Politicians yet to return big money from Stanford’s Ponzi Scam

Five years after R. Allen Stanford’s investment companies collapsed in an infamous multibillion-dollar Ponzi scheme, records show that the receiver charged with recouping money for victims still is chasing a long list of politicians.

Stanford was a generous and bipartisan donor to political campaigns. After his conviction, Ralph Janvey was appointed by the court as receiver and given the task of tracking down and recovering Stanford’s fraudulent expenditures so the money could be returned to the Ponzi scheme victims.

Some of the big donors have returned money, even if they had to be sued: The Democratic Senatorial Campaign Committee has returned $950,000, and the National Republican Congressional Committee gave back nearly $250,000.

But a number of other campaigns have not. By Mr. Janvey’s calculation, nearly $120,000 in tainted donations should go to creditors.

The Obama campaign has not returned $4,600, and Rep. Pete Sessions, Texas Republican, and the New Jersey Democratic State Committee each owes $10,000, according to the receiver’s most recent list.

A spokeswoman for Mr. Sessions said he has already gotten rid of money from Stanford, who is serving a 110-year prison sentence on fraud charges.

“Congressman Sessions donated to charity the dollar amount of all contributions from individuals charged in the case,” Sessions spokeswoman Torrie Miller wrote in an email.

Federal Election Commission rules allow politicians to disgorge unwanted or illegal donations by donating to charity, but that won’t get Mr. Sessions or any other lawmaker off of Mr. Janvey’s list.

Scott Powers, an attorney for Mr. Janey, said contributions to charity that are equal to the amount of campaign donations from Stanford don’t make any difference.

“The money at issue did not rightfully belong to Mr. Stanford,” he said.

“It was not rightfully transferred to the political committees. And so the political committees are not entitled to decide that the money should be given to charity rather than given to the receiver for distribution to the victims from whom the money was taken in the first place.”

The DSCC and the NRCC, which have returned their money, did so only after losing arguments in court. In perhaps a rare example of Capitol Hill bipartisanship, the fundraising committees said Mr. Janvey’s demand wasn’t timely.

But the 5th U.S. Circuit Court of Appeals ruled in Mr. Janvey’s favor in October 2012.

The problem for Mr. Janvey now is that the donations that still haven’t been collected aren’t worth the expense of filing lawsuits. Most of the outstanding contributions are for a few thousand dollars each.

Other top recipients on the receiver’s list include Sen. John Cornyn, Texas Republican, who received $6,000 from Stanford, and congressional Delegate Donna M. Christensen, a Democrat who represents the Virgin Islands and accepted $5,000 from him.

Also listed are Senate Minority Leader Mitch McConnell, Kentucky Republican, at $2,500, and former Rep. Rahm Emanuel, Illinois Democratic and current Chicago mayor, for $3,000.

Cornyn spokeswoman Megan Mitchell said the senator gave the money he received from Stanford to the Big Brothers Big Sisters of America and sent letters to federal agencies to ensure money caught up in the Stanford scheme was returned to investors.

Ms. Mitchell also said Mr. Cornyn co-sponsored a resolution calling on the Treasury secretary to “use the voice and the vote” of the U.S. to oppose World Bank or International Monetary Assistance to Antigua until its government cooperates with U.S. efforts to compensate Stanford victims.

Stanford’s fraud centered at his offshore bank in Antigua.

Still, Mr. Powers said, charitable contributions don’t do Stanford victims much good.

“For economic reasons, the receiver is not in a position to pursue litigation with every politician who received contributions from Stanford,” Mr. Powers said. “The receiver nevertheless calls on the remaining holdouts to do the right thing and to return the contributions for the benefit of the victims of the Stanford fraud.”

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Both parties scheme for Ponzi cash

By Jim McElhatton - The Washington Post

The fundraising arms for Democratic and Republican members of Congress don’t agree on much, except when it comes to all the big donations they’ve gotten over the years from jailed financier R. Allen Stanford.

In recent days, the Democratic Senatorial Campaign Committee (DSCC), the National Republican Congressional Committee (NRCC) and other party organizations appealed a court order to return more than $1.7 million combined they received that were tied to Mr. Stanford’s alleged multibillion-dollar bilking of thousands of investors. He’s in jail awaiting trial on charges of running a Ponzi scheme while a court-appointed receiver tries to recoup money for investors.

The appeals come a month after a federal judge in Texas ordered the organizations to return the money. But in a recent court filing, attorneys for the DSCC and the Democratic Congressional Campaign Committee, which owe more than $1.2 million combined, asked for a stay before having to turn over the money. They want to post bond or a letter of credit pending an appeal.

Meanwhile, in a separate set of court papers, attorneys for the NRCC, the Republican Senatorial Campaign Committee and Republican National Committee filed a notice to appeal the ruling, too.

“After thoroughly reviewing the court’s decision and the relevant law, and in light of an important change in the precedent on which the court relied, we believe we have an excellent chance of success,” said Kirsten Kukowski, spokeswoman for the RNC.

The combined legal efforts of the political parties show the lengths political committees mdash; Democrat and Republican alike — will go to protect party coffers with control of Congress and the White House up for grabs in 2012.

“Stanford aimed most of his campaign contributions to congressional leaders and party bosses, and eventually started giving heavily to presidential candidates as well, which coincided with the weakening of offshore disclosure and tax regulations that directly benefited Stanford’s shady business,” said Craig Holman, legislative representative for the D.C.-based watchdog group Public Citizen.

“Like other campaign contributions tainted by scandal, candidates and the party committees should try to show that they personally have not been influenced by the money and turn Stanford contributions over to charity,” he said.

Federal law allows campaign committees to part with donations in several ways. They can return contributions, donate them to charity or send the money to the U.S. Treasury.

But Ralph Janvey, receiver in the Stanford case, wants the money returned to investors. In addition to taking the major-party fundraising committees to court, the receiver previously sent letters to dozens of other politicians who received Stanford money over the years. More than a year later, he’s still waiting.

According to the most recent accounting last month, politicians have returned $132,500, with nearly $1.8 million still not yet returned, though most of that is still in the hands of the party fundraising groups fighting in court.

Aside from the political committees, Rep. Charles B. Rangel, New York Democrat, appears to be the biggest beneficiary of Stanford cash among those who have yet to return donations. The Rangel Victory Fund received $25,000 from Mr. Stanford, his associates and businesses, money that Mr. Janvey says is directly tied to the Ponzi scheme.

Other beneficiaries include the New Jersey Democratic State Committee and Rep. Pete Sessions, Texas Republican, with $10,000 each. Rep. Gregory Meeks, New York Democrat, received $6,600.

Phone and email messages left with the members of Congress were not returned, nor was a message left with the New Jersey Democratic State Committee.

Among dozens of politicians who have returned the contributions are Sen. Richard C. Shelby, Alabama Republican, who sent back $14,000; former Sen. Christopher J. Dodd, Connecticut Democrat, who returned $27,500 from his presidential and Senate campaigns; and Sen. Harry Reid, Nevada Democrat, who returned $8,000.

In court documents, attorneys for the major-party committees put forth several arguments for why they should be allowed to keep the contributions, including arguing that the lawsuits seeking the return of the money weren’t filed on time.

U.S. District Judge David Godbey disagreed, noting in a 61-page ruling that the committees “fail to create a fact issue concerning the Ponzi scheme’s existence or the contributions’ source and make no attempt to show that the contributions were made in exchange for consideration of reasonably equivalent value.”

The judge ordered the Democratic Senatorial Campaign Committee to return $1,037,347; the NRCC, $260,291; the Democratic Congressional Campaign Committee, $218,273; the National Republican Senatorial Committee, $90,960; and the Republican National Committee, $140,241.

Kevin Sadler, attorney for Mr. Janvey, said in an email that the ruling represented an important victory for the receivership and thousands of victims of the Ponzi scheme.

“As important as this decision is, there remain hundreds of other defendants, individuals, companies and organizations, which, like these political committees, received hundreds of millions of dollars of investor funds diverted by Allen Stanford and his fraud scheme,” Mr. Sadler said.

“Such funds rightfully belong only to the receiver, whose duty it is to recover these funds and use them to compensate the victims of the Stanford fraud.”

Mr. Stanford’s trial recently was postponed from September to January. He has pleaded not guilty to charges of bilking investors of about $7 billion.