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.
Tuesday, 9 August 2011
Friday, 5 August 2011
Stanford liquidators to access $20m of assets
By Jane Croft in London - ft.com
Grant Thornton, the liquidators of Allen Stanford’s business empire, will be permitted to draw down up to $20m of the $100m of assets currently frozen in London, a judge has ruled.
Mrs Justice Gloster, sitting at London’s Central Criminal Court, ruled that the liquidators of Antigua-based Stanford International Bank can use the funds to launch legal action against third parties and to market and sell property assets once owned by the cricket-loving tycoon, who has been accused of orchestrating a multibillion-dollar fraud, which he denies.
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Initially some $5m of the assets, which are partly tied up in London hedge fund accounts, will be drawn down by the liquidators, who can access up to $20m of funds in total.
Grant Thornton, which came on board as liquidator to SIB in May, has already received approval from an ad hoc creditors’ committee for its action plan aimed at helping realise value from Antiguan assets for the victims of the alleged Ponzi scheme.
Marcus Wide, joint liquidator, told the Financial Times that part of the funds would be used to launch litigation to help secure $70m of value from properties in Antigua – including the headquarters of SIB – which are currently frozen by a court order.
“We will also do a property survey of the real estate and get expert advice on it and we will also be filing legal claims against third parties before we run out of time,” he said
Mr Wide added that funds would also be spent on minor development of certain assets – such as finishing a port facility that is 95 per cent complete and building a road across Pelican Island, an Antiguan island, which could help push up its market value.
The liquidators have argued in a recent letter to creditors that the additional funds would help unlock underlying value in the real estate as it would enable sales over a period of time rather than in a quick sale.
The London court was told this week by Grant Thornton – which is being advised by law firm Lawrence Graham – that if the judge did not approve the application, they were considering alternative financing from a hedge fund to pursue the action plan.
The application made this week in the London courts was fiercely opposed by lawyers for the UK’s Serious Fraud Office acting on behalf of the Department of Justice, which believes the money should ultimately be repatriated to the US.
Mr Stanford’s trial was postponed in January in order to allow him to wean himself off a cocktail of anti-anxiety drugs. His knighthood was revoked after criminal charges were filed.
Grant Thornton, the liquidators of Allen Stanford’s business empire, will be permitted to draw down up to $20m of the $100m of assets currently frozen in London, a judge has ruled.
Mrs Justice Gloster, sitting at London’s Central Criminal Court, ruled that the liquidators of Antigua-based Stanford International Bank can use the funds to launch legal action against third parties and to market and sell property assets once owned by the cricket-loving tycoon, who has been accused of orchestrating a multibillion-dollar fraud, which he denies.
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Initially some $5m of the assets, which are partly tied up in London hedge fund accounts, will be drawn down by the liquidators, who can access up to $20m of funds in total.
Grant Thornton, which came on board as liquidator to SIB in May, has already received approval from an ad hoc creditors’ committee for its action plan aimed at helping realise value from Antiguan assets for the victims of the alleged Ponzi scheme.
Marcus Wide, joint liquidator, told the Financial Times that part of the funds would be used to launch litigation to help secure $70m of value from properties in Antigua – including the headquarters of SIB – which are currently frozen by a court order.
“We will also do a property survey of the real estate and get expert advice on it and we will also be filing legal claims against third parties before we run out of time,” he said
Mr Wide added that funds would also be spent on minor development of certain assets – such as finishing a port facility that is 95 per cent complete and building a road across Pelican Island, an Antiguan island, which could help push up its market value.
The liquidators have argued in a recent letter to creditors that the additional funds would help unlock underlying value in the real estate as it would enable sales over a period of time rather than in a quick sale.
The London court was told this week by Grant Thornton – which is being advised by law firm Lawrence Graham – that if the judge did not approve the application, they were considering alternative financing from a hedge fund to pursue the action plan.
The application made this week in the London courts was fiercely opposed by lawyers for the UK’s Serious Fraud Office acting on behalf of the Department of Justice, which believes the money should ultimately be repatriated to the US.
Mr Stanford’s trial was postponed in January in order to allow him to wean himself off a cocktail of anti-anxiety drugs. His knighthood was revoked after criminal charges were filed.
Thursday, 4 August 2011
Stanford liquidators apply to use assets
By Jane Croft ft.com
The liquidators of Allen Stanford’s business empire have made an application for $20m to be released from an estimated $100m of assets frozen in the UK so they can help recover other assets for victims of the alleged Ponzi scheme.
Grant Thornton, the liquidators of Antigua-based Stanford International Bank, made the application to London’s Central Criminal Court. The court heard that the liquidators would make use of the funds for lawsuits and to help manage and market property assets in the West Indies.
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The application was opposed by lawyers for the UK Serious Fraud Office on behalf of the US Department of Justice which says the money should ultimately be repatriated to the US. The assets, mostly invested in hedge funds, were frozen after an earlier Court of Appeal ruling.
Mr Stanford was accused in 2009 of orchestrating a multibillion-dollar fraud, which he denies. His trial was postponed in January to allow him to be treated for his addiction to anti-anxiety drugs. His knighthood was revoked after criminal charges were filed.
At the height of his success, he had a significant presence in Antigua. He was the island’s largest private employer, and the institution at the heart of the alleged Ponzi scheme – Stanford International Bank – was domiciled in the capital, St John’s.
Andrew Bodnar, acting for the liquidators, told the court on Wednesday they wanted permission to draw down $5m initially and then potentially further sums up to a maximum of $20m.
Mr Bodnar told the court that “it would be very different if I was asking for the entirety of the London assets”, and added he was asking “that the money is made available to ensure the liquidators do not run out of funding in pursuit of these assets”.
He told the court that the liquidators were newly appointed and had put forward a new action plan which had been approved by the creditors’ committee.
The court heard the liquidators, who have asked for a speedy decision on the issue, were also looking at the alternative of finance from a hedge fund to cover the legal claim and were facing an imminent decision on whether to sign up to this alternative.
Andrew Mitchell QC, acting for the SFO on behalf of the DoJ, told the court the DoJ had made it clear that it wanted the $100m of assets ultimately to be repatriated to the US.
“For every cent that’s released it’s one cent less for the victims – that’s the problem,” he told the court.
The liquidators of Allen Stanford’s business empire have made an application for $20m to be released from an estimated $100m of assets frozen in the UK so they can help recover other assets for victims of the alleged Ponzi scheme.
Grant Thornton, the liquidators of Antigua-based Stanford International Bank, made the application to London’s Central Criminal Court. The court heard that the liquidators would make use of the funds for lawsuits and to help manage and market property assets in the West Indies.
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The application was opposed by lawyers for the UK Serious Fraud Office on behalf of the US Department of Justice which says the money should ultimately be repatriated to the US. The assets, mostly invested in hedge funds, were frozen after an earlier Court of Appeal ruling.
Mr Stanford was accused in 2009 of orchestrating a multibillion-dollar fraud, which he denies. His trial was postponed in January to allow him to be treated for his addiction to anti-anxiety drugs. His knighthood was revoked after criminal charges were filed.
At the height of his success, he had a significant presence in Antigua. He was the island’s largest private employer, and the institution at the heart of the alleged Ponzi scheme – Stanford International Bank – was domiciled in the capital, St John’s.
Andrew Bodnar, acting for the liquidators, told the court on Wednesday they wanted permission to draw down $5m initially and then potentially further sums up to a maximum of $20m.
Mr Bodnar told the court that “it would be very different if I was asking for the entirety of the London assets”, and added he was asking “that the money is made available to ensure the liquidators do not run out of funding in pursuit of these assets”.
He told the court that the liquidators were newly appointed and had put forward a new action plan which had been approved by the creditors’ committee.
The court heard the liquidators, who have asked for a speedy decision on the issue, were also looking at the alternative of finance from a hedge fund to cover the legal claim and were facing an imminent decision on whether to sign up to this alternative.
Andrew Mitchell QC, acting for the SFO on behalf of the DoJ, told the court the DoJ had made it clear that it wanted the $100m of assets ultimately to be repatriated to the US.
“For every cent that’s released it’s one cent less for the victims – that’s the problem,” he told the court.
Tuesday, 2 August 2011
Both parties scheme for Ponzi cash
By Jim McElhatton - The Washington Post
The fundraising arms for Democratic and Republican members of Congress don’t agree on much, except when it comes to all the big donations they’ve gotten over the years from jailed financier R. Allen Stanford.
In recent days, the Democratic Senatorial Campaign Committee (DSCC), the National Republican Congressional Committee (NRCC) and other party organizations appealed a court order to return more than $1.7 million combined they received that were tied to Mr. Stanford’s alleged multibillion-dollar bilking of thousands of investors. He’s in jail awaiting trial on charges of running a Ponzi scheme while a court-appointed receiver tries to recoup money for investors.
The appeals come a month after a federal judge in Texas ordered the organizations to return the money. But in a recent court filing, attorneys for the DSCC and the Democratic Congressional Campaign Committee, which owe more than $1.2 million combined, asked for a stay before having to turn over the money. They want to post bond or a letter of credit pending an appeal.
Meanwhile, in a separate set of court papers, attorneys for the NRCC, the Republican Senatorial Campaign Committee and Republican National Committee filed a notice to appeal the ruling, too.
“After thoroughly reviewing the court’s decision and the relevant law, and in light of an important change in the precedent on which the court relied, we believe we have an excellent chance of success,” said Kirsten Kukowski, spokeswoman for the RNC.
The combined legal efforts of the political parties show the lengths political committees mdash; Democrat and Republican alike — will go to protect party coffers with control of Congress and the White House up for grabs in 2012.
“Stanford aimed most of his campaign contributions to congressional leaders and party bosses, and eventually started giving heavily to presidential candidates as well, which coincided with the weakening of offshore disclosure and tax regulations that directly benefited Stanford’s shady business,” said Craig Holman, legislative representative for the D.C.-based watchdog group Public Citizen.
“Like other campaign contributions tainted by scandal, candidates and the party committees should try to show that they personally have not been influenced by the money and turn Stanford contributions over to charity,” he said.
Federal law allows campaign committees to part with donations in several ways. They can return contributions, donate them to charity or send the money to the U.S. Treasury.
But Ralph Janvey, receiver in the Stanford case, wants the money returned to investors. In addition to taking the major-party fundraising committees to court, the receiver previously sent letters to dozens of other politicians who received Stanford money over the years. More than a year later, he’s still waiting.
According to the most recent accounting last month, politicians have returned $132,500, with nearly $1.8 million still not yet returned, though most of that is still in the hands of the party fundraising groups fighting in court.
Aside from the political committees, Rep. Charles B. Rangel, New York Democrat, appears to be the biggest beneficiary of Stanford cash among those who have yet to return donations. The Rangel Victory Fund received $25,000 from Mr. Stanford, his associates and businesses, money that Mr. Janvey says is directly tied to the Ponzi scheme.
Other beneficiaries include the New Jersey Democratic State Committee and Rep. Pete Sessions, Texas Republican, with $10,000 each. Rep. Gregory Meeks, New York Democrat, received $6,600.
Phone and email messages left with the members of Congress were not returned, nor was a message left with the New Jersey Democratic State Committee.
Among dozens of politicians who have returned the contributions are Sen. Richard C. Shelby, Alabama Republican, who sent back $14,000; former Sen. Christopher J. Dodd, Connecticut Democrat, who returned $27,500 from his presidential and Senate campaigns; and Sen. Harry Reid, Nevada Democrat, who returned $8,000.
In court documents, attorneys for the major-party committees put forth several arguments for why they should be allowed to keep the contributions, including arguing that the lawsuits seeking the return of the money weren’t filed on time.
U.S. District Judge David Godbey disagreed, noting in a 61-page ruling that the committees “fail to create a fact issue concerning the Ponzi scheme’s existence or the contributions’ source and make no attempt to show that the contributions were made in exchange for consideration of reasonably equivalent value.”
The judge ordered the Democratic Senatorial Campaign Committee to return $1,037,347; the NRCC, $260,291; the Democratic Congressional Campaign Committee, $218,273; the National Republican Senatorial Committee, $90,960; and the Republican National Committee, $140,241.
Kevin Sadler, attorney for Mr. Janvey, said in an email that the ruling represented an important victory for the receivership and thousands of victims of the Ponzi scheme.
“As important as this decision is, there remain hundreds of other defendants, individuals, companies and organizations, which, like these political committees, received hundreds of millions of dollars of investor funds diverted by Allen Stanford and his fraud scheme,” Mr. Sadler said.
“Such funds rightfully belong only to the receiver, whose duty it is to recover these funds and use them to compensate the victims of the Stanford fraud.”
Mr. Stanford’s trial recently was postponed from September to January. He has pleaded not guilty to charges of bilking investors of about $7 billion.
The fundraising arms for Democratic and Republican members of Congress don’t agree on much, except when it comes to all the big donations they’ve gotten over the years from jailed financier R. Allen Stanford.
In recent days, the Democratic Senatorial Campaign Committee (DSCC), the National Republican Congressional Committee (NRCC) and other party organizations appealed a court order to return more than $1.7 million combined they received that were tied to Mr. Stanford’s alleged multibillion-dollar bilking of thousands of investors. He’s in jail awaiting trial on charges of running a Ponzi scheme while a court-appointed receiver tries to recoup money for investors.
The appeals come a month after a federal judge in Texas ordered the organizations to return the money. But in a recent court filing, attorneys for the DSCC and the Democratic Congressional Campaign Committee, which owe more than $1.2 million combined, asked for a stay before having to turn over the money. They want to post bond or a letter of credit pending an appeal.
Meanwhile, in a separate set of court papers, attorneys for the NRCC, the Republican Senatorial Campaign Committee and Republican National Committee filed a notice to appeal the ruling, too.
“After thoroughly reviewing the court’s decision and the relevant law, and in light of an important change in the precedent on which the court relied, we believe we have an excellent chance of success,” said Kirsten Kukowski, spokeswoman for the RNC.
The combined legal efforts of the political parties show the lengths political committees mdash; Democrat and Republican alike — will go to protect party coffers with control of Congress and the White House up for grabs in 2012.
“Stanford aimed most of his campaign contributions to congressional leaders and party bosses, and eventually started giving heavily to presidential candidates as well, which coincided with the weakening of offshore disclosure and tax regulations that directly benefited Stanford’s shady business,” said Craig Holman, legislative representative for the D.C.-based watchdog group Public Citizen.
“Like other campaign contributions tainted by scandal, candidates and the party committees should try to show that they personally have not been influenced by the money and turn Stanford contributions over to charity,” he said.
Federal law allows campaign committees to part with donations in several ways. They can return contributions, donate them to charity or send the money to the U.S. Treasury.
But Ralph Janvey, receiver in the Stanford case, wants the money returned to investors. In addition to taking the major-party fundraising committees to court, the receiver previously sent letters to dozens of other politicians who received Stanford money over the years. More than a year later, he’s still waiting.
According to the most recent accounting last month, politicians have returned $132,500, with nearly $1.8 million still not yet returned, though most of that is still in the hands of the party fundraising groups fighting in court.
Aside from the political committees, Rep. Charles B. Rangel, New York Democrat, appears to be the biggest beneficiary of Stanford cash among those who have yet to return donations. The Rangel Victory Fund received $25,000 from Mr. Stanford, his associates and businesses, money that Mr. Janvey says is directly tied to the Ponzi scheme.
Other beneficiaries include the New Jersey Democratic State Committee and Rep. Pete Sessions, Texas Republican, with $10,000 each. Rep. Gregory Meeks, New York Democrat, received $6,600.
Phone and email messages left with the members of Congress were not returned, nor was a message left with the New Jersey Democratic State Committee.
Among dozens of politicians who have returned the contributions are Sen. Richard C. Shelby, Alabama Republican, who sent back $14,000; former Sen. Christopher J. Dodd, Connecticut Democrat, who returned $27,500 from his presidential and Senate campaigns; and Sen. Harry Reid, Nevada Democrat, who returned $8,000.
In court documents, attorneys for the major-party committees put forth several arguments for why they should be allowed to keep the contributions, including arguing that the lawsuits seeking the return of the money weren’t filed on time.
U.S. District Judge David Godbey disagreed, noting in a 61-page ruling that the committees “fail to create a fact issue concerning the Ponzi scheme’s existence or the contributions’ source and make no attempt to show that the contributions were made in exchange for consideration of reasonably equivalent value.”
The judge ordered the Democratic Senatorial Campaign Committee to return $1,037,347; the NRCC, $260,291; the Democratic Congressional Campaign Committee, $218,273; the National Republican Senatorial Committee, $90,960; and the Republican National Committee, $140,241.
Kevin Sadler, attorney for Mr. Janvey, said in an email that the ruling represented an important victory for the receivership and thousands of victims of the Ponzi scheme.
“As important as this decision is, there remain hundreds of other defendants, individuals, companies and organizations, which, like these political committees, received hundreds of millions of dollars of investor funds diverted by Allen Stanford and his fraud scheme,” Mr. Sadler said.
“Such funds rightfully belong only to the receiver, whose duty it is to recover these funds and use them to compensate the victims of the Stanford fraud.”
Mr. Stanford’s trial recently was postponed from September to January. He has pleaded not guilty to charges of bilking investors of about $7 billion.
SEC Probing Stanford Receiver for Keeping $118 Million
By: Mary Thompson and Scott Cohn - CNBC
Investor complaints about the long delays and puny payouts from the receiver in charge of rounding up assets from Allen Stanford's alleged $7 billion ponzi scheme have prompted an SEC investigation of the receiver.
SEC Inspector General David Kotz confirms he is looking into whether the SEC's actions regarding oversight of the receiver has been on the up and up. In a motion filed Monday, attorneys said that of the $119.7 million recovered by the receiver, $118.2 million has gone to expenses and fees, leaving just $1.5 million for investors.
The receiver, Dallas attorney Ralph Janvey, was appointed by a federal judge at the SEC's request, after the agency sued Stanford in 2009. But more than two years later, Janvey has recovered just pennies on the dollar for Stanford investors.
"We did receive a complaint recently about Stanford receivership-related issue," Kotz told CNBC. "We have looked at it and plan to open up an inquiry or investigation with respect to allegations regarding improper conduct of SEC employees."
It is the latest in a series of Stanford-related investigations by Kotz, who earlier found SEC staffers were aware of problems at Stanford as far back as 1997.
The new investigation is apparently the result of a request by a Massachusetts law firm, Kachroo Legal Services, that has been attempting to intervene in the Stanford litigation on behalf of a handful of Stanford investors claiming "malfeasance and waste" in the receivership.
The complaint also alleges an improper relationship between Janvey and the official court-appointed Stanford investors committee, which consists of four attorneys and two individual investors. Rather than looking out for all 28,000 investors, the complaint alleges, the committee is simply generating more fees for the attorneys.
"And the potential compensation to these attorneys is enormous," the complaint says.
Janvey's attorney, Kevin Sadler, tells CNBC in a statement that Janvey has not yet heard from Kotz, "but will respond promptly and appropriately to any such request or inquiry, just as the receiver has responded to numerous requests from other government agencies" since being appointed in February of 2009.
"The allegation of an 'inside deal' between the receiver and the investors committee is patently false and completely irresponsible," the statement adds.
"Through dozens of motions, reports and fee applications filed with the court, as well as hearings held in open court, all of the receiver's activities have been transparent and open to scrutiny by the Court and other interested parties."
But attorney Gaytri Kachroo, who filed the new motion and requested the Inspector General's investigation, notes that the last time the SEC objected to a bill from Janvey was more than a year ago.
Stanford, 61, has denied wrongdoing and claims Janvey and the SEC have been dismantling a legitimate business. He is scheduled to go on trial in January on 14 criminal counts.
Investor complaints about the long delays and puny payouts from the receiver in charge of rounding up assets from Allen Stanford's alleged $7 billion ponzi scheme have prompted an SEC investigation of the receiver.
SEC Inspector General David Kotz confirms he is looking into whether the SEC's actions regarding oversight of the receiver has been on the up and up. In a motion filed Monday, attorneys said that of the $119.7 million recovered by the receiver, $118.2 million has gone to expenses and fees, leaving just $1.5 million for investors.
The receiver, Dallas attorney Ralph Janvey, was appointed by a federal judge at the SEC's request, after the agency sued Stanford in 2009. But more than two years later, Janvey has recovered just pennies on the dollar for Stanford investors.
"We did receive a complaint recently about Stanford receivership-related issue," Kotz told CNBC. "We have looked at it and plan to open up an inquiry or investigation with respect to allegations regarding improper conduct of SEC employees."
It is the latest in a series of Stanford-related investigations by Kotz, who earlier found SEC staffers were aware of problems at Stanford as far back as 1997.
The new investigation is apparently the result of a request by a Massachusetts law firm, Kachroo Legal Services, that has been attempting to intervene in the Stanford litigation on behalf of a handful of Stanford investors claiming "malfeasance and waste" in the receivership.
The complaint also alleges an improper relationship between Janvey and the official court-appointed Stanford investors committee, which consists of four attorneys and two individual investors. Rather than looking out for all 28,000 investors, the complaint alleges, the committee is simply generating more fees for the attorneys.
"And the potential compensation to these attorneys is enormous," the complaint says.
Janvey's attorney, Kevin Sadler, tells CNBC in a statement that Janvey has not yet heard from Kotz, "but will respond promptly and appropriately to any such request or inquiry, just as the receiver has responded to numerous requests from other government agencies" since being appointed in February of 2009.
"The allegation of an 'inside deal' between the receiver and the investors committee is patently false and completely irresponsible," the statement adds.
"Through dozens of motions, reports and fee applications filed with the court, as well as hearings held in open court, all of the receiver's activities have been transparent and open to scrutiny by the Court and other interested parties."
But attorney Gaytri Kachroo, who filed the new motion and requested the Inspector General's investigation, notes that the last time the SEC objected to a bill from Janvey was more than a year ago.
Stanford, 61, has denied wrongdoing and claims Janvey and the SEC have been dismantling a legitimate business. He is scheduled to go on trial in January on 14 criminal counts.