SEC lifts suspension for Dallas attorney accused of helping Stanford’s $7 billion fraud avoid detection

By Michael Lindenberger
mlindenberger@dallasnews.com

Shown here in 2002, former SEC enforcement official Spencer Barasch has been reinstated to practice law before the Security and Exchange Commission, about one year after he was suspended. Government officials say he helped steer investigators the other way when convicted schemer R. Allen Stanford was defrauding investors of $7 billion.

The Dallas lawyer accused by the U.S. Department of Justice’s inspector general of single-handedly using his position at the Securities and Exchange Commission to let R. Allen Stanford get away with defrauding investors of $7 billion is free to practice law again before the SEC.

Spencer Barasch worked 17 years for the SEC, including seven years as its chief of enforcement at the division office located in Fort Worth. After he resigned in 2005, he began representing Stanford before the SEC.

The inspector general’s report concluded that over the years as enforcement chief he had repeatedly denied federal investigators’ pleas to investigate suspicious aspects of Stanford’s offshore investment accounts, which later were determined to have been frauds.

Barasch denied wrongdoing at the time. He paid $50,000 to the Department of Justice to settle civil claims alleging impropriety.

Stanford was indicted in 2009 and convicted last year. He is serving a 110-year sentence in federal prison.

Last year, the SEC suspended Barasch from practicing before the commission, and said he could apply for readmission in one year. Barasch’s attorney released a statement at the time saying that Barasch had accepted the suspension to save on legal bills.

Barasch was head of enforcement for the SEC’s Fort Worth office from 1998 to April 2005. After leaving the government, he represented Stanford before the SEC in 2006.

A 2010 article in The Dallas Mornings News about the inspector general’s report included this anecdote:

In 2005, the report said, an SEC staff attorney presented the agency’s latest findings at a regional meeting of securities law enforcers attended by Barasch. The audit showed growing concern that the alleged Ponzi scheme was growing and putting billions of dollars at risk.
During the presentation, Barasch was said to look “annoyed.” Afterward, he reportedly told the attorney he had “no interest” in bringing action against Stanford.
“I thought I’d turned in a good piece of work and was talking about it to significant players in the regulatory community,” Victoria Prescott, the attorney, said in the report. “And I no sooner sit down, shut up and the meeting ended, but then I got pulled aside and was told this has already been looked at and we’re not going to do it.”

Some former colleagues defended him, however, with one telling The News that, at worst, he had used bad judgment.

SEC Order reinstating Spencer Barasch by Michael Lindenberger

SEC Order reinstating Spencer Barasch by Michael Lindenberger

Read More: http://sivg.org.ag/topic189.html

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Louisiana officials want release of SEC report in Stanford case

A Louisiana senator told officials of the Securities and Exchange Commission Friday that he wants immediate release of a year-old report by the commission's inspector general on efforts to recover money for victims of a multibillion-dollar fraud. 

U.S. Sen. David Vitter, R-La., described as incompetent efforts by a court-appointed receiver to find and distribute assets of convicted con man Robert Allen Stanford. 

Stanford, 63, of Houston, is serving a 110-year prison sentence for a fraud conviction that followed estimated worldwide losses of approximately $7 billion. About $1 billion of those losses were from about 1,000 investors in the Baton Rouge, Lafayette and Covington areas, according to estimates by state Sen. Bodi White, R-Central, and Baton Rouge attorney Phillip W. Preis.

 "The fraud caused an absolute tragedy for many Louisiana families who invested their hard-earned retirement savings in good faith that it would be there for them when they retired,"

Vitter said Friday in a letter to Mary Jo White, who chairs the SEC. Vitter said the receiver in the case, Dallas attorney Ralph Janvey, spent $100 million to collect $55 million for Stanford's victims.

 "In the best light, Janvey's actions can only be seen as incompetent," Vitter told White in that letter. He urged White to release the SEC inspector general's report on Janvey, noting that it was completed in March 2012.

 There are more than 20,000 Stanford victims across more than 100 countries.

 A retired Zachary couple, Louis and Kathy Mier, saw $240,000 of their savings stolen by Stanford's fraudulent scheme.

 "Whatever any of our congressmen do to shed light on the truth of what happened, and whatever they can do to help us get our money back and be whole again, would make Louis and me very, very happy," Kathy Mier said Friday.

 John J. Nester, a spokesman for the SEC, said in an email Friday that neither he nor other SEC officials would comment on Vitter's request before White issues a response to the senator's letter.

 U.S. Sen. Mary Landrieu, D-La., released a statement through her staff: "The Stanford victims deserve answers, and the immediate release of the IG's report is the very least the SEC can do."

 U.S. Rep. Bill Cassidy, R.-Baton Rouge, said through his staff: "I strongly urge the SEC … to release the full results of the inspector general's report. The victims of this crime were hard working Louisiana families, and they are entitled to see the details of the report."

 Vitter noted that Janvey, against the SEC's wishes, unsuccessfully sued some Stanford victims in an effort to seize money those victims retrieved before Stanford's operations were shut down in February 2009.

 "Given the demonstrated incompetence of the court-appointed receiver, it makes you wonder how bad this (inspector general's) report gets," Vitter added. "The Stanford victims deserve to see."

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Victims Check your claims!!

I was recently contacted by several victims asking for help regarding their claims with Janvey - or the company that is dealing with the claims (Gilardi) for Janvey.

They informed me that their claims had been overwritten by a law company called Butzel Long. These are victims that had submitted their own claims and they wanted to know who Butzel Long were and why they had registered a claim in their name.

After making contact with Gilardi, I was shocked to find out that my own claim had been hijacked by Butzel Long, and they had submitted claims for hundreds of victims. I explained to them that:

1) I had never heard of Butzel Long.
2) I had already submitted my own claim
3) I did not have a law firm working for me.

The information I was given was that any payment in my name would be paid to Butzel Long and it would be up to me to make contact with them and get the money transferred into my name!!!

I then went onto Google and found out that Butzel Long is a law practice in New York. I made contact with this law firm and spent several hours trying to speak to someone about why they had submitted a claim for me and the other victims that had contacted me. After many phone calls and many hours spent on the phone I had not managed to speak to anyone but the receptionist who said she had no idea who was dealing with this matter, why they had filed a claim in my name and despite repeatedly trying I had only been put through to voice mails, where I left messages. Guess what, no one bothered to phone me back and explain the situation. What I did manage to find out was that a certain Peter Morgenstern is associated with Butzel Long and it would seem that my name -along with several hundred other names - came from Peter Morgenstern.

It has taken me weeks of telephone calls, many emails and threats of legal action to get Gilardi to remove Butzel Long from my claim and make sure that any payment comes to me and not to a third party.

I also made contact with Grant Thornton who informed me that Butzel Long had also filed claims for hundreds of victims, many of whom had already filed their own claims. The difference was that Grant Thornton wrote back and said they would only consider claims from Butzel Long where the claims were accompanied with a signed declaration of consent.

I would advise anyone who has ever made contact with Peter Morgenstern or any other lawyer to check with Gilardi and make sure that they have not hijacked your claim. Remember these lawyers do notwork for free and if they have submitted a claim on your behalf, they will not be doing it for free!!

YOU HAVE BEEN WARNED!!

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Stanford Victim Penny-a-Dollar Payment Plan Goes to Judge

By Thomas Korosec, Andrew Harris & Laurel Brubaker Calkins - Apr 11, 2013 8:12 PM GMT-0400

R. Allen Stanford’s investors may recoup some of their losses more than four years after the Stanford Group Co. founder was sued by the U.S. Securities and Exchange Commission and put out of business.

Ralph Janvey, the receiver appointed by a federal judge in 2009 to marshal and liquidate Stanford’s personal and business assets, today asked permission to make a $55 million interim distribution to about 17,000 claimants, or about 1 cent for each of the $5.1 billion lost in the fraud scheme.

“We will follow it up in a subsequent distribution as the money comes in,” Janvey’s attorney, Kevin Sadler of Baker Botts LLP, told U.S. District Judge David Godbey today in Dallas.

The proposed payout would trail the more than $5.4 billion paid to victims of Bernard L. Madoff, who was arrested in December 2008; about $4.9 billion paid clients of the MF Global Inc. brokerage after its parent MF Global Holdings Ltd. failed in October 2011; and the $123 million interim distribution for victims of Peregrine Financial Group Inc. founder Russell Wasendorf, who prosecutors last year said stole $215 million.

“No distribution plan can satisfy every claimant,”Janvey’s lawyers said in a Feb. 12 court filing. “But the receiver’s interim plan, which drew only three objections from thousands of claimants, comes remarkably close.”

Cross-Border Protocol

Godbey didn’t rule today on Janvey’s bid for payment plan approval. The judge granted a request to approve the Cross-Border Protocol, a cooperation agreement between the Dallas court-appointed receivership and U.S. authorities on one side, and Antiguan court-appointed liquidators of Stanford assets outside the U.S. on the other. That approval could boost investors’ final recovery.

“The court finds the motion to be well-taken,” Godbey said in a two-page order. He heard more than two hours of argument this morning.

A federal jury in Houston last year found Stanford, 63, guilty of lying to investors about the nature and oversight of certificates of deposit issued by his Antigua-based bank. The jurors decided he must forfeit $330 million in accounts seized by the U.S. government.

Sentenced to 110 years in federal prison, Stanford has appealed the verdict.

Godbey today asked Sadler whether it was proper to distribute Stanford’s money before entering a final order in the SEC case against the financier and his businesses.

No Precedent

No legal precedent requires Godbey to first issue such a ruling, Janvey’s lawyer replied. He also told the judge that in a prior decision he said “not a nickel” of the money recovered by the receiver from Stanford entities was not taken by fraud.

One objection to the payout plan came from the law firm Curtis, Mallet-Prevost, Colt & Mosle LLP. A lawyer for the firm, Myles Bartley, told the judge today that it’s owed $1.4 million for work done for Stanford entities and isn’t included in the first group of distributions.

Sadler said there would be enough funds to resolve those claims even if the judge approved the proposed payment plan.

In an e-mailed statement, Sadler called the judge’s ruling today “a significant milestone” in the receivership’s effort to get money to Stanford fraud victims.

Godbey’s order requires the Janvey receivership and the Antiguan liquidators to “perform in accordance with their rights and obligations as outlined in the settlement agreement.”

Long Dispute

Lawyers for both factions battled for months for control of $300 million of Stanford assets outside the U.S.

“So long as it continues, millions of dollars in assets that could otherwise be distributed to victims of the Stanford Ponzi scheme will remain tied up in the courts,” Sadler told Godbey in a filing last month.

The liquidators, Grant Thornton International Ltd. accountants Hugh Dickson and Marcus Wide, joined in the approval request through a separate filing.

For dropping their dispute with Janvey and the U.S. Justice Department, the Antiguan liquidators will receive fees of $36 million from Stanford’s frozen funds in the U.K., according to a statement jointly released by both receivers on March 12. The Antiguan liquidators already have received $20 million from the U.K. accounts.

About $23 million in Canadian funds and $132.5 million in Swiss funds will be transferred to the Justice Department and Janvey for distribution to investors through a system the U.S. receiver is establishing, according to the joint statement.

‘Ransom’ Payment

Angie Shaw, a founder of the Stanford Victims Coalition, has denounced the agreement as “ransom” that rewards the Antiguan liquidators at the investors’ expense.
(Comment from Kate...I see Shaw is still opposing anything and everything that does not support her SIPC claim. She has always opposed this agreement because she told me it could interfere with her SIPC claim. So thanks Shaw for putting your own wants and needs before those of the victims. Clearly when the Joint Liquidators are successful in getting money from the banks, I take it Shaw will not want any!!)

“There is no Plan B,” Sadler told the judge.

Edward H. Davis Jr., an attorney for the liquidators, told Godbey today that an Antiguan court approved the agreement this week.

He said the agreement funds a “war chest” for the liquidators to further pursue lawsuits.

“The Joint Liquidators are pleased to have obtained the approval of the settlement from the High Court in Antigua this past Monday,” Davis said today in an e-mailed statement.

Attorneys representing law firms already defending suits filed by Janvey in the U.S. objected to the accord, arguing that it would result in more litigation offshore.

“There is obviously a jurisdictional issue,” Godbey said.“There is no getting around it.”

Fees Paid

Janvey’s professionals had been paid $63.3 million in fees and expenses as of Feb. 7, according to his most recent status report. That represents about a quarter of the $230.2 million Janvey has recovered for the estate. He has paid out $53.3 million more in costs to wind up Stanford’s business interests.

Shaw couldn’t immediately be reached for comment on Godbey’s ruling this afternoon. Peter Morgenstern, an attorney who serves on the official Stanford Investors Committee, also didn’t immediately reply to voice-mail and e-mail requests for comment.

An additional $4.1 million in Stanford-related assets have been identified in an account held by Pershing LLC, according to a court filing by Sadler yesterday seeking an order for the turnover of those funds.

The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston).

To contact the reporters on this story: Tom Korosec in the Dallas federal courthouse at tkorosec@texaswordworks.com; Andrew Harris in the Chicago federal courthouse at aharris16@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net. 

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Antiguan Courts Ratify Agreement Between Janvey & GT

Good news for ALL victims!! 

Today I attended the Antiguan courts with Marcus Wide, Edd Davis and four other lawyers.

I am pleased to inform you that the agreement between the parties has been ratified by the Antigua courts. Let us all hope that when the agreement goes before judge Godbey later this week no individuals attempt to block this agreement which has the support of the vast majority of victims.

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Eighty-nine investors defrauded by imprisoned financier Robert Allen Stanford are seeking $115 million from seven insurance companies in addition to claims that could total as much as $1 billion against the Louisiana Office of Financial Institutions and SEI Investments Co. 

Stanford, who was indicted by a federal grand jury for frauds exceeding $7 billion, is currently serving 115 years behind bars.


According to reports emanating out of the United States, six of the insurers responded earlier in March by transferring the investors’ four-year-old state court suit to Baton Rouge federal court, action the investors have fought hard in the past.


“We feel confident that this case should not be removed to federal court, because the state court has already ruled on it and granted the investors class-action status,” said Phillip W Preis, Baton Rouge attorney for the investors.


The investors sued OFI and Pennsylvania-based SEI in 19th Judicial District Court in Baton Rouge in 2009. That was soon after the Securities and Exchange Commission shut down Stanford’s worldwide operations and alleged his investment programme was nothing more than a fraudulent scheme.


However, a federal judge in Dallas, where the SEC had filed its complaint, yanked the Louisiana investors’ suit into his Texas court and then dismissed the case, a US online news site, The Advocate, reported.


It added that the Dallas judge ruled in 2011 that the Baton Rouge investors’ suit violated a Securities Litigation Uniform Standards Act prohibition against state court litigation that could negatively affect the nation’s financial markets.


Last year, however, a three-judge panel of the US 5th Circuit Court of Appeals overruled the Dallas judge and concluded that investors could pursue recovery of their losses in Baton Rouge state court.


“That returned the investor claims to state District Judge Michael Caldwell, who held hearings on disputed allegations that OFI knew of Stanford’s misdeeds and should have warned investors, as well as a complaint that SEI ignored a duty to tell investors that Stanford’s assets were grossly overvalued,” The Advocate reported.


“Caldwell issued a judgment last year that certified the investors’ suit as a class action, meaning that all people who lost investments at Stanford Trust Co’s Baton Rouge office could join the suit as plaintiffs against SEI, OFI, and now SEI’s seven insurers.”


Caldwell has not yet scheduled a trial for the case, The Advocate said.

The US Supreme Court has agreed to hear arguments on appeals of related Stanford investor cases in October.


The six insurers that transferred the dispute last month to US District Judge James J Brady are: Allied World Assurance Co (US) Inc, Continental Casualty Co, Arch Insurance Co, Indian Harbor Insurance Co, Nutmeg Insurance Co, and certain underwriters at Lloyd’s of London.


Those insurers told Brady a seventh firm - Endurance Specialty Insurance Ltd of Bermuda - did not join their motion because Endurance officials had not yet been served with a copy of the investors’ suit.



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Important Announcement Concerning Stanford Receivership

The Joint Liquidators (JLs) Marcus Wide and Hugh Dickson of the Stanford International Bank, Ltd. (SIB) and the U.S. Receiver for Stanford Financial Group and all related entities (Receiver), have entered into a Settlement Agreement and Cross-Border Protocol (Settlement Agreement) with one another, the U.S. Examiner, John Little, the Official Stanford Investors Committee (OSIC), the U.S. Department of Justice (DOJ), and the Securities and Exchange Commission (SEC).  The Advisory Creditors Committee of the Liquidation of SIB has also voted to give its approval to the Settlement Agreement. 

Among many other benefits, the Settlement Agreement resolves litigation over approximately $300 million in assets frozen in Canada, Switzerland and the United Kingdom, and creates a unified plan among the JLs, the Receiver, and the DOJ to expedite the handling and distribution of those assets to creditor-victims. 

The Settlement Agreement will only become effective after it has been approved by courts in the US, Antigua, and the U.K.  On March 12, 2013, the Receiver, SEC, Examiner, and Official Stanford Investors Committee filed a Joint Motion to Approve the Settlement Agreement in the U.S. District Court for the Northern District of Texas. Responses to the Joint Motion must be filed no later than  March 28, 2013 at 5:00 p.m. central and the Court will hold a hearing on the Joint Motion on Thursday, April 11, 2013 at 9:00 a.m. central    The text of the Court's Order setting the response deadline and hearing is set forth  below.   Anyone considering filing a response to the Joint Motion or appearing in the U.S. District Court in relation to the motion should consult with their own legal counsel.

After all three courts have approved the Settlement Agreement, it will become effective and pursuant to the terms of the Settlement Agreement the parties will pursue the release of funds via appropriate legal processes in the respective countries, including Canada and Switzerland.  The Settlement Agreement has several benefits, including that it:

• creates a plan for the distribution of almost 90% of the frozen assets from the U.K., Canada, and Switzerland pursuant to which distributions will be made as soon as the necessary approvals are obtained from the pertinent authorities in those countries;
• allocates $36 million of the funds in the U.K. to the JLs’ estate in order to pursue additional funds for the estate, to be released over time under the supervision of the Central Criminal Court in London, which the JLs expect to significantly enhance amounts available for distribution because those funds will be used to further additional asset recovery efforts.  The remaining $44 million of the funds in the U.K. will be distributed to creditor-victims by the JLs;
• allocates in Canada all $23 million to the DOJ to be transferred to the Receiver to be distributed to creditor-victims;
• allocates in Switzerland $132.5 million to be forfeited to the DOJ and transferred to the Receiver to be distributed to creditor-victims and $60.5 million to be transferred to the JLs for distribution to victims;
•   provides that distribution of the frozen funds shall be made to creditor-victims of SIB and not to other claimants such as the Internal Revenue Service or the Antiguan government;

• provides a framework for the sharing of information among the JLs, the Receiver, and OSIC to achieve efficiencies, minimize burdens, and maximize recoveries in Stanford-related litigation;
• facilitates cooperation and coordination of efforts with respect to litigation and recovery and monetization of Stanford assets;
• provides for coordination of claims and distribution processes between the JLs and the Receiver; and
• terminates the substantial expense of competing legal claims to, and proceedings relating to, the frozen assets in Canada, the U.K., Switzerland, and the US.

The Settlement Agreement is a product of the parties’ common goal of optimizing and enlarging the overall recovery for creditor-victims as quickly and cost-effectively as possible.  The parties to the Agreement all believe that the Agreement is in the best interests of the victims of the Stanford fraud.   

Further information, including a copy of the Agreement, the Joint Motion to Approve the Agreement, and a Q&A about the Agreement, are available on the U.S. Receiver’s website at http://stanfordfinancialreceivership.com.  Further information is also available on the JLs’ official website at http://www.sibliquidation.com, and on the Examiner’s website http://www.lpf-law.com/.   

Text of March 18, 2013 Order of the U.S. District Court for the Northern District of Texas:

The Court will hold a hearing on the Receiver's motion for approval of interim distribution plan [1766] and the SEC, Receiver, Examiner, and Official Stanford Investors Committee's joint motion to approve settlement agreement and cross-border protocol (the "Joint Motion") [Doc. 1793 in  SEC v. Stanford, 09-CV-298, Doc. 189 in In re Stanford International Bank, 09-CV-721] on Thursday, April 11, 2013 at 9:00 a.m. in Courtroom 1505. The time for parties to these actions to respond to the Receiver's motion for approval of interim distribution plan has lapsed, see N.D. TEX. R. CIV. P. 7.1(e), and the Court will not entertain any further responses or objections from those parties. Parties who wish to file a response to the Joint Motion must do so no later than March 28, 2013 at 5:00.  Nonparties, including but not limited to investors or other potential claimants, may file written comments or objections to either motion, also no later than March 28, 2013 at 5:00 p.m.  The Receiver may file a reply to those responses, comments, or objections no later than April 5, 2013 at 5:00 PM. During the hearing, the Court will not entertain comments, objections, or argument from parties or nonparties that failed to file written responses, comments, or objections. 

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Investors in $7B swindle by ex-tycoon R. Allen Stanford may finally get back some losses

HOUSTON — Investors in a $7 billion Ponzi scheme orchestrated by former Texas tycoon R. Allen Stanford could finally begin getting back some of what they lost in the next few months, after a recovery process that has dragged on for more than four years.

 Investors — some of whom lost their life savings — will see only a pittance of what they put into the scheme. But the process got a boost this week as parties that had been battling each other for control of about $300 million in frozen foreign bank accounts and other assets once owned by Stanford reached an agreement to work together.

 “The freeing up of funds ... is a good thing,” Angela Shaw, a Dallas-area woman who founded the Stanford Victims Coalition after three generations of her family lost $4.5 million in the fraud, said Friday.

 In a Ponzi scheme, money from new investors is used to pay old ones. Prosecutors said Stanford persuaded investors to buy certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua then used the money to fund a string of failed businesses, bribe regulators and pay for his lavish lifestyle. Stanford, 62, was convicted last year on 13 fraud-related counts and sentenced to 110 years in prison.

 Stanford’s financial empire once spanned from the U.S. to Latin America and the Caribbean. In the wake of its collapse, a U.S. judge in Dallas and an Antiguan court both appointed people to try to recover assets. The U.S. Justice Department also undertook its own effort.

 This week’s agreement consolidates the efforts to take control of assets frozen in Canada, Switzerland and the United Kingdom.

 “Without the ... agreement, the (parties) will be forced to expend substantial time, energy and money fighting over the Stanford assets,” attorneys for Ralph Janvey, the receiver appointed by a judge in Dallas to oversee the recovery efforts, wrote in a court motion filed this week.

 Edward Davis Jr., one of the attorneys for the Antiguan liquidators, said the agreement is the “beginning of relationship that allows for everyone to be rolling in the same direction.”

 British retiree Kate Freeman, who lost $820,000 in Stanford’s scheme, said she believes the agreement is a positive step.

 “This will help all of the victims,” Freeman said in a telephone interview from her home in Antigua. “This will put a little bit of money in everyone’s pocket.”

 Freeman said the agreement will provide the liquidators in Antigua needed funds to pursue lawsuits against individuals and organizations who aided Stanford’s fraud.

 The first distribution to investors will probably come from the U.S. receiver, who in January announced a plan to make an initial distribution of $55 million. That plan is still waiting for approval by a federal judge, but that could happen within the next month or two, officials say.

 As of the end of January, Janvey had collected more than $230 million. But he had also racked up more than $119 million in fees and expenses, leaving about $111 million for investors.

 Investors have criticized the amount of fees and expenses that have been tallied by the recovery process. Attorneys for Janvey have defended the expenses, saying the collapse of Stanford’s business empire required an expensive clean up.

 The Antiguan liquidators have retained control of about $227 million in assets, mostly in land once owned by Stanford, Davis said. That money won’t be available for distribution until the land is sold.

 The initial distribution from the liquidators will likely come by this summer from funds recovered from the United Kingdom, he said.

 The amount investors will ultimately get back is expected to be small — probably about 1 percent of what they put in.

 “If you’ve saved your whole life and invested $300,000, you are only getting back $3,000,” Shaw said. 

Andrew Stoltmann, a Chicago-based attorney who specializes in investment fraud, said such small recoveries are the norm.

 “Unfortunately these sorts of recoveries are kind of the nature of the beast when it comes to Ponzi schemes,” he said.

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KLS Stanford Update March 2013

Stanford Update March 2013 

 Dear Stanford Clients: This update will summarize recent events in the Stanford matters over the past several weeks.

 SEC Litigation 

 In our last update, we notified you that the magistrate judge in our SEC class action denied the Government's request to stay all discovery. We are summarizing here the outcome of the discovery hearing which was held in Miami on February 14, 2013. One of the key hurdles to overcome in an action against the Government is the discretionary function exception. The magistrate made clear that this hurdle has been overcome and the court had already ruled on the sovereign immunity issue. The magistrate also held that "it is not obvious that [the Government's second motion to dismiss] will succeed." A copy of this ruling is attached for your review. Following this ruling, we have moved forward with discovery and we continue to wait for the district court to rule on the Government's second motion to dismiss.

 In view of the delays caused by the Government's motion to stay discovery, we requested that the Court push back certain pre-trial and trial deadlines to allow us adequate time to pursue the discovery required to prove our case. We are happy to report that the Court granted our request and pushed back discovery deadlines to afford us this opportunity, which also resulted in a new trial date set for April 7, 2014.

 Potential NAFTA Action

 We have also recently become aware of a potential new action being pursued by Peter Morgenstern on behalf of Mexican investors. Apparently, Mr. Morgenstern intends on filing a private arbitration against the United States under the arbitration provisions of NAFTA. It appears that participation in this arbitration by Mexican investors may result in your inability to participate in our SEC class action. Please note that there are three key issues to keep in mind as you consider joining this litigation: (1) the timeline and pressure being imposed on investors to make this decision appears unfair; (2) as far as we know, such an action has never previously been taken and therefore no precedent exists for it; and (3) as far as your SEC action is concerned, you may be precluded from participating in the class action and may be considered an opting out of the class action in which you have already invested time, money and resources.

 First, we do not know of any successful action against the United States for failure to provide fair and equitable treatment to foreign investors under circumstances similar to the Stanford Ponzi scheme. This is an untested and speculative theory for recovery which could disqualify you from participating in our action. Our action has already overcome the key initial hurdle and has a defined path towards a successful verdict. Moreover, discovery in arbitration is far more limited than discovery in our pending action. We know from our case that, in order to overcome the Government's position on these claims, extensive discovery is necessary. We do not believe that the procedural intricacies of a NAFTA international arbitration, including the limited means of discovery, provide the best avenue for recovery against the Government. We believe the risk of being disqualified from participating in our SEC action outweighs the potential for obtaining a successful judgment against the Government in the NAFTA international arbitration.

 Claims 

 In the meantime, we have been working with many of our clients who have received determination notices from the Stanford Receiver regarding the claim amount. We have assisted our clients in objecting to those determinations if they were less than the total claimed amount, and we will continue to assist any and all clients who would like us to review their claims determination and provide advice. Should you have any questions, please do not hesitate to contact us.

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Settlement Agreement and Cross-Border Protocol Q and A

When will money be distributed?

The date when distributions will be made is presently unknown. Although the Receiver, the Joint Liquidators, and the Department of Justice have reached agreement regarding the disposition of the international Stanford assets, the assets remain in control of authorities in the U.K., Switzerland, and Canada. The parties will work together to encourage these authorities to release the assets quickly upon approval of the agreement so that money may be distributed to creditor-victims as soon as possible.

What was the cause for the delay in reaching a final agreement after the agreement in principle was announced?

The settlement agreement is a six-party agreement that deals with assets and related litigation in five different jurisdictions. As a result, the drafting of the agreement was a lengthy process, requiring consultation with attorneys and authorities in numerous jurisdictions. Once the agreement was drafted, all parties to the agreement carefully evaluated the agreement, considering all possible implications of finally approving its terms. Because of the importance of the issues covered by the settlement agreement, the final deliberative phase of the process was necessarily lengthy. The length of time needed to complete the settlement agreement is ultimately a reflection of the degree of care all parties exercised in preparing and finalizing the agreement.

Why is $36 million being reserved for working capital?

The settlement agreement allocates $18 million to the Antiguan liquidation estate primarily to fund litigation that the parties believe will have a substantially positive return for the Antiguan liquidation estate. An additional $18 million may also be allocated for working capital, including litigation funding, if necessary. This working capital cannot be used to fund any litigation adverse to any other party to the definitive agreement. Further, every effort will be made to minimize the amount actually used for working capital, and any funds not actually used for working capital will be released for distribution to creditor-victims.

What is the status of the $20 million that was previously loaned to the Antiguan liquidation estate from the U.K. Central Criminal Court?

The $20 million, which came from Stanford assets in the U.K., was advanced to the Antiguan liquidation estate during the pendency of the dispute over control of those assets. The funds have been spent to cover expenses of the Antiguan liquidation estate, which was the purpose for which they were advanced by the Central Criminal Court. Because the Settlement Agreement places control of the U.K. assets with the Antiguan Joint Liquidators, the Settlement Agreement extinguishes the obligation to repay the loan.

Who will receive money from the distribution?

The international assets covered by the settlement agreement will be released only to creditor-victims of the Stanford fraud scheme. No other claimant will receive a distribution from the pool of international assets. Therefore, claimants such as the United States Internal Revenue Service and the Government of Antigua and Barbuda will be excluded from the distribution of the international Stanford assets.

What do claimants need to do to become eligible for a distribution by the Receiver from the international assets covered by the settlement agreement?

The Receiver will distribute funds from the international assets to eligible claimants who submitted claims to the Receiver on or before September 1, 2012, which was the deadline set by the United States District Court for the Northern District of Texas for submitting claims to the Receiver. Claimants do not need to take any further action at this time to become eligible for a distribution of funds from the international assets.

Why aren't the Joint Liquidators and the Receiver making a single, joint distribution?

The Receiver and the Joint Liquidators are each charged by their appointing courts with making a distribution of assets from their respective estates. The laws applicable to their respective distributions are similar but not identical. Therefore, it is impractical to have a single, joint distribution. However, the Joint Liquidators and the Receiver have agreed to coordinate their efforts to the maximum extent possible to minimize duplication.

Will this agreement end all litigation between the Receiver and the Joint Liquidators?

The agreement will resolve all current disputes between and among the Receiver, the Joint Liquidators, and the Department of Justice concerning the international Stanford assets. It is anticipated that further court proceedings may be required before all international assets are released for distribution. However, the Receiver, the Joint Liquidators, and the Department of Justice have agreed to work in concert in any such proceedings to ensure that assets are released for distribution as quickly and expeditiously as possible.

What has to happen before the settlement agreement is fully and finally approved?

The settlement agreement will be presented to the US federal court in Dallas, the court in Antigua and Barbuda, and to the Central Criminal Court in London. Once all of those courts have approved the settlement agreement, the agreement will become effective.

Will creditors be permitted to state their views concerning the settlement agreement prior to review of the agreement by the courts?

Yes. The Receiver, the Joint Liquidators, the Examiner, and the Official Stanford Investors Committee each invite Stanford creditors to contact them and express their views, whether favorable or unfavorable, concerning the settlement agreement. Creditors are also encouraged to file any objections to the settlement agreement with the courts in the United States and Antigua and to attend the hearings regarding approval of the settlement agreement. The Receiver, the Joint Liquidators, and the Examiner will post notice on their respective websites regarding the date and locations of those hearings, as well as the deadlines for filing objections to settlement approval. Creditors considering filing an objection or appearing in court should consult with their own legal counsel.

How will the Receiver, the Joint Liquidators, and the Official Stanford Investors Committee handle asset recovery litigation in the future?

In general, the Receiver, the Official Stanford Investors Committee, and the Joint Liquidators will continue to handle litigation in the jurisdictions where they have already been recognized. The Receiver, the Official Stanford Investors Committee, and the Joint Liquidators will share information and coordinate their efforts when possible in an effort to maximize recoveries for victims of the Stanford fraud.


For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum

 

 

Stanford International Bank Joint Liquidators, U.S. Stanford Receiver, Examiner, Official Stanford Investors Committee, DOJ, and SEC Sign Settlement Agreement and Cross-Border Protocol

Stanford International Bank Joint Liquidators, U.S. Stanford Receiver, Examiner, Official Stanford Investors Committee, DOJ, and SEC Sign Settlement Agreement and Cross-Border Protocol

DALLAS, TX, March 12, 2013 The Joint Liquidators (JLs) Marcus Wide and Hugh Dickson of the Stanford International Bank, Ltd. (SIB) and the U.S. Receiver for Stanford Financial Group and all related entities (Receiver), announced today that they have entered into a Settlement Agreement and Cross-Border Protocol (Settlement Agreement) with one another, the U.S_ Examiner, John Little, the Official Stanford Investors Committee (OSIC), the U.S. Department of Justice (DOJ), and the Securities and Exchange Commission (SEC). The Advisory Creditors Committee of the Liquidation of SIB has also voted to give its approval to the Settlement Agreement.

Among many other benefits, the Settlement Agreement resolves litigation over approximately $300 million in assets frozen in Canada, Switzerland and the United Kingdom, and creates a unified plan among the JLs, the Receiver, and the DOJ to expedite the handling and distribution of those assets to creditor-victims.

The Settlement Agreement will only become effective after it has been approved by courts in the US, Antigua, and the U.K. When the Agreement is presented to the US court and the Antiguan court for approval, victims will have the opportunity to appear and express their views concerning the Settlement Agreement. After all three courts have approved the Settlement Agreement, it will become effective and pursuant to the terms of the Settlement Agreement the parties will pursue the release of funds via appropriate legal processes in the respective countries, including Canada and Switzerland.

The Settlement Agreement has several benefits, including that it:

  • creates a plan for the distribution of almost 90% of the frozen assets from the U.K., Canada, and Switzerland pursuant to which distributions will be made as soon as the necessary approvals are obtained from the pertinent authorities in those countries;

  • allocates $36 million of the funds in the U.K. to the JLs' estate in order to pursue additional funds for the estate, to be released over time under the supervision of the U.K. Central Criminal Court, which the JLs expect to significantly enhance amounts available for distribution because those funds will be used to further additional asset recovery efforts. The remaining $44 million of the funds in the U.K. will be distributed to creditor-victims by the JLs;

• allocates in Canada all $23 million to the DOJ to be transferred to the Receiver to be distributed to creditor-victims;

• allocates in Switzerland $132.5 million to be forfeited to the DOJ and transferred to the Receiver to be distributed to creditor-victims and $60.5 million to be transferred to the JLs for distribution to victims;

• provides that distribution of the frozen funds shall be made to creditor-victims of SIB and not to other claimants such as the Internal Revenue Service or the Antiguan government;

• provides a framework for the sharing of information among the JLs, the Receiver, and OSIC to achieve efficiencies, minimize burdens, and maximize recoveries in Stanford-related litigation;

  • facilitates cooperation and coordination of efforts with respect to litigation and recovery and monetization of Stanford assets;

• provides for coordination of claims and distribution processes between the JLs and the Receiver; and • terminates the substantial expense of competing legal claims to, and proceedings relating to, the frozen assets in Canada, the U.K., Switzerland, and the US.

The Settlement Agreement is a product of the parties' common goal of optimizing and enlarging the overall recovery for creditor-victims as quickly and cost-effectively as possible. The parties to the Agreement all believe that the Agreement is in the best interests of the victims of the Stanford fraud.

Further information, including a copy of the Agreement, will be posted on the U.S. Receiver's website at http://stanfordfinancialreceivership.com, on the JLs official website at http://www.sibliquidation.com, and on the Examiner's website http://www.lpf-law.com/. Persons who believe they were victims of this fraud scheme should visit those sites for additional information. sivgadmin Posts: 21 Joined: Fri Nov 16, 2012 4:58 pm


For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum

IRS Hit Stanford Estate for $432 million

The Internal Revenue Service filed a "notice of claim" yesterday with the US District Court advising the Court that it is IRS's view that Allen Stanford is indebted to the United States for approximately $432 million in personal tax liability. The IRS intervened in the SEC's lawsuit against Allen Stanford three years ago and asserted the existence of a claim against Allen and Susan Stanford, which at that time was for approximately $226 million in personal tax liability. The U.S. District Court permitted the intervention and retained the authority to adjudicate all aspects of the IRS claim.

 

SIVG has been warning victims for years about the IRS having a claim against the Stanford estate, now we see our claims are all true.

 

Time is running out we have only two days before the JL's Grant-Thornton neet with the DoJ in Washington. Please write to the DOJ and tell them you want the money to go to Grant Thornton now before its to late!.

 

I want to see some sort of interim payout before the end of this year......if you want the same it is your duty to make the DOJ aware of how you feel.

 

 Addresses to send emails:

kondi.kleinman@usdoj.gov
reeceD@sec.gov

 

Statement Regarding DoJ Meeting Next Week

Dear Members,

The Joint Liquidators have posted responses to communications from Ms Shaw and Mr. Escalona on their website at sibliquidation.com.   These are quite lengthy and we thought it might be useful to summarise a couple of the key points, and add some comments of our own before we go to Washington DC to represent Stanford International Victims Group at the "summit" meeting between DoJ, the victims groups, the Receiver parties, and the Joint Liquidators and their Creditor Committee.

From where we sit it appears that Ms. Shaw and Mr. Escalona have joined forces to encourage the DoJ and Receiver parties to block the JL's actions to get an early release of the SIB frozen funds - preferring the "all American" solution, no matter what the cost or delay.  The DoJ intervention to freeze funds, took place at a time when the funds were not at risk as they were going to go to one of the Court appointees. In so doing they have only caused several years delay in these funds becoming available to support recovery actions and distributions to depositors without adding any value or certainty.  The JL's have been trying to get these funds released since their appointment over a year ago as they were in a position to flow the bulk of them through to depositors promptly, and use some part of them to generate further recoveries which could also have been distributed by now.  (The JL's did not press forward with their claims process as early as they might have had there been the prospect of distribution to save money in the early going.)

There is no doubt that DoJ was continually aware of Ms. Shaw and Mr. Escalona, and hearing from no other victims were able to assume these were the only victim voices. Were it not for the JL's we would not have been included in this summit, as DoJ say they were not aware of the Stanford International Victims Group, nor its site which we believe properly posts all victims views in an effort to be genuinely representative. In that context we note Ms Shaw did not post the JL's response to her open letter, and as best we can tell neither has Mr.  Escalona posted the multiple responses by the JL's to his open communications.  We are concerned that he has mostly served to "re-victimise" the victims by asking for more money on a continuing basis.

Mr. Escalona also continues to make legal pronouncements on the JL's procedures and policies.  He is not a lawyer licensed to practice any where that we can determine, and certainly not in Antigua.  We are told he has not answered the JL's on this point when they asked him directly if he was a lawyer.  He demonstrates a continuing lack of knowledge of the laws of Antigua, and binding rules implemented under those laws, and the simply has no experience with, or understanding of, the intricacies of international insolvency proceedings. Unfortunately it appears he is simply wrong on many of his pronouncements, yet to depositors who rely on him for information, his is only voice heard, which creates problems and costs for the JL's as they go about their business.  

We invite you to look at the backgrounds of the JL's team who are all specialists in fraud and international insolvency with many years experience.  The US team of lawyers, including the Receiver, the lead lawyer from Baker Botts, the Examiner and the tort lawyers on OSIC, have virtually none collectively, never mind individually, nor does the US Court running the US case, which has declined to refer the matter to the US Bankruptcy Court, where that expertise resides. Bluntly it seems to us that this is one of the biggest reasons why the JL's have not been able to come up with a cooperative protocol, as fear by the Receiver parties for their positions  prevails rather than an understanding as to how to make the tools available work for both of the Receiver and the JLs,which was the JL's aim.

We note the JLs have pledged to continue the fight to recover funds for the earliest distribution possible and ultimately in the largest amounts possible.  If any of our members have concerns or questions with respect to what the JLs are doing, it is our experience that they are very responsive to direct communication.  

Statement from Grant Thornton

Dear SIB Depositor:

We noted with great interest the 110 year sentence given to Robert Allen Stanford yesterday. While this sentence does not begin to make up for the pain and suffering that you have experienced, we are confident that justice has been served at least in that regard. We remain committed, as the Joint Liquidators of the Stanford International Bank, to run the Estate as efficiently and effectively as possible. We are working hard to marshal and liquidate assets and pursue claims on your behalf. Our goal is to make a prompt and fair interim distribution to you as soon as possible and hopefully by as early as September 30 of this year if we can convince the US Department of Justice to drop their freeze on the funds in Europe and Canada.
As always, please direct your questions to us at: stanford.claims.support@uk.gt.com.

Marcus Wide and Hugh Dickson, SIB Joint Liquidators

Control over ex-tycoon Stanford's assets at issue

By JUAN A. LOZANO, Associated Press 

HOUSTON (AP) — As former Texas tycoon R. Allen Stanford's criminal case gets ready to wind down with his sentencing Thursday for a $7 billion Ponzi scheme, the battle for control of his remaining assets around the globe still hasn't been settled.

Investors are hoping to get back some of the money that was taken from them, but those leading the efforts are at odds over who should control Stanford's frozen bank accounts and properties. They've even duplicated efforts to go after certain assets.

The legal battle over the assets has frustrated investors, who are still waiting for a payout more than three years after Stanford's businesses were shut down.

"There are people who have died while waiting for a distribution of the assets, people whose families have been left with nothing, people basically living on donations," said Luis Lopez Duran, a Venezuelan attorney who lost money in the scheme.

Prosecutors say Stanford used the money from investors who bought certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua to fund a string of failed businesses, bribe regulators and pay for his lavish lifestyle. Stanford was convicted in March on 13 of 14 fraud-related counts and could spend the rest of his life behind bars.

Stanford's financial empire once spanned from the U.S. to Latin America and the Caribbean. An Antiguan court and a U.S. judge in Dallas have both appointed people to try to recover assets. The U.S. Justice Department is also undertaking its own effort.

Ralph Janvey is the receiver appointed by a federal judge in Dallas. Since 2009, he has worked to close Stanford's various companies and sell his assets, having so far collected more than $220 million.
But Janvey has also racked up more than $108 million in fees and expenses, leaving just $112 million for investors.

Kevin Sadler, an attorney for Janvey, defended these costs, saying Stanford's empire "collapsed, it left a huge mess that has required a huge (and expensive) clean up."

Meanwhile, an Antiguan court appointed liquidators who say they have recovered or could potentially recover more than $323 million in assets for investors. But about $212 million is tied up in land once owned by Stanford that has yet to be sold.

Edward Davis Jr., one of the attorneys for the liquidators, said their process is cheaper, faster and better than the Janvey-run receivership, which he said is inefficient and too expensive.

"We are trying our very utmost to gather up assets and make claims to put money in (investors') pockets," Davis said.

The liquidators are also battling the U.S. Justice Department for control of about $330 million in frozen Stanford bank accounts in Canada, Switzerland and the United Kingdom.

In a May 3 letter, the liquidators asked the Justice Department to withdraw its claim. Davis said the liquidators are worried a large portion of these funds would not go to investors but instead be used to pay for U.S. receivership costs and claims by the Internal Revenue Service against Stanford.

In a June 4 response, Frederick Reynolds, a deputy chief with the Justice Department, suggested U.S. officials as well as Janvey and the liquidators meet to try to settle their differences.

"Continued litigation among the parties will only ensure that the total amount of money available for distribution to Stanford victims will be depleted by costs and fees incurred by the Receiver and the Joint Liquidators," he wrote.

The liquidators have said such a meeting would do no good. The Justice Department has since said if it gets control of the $330 million, it will use the Janvey-run receivership to distribute those funds to victims.

Investors, meanwhile, are divided over who should be in charge.

Richard Watson, a British citizen who lives in Antigua and lost much of his life savings, believes the liquidators should handle everything.

"Our worry is that those funds will find their way to the DOJ, from the DOJ they will go to the U.S. receiver and they will be squandered in attorney's fees. And the creditors won't see one cent," he said.

Regardless, whatever is ultimately recovered will be only a fraction of what investors lost. More could be recouped through lawsuits, but that could take years.
Investors have until Sept. 1 to make a claim with the U.S. receivership. The liquidators do not have a deadline.