Stanford Ponzi Victims To Be Compensated

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.

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For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/

Justices Throw a Rope to Stanford Ponzi Victims

WASHINGTON (CN) - Federal law does not preclude investors allegedly defrauded by R. Allen Stanford's $7 billion Ponzi scheme from attempting recovery via state class actions, the Supreme Court ruled Wednesday.

 For nearly 15 years, Stanford Group Co. and related entities sold certificates of deposit issued by its Antigua-based Stanford International Bank, and then used investor funds to cover its liabilities.

 Its eponymous leader was sentenced in 2012 to 110 years in federal prison after a federal jury in Houston, Texas, convicted him on 13 of 14 counts of conspiracy, wire fraud and mail fraud.

Read the full transcript from the Courthouse News Service here. 

 For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/

SLUSA - The full Court Ruling

Great news for ALL victims! With the SLUSA ruling going in favour of the victims all the FROZEN court cases can now proceed.

To view the full court ruling on SLUSA 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/

U.S. Justices say Allen Stanford Victim Lawsuits can go Forward

(Reuters) - The Supreme Court on Wednesday ruled that lawyers, insurance brokers and others who worked with convicted swindler Allen Stanford cannot avoid lawsuits by investors seeking to recoup losses incurred in his $7 billion Ponzi scheme.

On a 7-2 vote the court held that lawsuits filed in state court can go forward. New York-based law firms Chadbourne & Parke and Proskauer Rose and insurance brokerage Willis Group Holdings Plc were all sued by former Stanford investors. The investors also sued financial services firm SEI Investments and insurance company Bowen, Miclette & Britt.

Writing for the majority, Justice Stephen Breyer said the Securities Litigation Uniform Standards Act did not prevent the state lawsuits from proceeding. The law says that state lawsuits are barred when the alleged misrepresentations are "in connection with" the purchase or sale of a covered security.

As the defendants in the case were not selling securities traded on U.S. exchanges, "it is difficult to see why the federal securities laws would be - or should be - concerned with shielding such entities from lawsuits," he wrote.

The defendants sought Supreme Court review after the New Orleans-based 5th U.S. Circuit Court of Appeals in March 2012 said the lawsuits brought under state laws by the former Stanford clients could go ahead.

The former Stanford clients are keen to pursue state law claims because the Supreme Court has previously held that similar so-called "aiding and abetting" claims cannot be made under federal law.
The class action lawsuits filed by the former investors accused Thomas Sjoblom, a lawyer who worked at both law firms, of obstructing a Securities and Exchange Commission probe into Stanford, and sought to hold the other defendants responsible as well.

The Obama administration, representing the SEC, sided with the defendants over the interpretation of the state law in an avowed effort to protect the agency's own authority to pursue wide-ranging investigations.

The administration pointed out that the "in connection with" language in SLUSA that limits state court lawsuits mirrors language in federal law that gives broad authority of the SEC to pursue such misrepresentations. Therefore, the administration urged the court to give the phrase a broad interpretation.

Stanford's fraud involved the sale of certificates of deposit by his Antigua-based Stanford International Bank. Much of the litigation centers on whether these qualified as securities under applicable laws.

The cases are Chadbourne & Parke LLP v. Troice et al, U.S. Supreme Court. No. 12-79; Willis of Colorado Inc et al v. Troice et al, U.S. Supreme Court, No. 12-86; and Proskauer Rose LLP v. Troice et al, U.S. Supreme Court, No. 12-88.

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For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/

Stanford Financial Claims 7th Distribution December 4th 2013

Receiver files 7th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan - On December 4, 2013, the Receiver filed his 7th Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 7th Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed.

 To view a copy of the 7th Schedule, please click here: http://sivg.org.ag/topic240.html

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org.ag/

Stanford Financial Claims 5th Distribution October 25th 2013

Receiver files 5th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan - On October 25, 2013, the Receiver filed his 5th Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 5th Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed.

To view a copy of the 5th Schedule, please click here:

http://sivg.org.ag/topic225.html

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org.ag/

SEC wins dismissal of lawsuit over handling of $7 billion Stanford fraud

We are awaiting a statement from Gaytri regarding this, she says the Judge totally missed the point of our lawsuits and she is appealing this. We will post Gaytri's response as soon as we receive it.


 (Reuters) - A federal judge in Florida has thrown out a lawsuit accusing the U.S. Securities and Exchange Commission of negligence for failing to report that the now-imprisoned swindler Allen Stanford was running a $7.2 billion Ponzi scheme.


 U.S. District Judge Robert Scola in Miami said the market regulator was shielded under an exception to the Federal Tort Claims Act that bars claims arising from misrepresentation or deceit.


 The plaintiffs, Carlos Zelaya and George Glantz, said they lost a combined $1.65 million with Stanford, and sought class-action status on behalf of investors who were victims of his fraud. They plan to appeal Monday's decision, their lawyer Gaytri Kachroo said. SEC spokesman Kevin Callahan declined to comment.


 Stanford, 63, is serving a 110-year prison sentence after he was convicted on criminal charges in March 2012 for a fraud that the government said was centered in certificates of deposit issued by his Antigua-based Stanford International Bank.


 Zelaya and Glantz claimed that the SEC considered Stanford's business a fraud after each of four examinations between 1997 and 2004, but failed to advise the Securities Investor Protection Corp, which compensates victims of failed brokerages.


 The SEC filed civil charges against Stanford in February 2009, two months after the multibillion-dollar Ponzi scheme of New York-based swindler Bernard Madoff was uncovered. In a typical Ponzi scheme, investors are promised high or consistent returns relative to the amount of risk taken, and older investors are paid with money from newer investors.


 Last September, Scola let the lawsuit against the SEC go forward, saying the plaintiffs could argue that the regulator had breached a duty to report Stanford's misconduct.


 But on Monday, he said the FTCA exception barring claims of misrepresentation deprived him of jurisdiction.

 "The plaintiffs claim that they were induced into entering disadvantageous business transactions because of the SEC's misrepresentation," he wrote. "The plaintiffs' cause of action is a classic claim for misrepresentation."


 Their lawyer Kachroo said: "We believe that the judge did not draw the appropriate distinction between a claim based on a misrepresentation and our claim based on a failure to warn in line with the SEC's mandatory duty to notify SIPC."


 In 2010, the SEC's inspector general criticized the regulator, finding that it knew as early as 1997 that Stanford was likely running a Ponzi scheme.


 Earlier this year, federal appeals courts in New York and California dismissed lawsuits against the SEC by victims of Madoff's fraud.


 The case is Zelaya et al. v. U.S., U.S. District Court, Southern District of Florida, No. 11-62644.


Read More: http://sivg.org.ag/topic177.html


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org.ag/

Investors Sue Insurance Company That Vouched for Stanford Ponzi Scam

By John Pacenti All Articles 
Daily Business Review

 The letters circulated by Stanford International Bank among would-be investors claimed deposits were insured by Lloyds of London and that the bank's employees were "first class business people."

 The letters proclaimed the bank had undergone "stringent risk management review by an outside audit firm." 

Stanford International Bank is now known as one of the world's largest Ponzi schemes, a $7 billion scam that is second only to the con pulled off by the former New York investment adviser and financier Bernard Madoff. The Stanford bank, which was based in Antigua and maintained a sizable footprint in Miami, went under in 2009.

 So while the bank's founder and one-time billionaire, R. Allen Stanford, is serving a 110-year prison sentence for fraud, investors are looking for deep pockets to make them whole.

 They hope they found it in Willis Group Holdings, the U.K.-based insurance company that provided Stanford with written endorsements. The investors are also suing Willis Group's American subsidiary based in Colorado.

 Getting the litigation to stick in one jurisdiction, though, hasn't been easy. Filed in Miami-Dade Circuit Court in February, the plaintiffs' suit was transferred to U.S. District Court in Miami on June 3.

 U.S. District Judge Jose E. Martinez stayed the case on June 14 after the Willis Group argued the U.S. Supreme Court is looking at the liability of insurance letters to investors in a related case against Willis Group.

 Other lawsuits against Willis Group by similarly situated plaintiffs have ended up in multidistrict litigation in Dallas. One has also been stayed by a Miami federal judge.

 A telephone call placed to attorney Edward Soto, a partner at Weil Gotshal & Manges in Miami who represents Willis Group, was not returned by deadline.

 But in his motion to Martinez for a stay, Soto said the defendant expects the case and four others filed against Willis Group to be transferred to the U.S. Bankruptcy Court in Texas that oversees the estate of Stanford International Bank.

 The plaintiffs attorney, Ervin Gonzalez, said businesses that vouch for criminal enterprises like Stanford need to be held accountable.

 "If someone is going to give an endorsement ... they'd better be careful because people rely on those endorsements," said Gonzalez, a partner at Colson Hicks Eidson in Coral Gables, Fla. "They have an obligation and a duty to be accurate."

 Also representing the plaintiffs is attorney Luis Delgado, a partner at Miami's Homer & Bonner.

 "From in or around August 2004 through 2008, Willis provided 'safety and soundness' letters to Stanford Financial's agents on Willis letterhead and signed by a Willis executive," the lawsuit claims.

 The letters misled clients into believing their deposits were safe and insured, the lawsuit states.

 The 29 plaintiffs are from Uruguay, Bolivia, Colombia and Venezuela and had a combined loss of $30 million when SIB collapsed. The lawsuit states they received identical Willis Group letters with the only difference being the date and address.

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org.ag/

LG wins high-profile role on Stanford Bank liquidation

By Suzi Ring - legalweek.com

LG has won a high-profile role to advise the newly-appointed liquidators of Stanford International Bank (SIB) following its 2009 collapse amid a billion-dollar 
fraud scandal.

The UK law firm is acting for accountancy firm Grant Thornton, which was appointed to handle the liquidation in May after former liquidator Vantis was removed in June last year.

SIB founder Allen Stanford (pictured) is currently in prison awaiting trial after being charged in 2009 with defrauding investors with a $7bn (£4.3bn) Ponzi scheme run out of the bank.

LG is advising on all UK matters concerning SIB’s assets in London, including the $110m (£68m) of assets currently restrained by the Serious Fraud Office on behalf of the US Department of Justice.

LG senior partner Andrew Witts said: “We are delighted to be retained by Grant Thornton in this matter. It is clearly an important case, which raises potentially interesting issues of law on priority over the SIB assets in London, which are currently the subject of a restraint order.”

SIB collapsed in 2009 after Stanford, Stanford Financial Group chief financial officer James Davis and chief investment officer Laura Pendergest-Holt were subject to fraud charges relating to an alleged Ponzi scheme thought to have affected tens of thousands of depositors worldwide.

Vantis, which was formerly advised by CMS Cameron McKenna, was removed as the liquidator of SIB last year by an Antiguan court before later going into administration.

SIPC to Announce Stanford Liquidation Decision in Mid-September

WASHINGTON, July 1, 2011 /PRNewswire-USNewswire/ -- The Securities Investor Protection Corporation ("SIPC"), which maintains a special reserve fund mandated by Congress to protect the customers of insolvent brokerage firms, said today that it expects its Board of Directors to announce on or about September 15, 2011 its decision about the referral provided by the U.S. Securities and Exchange Commission ("SEC") with respect to the Stanford Group Company, operated by Robert Allen Stanford.

On February 17, 2009, the SEC filed an action in the U.S. District Court for the Northern District of Texas alleging that Stanford orchestrated an $8 billion fraud based on false promises of guaranteed returns related to certificates of deposit ("CDs") issued by the Antiguan-based Stanford International Bank ("SIB"). The SEC's Complaint alleged that SIB sold approximately $7.2 billion of CDs to investors by promising returns that were "improbable, if not impossible." See: Â Complaint, SEC v. Stanford International Bank, Ltd., et al., Case No. 3:09-CV-0298-N (N.D. Tex. filed February 17, 2009).

In response to the SEC's request for emergency relief, the Court immediately issued a temporary restraining order, froze the defendants' assets, and appointed a receiver to marshal those assets. Â The SEC filed a second amended complaint on June 19, 2009, alleging that Stanford conducted a Ponzi scheme.

SIPC President and CEO Stephen Harbeck said that SIPC has already started conferring with the SEC and the Stanford receiver regarding the SEC's referral in the Stanford matter.

The SEC's referral on June 15, 2011 was the first time the SEC had informed SIPC of the possibility that the Stanford matter was appropriate for a proceeding under the Securities Investor Protection Act ("SIPA").

ABOUT SIPC

The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customers cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.

The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities custodied with the broker for up to a maximum of $500,000 per customer. Â This figure includes a maximum of $250,000 on claims for cash. From the time Congress created it in 1970 through December 2010, SIPC has advanced $ 1.6 billion in order to make possible the recovery of $ 109.3 billion in assets for an estimated 739,000 investors.

Stanford Receiver Sues Libyan Fund for $55 Million Withdrawn, Lawyer Says

Source:Bloomburg
R. Allen Stanford’s court-appointed receiver sued the Libyan government wealth fund for $55 million he claims the state withdrew from Stanford’s alleged Ponzi scheme before it collapsed in early 2009, according to the receiver’s lawyer.

Ralph S. Janvey, Stanford’s receiver, also won a temporary freeze on some Libyan government bank accounts in the U.S. until a federal judge can determine if the money should be distributed to investors allegedly swindled of more than $7 billion, said Janvey’s lead attorney, Kevin M. Sadler.

“The payments made to the Libyan defendants were fraudulent transfers, using funds which Stanford obtained by fraud from investors who purchased Stanford’s phony CDs even as the Ponzi scheme was beginning to collapse,’’ Sadler said today by e-mail.

Janvey’s suit was filed under seal June 3 in U.S. District Court in Dallas, Sadler said. The lawsuit couldn’t be independently confirmed using the court’s electronic docket.

Stanford, 61, denies all allegations of wrongdoing. He previously said he met with Libyan sovereign-wealth fund officials shortly before the U.S. Securities and Exchange Commission seized his operations on suspicion of fraud in February 2009.

The Libyans withdrew $12 million of their Stanford investment immediately after this meeting, which occurred in Libya “just three weeks before the SEC filed suit,’’ Sadler said in today’s e-mail.

Order to Freeze
Janvey obtained a court order on June 6 freezing $55 million in Libyan assets in U.S. bank accounts, pending a December hearing before U.S. District Judge David Godbey, Sadler said. The judge oversees the SEC’s case against Stanford and several of his companies.

Stanford faces 14 criminal charges that he deceived investors about the safety and oversight of certificates of deposit sold by his Antigua-based Stanford International Bank Ltd. He is in a prison hospital unit in Butner, North Carolina, until he completes rehabilitation from a prescription-drug dependency he acquired in jail.

The former billionaire has been in custody as a flight risk since his indictment in June 2009. His attorneys have asked for a delay in his criminal trial, now scheduled for September in Houston federal court, until he is found competent to assist in his defense.

The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).

HSBC Agrees to Pay $62.5 Million to Settle U.S. Class-Action Madoff Suit

The following article raises the question are HSBC not also liable for acting as custodian for Allen Stanford?

HSBC Holdings Plc (HSBA), Europe’s biggest bank, agreed to pay $62.5 million to settle a group lawsuit in New York, filed by investors in a fund that lost money in Bernard Madoff’s fraud while the bank acted as custodian.

The accord, which needs court approval, applies to a class- action case against several HSBC units and other defendants by investors in the Ireland-based Thema International Fund Plc, whose assets were invested with Bernard L. Madoff Securities LLC, HSBC said in a statement today.

The settlement “shall in no way be construed” as an admission of fault, HSBC said in the statement. The London-based bank, which faces other Madoff-related lawsuits in Germany, Luxembourg and other countries, has “good defenses” against them, it said.

Thema Fund, a so-called Madoff feeder fund, was controlled by Bank Medici AG, according to a statement by the fund’s law firm, Chapin Fitzgerald Sullivan & Bottini LLP. Bank Medici with its founder Sonja Kohn is part of a $59 billion suit by the trustee liquidating Madoff’s firm.

HSBC units acted as custodian for Thema and other funds that funneled money to Madoff. Irving Picard, the trustee liquidating New York-based Bernard L. Madoff Investment Securities LLC, in December sued HSBC and a dozen feeder funds for $9 billion in U.S. Bankruptcy Court in Manhattan, saying they should have known of the fraud.

HSBC Losses
HSBC didn’t know of the fraud and lost $1 billion of its own money investing in funds that in turn put money with Madoff, the bank said last month in court papers seeking dismissal of Picard’s lawsuit.

The bank was warned twice by auditors that entrusting as much as $8 billion in client funds to Madoff opened it up to “fraud and operational risks,” according to KPMG LLP reports obtained in March by Bloomberg News. The investors claim HSBC failed to act on the warnings.

According to HSBC’s May filing, Picard, who sued HSBC saying he was doing so on behalf of Madoff investors, is competing with the feeder funds and investors that have sued HSBC, and intends to claim any money they recover from the U.K. bank to give it to other investors.

“He is attempting to steal their claims, along with the funds’ claims, and planning to provide the fruits of any recoveries to other parties,” on the principle of “robbing Peter to pay Paul,” HSBC said as it asked a judge to dismiss Picard’s suit.

Amanda Remus, a Picard spokeswoman, declined at the time to comment.

Alpha Suit
On May 27, Alpha Prime Fund Ltd. and Senator Fund SPC, two funds sued along with HSBC by the Madoff firm’s trustee, filed so-called cross claims against HSBC to try to recoup “hundreds of millions of dollars” in losses they incurred in the fraud.

HSBC in December was sued by a group of 650 mainly private German investors in Luxembourg seeking compensation for losses they suffered through Herald (Lux) US Absolute Return Fund, which placed assets with Madoff. That suit seeks about 25 million euros ($36.6 million) in damages.

Thema and another fund, AA (Alternative Advantage) Plc, sued HSBC in January 2009 in Dublin’s High Court.

HSBC is facing about 50 investor complaints in Ireland for allegedly failing in its duties as custodian for Thema, a European-Union regulated fund, and AA (Alternative Advantage) Plc. Both funds suspended redemptions after Madoff’s fraud was uncovered. Custodians are responsible for oversight of funds, and manage deposits and payments to investors.

Dublin Court
A court in Dublin in January ordered HSBC to disclose a report on the status of the Thema fund without ruling on whether HSBC had made the necessary data available. Almost all of the funds invested in Thema “are currently lost, apparently as a result of the fallout from the collapse of the Madoff empire,” Judge Frank Clarke said in the Jan. 10 order in a case filed by French investor Aforge Finance SAS, which lost about 54 million euros in Thema.

HSBC’s Luxembourg unit was also custodian for the Herald (Lux) fund, which had assets of $225.7 million as of Oct. 31, 2008, according to Bloomberg data. The fund was forced to dissolve because of Madoff-related losses.

The Luxembourg-based liquidators of the Herald Lux fund are suing HSBC for the return of lost assets. Luxembourg’s financial market regulator in November 2009 ordered HSBC Securities Services in Luxembourg to review its internal rules related to its role as custodian bank of local mutual funds.

Luxembourg Liquidators
In Luxembourg, the liquidators may be the only possibility for Herald (Lux) investors to recoup some of their lost money after a March 4 ruling by a commercial court that liquidators alone can recover capital assets.

Documents from Madoff’s company show the value of HSBC- serviced funds as of Nov. 30, 2008, was about $8.4 billion, including fake profit from Madoff’s Ponzi scheme, according to HSBC’s statement. The funds’ actual transfers to Madoff’s firm minus their actual withdrawals during the period HSBC acted as custodian, totaled about $4.3 billion, it said.

The settlement provides for a $10 million litigation fund that will allow investors to try to recover money from defendants that haven’t settled, said Thema Fund’s law firm in the statement.

Stanford's receiver sues him for $1.8 billion from CD loans

A court-appointed receiver filed suit Friday against jailed financier R. Allen Stanford, asking return of $1.8 billion loaned to him since 1999.

The lawsuit filed in North Texas U.S. District Court claims that across the years, Stanford rarely earned any income outside what he was loaned from Stanford International Bank Ltd.’s certificate of deposit sales. He also never repaid the money, it says.

Stanford was chief executive officer of Stanford Financial Group and its affiliates until early 2009, when the international financial empire came crashing down under the weight of a U.S. Securities and Exchange Commission investigation.

He, four Stanford executives and an Antiguan bank regulator were indicted on multiple charges that they ran or participated in a $7.2 billion Ponzi scheme on CD investors.

The lawsuit says the investors numbers 50,000 in 100 countries. Scores of Mississippians were among them and lost their retirement funds and life savings.

Stanford, who is in jail, is set to go on trial Sept. 12 in Houston, Texas. The others are expected to be tried afterward.

They all pleaded not guilty, except former COO James M. Davis, who pleaded guilty later in 2009 and will testify against them.

The new lawsuit insists that at least since 1999, Stanford’s financial empire was insolvent. It also insists that each payment of CD proceeds to him was “made with actual intent to hinder, delay and defraud” its creditors.

Ralph Janvey, the receiver, said he’s still seeking records from Antigua and Switzerland, where a “secret” account disbursed money to Stanford.

He also says that at the time SIB was placed into receivership in Februrary 2009, the bank was insolvent by more than $6 billion.

“R. Allen Stanford was either unable to repay principal or interest on the loans or never intended to do so,” the lawsuit states.

Treasures of alleged Ponzi schemer Stanford auctioned

While Texas financier Allen Stanford awaits trial on charges of running a $7 billion Ponzi scheme, hordes of buyers waited on Saturday at a sweltering warehouse for an auction of his possessions.

People lined up around the northeast Houston warehouse for a chance to bid on items like a $55,000 Baccarat crystal eagle -- a symbol prominent in Stanford's company logo -- and an arsenal of guns and rifles, including 30 Glock semi-automatic pistols still in their original packaging.

"I got pretty excited over the wine," said Eric Worstell, one of three brothers who make up the third generation of auctioneers in the 57-year-old Seth Worstell Auction Company which won a bid to liquidate Stanford's property.

More than 1,000 bottles of wine, champagne and other spirits were part of the treasure trove of items on the auction block that included art, antiques, silver, crystal, and china, much of which appeared unused.

Worstell said the company expected to collect at least $250,000 in the six-hour auction, which included a Chevrolet Suburban and a Ford Taurus. After the auction house gets its cut, the balance will go to a court-appointed receiver.

Stanford was arrested in June 2009 and charged with mail and wire fraud in connection with a $7 billion scheme linked to certificates of deposit issued by his Antigua-based banking company.

Authorities have said the one-time billionaire used proceeds in part to fund other ventures and a lavish lifestyle that included several yachts and private jets, and homes around the world, most of which have been liquidated by the receiver.

Stanford, 61, has denied any wrongdoing and remains incarcerated without bail in a federal detention facility.

Artwork at the auction house varied widely in value, from a bronze sculpture to posters with motivational messages about pride and attitude.

A pallet of 34 laptop bags were heaped on a table across from marble-based lamps, Chinese dragons and two-foot-tall cut-glass vases.

Coffee mugs with the company logo were boxed up near five tables of embossed leather books, including a 134-volume set of Civil War records, medical and legal texts, and novels by William Faulkner and Jules Verne.

The gun collection appeared to be a big draw for many who paid the $100 registration fee, including engineer Isaac Fox.

"I've never been to an auction before, so I was kind of curious," he said. "This one has a little notoriety about it."

Fox's friend, Brent Aronson, was also interested in the guns, but was eyeing the piles of computer equipment -- much of it still in the box -- and a chair for his wife.

Trina Fowlkes, who works in the financial industry, said she showed up mostly for the spectacle, but was not greatly impressed.

"He supposedly had so many fabulous things, but this is mostly office furniture," Fowlkes said. "If we don't pass out from the heat, we'll stick around."

An assortment of burled and carved wood antique furniture stood side-by-side with office cubicle components in the 20,000-square-foot warehouse where industrial fans provided the only relief from temperatures in the mid-90s.

IT coordinator Steve Shapiro said he came out to look for a bargain to add to his crystal collection, but the Stanford connection offered no extra cachet.

"I'm certainly not paying any more than its actual value just because it was his," Shapiro said. "If it had belonged to Jackie Kennedy Onassis maybe."

The SEC and Stanford

A Securities and Exchange Commission worker gave investors false and misleading information about an alleged Ponzi scheme that could have hindered investigation of a fraud in which he also was a victim, the agency’s watchdog said.

The employee, based at SEC headquarters in Washington, shared non-public information with several investors during the SEC’s investigation and litigation of the case, SEC Inspector General H. David Kotz said in his semi-annual report to Congress released today. The report didn’t identify either the SEC employee or the firm accused of conducting the fraud.

Kotz opened his probe in February after a senior official said the employee had contacted fellow investors and told them that the company was legitimate and that investors “would be receiving considerable sums of money,” according to the report. Some or all of the investors knew the man worked at the SEC and believed he had first-hand knowledge of the investigation, according to the report.

“His conduct not only confused certain investors and gave them a false sense of hope, but it also had the potential to adversely affect an on-going enforcement investigation,” Kotz said in the report. The employee was placed on administrative leave, and Kotz referred the matter for disciplinary action “up to and including dismissal,” according to the report.

The SEC sued the firm on Oct. 6 and won a judgment on Feb. 14, according to the report. Imperia Invest, a Web-based entity with a fictitious Bahamian address, was ordered to pay more than $15 million in a default judgment on Feb. 14 after failing to respond to the SEC’s lawsuit, according to court documents.

Becker

Elsewhere in the report, Kotz summarized the status of other on-going investigations, including one involving former SEC general counsel David M. Becker. Kotz said his office has searched 1.7 million e-mails and is beginning witness interviews to determine whether Becker violated conflict-of-interest rules.

Becker, who re-joined the SEC in 2009 after the Bernard Madoff Ponzi scheme unraveled, has been sued by the trustee liquidating the jailed money manager’s business over profits he inherited from his parents’ Madoff account. Becker helped set SEC policy stemming from the case before leaving in February.

The inspector general’s staff has met with congressional investigators on the Becker probe and plans to issue findings before Sept. 30, according to the report.

Pornography

The report also details new cases of agency employees and contractors viewing pornography on SEC computers, following reports last year that 30 workers had improperly used agency computers for that purpose in the preceding five years.

An accountant based at the agency’s Washington headquarters “successfully accessed numerous sexually explicit photographs from his SEC computer, including graphic depictions of sexual acts” -- often during normal work hours, according to the report. Managers recommended that he be fired, the report said.

Two Washington-based attorneys were also accused of accessing pornography at work. One of them resigned, according to the report, and management recommended that the other -- who used an SEC computer to access “inappropriate images of partially or fully nude women” -- be fired.

In another case, a contractor was fired and escorted from the building after admitting he had been viewing pornography on his SEC computer for at least a year, even as he’d received computer training and notices that such behaviour was banned.

SEC Chairman Mary Schapiro said last year that she was “angry and frustrated that a very few individuals have demonstrated that they are willing to place the credibility of the SEC at risk.”

John Nester, an SEC spokesman, declined to comment on the inspector general’s investigations.

Ponzi Proprieties

"It is with a pious fraud as with a bad action; it begets a calamitous necessity of going on."

-- Thomas Paine, The Age of Reason.

One of the questions being asked with increasing regularity is what is the polite thing to do when you have benefitted from the actions of someone running a Ponzi scheme. In one case it may be that you invested and got remarkable returns, and in another it may be that you were not an investor, but the recipient of the funds that the Ponzi schemer stole. Herewith two different answers to that question. But first, a word about the process itself.

Let us assume that you invested $100 with Bernie Madoff 10 years ago, and for the last 10 years have been getting a 30 percent return on the investment. Now you learn that in the years after you made your first investment, Mr. Madoff convinced everyone in your neighbourhood to give him $100 to invest, and he used that to pay you. Once that became known, of course, your neighbours were upset. The courts were also upset and appointed someone called a receiver to try to recoup for your neighbours the profits on the $100 investment you and other early investors made. Early investors were not the only beneficiaries of Ponzi schemes. Sometimes the schemer gave money he collected to charities, or even politicians, for political purposes.

Irving Picard is the court-appointed trustee of the Madoff mess that was uncovered on December 8, 2008. To date, Mr. Picard has recovered almost one half of the estimated $20 billion lost by Madoff investors. A good chunk of what Mr. Picard has collected to date comes from the widow of Jeffry M. Picower. Mr. Picower had invested with Mr. Madoff for more than 30 years. Ms. Picower agreed to return $7.2 billion to the fund. In a statement accompanying her agreement to pay, she said:

On behalf of my late husband Jeffry and his estate, I am announcing today that we... will return every penny received from almost 35 years of investing with Bernard Madoff, an amount totalling $7.2 billion that will go to the Madoff victims' compensation fund. Although it is my understanding that the estate's legal liability may not have exceeded $2.4 billion, I believe that this settlement honours what Jeffry would have wanted... I believe that the Madoff Ponzi scheme was deplorable and I am deeply saddened by the tragic impact it continues to have on the lives of its victims. It is my hope that this settlement will ease that suffering.
Not everyone is concerned about victims.

Ralph Janvey is a Dallas lawyer. He is the receiver for Stanford Financial Group that was run by R. Allen Stanford. In early 2009, it was learned that Mr. Stanford had stolen more than $7 billion from investors in 114 countries in a Ponzi scheme. Mr. Janvey, like Mr. Picard, is charged with trying to recover that money for the victims of the fraud. To date, Mr. Janvey has recovered less than $200 million. Part of his problem is the kinds of people who benefitted from the scheme before it was uncovered. They were not all investors. Some of them were members of Congress and the Democratic and Republican National Committees, to whom Mr. Stanford made contributions.

They were not eager to return the funds they had received. According to the Washington Post: "At least 50 members of the House and Senate have either ignored restitution demands or donated some of Stanford's campaign contributions to charity instead... " Included among the refuseniks are Eric Cantor, the House Majority Leader, Charles Schumer, the chairman of the Senate Rules Committee, Senator Bill Nelson who chairs a Finance Committee subcommittee and Senator John Cornyn, a member of the Judiciary Committee.

Senator Cornyn explained that, when he learned of the Ponzi-like character of the Stanford operation, he donated the money he'd received to charity. Senator Cornyn comes from Texas. According to one victims' group, 1,300 Texans invested with Stanford and lost $582 million that the receiver is trying to recover. The 1,300 probably feel a lot better knowing that Mr. Cornyn gave the funds that rightfully belonged to them to charity instead of to the receiver, who could have distributed it back to them. Senator Nelson told the Post he had given the money he received to charity but was now preparing to write a check to the receiver. Mr. Cantor said he'd give back the money if the receiver gave him a release. It isn't clear what he wants to be released from. The political fundraising committees are less tractable. According to the Post, "four of the principal national Republican and Democratic fundraising committees took in $1.6 million in Stanford donations," that they have refused to disgorge and over which they are now fighting with the receiver.

It's too bad the beneficiaries of the Stanford scam didn't have among their number people of the caliber of Ms. Picower. If there were, the receiver might have recovered more than a paltry $200 million. Indeed, it's too bad there aren't more people with a moral compass like that possessed by Ms. Picower living among us.

Stanford International Bank Limited (In Liquidation) - Notice to Creditors/(Noticia a los a Acreedores)

English Version

Marcus Wide and Hugh Dickson of Grant Thornton Appointed New World-Wide Liquidators of Stanford International Bank Limited

Marcus Wide and Hugh Dickson of Grant Thornton were appointed as the new liquidators of Stanford International Bank Limited ("SIB") by order of the Eastern Caribbean Supreme Court at Antigua on 12 May, 2011. Mr Wide and Mr Dickson were appointed in place of the former liquidators, Nigel Hamilton-Smith and Peter Wastell.

The new liquidators and their staff are working with the former liquidators to ensure that control of SIB is transferred to the new liquidators in an orderly fashion. The new liquidators are currently working with legal counsel in the various jurisdictions to develop a business plan and budget to generate the maximum possible return to depositors through co-operation and co-ordination with other office holders where possible. It is also the intention of the new liquidators to establish a committee representative of the body of depositors to assist and provide input in the liquidation process.

All creditor enquiries should now be directed to the new liquidators via email: stanford.enquiries@uk.gt.com. The new liquidators are also in the process of establishing a website to keep creditors informed of developments in the liquidation. The website address will be: www.grant-thornton.co.uk/stanford.aspx. The new liquidators will post regular communications updating you on the status of the liquidation and recommend that creditors monitor the website for information. Please note that creditors do not need to take any further action if you have previously registered your claim via the online claims management system.

Marcus Wide and Hugh Dickson
Joint Liquidators

Versión en Español

Marcus Wide y Hugh Dickson de Grant Thornton nombrados como los nuevos liquidadores mundial de Stanford International Bank Limited.

Marcus Wide y Hugh Dickson fueron nombrados como los nuevos liquidadores de Stanford International Bank Limited (“SIB”) por una orden de la Corte Suprema del Caribe Oriental en Antigua el 12 de Mayo del 2011. Los señores Wide y Dickson fueron nombrados en lugar de los anteriores liquidadores, Nigel Hamilton-Smith y Peter Wastell.

Los nuevos liquidadores y su personal están trabajando con los anteriores liquidadores para asegurarse que el control de SIB sea transferido a los nuevos liquidadores de un modo ordenado. Los nuevos liquidadores están actualmente trabajando con abogados en varias jurisdicciones para desarrollar un plan de negocios y presupuesto para generar el máximo retorno posible a los depositantes a través de la cooperación y coordinación con otros administradores judiciales siempre y cuando sea posible. También es la intención de los nuevos liquidadores de establecer un comité que represente el conjunto de depositantes para que puedan asistir y contribuir en el proceso de liquidación.

Todas las consultas de los acreedores deben ser ahora dirigidas a los nuevos liquidadores a través de la siguiente dirección de correo electrónico: stanford.enquiries@uk.gt.com. Los nuevos liquidadores están también en el proceso de establecer un sitio en la web para mantener a los acreedores informados sobre la evolución de la liquidación. La dirección del sitio en la web será: www.grant-thornton.co.uk/stanford.aspx. Los nuevos liquidadores publicarán comunicaciones frecuentes, resumiendo sus hallazgos en la liquidación y les recomiendan a los acreedores monitorear el sitio web por información al respecto. Por favor tengan en cuenta que los acreedores no necesitan tomar ninguna acción adicional si ya registraron su reclamación a través del Sistema de Gestión de Reclamación en línea.

Marcus Wide y Hugh Dickson
Liquidadores Conj

Is the end near?

As they approach their 60s, Blaine Smith and his wife, who once had a $1.5 million nest egg, are preparing to move into a rental house or apartment in July.

The couple is selling their $850,000 dream home, for which they saved for most of their professional lives—working two, and sometimes three, jobs—because they're no longer able to afford the mortgage payments.

They've also delayed their retirement plans, returning to work at a time when they thought they would be taking it easy. And they haven't taken a vacation since flamboyant financier Robert Allen Stanford's alleged $7 billion Ponzi scheme came to light.

The Smiths are but two of an estimated 28,000 victims of the Stanford Group, spread across 46 states and 188 countries, who still are awaiting justice. The Smiths unknowingly invested—and lost—their 30-year savings in the group's certificates of deposit.

"It's the worst nightmare you could ever imagine," Smith says. "It consumes me to know that the [Securities and Exchange Commission] sat on this for 12 years and didn't warn anyone."


A federal judge finally has set aside a trial date for Stanford, the man behind the alleged scheme. Jury selection is scheduled to begin Sept. 12 in Houston.

But the Smiths, and thousands of other bilked Stanford investors, still are waiting to see whether they'll ever see so much as a penny of their money returned.

Court-appointed Stanford receiver Ralph Janvey, who is suing to recover $600 million, has recovered less than one-third of that amount. After attorneys' fees and other expenses, that leaves about $100 million. Investors who lost money likely are to see only a penny or two for every dollar they invested.

The Smiths and other victims likewise are still awaiting word on whether the Securities Investor Protection Corporation—an insurance fund for brokerages—will cover any of their losses up to $500,000. The agency, which is overseen by the SEC, so far has opposed covering Stanford victims because the investments were CDs rather than stocks; a final decision is expected in the next few weeks.

The SIPC has helped an estimated 739,000 investors recover $109.3 billion in assets over the past 40 years, but the brokerage insurance does not cover every investor or every investment.

The 61-year-old Stanford, who denies all wrongdoing, is charged with 14 criminal counts involving certificates of deposit issued by his Antigua-based Stanford International Bank. He has been imprisoned as a flight risk since he was arrested almost two years ago.

The case has been fraught with drama, including a fight with an inmate over the use of a telephone, during which Stanford suffered a broken nose and a major concussion that left him unconscious. He also suffered an aneurysm in his leg.

The judge postponed the case a second time in January to allow Stanford to undergo drug rehabilitation in a prison facility to address an addiction to prescription anxiety drugs he acquired while jailed. Stanford has been undergoing detox treatment at the hospital unit at the federal prison in Butner, N.C., since mid-February.

Stanford has dismissed or been abandoned by at least five legal teams, all of which were unsuccessful in persuading the court to free him as he awaits trial. The current legal team was appointed after he was declared an indigent defendant. Attorneys and many of the principal players in the case declined to comment for this story, citing a gag order imposed by the judge.

In the meantime, new details have emerged in recent weeks about the SEC's delay in investigating the Stanford Group. A congressional subcommittee conducted a hearing in May on the agency's failures to stop the alleged Ponzi scheme. A former official accused of repeatedly blocking efforts to investigate the group now is the subject of a federal criminal inquiry for having done legal work for Stanford after leaving the SEC.

Spencer C. Barasch, now a private-sector lawyer in Texas, has represented clients dealing with the agency, including Stanford, despite being told multiple times by the SEC's ethics office that it was improper. He previously led the enforcement bureau in the SEC's Fort Worth office, and he had blocked efforts to pursue Stanford at least six times in a seven-year span in spite of repeated accusations of fraudulent behaviour, according to a report released last year by the SEC's inspector general. Barasch's law firm continues to say that he did not violate conflicts of interest.

"This is not even defensible," U.S. Rep. Randy Neugebauer, a Texas Republican who serves as the head of the House subcommittee, said at the conclusion of the hearing. "It is extremely disturbing that we had a culture in agencies that demand high levels of disclosure and integrity, that within that very agency there wasn't a similar amount of integrity."

Longtime SEC employee Julie Preuitt also testified at the hearing that she was reprimanded and demoted for reporting as early as 1997 that Stanford likely was operating a massive Ponzi scheme. An internal watchdog issued a report last year that concluded the agency had treated her improperly, she says, adding that "the commission has failed to discipline anyone, at least not visibly, nor has there been any effort to restore me to a position with similar duties and responsibilities to the one I held before. I paid a heavy price for complaining."

As far as Smith and other victims are concerned, the SEC is the true guilty party in the Stanford case. Their goal is to see the return of at least a portion of the money they lost.

"I would much prefer to see the SEC on trial," Smith says. "They're the true culprits: the people who allowed this to happen. I could care less about Allen Stanford. He's a liar, he's an evil person and he set out to steal money from investors from the very beginning.

"But the only reason I want him to be convicted is so that some of the other governmental entities in other countries holding up money will release it once there is a guilty verdict rendered against him."

Third Party Discovery of Foreign Bank Records Should First Proceed Under the Hague Convention

Where U.S. litigation discovery obligations were argued to be in conflict with foreign civil and criminal privacy statutes, many recent opinions found that discovery should proceed under the Federal Rules over the protest of the foreign data custodians. See, e.g., Gucci Amer., Inc. v. Curveal Fashion, No. 09 Civ. 8458, 2010 WL 808639 (S.D.N.Y. Mar. 8, 2010) (compelling the third-party U.S. parent of a foreign bank to produce documents located at its subsidiary despite claims that such production was illegal under Malaysian law) discussed further in prior blog posts here and here. However, in SEC v. Stanford International Bank Ltd, the court departed from this pattern in finding that discovery should first proceed under the Hague convention “in the interest of comity.” Civil Action No. 3:09–CV–0298–N, 2011 WL 1378470 at *14 (N.D.Tex. April 6, 2011).

In this case, the court previously determined that R. Allen Stanford, his associates, and various entities under Stanford's control (collectively “Stanford”) operated “a massive Ponzi scheme that stole approximately $8 billion from an estimated 50,000 investors scattered over more than 100 countries,” and accordingly, the Court appointed a Receiver to identify and take control of Stanford’s assets. Id. at *1. As third-party Société Générale Private Banking (Suisse) S.A. (“SocGen”) was believed to hold accounts belonging to Stanford, the Receiver sought to discover account records under the Federal Rules of Civil Procedure (“FRCP”). Id. at *2. SocGen, opposing discovery under the FRCP, argued that as the sought-after documents were located in Switzerland, compliance with the FRCP discovery request would “subject it and its employees to criminal, civil, and administrative penalties under Swiss law.” Id. Instead, SocGen argued that the Receiver should first utilize the discovery procedures of the Hague Convention, of which Switzerland is a signatory.

To determine under which mechanism discovery should proceed, the court applied the balancing of factors set out in Société Nationale Industrielle Aérospatiale v. U.S. District Court, 482 U.S. 522, 538, 107 S.Ct. 2542, 96 L.Ed.2d 461 (1987) (“Aérospatiale”) and Minpeco, S.A. v. Conticommodity Serv., Inc., 116 F.R.D. 517, 523 (S.D.N.Y. 1987). These factors include: (1) the importance to the litigation of the documents or other information requested; (2) the degree of specificity of the request; (3) whether the information originated in the United States; (4) the availability of alternative means of securing the information, (5) the competing interests of the nations whose laws are in conflict; (6) the hardship of compliance on the party or witnesses from whom discovery is sought; and (7) the good faith of the party resisting discovery under the Federal Rules. See id. at *4.

The court’s application of these factors was initially fairly typical. Factors 1, 2, and 4 were found to favor the Receiver, as the documents were “vital” to the receivership proceedings and not available anywhere else. In particular, the court noted that as it considered the Receiver to essentially be SocGen’s customer, the discovery request “constitutes no more than a bank customer asking for a copy of its own records.” Id. at *5-6, 8, and 11. Counseling the opposite conclusion, factors 3, 6, and 7 were found to favor SocGen, as the documents were only located in Switzerland; this defense was not raised in bad faith; and “comity counsels deference” to SocGen’s “potentially well-founded fear” that compliance with the discovery request under the Federal Rules could lead to prosecution. Id. at *7-8, and 12-13.

Where the Court’s analysis deviates significantly from other opinions is its consideration of the fifth factor, which in this case involves the competing interests of the U.S. and Switzerland. Whereas other courts found that U.S. discovery interests trumped foreign privacy concerns, the Stanford court found this factor to be neutral, after noting that any such balancing of interests would be “political” and “especially inapposite in this case, where the legislative authorities of both nations essentially have spoken by adopting the Convention.” Id. at *9. Compare id. (“the Convention inherently, and adequately, balances the competing sovereign interests here because its use will benefit U.S. interests by providing the needed evidence, and protect Swiss interests by avoiding intrusions upon Swiss sovereignty.”) with Gucci, 2010 WL at *7 (“[T]he Court concludes that the United States interest in fully and fairly adjudicating matters before its courts . . . outweighs Malaysia’s interest in protecting the confidentiality of its banking customers’ records.”).

On balance, the Stanford court found that the comity factors weighed in SocGen’s favor “at least in the first instance.” Id. at *13. Accordingly, the Receiver was to proceed with discovery under the Hague Convention, but was not precluded from renewing its request for discovery under the FRCP should its efforts be unsuccessful. Id. at *13-14. In so holding, the court acknowledged that others relied on the discretion provided by the Supreme Court in Aérospatiale as a “green light to generally ‘discard[ ] the treaty as an unnecessary hassle.’” Id. at *3 (citing In re Automotive Refinishing, 358 F.3d 288, 306 (3rd Cir. 2004)). However, this approach “ignores Aérospatiale's admonition to ‘exercise special vigilance’ in international discovery disputes . . . and exemplifies courts' intrinsic ‘proforum bias’ warned against by . . . the Aérospatiale minority.” Id.

While it is unclear the extent to which this approach will be followed by other courts in the future, this opinion illustrates that it is possible for litigants and third parties to successfully navigate cross border discovery conflicts even where privacy interests are at stake.

SIB Gets New Joint Liquidators

Antigua St John's - The Stanford Investment Bank (SIB) has new liquidators, as decided by Justice Mario Michel of the Eastern Caribbean Court of Appeal earlier this month.

The new liquidators, Marcus A Wide of the British Virgin Islands and Hugh Dickson of the Cayman Islands, replace Nigel Hamilton-Smith and Peter Wastell.

Alexander Fundora is the Stanford International Bank Ltd creditor who led the action to appoint new liquidators.

In a recent statement, Hamilton-Smith said his team is now focused on ensuring a smooth handover, including all in-progress claims, to the new appointees.

He said, “The new liquidators will be able to continue the good work in recovering assets for investors – including land assets in Antigua, funds in Switzerland, funds in the UK, and other asset tracing claims that may arise in the future.”

The former joint liquidators had reportedly been able to agree 12,083 investor claims, totalling more than US$4 billion.

“Our primary aim now is to ensure that this progress is continued,” Hamilton-Smith said.

He advised that SIB investors should contact the new joint liquidators at stanford.enquiries@uk.gt.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it for information about their claims.

The outgoing liquidators had previously provided an investor update on April 18, in which they outlined progress to date.

Wide and Dickson bring more than 60 years' combined experience in insolvency, and now specialize in offshore entities and complex and contentious cases. Wide in particular has liquidated over 30 failed banks in the Caribbean.