and/or are showing negative returns, is not financially prudent,” Ruth Brewer Schuster, Stanford’s civil lawyer, said in a July 24 court filing opposing the sale of the Israeli funds.
“We believe the appeal is without merit,” Kristie Blumenschein, a spokeswoman for Janvey, said in an e-mailed response to questions.
Stanford, who has also been indicted on criminal fraud charges, has denied all allegations of wrongdoing. He is being held without bail pending a trial which could be more than one year away.
The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas
Stanford’s attorneys yesterday filed papers with the federal court in Dallas signaling their intent to appeal trial court Judge David Godbey’s Aug. 25 rulings enabling the receiver to sell Stanford’s stakes in a Houston luxury hotel development and two Israeli development funds.
The U.S. Securities and Exchange Commission sued Stanford in February, claiming he and two business associates led a “massive” fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd.
The Dallas court then appointed attorney Ralph Janvey as receiver for Stanford’s businesses, authorizing him to marshal the financier’s assets to repay investors. Janvey in July asked the court to approve his sale of the private equity holdings.
The receiver asked for, and received, permission to liquidate Stanford’s shares in Midway CC Hotel Partners LP for $2.7 million plus the assumption of obligations of Stanford Venture Capital Holdings Inc., which the receiver said included a pending $4.5 million capital call.
Janvey also obtained Godbey’s permission to sell for $4.1 million of Stanford’s $14.3 million stake in the Israeli development funds to avoid $2.5 million in past-due capital calls and another $61 million in future commitments.
‘Not Prudent’
Attorneys for the financier opposed the sale plans, arguing they weren’t in the best interests of the receivership estate.
“Liquidating the investments now, while they remain immature and/or are showing negative returns, is not financially prudent,” Ruth Brewer Schuster, Stanford’s civil lawyer, said in a July 24 court filing opposing the sale of the Israeli funds.
“We believe the appeal is without merit,” Kristie Blumenschein, a spokeswoman for Janvey, said in an e-mailed response to questions.
Stanford, who has also been indicted on criminal fraud charges, has denied all allegations of wrongdoing. He is being held without bail pending a trial which could be more than one year away.
The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas
Tuesday, 15 September 2009
Canadian court recognizes Stanford's U.S. receiver
A court in Canada ruled that the U.S. receiver in charge of alleged swindler Allen Stanford's estate should have control of the firm's Canadian assets, a blow to the Antiguan liquidators who sought them.
Nigel Hamilton-Smith, one of the Antiguan liquidators, said in a statement on Monday that they will appeal the decision that was handed down by the Montreal Superior Court verbally on Friday.
Ralph Janvey, the U.S. receiver in the case, and the Antiguan liquidators have been battling over control of the assets of Stanford International Bank Ltd, the offshore bank that prosecutors say is at the center an alleged $7 billion fraud.
"We are gratified that the Quebec court has recognized the legitimacy of the U.S. court's order and my authority under the order," Janvey said in a statement. "We look forward to proceeding to assure that funds held by Stanford International Bank Ltd and other entities in the Stanford Financial Group are made available for a fair and equitable distribution to the victims."
Allen Stanford and others faces civil and criminal fraud charges related to an alleged Ponzi scheme. Prosecutors say Stanford used proceeds from the sale of fraudulent certificates of deposit issued by his Caribbean bank to fund his luxurious lifestyle.
Nigel Hamilton-Smith, one of the Antiguan liquidators, said in a statement on Monday that they will appeal the decision that was handed down by the Montreal Superior Court verbally on Friday.
Ralph Janvey, the U.S. receiver in the case, and the Antiguan liquidators have been battling over control of the assets of Stanford International Bank Ltd, the offshore bank that prosecutors say is at the center an alleged $7 billion fraud.
"We are gratified that the Quebec court has recognized the legitimacy of the U.S. court's order and my authority under the order," Janvey said in a statement. "We look forward to proceeding to assure that funds held by Stanford International Bank Ltd and other entities in the Stanford Financial Group are made available for a fair and equitable distribution to the victims."
Allen Stanford and others faces civil and criminal fraud charges related to an alleged Ponzi scheme. Prosecutors say Stanford used proceeds from the sale of fraudulent certificates of deposit issued by his Caribbean bank to fund his luxurious lifestyle.
Sunday, 13 September 2009
Former agent goes to court on Stanford-related charge
A former top federal drug agent appeared handcuffed in a Fort Lauderdale, Fla., federal court today, a day after he was indicted on charges related to the Stanford Financial Group fraud case.
Thomas Raffanello, who was Stanford Financial's global security director, is accused of conspiracy, destroying records and impeding a probe by the U.S. Securities and Exchange Commission into the operations of Stanford Financial, founded by Texas native R. Allen Stanford—who also faces criminal charges.
Raffanello is the former head of the U.S. Drug Enforcement Administration's Miami office.
Magistrate Robin Rosenbaum set bail at $100,000 and set Raffanello's arraignment for next Friday. .
Raffanello, 61, is the second Stanford executive to be charged in Florida by prosecutors and federal securities regulators who accuse Stanford and others of bilking investors out of more than $7 billion through a scheme involving bogus certificates of deposit.
Thursday's three-count indictment accuses Raffanello, 61, and Bruce Perraud, 42, of helping to shred documents at Stanford Financial's office in Fort Lauderdale. Their lawyers have said the men only destroyed documents after giving investigators electronic duplicates.
R. Allen Stanford, who also denies wrongdoing, is being held without bail in a Conroe jail awaiting trial on a 19-count indictment by a federal grand jury in Houston. That indictment also named three other company executives and a banking regulator in the Caribbean island nation of Antigua and Barbuda.
Another company executive was charged separately, pleaded guilty and is cooperating with prosecutors.
Thomas Raffanello, who was Stanford Financial's global security director, is accused of conspiracy, destroying records and impeding a probe by the U.S. Securities and Exchange Commission into the operations of Stanford Financial, founded by Texas native R. Allen Stanford—who also faces criminal charges.
Raffanello is the former head of the U.S. Drug Enforcement Administration's Miami office.
Magistrate Robin Rosenbaum set bail at $100,000 and set Raffanello's arraignment for next Friday. .
Raffanello, 61, is the second Stanford executive to be charged in Florida by prosecutors and federal securities regulators who accuse Stanford and others of bilking investors out of more than $7 billion through a scheme involving bogus certificates of deposit.
Thursday's three-count indictment accuses Raffanello, 61, and Bruce Perraud, 42, of helping to shred documents at Stanford Financial's office in Fort Lauderdale. Their lawyers have said the men only destroyed documents after giving investigators electronic duplicates.
R. Allen Stanford, who also denies wrongdoing, is being held without bail in a Conroe jail awaiting trial on a 19-count indictment by a federal grand jury in Houston. That indictment also named three other company executives and a banking regulator in the Caribbean island nation of Antigua and Barbuda.
Another company executive was charged separately, pleaded guilty and is cooperating with prosecutors.
Wednesday, 19 August 2009
Appellate court: Stanford criminal case stays put
An appellate court today refused to move R. Allen Stanford's criminal case to a new federal judge as the fallen billionaire requested.
A three-member panel of the 5th U.S. Circuit Court of Appeals denied the request in a one-sentence order.
Houston civil attorney Michael Sydow and Washington criminal defense lawyer Robert Luskin had asked that Senior U.S. District Judge David Hittner be removed from the case and it be moved to U.S. District Judge Vanessa Gilmore, who drew the first case against one of Stanford's codefendants. Stanford and others are accused of bilking investors in a $7 billion fraud.
“We're disappointed in the result but hopeful that Mr. Stanford will ultimately be permitted to be represented by counsel of his choice,” Luskin said Tuesday.
Luskin and Sydow argued Hittner exhibited “unexplained hostility” in refusing Sydow's request to make an appearance and in ordering that Sydow have no further involvement in the criminal case.
Sydow asked the court to consider him Stanford's lawyer for the limited purpose of receiving notices on a motion filed by Luskin's firm, Patton Boggs, which wants assurance it will be paid before it agrees to represent Stanford.
Houston criminal defense lawyer Dick DeGuerin has asked to be released from the case but Hittner has required DeGuerin stay on until another lawyer enters unconditionally on Stanford's behalf.
Today's appellate ruling came just hours after prosecutors Gregg Costa and Paul Pelletier asked the court to deny Stanford's request to move the case. They said the request for appellate intervention was premature and that allowing attorneys into the case conditionally would cause delay.
The prosecutors said Hittner did not display bias against Sydow and that the matter of fees could be resolved in other courts.
Stanford has not been able to pay his lawyers because his personal assets were frozen along with his company's assets in a civil suit filed in Dallas by the Securities and Exchange Commission. Attorneys for several Stanford-related entities and individuals are attempting to be paid through unfrozen assets or an insurance policy.
A three-member panel of the 5th U.S. Circuit Court of Appeals denied the request in a one-sentence order.
Houston civil attorney Michael Sydow and Washington criminal defense lawyer Robert Luskin had asked that Senior U.S. District Judge David Hittner be removed from the case and it be moved to U.S. District Judge Vanessa Gilmore, who drew the first case against one of Stanford's codefendants. Stanford and others are accused of bilking investors in a $7 billion fraud.
“We're disappointed in the result but hopeful that Mr. Stanford will ultimately be permitted to be represented by counsel of his choice,” Luskin said Tuesday.
Luskin and Sydow argued Hittner exhibited “unexplained hostility” in refusing Sydow's request to make an appearance and in ordering that Sydow have no further involvement in the criminal case.
Sydow asked the court to consider him Stanford's lawyer for the limited purpose of receiving notices on a motion filed by Luskin's firm, Patton Boggs, which wants assurance it will be paid before it agrees to represent Stanford.
Houston criminal defense lawyer Dick DeGuerin has asked to be released from the case but Hittner has required DeGuerin stay on until another lawyer enters unconditionally on Stanford's behalf.
Today's appellate ruling came just hours after prosecutors Gregg Costa and Paul Pelletier asked the court to deny Stanford's request to move the case. They said the request for appellate intervention was premature and that allowing attorneys into the case conditionally would cause delay.
The prosecutors said Hittner did not display bias against Sydow and that the matter of fees could be resolved in other courts.
Stanford has not been able to pay his lawyers because his personal assets were frozen along with his company's assets in a civil suit filed in Dallas by the Securities and Exchange Commission. Attorneys for several Stanford-related entities and individuals are attempting to be paid through unfrozen assets or an insurance policy.