Samstag, 29. August 2009

Stanford Investors Accuse Lawyer, Law Firm of Aiding Fraud

August 29, 2009
By Andrew Harris
Three people who say they invested with R. Allen Stanford, the Texas financier accused of running a $7 billion fraud, sued New York law firm Proskauer Rose LLP and attorney Thomas Sjoblom, accusing them of aiding the deception.

The investors claim that the firm and Sjoblom, listed on the Proskauer Web site as a partner, worked for Stanford knowing he was engaged in illegal and improper conduct, according to a complaint in federal court in Dallas.

"Defendants aided and abetted and participated" with Stanford Financial Group Co. and Antigua-based Stanford International Bank Ltd. "in a fraudulent scheme, making defendants directly liable for fraud," according to the complaint filed Aug. 27.

Stanford, the principal of Stanford Financial Group and the bank, was sued in February by the U.S. Securities and Exchange Commission for allegedly running a "massive" fraud scheme involving the sale of certificates of deposit.

A federal grand jury in Houston indicted Stanford and four other people in June on parallel criminal allegations. Stanford has denied all allegations of wrongdoing.

Proskauer Rose said yesterday it will seek dismissal of the suit.

Legally Flawed

"This suit is legally flawed and factually erroneous," Josh Epstein, a firm spokesman, said in an e-mail. "There is no basis whatsoever for any claim that Proskauer, which functioned as defense counsel in a regulatory investigation, bears any responsibility for the fraud allegedly inflicted upon investors."

Sjoblom didn't reply to voice-mail and e-mail messages seeking comment yesterday.

The investors, two U.S. citizens and one Mexican national, seek class-action, or group, status on behalf of other Stanford investors. They're also seeking more than $7 billion in compensation and punitive damages.

The case is Troice v. Proskauer Rose LLP, 09cv1600, U.S. District Court, Northern District of Texas (Dallas).

Visit the Stanford International Victims Group - SIVG official forum

Freitag, 28. August 2009

Ex-Stanford CFO Davis Pleads Guilty in Fraud Case

August 28, 2009
James M. Davis, chief financial officer of Stanford Financial Group Co., pleaded guilty to helping R. Allen Stanford in a $7 billion Ponzi scheme and prosecutors said he will testify against his former colleagues.

Davis, 60, admitted three felony counts today before U.S. District Judge David Hittner in Houston and agreed to forfeit $1 billion. Davis has been "cooperating like crazy" with authorities investigating the company, said his defense attorney, David Finn of Dallas.

"Mr. Davis knows he's looking at very, very stiff punishment down the road," Finn said after the plea hearing. "Probation is out of the question in this case."

The Justice Department will request leniency in Davis's sentencing if it deems his cooperation "sufficient," Assistant U.S. Attorney Paul Pelletier told Hittner. Davis has met for hundreds of hours with federal investigators, helping them find hundreds of millions of dollars that he claimed Stanford stashed in European banks, Finn said.

"You'll see just how far back this goes," Finn said of the alleged fraud. "This didn't get cooked up overnight."

Stanford, the company founder who is being held without bail, was to appear before Hittner later today for a hearing on his legal defense. Instead, he was taken to a medical center with what a court aide said was an elevated pulse rate.

Getting Together

"I think it had everything to do with my client and Hittner and the government getting together in court today," Finn said of Stanford's health emergency. "You could call it serendipity, but what are the odds?"

Stanford's assets were frozen by the court at the U.S. Securities and Exchange Commission's request and his current lawyer has asked to leave the case, saying he might not get paid. A U.S. grand jury indicted Stanford and Chief Investment Officer Laura Pendergest-Holt for fraud in June.

Davis waived indictment and was charged separately with conspiracy to commit mail, wire and securities fraud, as well as mail fraud and conspiracy to obstruct an SEC investigation.

The SEC in a civil suit accused Stanford, Davis and Pendergest-Holt of running a fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. Stanford and Davis promised "improbable if not impossible" returns on the CDs, the SEC said.

After today's hearing, Finn told reporters Davis's cooperation included a visit to his family farm in rural Mississippi, where he helped a government dive team search for evidence in tanks and ponds.

Not a Dime

Asked what the nature of that evidence was, Finn replied, "you'll find out." Davis is working as a laborer on a Michigan farm, where he's being paid $10 an hour, and is penniless, his lawyer said.

"He doesn't have a dime," Finn said. "He can't even pay me."

Since his July 13 arraignment, Davis has been free on $500,000 bond, which includes a $5,000 cash deposit. He faces as many as 30 years in prison and won't be sentenced until the government no longer needs his cooperation.

Finn said Davis's cooperation has focused on two fronts: locating assets Stanford stashed overseas and helping the U.S. extradite Antigua's top banking regulator, Leroy King, who was indicted along with Stanford for allegedly taking bribes to conceal the fraud.

"Cash payments were being made under the table in an airplane hanger by Allen Stanford to the regulator," Finn said.

King, who is under house arrest, is scheduled for an extradition hearing in Antigua next month, according to prosecutors.

The case is U.S. v. Davis, 4:09-cr-00335, U.S. District Court, Southern District of Texas (Houston).

Visit the Stanford International Victims Group - SIVG official forum

Dienstag, 25. August 2009

Stanford Victims file Class Action Suit against Trustmark National Bank, HSBC Bank PLC, The Toronto-Dominion Bank, SG Private Banking (SUISSE) S.A., and Bank of Houston TX

August 25, 2009
By Peter Morgenstern
Victims of Stanford International Bank, Ltd., part of R. Allen Stanford's Stanford Finanical Group, filed a class action lawsuit in Texas state court in Houston on August 23, alleging that Trustmark National Bank, HSBC Bank PLC, The Toronto-Dominion Bank, SG Private Banking (Suisse) S.A., and Bank of Houston "provided essential assistance to Stanford in one of the largest financial crimes in history."

The class action petition alleges that the banks conspired with Stanford to commit fraud. The plaintiffs seek more than $7 billion in damages. The lawsuit also seeks to recover of all of the fees paid to the banks by Stanford under the Uniform Fraudulent Transfers Act.

The plaintiffs are represented by the New York law firm of Morgenstern & Blue, LLC, which last month filed a class action complaint against the Commonwealth of Antigua and Barbuda alleging that the island nation conspired with Stanford and protected Stanford's banking activities from scrutiny by the Securities and Exchange Commission and other regulators.

The case is Rotstain v. Trustmark National Bank, Harris County (Houston).

Visit the Stanford International Victims Group - SIVG official forum