Freitag, 8. Juli 2011

Stanford Victims Refuse to be defrauded by Texas Receiver

July 8, 2011
Released by Kate Freeman
Since the SEC shut down Allen Stanford's investing and banking operations over two years ago, the receivership to help the victims recover their losses has been consuming all the assets, reveals a motion filed today by Kachroo Legal Services, P.C. and its principal, Gaytri Kachroo.

Out of a $7 billion Ponzi scheme, the receiver has collected, net of expenses just $1.5m. Whereas through January 2011 the receivership estate has paid out a massive $118.2m in expenses – but none to the investors. As a result, there remains only $1.5 million for the Stanford victims from the efforts of the Receiver, this equates to $71.42 per investor, but even this small amount will likely be consumed by the Receiver. It is clear that the Receiver has not added any substantial value to the estate, and failed in his directive.

The Stanford Investors Committee (FIC) attorneys have substantial interests in the fees they generate through contingency actions. Almost no party to this action sits completely independent of and disinterested in the assets that are recovered in this receivership. And when those assets are scarce, as in this case, their interest is sharply at odds with that of the investors.

In the motion, led by Catherine Burnell of Antigua and the U.K., Ursula Mesa of Florida and Peru, Marcelo Avila of Ecuador, and Steven Graham of Louisiana - representative of the international breadth of investment into this alleged Ponzi scheme of some $7 billion - investors state that the Receiver has taken all $120 million of the assets thus far collected by him and already existing in the estate. What is more, the attorneys who were installed on the Stanford Investor Committee and responsible for holding the Receiver accountable had in fact done a deal to make themselves a preapproved 25% on all the fraudulent conveyance cases launched by the Receivership!

To date little objection has been filed against the receivership, and finally the KLS group of investors have voiced the dissatisfaction of thousands of investors with the current Texas receiver, Janvey and the Stanford Investor Committee appointed by the courts. No party to the receivership is acting as a check on the excessive fees and expenses compared to the minimal recovery, challenging the contingency fee arrangement, the operation of the receivership and otherwise voicing concern over the ineffectiveness of this receivership. The only person objecting is Alan Stanford — the person who allegedly committed the fraud.

The motion was filed on the heels of a change in the Antiguan liquidation, which had come under similar complaint and attack and lead to the removal of the previous receivers and their substitution by Grant Thornton.
Movants file this motion to intervene in this proceeding and for appointment to the Committee on behalf of themselves and as representatives for investors with over 500 Stanford accounts that are part of the receivership (the "KLS Stanford Victims").

The payments provided to attorneys and the Receiver in this case do not appear to reflect any reasonable compensation for the services provided nor appear in the best interest of the receivership or the victims, upon whose behalf the receivership should benefit. Moreover, the Receiver's contingency agreements with the attorneys on the Committee create a substantial and disabling self-interest that precludes adequate, independent representation of the investors by the Committee and in this proceeding.
In connection with the Motion to Intervene, KLS diligently reviewed the filings in this action, and other actions taken on behalf of the receivership, including the fee applications and reports by the Receiver. It appears on the basis of the pleadings and documents in this action, that the receiver has failed in his directive to "minimize expenses in furtherance of maximum and timely disbursement thereof to claimants," as ordered by the Court. The payments provided to attorneys, consultants and the Receiver in this case do not appear to reflect any reasonable compensation for the services provided nor appear in the best interests of the receivership or the victims.

The issues of the exorbitant fees and the operation of the estate, which have drained substantial recovered assets, do not appear to be adequately raised or addressed by the Official Stanford Investor Committee nor any other party to this proceeding.

As part of the Official Stanford Investor Committee, the Movants would raise these and other related issues to adequately represent the interests of Stanford investors worldwide.

Visit the Stanford International Victims Group - SIVG official forum

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