Allen Stanford Lawyer Sued by Receiver for Aiding Fraud

By Edvard Pettersson & Thomas Korosec (Bloomberg)


A lawyer who worked for convicted financier R. Allen Stanford and two law firms that employed the attorney were sued by the receiver for Stanford’s business over claims they aided his Ponzi scheme.

The court-appointed receiver, Ralph Janvey, filed a complaint yesterday in federal court in Dallas. He accuses Thomas Sjoblom, the lawyer, and Proskauer Rose LLP, where Sjoblom was a partner from 2006 to 2009, and Chadbourne & Parke LLP, where Sjoblom was a partner from 2002 to 2006, of aiding and abetting Stanford’s fraudulent scheme.

Stanford, 62, was convicted in March of stealing more than $2 billion from depositors at his Antigua bank to finance a lavish personal lifestyle that included private jets, yachts and mansions. He is serving a 110-year term in a federal prison in Florida as he appeals his conviction and sentence.
Sjoblom, in the summer of 2005, joined a conspiracy at Houston-based Stanford Financial to obstruct a U.S. Securities Exchange Commission investigation into the Ponzi scheme, according to Janvey’s complaint.

“Sjoblom, who had 20 years of experience as a senior lawyer in the SEC’s Enforcement Division, spent the next four years delaying and obstructing the investigation by lying to the SEC,” Janvey said.

Receiver’s Allegations

The receiver accuses the lawyer of falsely stating that he had personally confirmed Stanford Financial wasn’t a Ponzi scheme, instructing Stanford Financial to hide documents from the SEC, misrepresenting the existence and nature of the SEC’s investigation to Stanford Group Co.’s auditors, and offering false testimony to the SEC.

Sjoblom didn’t immediately respond to an e-mail after regular business hours yesterday seeking comment on the lawsuit.

Nick Clark, a spokesman for Proskauer, had no immediate comment, and Andrew Blum, a Chadbourne spokesman, didn’t immediately return a call seeking comment on the lawsuit after regular business hours.

The case is Janvey v. Proskauer, 13-00477, U.S. District Court, Northern District of Texas (Dallas).




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

http://sivg.org.ag/

The Stanford International Victims Group Forum

Stanford Judge Lets Receiver Raise Fee, Retains 20% Discount

Janvey and Little have got their pay rise while we the victims have just lost an additional amount of the pittance Janvey has in hand....and still not sign of any pay-out for the victims!! This is an absolute disgrace.  

By Andrew Harris and Edvard Pettersson - Apr 5, 2012

The court-appointed receiver for R. Allen Stanford can bill his time starting this year at 2012 rates with a 20 per cent discount in spite of objections by Stanford investors who haven't received any money so far.

 U.S. District Judge David C. Godbey in Dallas, in an order yesterday, imposed a 10 per cent "holdback" on out-of-pocket expenses. In a separate order today, Godbey approved the payment of $1.6 million in fees and expenses that the receiver, Dallas lawyer Ralph Janvey, had requested and said he could apply later for the held-back amount of $382,253.

 Janvey's outside counsel, Kevin Sadler, argued at a hearing yesterday that the receiver's team has been working at the same pay rates since 2009. Sadler said that Janvey, who regularly charges his clients $500 an hour, has been billing $340 an hour on the Stanford case and then discounting that by 20 per cent.

A federal jury in Houston last month found Stanford, 62, guilty of fraud in what prosecutors said was a $7 billion scheme involving bogus certificates of deposit at his Antigua-based bank. He's scheduled to be sentenced on June 14. J

anvey, whom Godbey appointed in February 2009 -- four months before Stanford was indicted -- and his outside professionals, including Baker Botts LLP (1143L), have been paid more than $52 million. That sum doesn't include a court-imposed $16 million hold-back.

The is Securities and Exchange Commission v. Stanford International Bank Ltd., 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas).

Stanford attorneys file another motion to delay trial

Stanford's attorneys are still pushing for delay, the judge should impose some sort of fine on them for wasting his and the courts time. The excuse this time is that a "non-attorney member of the defense team will not be available on that date"!! Can you believe it? They have had this date from Hitner for over 1 year and they have the nerve to say they will not be available!! How stupid and incompetent are these guys???

HOUSTON, United States, Monday January 16, 2012

The court-appointed attorneys for accused Ponzi schemer Allen Stanford have filed a new motion to delay the January 23 start of trial after being ordered to remain on the job.

They have asked for a continuance on the basis that a non-attorney member of the defense team will not be available on that date.

U.S. District Judge David Hittner said that request could be argued this week at a pre-trial hearing.

The judge previously denied a request by Stanford’s attorneys for the trial date to be delayed by three months.

Last Friday, the judge ordered Stanford’s four attorneys, among them Ali Fazel and Robert Scardino, to continue preparing for the trial after they submitted a withdrawal request two weeks ahead of jury selection. The attorneys said budget restrictions were hampering their effectiveness.

The judge, in a two-page order said, “The defense team’s primary reason for seeking such relief is based upon its self-proclamation that Stanford’s right to effective assistance of counsel will be impaired.

“The court notes that the defense team maintains this position despite the fact that two of its lawyers - Scardino and Fazel - have been appointed to this case since November 2010, and the other two lawyers - Parras and McGuire - have been appointed to this case since March 2011,” Judge Hittner added.

He also denied motions by the defense to throw out the case on constitutional grounds.

The 61-year-old Stanford was indicted in June 2009 on charges of defrauding investors through his Antigua-based Stanford International Bank Ltd. The former Texas financier has denied all wrongdoing.

State of Stanford's defense may leave questions

I can see Stanford trying to use this as a reason for a mistrial or an appeal if/when he is found guilty. Let's hope Hitner covers any exit doors during the trial.

By Loren Steffy, HOUSTON CHRONICLE

After three years, fallen billionaire R. Allen Stanford is set to go to trial in 10 days on charges he ran a $7 billion Ponzi scheme. Yet with the trial looming, his legal defense is in a shambles.

On Wednesday, his lawyers asked to withdraw from the case. A week before that, his expert witnesses quit because they hadn't been paid in three months.

Stanford's assets were frozen after his 2009 arrest, leaving him to rely on his company's insurance policy to pay for his defense. Stanford, who was denied bail and has remained in prison for almost three years, squandered most of the money on a revolving door of legal talent, going through 10 lawyers before the insurance company refused to pay for more.

Now, that money - like that of his investors - is gone. U.S. District Judge David Hittner has declared Stanford, who once reveled in a lavish lifestyle of private jets and Caribbean mansions, indigent. His current pair of lawyers is being paid with public funds.

The court has a limited budget from which to pay for indigent defense, and Stanford's share isn't nearly enough to address a case that as convoluted and globe-spanning as his. After balking at bills for the expert witnesses, the appeals court that controls his defense budget granted partial payment and ordered the experts to continue preparing for trial.

Then, according to Wednesday's filing by Stanford's lawyers, Hittner cut off pay for a jury consultant who had been helping the defense team prepare for the trial.

"As a result of the funding issues in this case and in light of the current trial deadlines, the defense will be compelled to try the case without having had the resources necessary to render constitutionally adequate representation, while the government has been entirely unfettered by any financial resource constraints," one of Stanford's attorneys, Ali Fazel, wrote in the filing.

The back-and-forth court decisions and the budget constraints have placed the defense in such an "untenable position" that they "cannot represent the accused competently," Fazel wrote.

Phillip Hilder, a Houston defense attorney who isn't involved in the case, said, "The defense is put in a no-win situation."

Hittner already told Stanford he can't have any more lawyers, so the judge is probably going to order the current legal team to see the case through.

Not like Enron
Stanford has become the anti-Skilling. Accused of complex financial crimes, his shoestring defense has little in common with the Enron executive's gold-plated and relentless legal campaign. Jeff Skilling still fights the charges against him, five years and tens of millions of dollars after his conviction.

"In Enron, you had a cohesive defense, you had clients who were not incarcerated, you had clients who were of a sound mind, and you had financial resources," said Hilder, who represented Enron whistle-blower Sherron Watkins, a government witness in Skilling's trial. "All of that is lacking in the Stanford case. It's just a comedy of missteps."

In filings last week, defense lawyers accused the government of violating Stanford's constitutional rights during his long pretrial incarceration because of injuries sustained in a beating he received from another inmate and an addiction to painkillers that resulted from those injuries that they say has left him mentally unable to aid in his defense.

What's more, Stanford's incarceration - which for much of 2011 was in North Carolina and which included stays in solitary confinement - has made it difficult for him to review defense materials, Fazel argued.

Wanting answers

It's hard to feel sorry for Stanford, whose firm wiped out the savings of many of his 22,000 investors. Justice may be served despite his hobbled defense, but in a case rife with questions about Stanford's political influence and why the government took so long to take action against him, the trial isn't likely to provide many answers.

Ex-SEC official fined for taking job with alleged Ponzi schemer

By David S. Hilzenrath, Published: January 13

A former Securities and Exchange Commission official has agreed to pay a $50,000 fine for going through the revolving door and working for alleged Ponzi scheme mastermind Robert Allen Stanford after purportedly taking part in SEC decisions to not investigate Stanford, the Justice Department said Friday.

Spencer C. Barasch, a lawyer who was head of enforcement in the SEC’s Fort Worth regional office, left the SEC in 2005 and went on to represent Stanford Financial Group briefly in an agency investigation, according to a March 2010 report by the SEC inspector general. In testimony to the inspector general’s office, Barasch gave this explanation, the report said: “Every lawyer in Texas and beyond is going to get rich over this case. Okay? And I hated being on the side-lines.” That was after Barasch participated in SEC decisions — going back to 1998 — to not pursue warnings that Stanford’s business might be conducting an investment fraud, according to the inspector general’s report. Barasch directed the closing of a preliminary investigation of Stanford in 1998, declined an SEC staff recommendation to investigate Stanford Financial Group in 2002 and declined to open a probe of the firm in 2003, the Justice Department said.

The Justice Department accused Barasch of violating a federal ethics law that makes it illegal for former federal officials to represent clients before their former agencies on matters in which they participated “personally and substantially” while working for the government, the inspector general’s office said in a news release Friday. Barasch has denied any wrongdoing, the Justice Department said. “At no time has he compromised his honour or ethics, and we vigorously dispute any suggestion to the contrary,” Paul Coggins, a lawyer for Barasch, said in a statement.

Barasch agreed to the settlement “to avoid the expense and uncertainty of protracted litigation,” Coggins said.

Under the civil settlement, Barasch agreed to pay the maximum fine for a violation of the statute, the Justice Department said. “Today’s settlement demonstrates that we will hold those that shirk their professional responsibilities accountable for their conduct,” Texas U.S. Attorney John M. Bales said in a statement Friday. “This misconduct highlights the dangers of a ‘revolving door’ environment between the SEC and the private securities law bar,” SEC Inspector General H. David Kotz said in a statement Friday.

The Justice Department’s agreement with Barasch was negotiated weeks ago but was kept on hold to give the SEC a chance to announce disciplinary action against Barasch at the same time, a person familiar with the matter said. The SEC, which has the authority to bar professionals from practicing before the agency, has not announced any disciplinary action. A second person familiar with the matter said that SEC commissioners on Thursday considered and rejected a settlement Barasch had reached with the SEC’s staff that would have barred him from practicing before the agency for six months.

Both spoke on the condition of anonymity to discuss what happened behind closed doors. “We’re still working on a resolution with the SEC,” Coggins said. Barasch “played a significant role in multiple decisions over the years to quash investigations of Stanford,” the report said. Barasch figured prominently in the March 2010 report examining the agency’s failure to stop Stanford despite repeated warnings over more than a decade.

The case highlights the revolving door between the SEC and law firms that defend people under investigation by the agency. It also involves one of the SEC’s biggest lapses.

In early 2009, after the collapse of Bernard Madoff’s massive investment fraud put Ponzi schemes in the spotlight, the SEC charged Stanford and his companies with operating an $8 billion fraud. The scheme allegedly involved false promises of guaranteed returns on certificates of deposit issued by a bank in Antigua. The Justice Department announced parallel criminal charges.

Stanford has been defending himself in the cases and is to go on trial Jan. 23.

The SEC has been under political pressure to help investors who put their trust in Stanford. In December, the SEC filed a lawsuit in federal court seeking to compel an investor protection fund bankrolled by the brokerage industry to backstop at least some of the investors’ losses.

As with Madoff’s epic Ponzi scheme, the SEC missed numerous chances to go after Stanford. But in Stanford’s case, some of the warnings were coming from the SEC’s staff. As early as 1997, a routine SEC examination of Stanford’s brokerage firm flagged potential misrepresentations to investors. In an internal agency tracking system, the business was described as a “possible Ponzi scheme,” the inspector general’s report said.

After leaving the agency, Barasch made three attempts to represent Stanford in connection with an SEC investigation of his new employer, the inspector general reported. Barasch initially e-mailed an SEC ethics official, saying he was “not aware of any conflicts” that would preclude his defense work, the inspector general reported.

Going through the revolving door is not ordinarily a crime, but various federal restrictions apply. The SEC ethics official determined in 2005 that Barasch was barred from representing Stanford, the inspector general reported. Nonetheless, the following year, Stanford retained Barasch to represent him in the probe, the report said. After he had already performed legal work for Stanford, Barasch for a second time sought SEC approval to represent Stanford and was again told he could not do so, the inspector general reported. “I needed the work. But I wanted it to be ethical work,” Barasch later told the inspector general’s office. After the SEC sued Stanford for fraud in 2009, Barasch again sought to represent him, the inspector general reported.

Barasch told the inspector general’s office that he decided to close an inquiry into Stanford in 1998 and refer the matter to the National Association of Securities Dealers, a self-regulatory group for the brokerage industry. Julie Preuitt, an SEC official who had been examining Stanford’s business, testified that she reacted to Barasch’s decision with “shock and disbelief and this incredible feeling of failure and great disappointment.” SEC examiners “dutifully conducted examinations of Stanford in 1997, 1998, 2002 and 2004, concluding in each case that Stanford’s CDs were likely a Ponzi scheme or a similar fraudulent scheme,” the inspector general’s report said. “While the Fort Worth examination group made multiple efforts after each examination to convince the Fort Worth enforcement program . . . to open and conduct an investigation of Stanford, no meaningful effort was made by enforcement to investigate the potential fraud or to bring an action to attempt to stop it until late 2005,” after Barasch left the agency, the inspector general said. Then, the SEC dropped the ball again, the report said. The only evidence of any investigative action taken in connection with the 1998 Stanford inquiry “was a voluntary request for documents” that the SEC sent to Stanford, the report said. After Stanford refused to produce documents, no further investigative steps were taken, the report said. A former enforcement official, Hugh Wright, testified that officials “thought it was a Ponzi scheme” but didn’t think they had enough facts to get the SEC’s leadership to authorize the use of a subpoena, according to the report. The enforcement staff’s main reservation about pursuing a Stanford probe in 1998 was a perceived “lack of U.S. investors” with a stake in the matter, SEC officials told the inspector general. Barasch told the inspector general’s staff that another factor in his decision not to pursue investigations was that Stanford’s certificates of deposit were issued by a foreign bank, according to the report. At the time, the SEC wanted to focus on cases of accounting fraud rather than Ponzi schemes, and the staff was under pressure to pursue “quick hit” cases that would boost its enforcement statistics, the inspector general reported.

The firm’s Web site says Barasch is the leader of its corporate governance and securities enforcement team, and that he has extensive experience defending clients in cases initiated by the SEC and other authorities. “Prior to joining Andrews Kurth as a partner, Spence spent 17 years with the SEC during which time he served in a variety of capacities, including director for the SEC’s enforcement program in the Southwest,” the site says. “While at the SEC, Spence directed high-profile investigations and litigation in all areas of the securities industry, often working closely with the DOJ and state and self-regulatory organizations,” the site says.

A study issued in May by the independent watchdog Project on Government Oversight (POGO) found that over a five-year period, 219 former SEC employees filed almost 800 disclosures saying they planned to represent clients or employers in dealings with the agency. The disclosures that POGO obtained through the Freedom of Information Act offered just a glimpse of the interaction between SEC alumni and the agency where they once worked, because former employees are required to make such disclosures only during the first two years after they leave the SEC.

Allen Stanford lawyers want out just before trial

By Jonathan Stempel | Reuters

Just 12 days before jury selection is to begin in a much-delayed case, lawyers for Allen Stanford, accused of running a $7.2 billion Ponzi scheme, have asked to withdraw from the case.

The request by Ali Fazel and Robert Scardino is the latest twist in a case in which Stanford, once believed to be a billionaire but who later claimed to be indigent, has employed roughly 14 different lawyers, and spent several months under medical care after being ruled incompetent to stand trial.

Fazel and Scardino, who were appointed by the court and are being paid with public funds, had previously sought to delay jury selection beyond the scheduled January 23 date.

In a joint filing on Wednesday with the U.S. District Court in Houston, they said rulings by the presiding judge David Hittner, budget matters and non-public issues make it "untenable" for them to stay on the case.

"The time and budgetary constraints imposed on defense counsel have operated to deprive the accused of counsel who are adequately prepared to render the constitutional threshold of effective assistance," they said. "Counsel cannot represent the accused competently."

A spokeswoman for the U.S. Department of Justice declined to comment.

It is unclear whether Hittner will grant the withdrawal request.

On December 28, he called the public interest in a speedy trial "particularly acute," citing charges that Stanford caused billions of dollars of losses and noting that the defendant has been in detention for 2-1/2 years since his June 2009 arrest.

"This case needs to be tried," he wrote.

Prosecutors accused Stanford of deceiving thousands of investors into buying bogus certificates of deposit from his Antiguan bank, Stanford International Bank Ltd.

The defendant faces a 14-count indictment in one of the largest white-collar fraud cases since Bernard Madoff was arrested in December 2008 for his Ponzi scheme, in which older investors are paid with money from newer investors.

Stanford also faces civil fraud charges by the U.S. Securities and Exchange Commission in a separate case.

Former SEC lawyer Spencer Barasch is expected, without admitting wrongdoing, to settle Justice Department civil charges over an apparent conflict of interest when he did some work for Stanford after leaving the Commission, people familiar with the matter have said.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No. 09-00342.

Stanford asks judge to delay trial after experts resign

By PURVA PATEL, HOUSTON CHRONICLE

Expert witnesses working for R. Allen Stanford's defense have resigned because they haven't been paid, according to a request made by the former billionaire's lawyers to postpone his trial.

Last week, U.S. District Judge David Hittner rejected a previous request for a 90-day continuance in the trial of Stanford, who is accused of swindling investors out of $7 billion. The latest request asks the judge to reconsider and notes Stanford - who was only recently deemed competent to assist his attorneys - needs time to go through the evidence in the case in order to assist in his defense.

So far, all expenses submitted to the district court have been within the budget previously submitted to the court, but experts haven't been paid for four months, according to a recent motion filed by Stanford's government- appointed lawyers.

Limitations on budget

The 5th Circuit Court of Appeals has also informed the attorneys that it intends to limit the expert budget moving forward and mandate that all payments be made after the trial ends, according to the motion.

"Counsel was informed by all experts that they cannot continue to assist the defense under the new parameters. ... All experts have therefore tendered their resignations to counsel and have ceased all work relating to this matter," the motion states.

The attorneys, therefore, can't prepare for trial or meet the court's deadlines, they argue.

Robert Scardino, an attorney for Stanford, declined to comment Monday.

While the district court usually handles approval of payments for indigent defendants like Stanford, the circuit court may step in when a case's budget looks like it will exceed the allocated funds, said Philip Hilder, a Houston attorney and former federal prosecutor.

There is usually an arbitrary lag time of weeks or months before payments are made after being submitted, but in such a time-consuming case, experts aren't necessarily going to "take it on good faith that they're going to get paid," Hilder said.

Ineffective counsel?

"The defense is in a difficult position because this particular case is expensive and yet they have a duty and obligation to zealously defend Mr. Stanford," Hilder said. "Unless the defense can properly and adequately utilize expert testimony, Mr. Stanford may have a claim for ineffective counsel."

Previously, Stanford's lawyers have claimed he suffered brain damage in a jailhouse attack that rendered him unable to assist in his own defense. His original trial date in January 2011 was postponed so he could undergo a series of evaluations at a federal prison hospital.

Hittner ruled last month that Stanford was competent, denied the lawyers' first request for more time to prepare for trial and ordered jury selection to begin Jan. 23.

Stanford, 61, who headed Houston-based Stanford Financial Group, maintains he is innocent of the 14 charges he faces.

He has been held without bail since his June 2009 arrest.

A federal indictment alleges Stanford and others defrauded investors who bought certificates of deposit issued by Stanford's bank in the Caribbean island nation of Antigua.

Three co-defendants are free on bail and will be tried later, and a fourth is fighting extradition from Antigua.

Stanford Group's chief financial officer was charged separately, pleaded guilty and is expected to testify if the case comes to trial.

Stanford Fallout Continues in Dallas

by BYRON HARRIS

DALLAS -- The $7 billion Ponzi scheme allegedly masterminded by Houston's Allen Stanford has a Dallas component.

The receivership aspect off the proceeding, involving all the property and its victims, is in a federal district court in Dallas.

The case is now 32-months-old. Angry lawyers and their clients gathered Thursday to find out the status of the case.

John Wade, a Louisiana veterinarian, who lost his company's pension to Stanford and also represents 1500 victims in Louisiana, was at Thursday's hearing.

"I see people that have died," said Wade, describing what's happened in the months while the case has languished.

"I see people that have gone through and tried to hold onto their assets and ultimately they've lost them," he said.

Some of the issues in the Dallas case are how much money and property is at stake, its location and who should have a voice in the matter.

Many of Stanford's investors were from Central and South America. His company was headquartered on the island of Antigua, which wants a prominent voice in the case.

Meanwhile lawyers administering the proceedings have already charged tens of millions of dollars in fees, while victims have received nothing.

"We're looking at recovery of maybe 10 or 15 cents on the dollar in liquidation of assets which for some of these people is not nearly enough," said Ed Snyder, attorney representing victims.

The criminal trial of Allen Stanford was supposed to happen January 2011. It has been delayed until January 2012, while his mental competency is evaluated. Lawyers told the Dallas courtroom it may well be delayed again.

Former Texas billionaire R. Allen Stanford remains in a Houston prison. Stanford is accused of putting the money in fake certificates of deposit.

Stanford Judge Says Receiver May Need to Conclude Search for ‘Pot of Gold’

By Laurel Brubaker Calkins and Andrew Harris

R. Allen Stanford’s court-appointed receiver may need to stop searching for a secret “pot of gold” and pay defrauded investors from the assets he has recovered so far, the judge overseeing the case said.

“I’m concerned the receiver is expending resources that could otherwise be distributed to investors trying to track down missing resources,” U.S. District Judge David Godbey said during a hearing today in Dallas for dozens of Stanford-related civil cases.

Stanford, 61, was sued by the U.S. Securities and Exchange Commission in February 2009 on claims he swindled investors of more than $7 billion through allegedly bogus certificates of deposit at his Antigua-based Stanford International Bank.

“If we knew where it was and were able to go get it, we would have,” SEC attorney David Reece told Godbey, referring to Stanford’s missing billions.

“When the U.S. Justice Department has already checked and there’s no pot of gold, then the receiver can stand down,” Godbey told lawyers for the receiver and investors. “There’s apparently not some trail to a $5 billion secret Swiss bank account that anyone knows about.”

Awaiting Trial
Stanford, who denies all wrongdoing, has been in custody as a flight risk since his indictment on parallel criminal charges in June 2009. He is being treated for a prison-acquired addiction to anxiety drugs while he awaits trial, set for January in Houston federal court.

Godbey told lawyers in Dallas today he’s concerned that receiver Ralph Janvey is duplicating efforts by U.S. prosecutors, who are also tracking Stanford’s assets overseas. The Justice Department has won administrative freezes on more than $300 million in Stanford-related bank accounts in Switzerland and the United Kingdom. These accounts are beyond Janvey’s control and may represent the receivership’s largest category of recoverable assets, according to court filings.

The Stanford receivership has about $100 million in unrestricted cash on hand, Kevin Sadler, Janvey’s lead lawyer, told Godbey today. This represents proceeds from the sale of virtually all of Stanford’s U.S. real estate and private equity holdings, after payment of the receivership’s fees and expenses.

Antigua, Barbuda
Stanford owned additional real estate in the Caribbean nation of Antigua and Barbuda, which is under the control of a separate liquidator appointed by that nation’s government. Lawyers for Janvey and Stanford’s Antiguan liquidators told Godbey today that they can’t agree how to share control of Stanford’s island properties and investor records located in Antigua.

“The U.S. receiver has liquidated 95 percent of what the receiver has control over that’s sellable,” Sadler told Godbey. “We’re basically out of the real estate business and the private equity business. We’ve got some lawsuits that’ll go on for years. And we’ve got some cash, but not enough to distribute right now because of the cost.”

Sadler said if the U.S. receiver gained control of the frozen U.K. and Swiss bank accounts and sold the Antiguan real estate, then there might be enough cash to justify the cost of creating a claims process to distribute recovered assets to investors.

“It’s not going to get cheaper the longer you wait,” Godbey told Sadler.

‘In Limbo’
“If we leave this just in limbo for another two or three years waiting to see if there’s a bigger pot of money, it may be difficult for people to put together claims,” Godbey said. “The prospects of finding a secret Swiss bank account with $5 billion in it is not something you’re holding out much hope for.”

The U.S. receiver and an official investors’ committee have filed more than 100 fraudulent transfer and aiding-and-abetting lawsuits, seeking to claw back proceeds from CD investors or payments to vendors, consultants or financial advisers who worked with Stanford’s companies. Court filings estimate these actions, if successful, could return as much as $500 million to the estate.

“We’ve sued everyone we can find,” Sadler told Godbey today.

Godbey asked the receiver for a plan detailing “what needs to be done to bring this to a conclusion and what it will cost” to complete the task of repaying Stanford’s investors. He didn’t set a timetable for further action on the matter

Supreme Court Nixes Allen Stanford Request To Review Case

Source: TPMMuckraker

The Supreme Court has denied the alleged Ponzi-schemer Allen Stanford's request for writ of certiorari, according to a letter filed by a court clerk last week. Stanford's previous legal team had requested the high court direct the lower court send the record in the case for review.

Lawyers for Stanford are awaiting a judge's decision on their request for Stanford to be released from federal custody and admitted to a rehabilitation program to treat his addicted to an anti-anxiety medication.

Meanwhile, several of those allegedly defrauded by Stanford say they plan to have a Massachusetts lawyer to sue the federal government for failing to take timely regulatory action against Stanford.

Information for those Considering Submitting their own FTCA Claims.

COMMON PROBLEMS WITH FTCA CLAIMS

I am no expert in correctly filling out an administrative claim under the FTCA.

I was given this by another investor who has been researching this for more than a year. These are the pitfalls and the relevant case law you will need to know if you decide to make your own claims without entrusting it to a lawyer or other expert:-


Below are just some of the problems that claimants run into... a person who wants to file their own claim should either read a lot of case law or consult with an attorney before filing out the SF-95 claims form... pretty tough to make this concise.


Must Include Sum Certain. See 28 U.S.C. §§ 2401, 2675(b); 28 C.F.R. § 14.2 Hamilton v. U.S., 741 F. Supp. 1159 (D.N.J. 1990). Failure to state a sum certain constitutes a fatal defect in the claim.

Complaints to Individuals. A complaint to an individual U.S. employee is not a claim; includes treating physician, facility commander or administrator, or IG. Winston Brothers Co. v. U.S., 371 F. Supp. 130 (D. Minn. 1973); Sullivan v. U.S., 428 F. Supp. 79 (E.D. Wis. 1977). Contra Blue v. U.S., 567 F. Supp. 394 (D. Conn. 1983). See also Roper Hospital, Inc. v. U.S., 869 F. Supp. 362 (D.S.C. 1994) (letter to Office of Personnel Management (OPM) by civilian hospital requesting review of denial of Mail Handler's benefits does not constitute a claim);

Spouse’s Name on SF 95 Not Sufficient. Identifying claimant's spouse as such on SF 95 not sufficient to present written demand for spouse. Rucker v. Department of Labor, 798 F.2d 891 (6th Cir. 1986). See also Nazarenus v. U.S., 1996 U.S. Dist. LEXIS 4096, 1996 WL 156408 (E.D. Pa.) (same); Davis v. U.S., 834 F. Supp. 517 (D. Mass. 1993) (same); Richardson v. U.S., 831 F. Supp. 657 (N.D. Ind. 1993) (spouse must file separate claim for loss of consortium–cites McNeil v. U.S., 508 U.S. 106 (1993), appealed from 7th Cir.);

Failure to Provide Specific Facts. Shoemaker v. U.S., 1997 U.S. Dist. LEXIS 2322, 1997 WL 96543 (S.D.N.Y.) (Claim that does not state place and date is not a claim since it is so attenuated and insubstantial under Hagans et al. v. Lavine, 415 U.S. 528 (2d Cir. 1974)).

Appropriate Documentation. Accompanied by appropriate evidence and information (28 C.F.R. § 14.4). A proper claim has sufficient documentation to permit investigation. Cook v. U.S. on behalf of Department of Labor, 978 F.2d 164 (5th Cir. 1992); Tidd v. U.S., 786 F.2d 1565 (11th Cir. 1986). Failure to document administrative claim results in dismissal of suit.

Valid Claims Only. Only a valid claim can be amended–not one lacking a sum certain. Christides v. U.S., 2004 U.S. Dist. LEXIS 7706 (N.D. Ill.) Letter received several days before SOL ran but not containing sum certain or place of accident cannot be amended by SF 95 received after two years ran.

So, filing an invalid claim a few days before the SOL runs out is a terrible way to throw away your chance at recovery under the FTCA.

Stanford's Lawyers Say They Need Two More Years to Prepare for Fraud Trial

Source:Laurel Brubaker Calkins (Bloomberg)


Lawyers for R. Allen Stanford, the Texas financier accused of a $7 billion Ponzi scheme, asked to delay a trial set to begin Jan. 24 for at least two years so they can prepare their defense.

Stanford’s trial preparation suffered during the first nine months of this year because his previous lawyer “focused on attempting to obtain funds from the insurance provider” more than on the financier’s defense,” the lawyers, Ali Fazel and Richard Scardino, said yesterday in a court filing. “During this period of time, the accused determined that little progress was made toward actual trial preparation.”

Fazel and Scardino were appointed as Stanford’s attorneys in October, after U.S. District Judge David Hittner in Houston declared the former billionaire indigent. They told Hittner in October that they would try to be ready for a January trial, which was then about 90 days away.

In requesting a delay yesterday, the lawyers said they won’t have enough time to properly analyze more than 5 million documents and dozens of potential witnesses before the current trial date.

Stanford, 60, has been detained as a flight risk since June 2009 on charges he swindled investors through the sale of bogus certificates of deposit by Antigua-based Stanford International Bank Ltd. His lawyers also have asked that Stanford be released on bond, claiming he is too heavily medicated in prison to participate in his defense.

Mental Fitness

Stanford’s personal doctor declared him incompetent to stand trial in court papers this month, and his lawyers have asked for a hearing to gauge the financier’s mental fitness, according to court records. Prosecutors received court approval to conduct their own psychiatric evaluation of Stanford, according to court records.

Fazel said in yesterday’s filing that the government, while it doesn’t oppose a delay, “wishes to be heard on the length of the continuance.”

Laura Sweeney, a Justice Department spokeswoman, declined to comment.

Stanford, who denies all wrongdoing, is on his fifth team of criminal defense lawyers after losing a court fight over access to $100 million in legal defense insurance coverage through his Stanford Financial Group of companies.

Stanford fired two successive criminal-defense lawyers in 2009 after each experienced what they described as personality and strategic conflicts with the jailed financier. Stanford was also briefly represented by the Houston Federal Public Defender’s Office and by two lawyers who were allowed to withdraw from the case after Stanford lost his insurance coverage in September.

Jets, Yachts, Island

Stanford was ranked by Forbes magazine as one of the world’s richest men in 2008, with an estimated net worth of more than $2 billion including a fleet of jets, yachts and a private Caribbean island. All of his corporate and personal assets were frozen by court order when the U.S. Securities and Exchange Commission accused him of running a “massive” Ponzi scheme in February 2009.

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

Lawyer says Stanford has fired him, too

One of jailed businessman R. Allen Stanford's two new lawyers on Friday asked a judge to let him withdraw from the case, saying Stanford has fired him.

Less than six weeks ago Mike Essmyer, a longtime Houston criminal defense lawyer, told U.S. District Judge David Hittner that Stanford wanted Essmyer and Robert S. Bennett to be his new legal team because of a conflict with his last set of lawyers.

But in his motion, Essmyer said he's had irreconcilable differences with Stanford, who fired him in writing. Essmyer said he's also had irreconcilable differences with Bennett.

Essmyer complains that though he is lead counsel, Bennett has acted independently.

It is unclear whether Hittner will let Essmyer withdraw. The judge was adamant in April that Bennett and Essmyer were the last counsel of record for Stanford, who has changed attorneys several times.

But Essmyer notes in his motion that Bennett has told insurers he has hired 15 other lawyers to work with him, including Harvard Law professor and former O.J. Simpson lawyer Alan Dershowitz.

Stanford, 60, founder and chairman of Stanford Financial Group, faces 21 federal criminal charges in connection with what the government calls a $7 billion Ponzi scheme.

Stanford has pleaded not guilty to all charges and has been detained as a flight risk since his indictment.

Essmyer had no comment late Friday, and Bennett could not be reached for comment

Stanford's Lawyer Played Key Role In Shielding Banker From Scrutiny

We told you arlier today about Yolanda Suarez, the Florida lawyer who forged ties with members of Congress and ran interference with journalists on behalf of Allen Stanford. But it's also worth paying attention to another Florida lawyer and key Stanford ally, who appears to have played an equally crucial role in allowing the Texas banker -- who was charged in June with orchestrating a multi-billion dollar Ponzi scheme -- to stay a step ahead of the government for so long.

As Stanford's lawyer of choice, Carlos Loumiet helped set up the unusual regulatory arrangement that allowed the Stanford Financial Group (SFG) to move hundreds of millions of dollars from Florida to Antigua with little scrutiny. Soon afterwards, he served on a Stanford-funded task-force to rewrite Antigua's banking laws -- an effort that U.S. regulators have said left major loopholes and hindered efforts to crack down on fraud. And the court-appointed receiver seeking to unravel Stanford's far-flung financial empire has demanded that the two law firms that have employed Loumiet -- who hasn't been charged with any wrongdoing -- hand over records of their work on behalf of Stanford.

As the Miami Herald reported earlier this year, the story starts in 1998, when Stanford wanted to set up an easy way to move money from SFG's Miami office, which sold certificates of deposit to investors, to Antigua, where his banking empire was headquartered.

He turned to Loumiet, at the time a lawyer at Greenberg Traurig. That's the Miami firm where Suarez, then SFG's legal counsel, had previously worked, and which would later become known as the firm from which Jack Abramoff bribed government officials. As the Herald has also reported, despite the objections of the state's top banking lawyer, Loumiet prevailed on Florida officials to allow SFG to set up a special trust office that could move money to Antigua without submitting to fraud or money -laundering checks. With the money pipeline established, the Herald reported, the Miami office sold millions in CDs over the next decade, then used jets to fly the checks, stuffed in pouches, to Antigua.

That wasn't the end of Loumiet's service to Stanford though. About a year later, the Clinton administration, as part of an effort to crack down on money laundering, was considering cutting off access to U.S. currency for all offshore institutions in Antigua.
In order to convince U.S. regulators to back off, Stanford volunteered to organize and fund a task force to re-write Antigua's banking laws -- allowing him to appoint the task force's members. Stanford named Loumiet and another Greenberg lawyer, Patrick O'Brien.

Loumiet touts the experience in the bio on his law firm website. But the revised laws that he and his fellow panelists drew up were denounced by the U.S. government as containing loopholes that made it even harder than previously for regulators to access bank records. In a letter to the Antiguan Prime Minister, the Treasury Department complained that the island nation had "weakened its anti-money laundering laws to the point they are now significantly below international standards, making Antigua more vulnerable to money laundering."

In an interview with the Washington Post at the time, Loumiet defended Stanford and suggested the U.S. and Britain did not have Antigua's best interests at heart. "Allen Stanford did not feel that if this was done with the benevolent help of the U.S. and Britain it would help Antigua," he said. "They were trying to put the fox in charge of the chicken coop, and frankly the chickens weren't very happy about it."

In any case, the panel had done its job. Stanford's operation continued largely free from regulatory scrutiny.

But Stanford still appears to have taken pains to keep Loumiet involved. When, in 2001, the lawyer moved from Greenberg to Hunton & Williams, where he remains, Stanford switched to the new firm and continued to use Loumiet as a lawyer.

That wasn't all Stanford used Loumiet's new firm for. Since 2000, Stanford Financial Group, like many large companies, had hired lobbyists to promote its interests in Washington. But, according to lobbying disclosure reports, Hunton was hired in 2005 to lobby Congress on tax issues, on behalf of Stanford personally. A spokeswoman for the firm declined to discuss what the work consisted of.

The court-appointed receiver on the Stanford case, Ralph Janvey, appears to see Loumiet's work as central to the operation. Janvey has asked both Greenberg and Hunton for files containing records of their work for Stanford. Hunton has handed over some files, but is fighting to keep others secret, citing legal issues regarding jurisdiction and client privilege.

A request to Loumiet from TPMmuckraker to discuss his work on behalf of Stanford was referred to a Hunton spokeswoman, who declined to comment.

Allen Stanford’s Trial Set to Start in January 2011

Allen Stanford’s trial on allegations that he led a $7 billion fraud scheme will begin in January 2011 in Houston federal court, U.S. District Judge David Hittner ruled.

Stanford’s lawyer, Kent Schaffer, had asked Hittner not to begin the trial until the summer of 2011. He said if defense lawyers have to proceed without resources provided by Stanford’s insurance policies, it could take as long as two and a half years to properly prepare for trial.

“The criminal case is going to get underway and it’s going to go on schedule,” Hittner said. “That is a solid date.”

Hittner convened a hearing over a request by Stanford and his co-defendants for a preliminary injunction forcing Lloyd’s of London to advance them defense costs. Lloyd’s lawyer called Stanford and his three co-defendants to testify at today’s hearing to the truth of facts alleged in the indictment, the regulatory case complaint and the receiver’s forensic report into Stanford’s financial services empire.

Each of the defendants declined to take the stand, through his criminal attorney, on the basis of the constitutional right against self incrimination.

Hittner questioned why Lloyd’s would ask the defendants about the alleged criminal acts under oath, since they have already pleaded innocent.

“If they plead the fifth, we get an inference that the answer would be favorable to us,” said Barry Chasnoff, a lawyer for Lloyd’s, referring to the Fifth Amendment to the U.S. Constitution.

Waiting for Ruling

Stanford must wait to learn if Hittner will order Lloyd’s to fund his defense, under directors and officers policies which Chasnoff said are worth about $100 million. Hittner allowed Lloyd’s and the Stanford defendants to present evidence and argument on whether the underwriters may refuse to pay the defense lawyers.

Hittner today deferred ruling on a request by Stanford and three co-defendants for an injunction barring the underwriters from voiding the insurance because a colleague who pleaded guilty said there was criminal activity at Stanford Financial Group Co.

The Stanford defendants, whose assets have been frozen by a court order in a related case, say they can’t afford lawyers without the Lloyd’s proceeds.

Stanford and the other executives in June were indicted by a U.S. grand jury on charges they ran a Ponzi scheme based on the sale of certificates of deposit through Antigua-based Stanford International Bank Ltd.

Prosecution

Stanford deceived investors about the nature of the investments and their oversight, while using money taken from later depositors to repay earlier ones, prosecutors said.

The financier, along with Chief Investment Officer Laura Pendergest-Holt and two other company officials, have denied the allegations.

Stanford appeared today in court in wearing green prison clothing and a salt-and-pepper beard. He was not in leg irons and guards loosened one handcuff during the hearing. Stanford did not speak to but glanced often at family members packed into the first row of the gallery. Spectators included his mother and father, his fiancé, his adult daughter, and a former girlfriend and her two children with Stanford.

Stanford Financial Group Chief Financial Officer James M. Davis in August pleaded guilty to three felony counts. Based on admissions in his plea agreement, attorneys for Lloyd’s last month told Hittner they were no longer obligated to pay for the legal defense of the remaining executives.

Felony Counts

Stanford faces 21 felony counts as well as parallel civil claims by the U.S. Securities and Exchange Commission, which sued him in Dallas and obtained a court order there freezing his assets.

While a criminal defendant who lacks money for a lawyer may have an attorney appointed by the court, there is no such provision for civil lawsuits. The loss of Lloyd’s coverage could leave Stanford without the ability to pay for counsel in the SEC case.

The court, not the insurer, should decide whether one defendant’s guilty plea can invalidate coverage for them all, attorneys for the executives have argued in court filings.

“Underwriters unilaterally have acted as both the judge and jury by concluding that their insureds are guilty and thus not entitled to the contractual protections afforded by the policies -- including the right to have their defense funded by the very policies purchased to provide such protection,” Lee H. Shidlofsky, a lawyer for the executives, said in a Dec. 14 court filing.

Economic Risk

“While plaintiffs’ constitutional rights and ability to defend themselves are in danger, the risk for underwriters is strictly economic,” said the attorney, a partner at Visser Shidlofsky LLP in Austin, Texas.

Lloyd’s countered that it was within its rights to exclude coverage for criminal activities.

“The D&O policy makes clear that underwriters did not intend to insure a criminal enterprise,” Neel Lane, a lawyer for Lloyd’s, said in Dec. 15 filing.

Today Shidlofsky said that if Lloyd’s doesn’t pay the legal fees, “it’s going to fall on the taxpayers. That is a significant chunk of change to saddle taxpayers with.”