Investors plan appeal of Stanford lawsuit dismissal

By JOE GYAN JR.

A federal appeals court will be asked to reverse a Baton Rouge federal judge's dismissal of a lawsuit that claims the Securities and Exchange Commission and a former official knew of Robert Allen Stanford's $7 billion fraud scheme but failed to investigate and stop it, an attorney for some victims said Friday.

The suit, filed in July by seven Baton Rouge residents and firms, was thrown out June 21 by U.S. District Judge Shelly Dick at the request of the federal government, which argued the SEC enjoys complete discretion in deciding what matters to investigate.

The suit alleges that Spencer Barasch, a former SEC regional enforcement director in Fort Worth, Texas, was negligent and engaged in deliberate misconduct in failing to investigate the scheme before investors suffered losses. The suit contends Barasch knew of the Stanford scheme but refused to probe it, allowing the continued defrauding of investors.

In his written ruling, Dick called Barasch's alleged conduct "disturbing" but said the law supports the government's position that there was no statute, regulation or policy that required Barasch to make an enforcement referral to either the National Association of Securities Dealers or the Texas State Securities Board.

"While the court sympathizes with the losses suffered by the plaintiffs in this matter, plaintiffs have failed to identify any mandatory obligations violated by SEC employees in the performance of their discretionary duties," the judge wrote.

Ed Gonzales, an attorney for the seven Baton Rouge residents and firms who filed suit in federal district court in Baton Rouge, said an appeal will be filed at the 5th U.S. Circuit Court of Appeals in New Orleans. Those plaintiffs say they lost roughly $3.5 million to the scheme.

Dick's ruling described the suit's plaintiffs as victims of a Ponzi scheme who lost their investments in Stanford International Bank Ltd.

The suit alleges the SEC knew in 1997 that Stanford was operating a fraudulent scheme and failed to stop him until February 2009.

Robert Stanford, 63, of Houston, is serving a 110-year prison sentence for a fraud conviction that followed estimated worldwide losses of approximately $7 billion. About $1 billion of those losses were from about 1,000 investors in the Baton Rouge, Lafayette and Covington areas, according to estimates by state Sen. Bodi White, R-Central, and Baton Rouge attorney Phil Preis, who represents numerous Stanford victims in another lawsuit.

A Ponzi scheme is a fake investment program. Illegal operators skim most of the money provided by people who believe they are investors.

Early investors receive dividends that actually are small portions of their personal funds and those of later investors. Stanford's Ponzi scheme attracted investment money for his Stanford International Bank on the Caribbean island of Antigua.

There are more than 20,000 Stanford victims across more than 100 countries.

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SEC Escapes Stanford Victims' Suit Over $7B Ponzi Scheme

By Law360, New York

A Louisiana judge Friday threw out a putative class action alleging the U.S. Securities and Exchange Commission facilitated Robert Allen Stanford's $7 billion Ponzi scheme, finding the agency was shielded by a law barring suits over federal officials' discretionary choices.

U.S. District Shelly D. Dick said the discretionary function exception of the Federal Tort Claims Act applied to the case brought by victims of Stanford in part because the alleged refusal of former official Spencer Barasch in the SEC's Fort Worth, Texas, office to investigate the Ponzi scheme was a matter of choice.

"While the Court sympathizes with the losses suffered by the plaintiffs in this matter, plaintiffs have failed to identify any mandatory obligations violated by SEC employees in the performance of their discretionary duties," Judge Dick concluded in granting the government's motion to dismiss.

"Plaintiff[s] have also failed to allege facts demonstrating that the challenged actions are not grounded in public policy considerations," she said.

The plaintiffs argued that Barasch's alleged conduct did not fall under the discretionary function exception because the SEC has a policy of making enforcement referrals to the National Association of Securities Dealers and the Texas State Securities Board. Therefore, if a decision was made to refer Stanford, and then not followed, that decision falls outside the discretionary function exception.

But Judge Dick rejected that argument, saying that while "the alleged conduct of Barasch is disturbing... the FTCA clearly states that the discretionary function exception applies 'whether or not the discretion involved be abused.'"

The suit, which was filed in July under the FTCA, alleged that SEC employees in Fort Worth knew as early as 1997 - only two years after Stanford Group Co. registered with the agency - that the company was likely operating a Ponzi scheme and did nothing about it.

Former SEC regional enforcement director Barasch, now an attorney with Andrews Kurth LLP, was singled out in the complaint for failing in his duties.

"In 1998 [to NASD] and again in 2002 [to TSSB] the SEC - through enforcement director Barasch and others - reached the conclusion that referrals should be made. Barasch himself was designated to perform these tasks," the complaint said. "But, in fact, these referrals were not made, with the effect that Stanford escaped scrutiny by other agencies for years, thus facilitating Stanford's scheme to defraud."

In dismissing the case, Judge Dick cited a similar decision by a Texas federal judge in another case brought against the SEC over Stanford's scheme. The plaintiffs in Dartez v. U.S. had argued that Barasch's decisions and the negligent supervision of his superiors were not protected policy considerations.

"While the [Dartez] decision is not binding on this Court, the Court can find no flaw in [its] reasoning," Judge Dick said.

The plaintiffs are represented by C. Frank Holthaus, Scott H. Fruge, Michael C. Palmintier and John W. DeGravelles of DeGravelles Palmintier Holthaus & Fruge and Edward J. Gonzales III.

The case is Anderson et al. v. United States of America, number 3:12-cv-00398, in the U.S. District Court for the Middle District of Louisiana.

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$83.5M Suit Says Willis Group Aided Stanford Fraud

By Law360

A group of holders of Stanford Financial Group CD accounts claims that Willis Group Holdings Public Limited Co. helped perpetuate Robert Allen Stanford's $7 billion Ponzi scheme, according to an $83.5 million class action removed from Florida state court Monday.

The plaintiffs, 64 citizens of El Salvador, Nicaragua, Panama, the United States and Spain who claim combined losses of more than $83.5 million, say that when they made their investments in Stanford Financial CDs, they relied on "safety and soundness" letters issued by Willis asserting that Stanford International Bank and its products were protected by certain insurance policies and were highly liquid.

"In fact, the Stanford Financial CDs were not CDs at all, but unregistered, unregulated securities sold illegally from Stanford Financial's home base in the United States," the plaintiffs say in their complaint. "These investments had no insurance and were fraught with risk."

The case is not the first to lay such accusations against Willis. In 2009, a class of between 1,200 and 5,000 Venezuelan clients sought $1.6 billion over claims they were allegedly lured into the scheme by the insurance brokers' assurance that Stanford CDs were sound, insured investments. And in another suit that year, Mexican investors implicated Willis, claiming the defendants contributed to a fraud that cost them roughly $1 billion.

Stanford was sentenced in June 2012 to 110 years in prison after being convicted on charges he misappropriated billions of dollars in investor funds, including some $1.6 billion he allegedly moved to a personal account. His $7 billion Ponzi scheme was second only to Bernie Madoff's record-setting scam.

From about August 2004 through 2008, Willis provided Stanford Financial with an undated form letter that said Willis was the insurance broker for Stanford International Bank and had placed directors and officers liability insurance and a bankers blanket bond with Lloyds of London, according to the current complaint.

The letters played a crucial role in Stanford's fraud because Stanford Finanical was an offshore bank and thus not insured by the Federal Deposit Insurance Corp. Willis' letters helped Stanford get around that obstacle by claiming the CDs "were even safer than U.S. Bank-issued CDs because of the unique insurance policies Willis had obtained," the complaint says.

"The Willis letters were specifically designed to win investors' trust and confidence in Stanford Financial's fraudulent scheme," the plaintiffs say in their complaint, noting that for investors with more than $1 million in their accounts, Stanford Financial advisors could get personally addressed letters from Willis.

"Willis' message to potential investors was this: Trust us, you can invest with confidence and security in Stanford Financial CDs," they add.

All of the plaintiffs in the current case made their purchases through Stanford Financial's Miami office, which the complaint says accounted for more than $1 billion in CD sales.

Willis of Colorado Inc. filed the notice of removal of the class action on the grounds of diversity between plaintiffs and defendants, of the Securities Litigation Uniform Standards Act of 1998 and that the Northern District of Texas has exclusive jurisdiction in Stanford receivership cases.

The notice of removal also claims that defendants Willis Group Holdings Public Limited Co. and Willis Ltd., which are based in Ireland and the United Kingdom, respectively, have been fraudulently joined in an effort to defeat diversity jurisdiction. It says that the plaintiffs' claims are on letters issued only by the subsidiary Willis of Colorado and "no reasonable possibility" exists of the plaintiffs recovering damages from the other entities.

Counsel for both sides could not be reached for comment late Tuesday.

The plaintiffs are represented by Luis Delgado and Christopher King of Homer & Bonner PA and Ervin Gonzalez of Colson Hicks Eidson PA.

Willis is represented by Edward Soto of Weil Gotshal & Manges LLP.

The case is Nuila de Gadala-Maria et al. v. Willis Group Holdings Public Limited Co., case number 1:13-cv-21989, in the U.S. District Court for the Southern District of Florida.

Read the Willis Group NOTICE OF REMOVAL.

Read the Willis Group Exhibit A.

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Stanford Judge Approves Interim Distribution to Victims

By Tom Korosec & Andrew Harris

A plan by a court-appointed receiver to distribute assets recovered from R. Allen Stanford's Ponzi scheme to investors was approved by a federal judge in Dallas.

U.S. District Judge David C. Godbey accepted the plan by Ralph Janvey, the receiver appointed in 2009 to marshal and liquidate Stanford's personal and business assets, to make a $55 million interim distribution to about 17,000 claimants, or about 1 cent for each of the $5.1 billion lost in the fraud scheme.

"We will follow it up in a subsequent distribution as the money comes in," Janvey's attorney, Kevin Sadler of Baker Botts LLP, told Godbey at a court hearing in April.

Ponzi scheme victims of Bernard L. Madoff, who was arrested in December 2008, recovered more than $5.4 billion. Clients of the MF Global Inc. brokerage were paid about $4.9 billion after its parent, MF Global Holdings Ltd., failed in October 2011. Victims of a scheme by Peregrine Financial Group Inc. founder Russell Wasendorf, who prosecutors last year said stole $215 million, received an interim distribution of $123 million.

A federal jury in Houston last year found Stanford, 63, guilty of lying to investors about the nature and oversight of certificates of deposit issued by his Antigua-based bank. The jurors decided he must forfeit $330 million in accounts seized by the U.S. government.

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

To contact the reporter on this story: Andrew Harris in the Chicago federal courthouse at aharris16@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

Source.

 

Read the ORDER APPROVING RECEIVER'S INTERIM DISTRIBUTION PLAN.

STANFORD RECEIVERSHIP CERTIFICATION NOTICE

Before making distribution payments under the Interim Plan, the Receiver is required to send a Certification Notice to the Investor CD Claimants. This Certification Notice must ask each Investor CD Claimant for certification regarding whether they have applied for or received compensation for their claimed losses from sources other than the Receivership and, if so, the amount of such compensation. Investor CD Claimants must timely respond to this Certification Notice as a condition of receiving payment under the Interim Plan.
EXHIBIT B: CERTIFICATION NOTICE

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INITIAL REPLY BRIEF OF THE SECURITIES AND EXCHANGE COMMISSION, APPELLANT

By Michael L. Post

In its opening brief, the Securities and Exchange Commission established that the district court erred both in incorrectly applying a preponderance standard of proof in this preliminary, summary proceeding and in applying an unduly narrow construction of the statutory term "customer" to preclude the possibility of coverage under the Securities Investor Protection Act of 1970 ("SIPA" or the "Act") for investors in the Stanford Ponzi scheme. The arguments made by the Securities Investor Protection Corporation ("SIPC") in response are based on an incorrect view of the nature of this proceeding and a misreading of the relevant statutory scheme, applicable case law, and underlying facts.

Contrary to SIPC's contention, this proceeding will not lead to a final determination of the key question at issue-whether any of the Stanford victims qualify as "customers" under SIPA. Nor did Congress confer greater discretion on SIPC than on the Commission to make the determination whether to seek to initiate a SIPA liquidation proceeding. Given the preliminary nature of the proceeding here, and the statutory relationship between the parties, a probable cause standard of proof is appropriate. Moreover, SIPC's formalistic construction of the term "customer" to preclude the potential for SIPA coverage here erroneously gives effect to both the fraudulent corporate boundaries designed by Allen Stanford to USCA Case #12-5286 Document #1437933 Filed: 05/24/2013 Page 9 of 40 facilitate his scheme and the illegitimate securities sent to investors in furtherance of that scheme.

Nor will the Commission's interpretation of the statutory definition of a "customer" undermine the statutory scheme as SIPC and its amici contend. The Commission is not advocating that every customer of every Stanford entity would have customer status under SIPA. See Brief of the SEC at 49 ("SEC __"). Rather, its position is that in the rare circumstances presented here-where the Stanford entities (including Stanford International Bank, Ltd. ("SIBL") and Stanford Group Company ("SGC")) were operated as a single fraudulent enterprise ignoring corporate boundaries, SGC accountholders who purchased SIBL CDs were solicited by SGC and dealt substantially with SGC employees, and the purported securities issued by SIBL were in reality interests in a Ponzi scheme-SGC accountholders who purchased SIBL CDs through SGC should be deemed to have deposited funds with SGC. This interpretation is the correct one; and it is at least a reasonable one that is entitled to deference.

Even apart from the lack of separateness of SGC and SIBL, the Commission's application should be granted under the Old Naples and Primeline cases.

The Commission's position here is also supported by two court of appeals cases expressly holding that customer status under SIPA "does not … depend simply on to whom the claimant handed her cash or made her check payable, or even where the funds were initially deposited." Old Naples, 223 F.3d at 1302; see Primeline, 295 F.3d at 1107. Relying on a different opinion's erroneous description of those cases, SIPC argues that the customers in those case provided money "to an ostensible agent of a broker-debtor." Br. 50 (quoting In re Bernard L. Madoff Inv. Secs., LLC, 708 F.3d 422, 428 (2d Cir. 2013)). In fact, the claimants in Old Naples provided money to a "separate company" that was owned by the same person who owned the SIPC-member introducing broker. 223 F.3d at 1299-1300. And in Primeline, at least some of the claimants provided money directly to companies separately owned by a sales representative of the broker-dealer. See 295 F.3d at 1104.

SIPC also argues that Old Naples and Primeline are distinguishable because they involved a broker that failed to clear a transaction with its clearing broker. Br. 50. But this is a distinction without a difference. As the Commission concluded, what matters is that depositing money with SIBL was "in reality no different than depositing it with SGC." Analysis at 8-9; see SEC 51-54.

Similarly unpersuasive is SIPC's attempt to distinguish Old Naples and Primeline on the ground that the investors there "never received the securities they intended to purchase." Br. 50. The court in Primeline expressly noted that some investors "received fraudulent 'Debenture Certificates'" "[i]n exchange for their cash." 295 F.3d at 1109. Moreover, the physical CDs should be disregarded here. See SEC 54.

Finally, SIPC urges this Court to reject Old Naples and Primeline as being against the supposed "weight of authority." Br. 51. But those cases involved facts most similar to those presented in this case, and SIPC points to no contrary authority in analogous circumstances. For example, in Aozora Bank Ltd., 480 B.R. 117 (S.D.N.Y. 2012), aff'd, 708 F.3. 422 (2d Cir. 2013), cited by SIPC, the investors at issue did not have accounts with the broker-dealer, and did not intend to open accounts with the broker-dealer. See 480 B.R. at 123-24, 128. Rather, their dealings were with independent entities which were not under common ownership and control with the broker-dealer. See id. at 121; see also SEC v. Kenneth Bove & Co., Inc., 378 F. Supp. 697, 698-99 (S.D.N.Y. 1974) (claimants, allegedly at debtor's direction, sent shares of stock to an independent, third-party broker). The Ninth Circuit's decision in Brentwood Securities-which both Old Naples (223 F.3d at 1300) and Primeline (295 F.3d at 1106) cited-is similarly far afield. Unlike here, the investor funds in Brentwood Securities did not get funneled back to the broker-dealer and "[n]othing in the record establishe[d]" that the broker-dealer "had any role at all" in the transactions at issue. 925 F.2d at 328.

SIPC and its amici argue that ruling in the Commission's favor would "transform SIPC into an insurer against every fraudulent scheme implicating a broker-dealer." Br. 47; see SIFMA Br. 20-21; Law Professors Br. 19-20. But the Commission's position depends on the rare factual situation where, among other circumstances, there is a sufficient basis both (1) to disregard the corporate form of the broker-dealer and (2) to disregard the issuance of the purported security to the investor. Moreover, this scenario is substantially similar to recognized "customer" situations, such as where a broker-dealer misappropriates cash deposited with the broker-dealer or takes a deposit of cash but does not purchase any securities for the depositor. See, e.g., In re Bernard L. Madoff Inv. Secs. LLC, 654 F.3d 229, 236 (2d Cir. 2011). Amicus Financial Services Institute ("FSI") contends that covering "all" of the SIBL CD investors' losses would exhaust SIPC's reserve fund (FSI Br. 5), but FSI fails to take account of the facts that (1) many investors did not buy SIBL CDs through SGC and (2) the statute caps at $500,000 each customer's potential SIPC advancement (see 15 U.S.C. 78fff-3(a)).

Read the complete SEC Reply to SIPC in SEC vs SIPC.

Related article (Nonmember affiliate company were also granted with SIPC cover): Forensic accountant gives Stanford investors a little hope

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Political Contributions

By U.S. Receiver Ralph Janvey

As part of the Receiver's efforts to recover assets for the Receivership Estate, the Receiver analyzed political contributions made by Stanford International Bank, Ltd., Stanford Group Company, Stanford Capital Management, LLC, R. Allen Stanford, James M. Davis and Laura Pendergest-Holt and certain entities they own or control.

As a result of that effort, shortly after the inception of the Receivership, the Receiver sent letters to each recipient of these political contributions requesting that they be returned to the Receiver.

The Receiver has also pursued litigation to recover certain political contributions. As of May 16, 2013, the Receiver had received $1.8M in returned contributions. A list of contributions returned voluntarily or as a result of litigation is below:

Source	Amount
Shelby for US Senate	$ 14,000
Barney Frank for Congress Committee	$ 1,000
Arcuri for Congress	$ 4,000
Neugebauer Congressional Committee	$ 2,000
Marsha Blackburn for Congress	$ 1,000
Friends for Harry Reid	$ 8,000
David Scott for Congress	$ 1,500
Freedom Funds - Mike Crapo, Honorary Chairman	$ 1,000
Chris Dodd for President	$ 11,500
Friends of Chris Dodd	$ 16,000
Friends of Mark Warner	$ 2,500
Minnick for Congress	$ 2,300
Lloyd Doggett for Congress	$ 2,000
Alexander for Senate 2014, Inc.	$ 3,000
Collins for Senator	$ 2,500
Friends of Jay Rockefeller	$ 5,000
Campaign Account of Robert Wexler	$ 2,500
Mel Watt for Congress	$ 3,000
Friends of John Boehner	$ 5,000
Pete Olson for Congress	$ 3,300
Charles Boustany Jr. MD for Congress	$ 1,500
People for Patty Murray	$ 2,000
Dave Camp for Congress	$ 2,000
Wicker for Senate	$ 8,800
Tiberi for Congress	$ 2,000
Friends of Max Baucus	$ 1,000
McCaul for Congress	$ 1,000
Boccieri for Congress	$ 2,300
Every Republican is Crucial-ERIC PAC	$ 3,000
John McCain 2008, Inc	$ 2,300
Friends of Bennie Thompson	$ 2,500
Friends of John Tanner	$ 2,500
Evan Bayh Committee	$ 2,000
Friends of Mary Landrieu	$ 2,500
Bachus Reelection	$ 2,000
Friends of Senator Schumer	$ 4,000
Halvorson for Congress	$ 2,300
Putnam for Congress	$ 2,500
Mike McMahon for Congress	$ 2,550
Hatch Election Committee	$ 2,100
Bill Nelson for U.S. Senate	$ 9,100
Friends for Gregory Meeks	$ 6,600
Charles A. Gonzalez Congressional Campaign	$ 5,000
Democratic Senatorial Congressional Committee	$ 950,000
National Republican Congressional Committee	$ 238,500
Democratic Congressional Campaign Committee	$ 202,000
Republican National Committee	$ 128,500
National Republican Senatorial Committee	$ 83,345
Total	$ 1,764,995

In February 2010 and May 2011, the Receiver sent letters to those recipients of political contributions who had yet to return them, requesting that they return an aggregate of $1.3 million in contributions as soon as possible. A list of the contributions that still remain outstanding is below:

OUTSTANDING REQUESTED AMOUNTS AS OF MAY 2013	Amount
New Jersey Democratic State Committee	$ 10,000
Representative Pete Sessions (R-TX)	$ 10,000
Senator John Cornyn (R-TX)	$ 6,000
Americans for a Republic Majority PAC	$ 5,000
Delegate Donna Christensen (D-USVI)	$ 5,000
KPAC (affiliated with Senator Kay Bailey Hutchinson of Texas)	$ 5,000
Lone Star Fund	$ 5,000
Senator Barack Obama (D-IL) (presidential campaign)	$ 4,600
Representative Dan Maffei (D-NY)	$ 4,550
Representative Richard Neal (D-MA)	$ 4,000
Greg Davis for Congress	$ 3,500
Leadership PAC 2006	$ 3,000
Representative James E. Clyburn (D-SC)	$ 3,000
Representative Rahm Emanuel (D-IL)	$ 3,000
Representative Eric Massa (D-NY)	$ 2,550
Former Senator John Sununu (R-NH)	$ 2,500
Representative John Lewis (D-GA)	$ 2,500
Representative Paul Kanjorski (D-PA)	$ 2,500
Representative Timothy Johnson (R-IL)	$ 2,500
Senator Gordon Smith (R-OR)	$ 2,500
Senator Mitch McConnell (R-KY)	$ 2,500
Senator Richard J. Durbin (D-IL)	$ 2,500
LEADPAC	$ 2,000
Representative Donald Payne (D-NJ)	$ 2,000
Representative Ileana Ros-Lehtinen (R-FL)	$ 2,000
Representative Kevin Brady (R-TX)	$ 2,000
Representative Vern Buchanan (R-FL)	$ 2,000
Senator Jack Reed	$ 2,000
Senator Patty Murray (D-WA)	$ 2,000
Representative Kendrick Meek (D-FL)	$ 1,500
Representative Peter King (R-NY)	$ 1,500
Representative Sam Johnson (R-TX)	$ 1,500
Representative Steve Cohen (D-TN)	$ 1,500
Former Senator Elizabeth Dole (R-NC)	$ 1,000
Representative Joe Barton (R-TX)	$ 1,000
Representative Shelley Moore Capito (R-WV)	$ 1,000
Senator Byron L. Dorgan (D-ND)	$ 1,000
Senator Maria Cantwell (D-WA)	$ 1,000
Senator Pat Roberts (R-KS)	$ 1,000
Total Campaign Contributions Requested Be Returned	$ 117,700

Source.

Related article.

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Canadian lawyer sues U.S. government over Allen Stanford ponzi scheme

	May 7, 2013 By Drew Hasselback Investors lost billions in the ponzi scheme orchestrated by Texas tycoon Allen Stanford, and now a Canadian lawyer believes he has an innovative legal strategy to recover funds for victims of the fraud who reside outside the United States. Todd Weiler, who specializes in international law, believes that "unconscionable negligence and/or manifest incompetence" on the part of U.S. regulators may have breached the foreign investor protection provisions of several international trade treaties signed by the U.S. government.
Todd Weiler claims the U.S. government breached international trade treaties by failing to protect foreign investors from Allen Stanford's $7-billion ponzi scheme. Peter J. Thompson/National Post
If this had happened to Americans in Mexico, there'd be no doubt that those Americans would be bringing a NAFTA claim against Mexico A request for arbitration and statement of claim the London, Ont. lawyer has delivered to the U.S. Department of State alleges that the U.S. Securities and Exchange Commission was aware of problems at the Stanford Group of Companies (SGC) and at Stanford Financial Group (SFG) as early as 1997. Yet in a "shocking and egregious failure," SEC officials failed to shut Stanford down until 2009, the claim alleges. Mr. Weiler alleges that the U.S. refused to take steps to shut Stanford down earlier because U.S. officials believed the majority of Stanford's victims were not U.S. nationals. The Canadian lawyer argues that international trade treaties, among them the North American Free Trade Agreement, require that the U.S. government treat investors from all signatory countries equally, regardless of their residency. "If this had happened to Americans in Mexico, there'd be no doubt that those Americans would be bringing a NAFTA claim against Mexico, and that they would deserve to win," Mr. Weiler said in an interview. "The Americans have for 100 years used these agreements and other policies to bring other governments to heel and make sure they get this kind of protection and legal security." The U.S. State Department web site shows that it has received notice of legal actions Mr. Weiler has filed on behalf of Stanford victims from Guatemala, Costa Rica, Dominican Republic, Uruguay, Chile and Peru, and which are brought under various trade agreements the U.S. has signed with those countries. However, the U.S. government has not yet acknowledged on the web site that it has received the NAFTA claim that Mr. Weiler has filed on behalf of Mexican and Canadian residents. All the claims contain allegations that have yet to be proven at a hearing. A high-flying Texas businessman who built a series of financial institutions in the United States and the Caribbean, Stanford was eventually arrested and charged with fraud in 2009. He had been known as "Sir Allen Stanford" in recognition of his services to the government of Antigua and Barbuda. He was tried in U.S. federal court and sentenced to 110 years in prison upon his conviction for fraud in 2012. His knighthood was revoked in 2010. Investors who placed funds with Stanford International Bank received "certificates of deposit" or CDs that were supposed to be low risk investments that offered generous returns. The scheme took in more than US$7-billion. Some 21,000 investors from around the world were taken in. SEC officials, who are responsible for protecting the investments of investors, acted with unconscionable negligence
	Stanford's activities caught the attention of U.S. regulators as early as 1997, a mere two years after the Stanford Group of Companies registered with the SEC in 1995, according to a report completed in 2010 by David Kotz, who was at the time the SEC's inspector general. The NAFTA claim filed by Mr. Weiler relies on that report, which concluded that the SEC could have sought legal action to shut down Stanford years earlier than it did.
A high-flying Texas businessman who built a series of financial institutions in the United States and the Caribbean, Stanford was eventually arrested and charged with fraud in 2009. Aaron M. Sprecher/Bloomberg
"SEC officials, who are responsible for protecting the investments of investors such as the claimants against criminal enterprises such as SFG, acted with unconscionable negligence and or manifest incompetence, causing millions of dollars of losses to the claimants as a result," the claim states. Because Mr. Weiler's claim is structured as a proposed international arbitration, the legal action is open only to non-U.S. residents from countries with which the U.S. has signed trade agreements. Mr. Weiler says the action, which he is bringing in conjunction with several other lawyers from the United States, could include "several thousand" clients. Other third parties have been targeted for their connection to Stanford. Liquidators of Stanford International Bank have sued Toronto-Dominion bank in Quebec and other jurisdictions on the theory that, as Stanford's banker, TD should have known the Texan businessman was up to no good. TD denies the allegation.

Source.

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Allen Stanford Told to Disgorge $6.7 Billion in SEC Case

April 26, 2013
By Andrew Harris

R. Allen Stanford, the Texas financier convicted last year of leading an investment fraud scheme, was ordered to disgorge more than $6.7 billion by the judge in a U.S. Securities and Exchange Commission lawsuit.

U.S. District Judge David Godbey in Dallas issued the order yesterday against Stanford, his Stanford Group Co. and the Antigua-based Stanford International Bank Ltd.

The order may clear the way for Godbey to grant a court- appointed receiver's request to make an interim $55 million payout to investors who lost money after buying certificates of deposit issued by the Stanford Bank.

"The fraud perpetrated was obviously egregious, was done with a high degree of scienter, caused billions in losses and occurred over the course of a decade," Godbey said, using the legal term to describe the mental state of intent to deceive.

A federal jury in Houston convicted Stanford of lying to investors about how their money was being handled.

"The truth is that he flushed it away," Justice Department lawyer William Stellmach told jurors in his closing arguments at the March 2012 trial. "He told depositors he was using their money in one way and the truth was completely different."

Stanford, 63, was sentenced to 110 years in prison. Maintaining his innocence, he has appealed the verdict.

Parallel Judgment

Godbey referred to the jury's guilty finding in granting the SEC's request he render a parallel judgment in their case filed in February 2009, four months before the financier was indicted. The judge also cited the August 2009 guilty plea by Stanford Group Chief Financial Officer James Davis.

"The court finds that $5.9 billion is a reasonable approximation of the gains connected to Stanford's fraud," Godbey said of the sum he would order disgorged. He then added more than $861 million in interest for a total of $6.76 billion. Davis too is jointly liable.

Finally the judge imposed a $5.9 billion penalty on Stanford and a $5 million assessment against Davis, who received a five-year prison sentence.

The court-appointed receiver, Ralph Janvey, asked Godbey this month for permission to begin repaying some of the losses incurred by the more than 17,000 claimants. At an April 11 hearing, the judge told Janvey's lawyer, Kevin Sadler, he was concerned about doing so before a final order had been entered against Stanford.

Societe Generale

In a separate filing today, a group of Stanford investors asked Godbey to grant them a judgment of at least $95 million in a lawsuit against a unit of Paris-based Societe Generale SA. (GLE)

The lender's Societe Generale Private Banking (Suisse) unit took the money from a Stanford bank account with his permission in December 2008 to repay a loan made to him four years earlier, according to court papers.

The financier had caused a business funded by Stanford investor-depositor money to guarantee the loan in 2007, the investors alleged, while those depositors received no benefit. The transfer of that money to Societe Generale just two months before the SEC sued Stanford and shut down his businesses was a fraudulent transfer, the investors claimed in today's filing.

Ken Hagan and Jim Galvin, New York-based spokesman for the French bank, did not immediately reply to voicemail messages seeking comment on the allegations.

Slush Fund

Davis, the CFO, testified at Stanford's trial that the financier maintained a Societe Generale Swiss bank account, funded by investor deposits.

"It was a slush fund, just used for whatever the holder wanted to use it for," Davis said during the Houston federal court trial in February 2012.

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

The investors' case is Rotstain v. Trustmark National Bank, 09-cv-02384, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporter on this story: Andrew Harris in the Chicago federal courthouse at aharris16@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

Source.

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SEC Order Against Stanford

April 25, 2013
By U.S. District Judge David C. Godbey

Securities and Exchange Commission, Plaintiff, vs. Stanford International Bank LTD., et al. Defendants. Civil Action No. 3:09-CV-0298-N

This Order addresses Plaintiff Security and Exchange Commission's ("SEC") motion for partial summary judgment [1779]. The Court grants the motion. The Court also denies Defendant R. Allen Stanford's motion for extension of time [1807].

The Court grants the SEC's motion for summary judgment. The Court enjoins Stanford from violating the Exchange Act § 10(b), Rule 10b-5, the Securities Act § 17(a), and the Advisers Act § 206(1) and (2), enjoins Davis violating the Exchange Act § 10(b), Rule 10b-5, the Securities Act § 17(a), and enjoins SGC and SIB from violating the Exchange Act § 10(b), Rule 10b-5, the Securities Act § 17(a), the Advisers Act § 206(1) and (2), and the Investment Company Act § 7(d). The Court finds Stanford, Davis, SGC, and SIB jointly and severally liable to disgorge the $5.9 billion fraudulently acquired by Stanford's scheme. The Court adds $861,189,969.06 of prejudgment interest to this total, for a total disgorgement liability of $6,761,189,969.06. Finally, the Court imposes a civil penalty of $5.9 billion on Stanford and $5 million on Davis.

Read the complete Order of U.S. District Judge David C. Godbey.

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Louisiana officials want release of SEC report in Stanford case

April 22, 2013
By BILL LODGE

A Louisiana senator told officials of the Securities and Exchange Commission Friday that he wants immediate release of a year-old report by the commission's inspector general on efforts to recover money for victims of a multibillion-dollar fraud.

U.S. Sen. David Vitter, R-La., described as incompetent efforts by a court-appointed receiver to find and distribute assets of convicted con man Robert Allen Stanford.

Stanford, 63, of Houston, is serving a 110-year prison sentence for a fraud conviction that followed estimated worldwide losses of approximately $7 billion. About $1 billion of those losses were from about 1,000 investors in the Baton Rouge, Lafayette and Covington areas, according to estimates by state Sen. Bodi White, R-Central, and Baton Rouge attorney Phillip W. Preis.

"The fraud caused an absolute tragedy for many Louisiana families who invested their hard-earned retirement savings in good faith that it would be there for them when they retired," Vitter said Friday in a letter to Mary Jo White, who chairs the SEC.

Vitter said the receiver in the case, Dallas attorney Ralph Janvey, spent $100 million to collect $55 million for Stanford's victims.

"In the best light, Janvey's actions can only be seen as incompetent," Vitter told White in that letter. He urged White to release the SEC inspector general's report on Janvey, noting that it was completed in March 2012.

There are more than 20,000 Stanford victims across more than 100 countries.

A retired Zachary couple, Louis and Kathy Mier, saw $240,000 of their savings stolen by Stanford's fraudulent scheme.

"Whatever any of our congressmen do to shed light on the truth of what happened, and whatever they can do to help us get our money back and be whole again, would make Louis and me very, very happy," Kathy Mier said Friday.

John J. Nester, a spokesman for the SEC, said in an email Friday that neither he nor other SEC officials would comment on Vitter's request before White issues a response to the senator's letter.

U.S. Sen. Mary Landrieu, D-La., released a statement through her staff: "The Stanford victims deserve answers, and the immediate release of the IG's report is the very least the SEC can do."

U.S. Rep. Bill Cassidy, R.-Baton Rouge, said through his staff: "I strongly urge the SEC … to release the full results of the inspector general's report. The victims of this crime were hard working Louisiana families, and they are entitled to see the details of the report."

Vitter noted that Janvey, against the SEC's wishes, unsuccessfully sued some Stanford victims in an effort to seize money those victims retrieved before Stanford's operations were shut down in February 2009.

"Given the demonstrated incompetence of the court-appointed receiver, it makes you wonder how bad this (inspector general's) report gets," Vitter added. "The Stanford victims deserve to see."

Source.

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SEC Can't Force Help For Stanford Victims, DC Circ. Told

April 12, 2013
By Counsel for Appellee SIPC

The Securities Investor Protection Corp. asked the D.C. Circuit on Monday to affirm a landmark district court ruling declaring it doesn't owe compensation to victims of Robert Allen Stanford's $7 billion Ponzi scheme, suggesting the U.S. Securities and Exchange Commission succumbed to political pressure in bringing the suit.

The SIPC asked the appeals court to affirm U.S. District Judge Robert L. Wilkins' decision dismissing the agency's application to compel the SIPC to pay the fraud victims' claims through a liquidation proceeding.

A top agency official had originally agreed that the SIPC did not owe funds under the Securities Investor Protection Act, SIPC claims, but that changed after U.S. Senator David Vitter, R-La., threatened to block the nominations of two SEC officials in June 2011, the SIPC said.

"The record shows that the SEC's general counsel agreed that SIPA did not apply to the Stanford case," the SIPC said. "It was only two years later that the SEC sought to force SIPC's hand, apparently bowing to pressure from a U.S. senator," referencing a June 14, 2011, press release from Vitter.

The corporation, funded by the brokerage industry to cover investors who lose money in failing firms, also claims the SEC didn't seek a liquidation until two years after its 2009 case against Stanford.

"If the SEC had thought the Stanford fraud was within the scope of what SIPA protects, it was under a legal obligation to notify SIPC immediately," the SIPC said. "The SEC did not do so, even though it filed an enforcement action against Stanford and secured the appointment of a receiver over U.S. Stanford assets in February 2009."

On July 3, Judge Wilkins ruled that Stanford's U.S.-based Stanford Group Co. was a member of the SIPC, but that the Antigua-based Stanford International Bank was not. Stanford International Bank Ltd. was an offshore bank, not a registered broker-dealer, which is what the SIPC oversees, Judge Wilkins said.

Judge Wilkins' decision was a major blow to victims of the Ponzi scheme, who together lost upwards of $7 billion in certificates of deposit administered by Stanford International Bank. It also carried broader legal significance, marking the first time since the enactment of SIPA 42 years ago that a federal court had ruled on how much power the SEC has to command a SIPC liquidation.

The U.S. Supreme Court has ruled that brokerage customers cannot force such proceedings, but that the SEC has the authority to do so.

Because of its precedential nature, a key issue in the Stanford dispute was the standard of proof required of the SEC. The agency argued for a more lenient standard than the SIPC did, describing its burden as merely probable cause supported by hearsay. Judge Wilkins ultimately chose the higher standard requested by the SIPC: a preponderance of the evidence. In an SIPC liquidation, an investor must meet a preponderance standard to prove the validity of his or her claim.

In its appellate brief filed in January, the SEC said Judge Wilkins had taken a too-narrow view of the term "customer." The agency argued that transactions with both Stanford entities should be treated the same way under SIPA because the company operated "as a single fraudulent enterprise that ignored corporate boundaries."

"This interpretation of the statute to allow for flexibility in certain circumstances is the correct one, and it is at least a reasonable one that was entitled to deference by the district court," the SEC said.

The SEC added that it was not seeking customer status for all Stanford investors, but only for those who held accounts with Stanford Group Co., purchased fraudulent certificates of deposit through SGC and deposited funds with Stanford International Bank Ltd.

But SIPC said Monday that the terms of its mission were clear: to protect investors when a member brokerage fails, adding that Judge Wilkins' purportedly narrow view of the term 'customer' was appropriate.

"By its terms, the statute does not insure against fraud or investment losses, instead protecting only the 'customer' property that an SIPC-'member' brokerage firm holds in custody when the brokerage fails," the corporation added.

The corporation also said the SEC's case was unprecedented because it has not made similar requests in proceedings related to the downfall of a major financial institution.

"In 40 years and over 300 liquidation proceedings — including the recent liquidations ofLehman Brothers Inc., Madoff Investment Securities LLC, and MF Global Inc. — this is the first the the SEC had ever tried to compel a liquidation."

Stanford was sentenced in June to 110 years in prison for his role in the fraud.

SIPC is represented by Edwin John U, Eugene F. Assaf Jr., John C. O'Quinn, Michael W. McConnell and Elizabeth M. Locke of Kirkland & Ellis LLP.

The case is U.S. Securities and Exchange Commission v. Securities Investor Protection Corp., case number 12-5286, in the U.S. Court of Appeals for the District of Columbia Circuit.

SIPC Response to SEC Appeal Brief.

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SIPC: $5.44 BILLION NOW DISTRIBUTED TO MADOFF VICTIMS

April 1, 2013
By Ailis Aaron Wolf

Madoff Trustee's Third Distribution Sends Approximately $506.2 Million to Customers With Allowed Claims.

With the distribution of approximately $506.2 million to victims in the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS), a total of $5.44 billion will now have been distributed to BLMIS customers with allowed claims. The Securities Investor Protection Corporation (SIPC) today applauded the hard work of Trustee Irving H. Picard and his attorneys in their continued efforts to recover and return funds to BLMIS customers.

When combined with the funds already returned to BLMIS customers from the Customer Fund and advances from SIPC, more than 50 percent of the total Madoff accounts with allowed claims will be fully satisfied following the third interim pro rata distribution. A total of 1,106 accounts will be fully satisfied following the third interim distribution out of a total of 2,178 accounts with allowed claims.

Since December 2008, $9.32 billion has either been recovered or agreements reached to recover funds to return to BLMIS customers. This amount is more than 53 percent of the approximately $17.5 billion in principal estimated to have been lost by BLMIS customers who filed allowed claims. The Trustee's recovery of more than $9.32 billion has been made possible through advances provided by SIPC, which is funded by the securities industry. To date, SIPC has committed approximately $807 million to pay customer claims and over $718 million to fund the liquidation proceeding. No monies recovered by the Trustee have been used to pay any administrative expenses. All recoveries made by the Trustee benefit customers.

SIPC President Stephen Harbeck said: "Thanks to the significant Tremont Funds settlement, which allocated more than $1 billion to the BLMIS Customer Fund, and additional funds recovered by Trustee Picard and his team since last fall, additional distributions continue to be made in an effort to fully satisfy as many BLMIS allowed claims as possible. We applaud the hard work Trustee Picard has undertaken to recover monies and distribute them to customers at the failed BLMIS brokerage. His successful efforts have resulted in the ability to fully satisfy more than half of the BLMIS accounts with allowed claims, a significant achievement. SIPC is pleased to continue to facilitate the work of the Trustee to make possible the maximum recovery and return of funds to customers."

ABOUT SIPC

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

The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities held in custody with the broker for up to a maximum of $500,000 per customer. This figure includes a maximum of $250,000 on claims for cash. From the time Congress created it in 1970 through December 2011, SIPC has advanced $ 1.8 billion in order to make possible the recovery of $ 117.5 billion in assets for an estimated 767,000 investors.

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KLS Stanford Update - SEC Litigation

March 14, 2013
By KACHROO LEGAL SERVICES, P.C.

In our last update, we notified you that the magistrate judge in our SEC class action denied the Government's request to stay all discovery. We are summarizing here the outcome of the discovery hearing which was held in Miami on February 14, 2013. One of the key hurdles to overcome in an action against the Government is the discretionary function exception. The magistrate made clear that this hurdle has been overcome and the court had already ruled on the sovereign immunity issue. The magistrate also held that "it is not obvious that [the Government's second motion to dismiss] will succeed." A copy of this ruling is attached for your review. Following this ruling, we have moved forward with discovery and we continue to wait for the district court to rule on the Government's second motion to dismiss.

In view of the delays caused by the Government's motion to stay discovery, we requested that the Court push back certain pre-trial and trial deadlines to allow us adequate time to pursue the discovery required to prove our case. We are happy to report that the Court granted our request and pushed back discovery deadlines to afford us this opportunity, which also resulted in a new trial date set for April 7, 2014.

In accordance with the foregoing and the undersigned's rulings in open Court, it is ORDERED and ADJUDGED as follows:
1.- The Motion to Stay Discovery [D.E. 50] is DENIED.

2.- The Motion to Compel [D.E. 51] is DENIED WITHOUT PREJUDICE as to Request No. 1 and Interrogatory No. 6 based on Defendant's agreement to supply the names and contact information of the SEC Fort Worth District Office staff members in response to Interrogatory No. 1. Such information is hereby designated as "CONFIDENTIAL, FOR ATTORNEYS' EYES ONLY", and shall be provided to Plaintiff's counsel by February 19, 2013.

3.- The Motion to Compel [D.E. 51] is DENIED WITHOUT PREJUDICE as to Request Nos. 2, 13-16 and Interrogatory Nos. 1-5, 7-8 subject to the following terms. Plaintiffs may notice a Rule 30(b)(6) deposition of the SEC, designating as categories the information sought in their discovery requestes, but narrowed in terms of time, entity and scope as more fully explained at the February 14, 2013 hearing. Within one week of receipt of the Rule 30(b)(6) Notice of Deposition, Defendant may submit a letter to the undersigned setting forth any objections to the designated categories at the undersigned's e-file address, otazo-reyes@flsd.uscourts.gov. Plaintiffs may respond to any such objections, by the same means, within one week. Thereafter, the undersigned will rule on the objections or, if necessary, set a telephonic hearing to address them. The parties' letters will be appended to the Order on the objections.
The Rule 30(b)(6) deposition of the SEC shall be scheduled on a date that is mutually agreeable to the parties, and at a time when the undersigned will be available to rule on any disputes that may arise regarding its scope. To this end, counsel may contact Chambers to coordinate the deposition date. Further, the parties may submit a proposed confidentiality order prior to the deposition.

Zelaya Order on Motion to Stay and Motion to Compel.

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Stanford U.S. Receiver Has Deal With Antigua Counterpart

March 13, 2013
By Laurel Brubaker Calkins

R. Allen Stanford's Antiguan- appointed liquidators agreed to stop seeking control of the convicted financier's assets in a deal that may allow defrauded investors to recover some of the $300 million Stanford stashed in accounts outside the U.S.

Receivers appointed by the U.S. and the Antiguan courts have battled for four years to control assets recovered from Stanford's financial-services empire. Stanford, 62, was convicted last March of leading a $7 billion investment fraud based on bogus certificates of deposit at his Antigua-based bank. He was sentenced to 110 years in prison.

"The funds that are the subject of this agreement represent the largest available source of investor money that Allen Stanford had not already spent by the time his Ponzi scheme collapsed," Kevin Sadler, lead attorney for U.S. receiver Ralph Janvey, said in an e-mail today. "In the absence of this agreement, these funds would remain out of reach of the Stanford victims for years to come."

For dropping their dispute with Janvey and the U.S. Justice Department, the Antiguan liquidators will receive fees of $36 million from Stanford's frozen funds in the U.K., according to a statement jointly released by both receivers today.

Professional Fees

The Antiguan liquidators have already received $20 million from the U.K. accounts, so the additional payment will boost their professional fees to $56 million -- almost as much as Janvey's receivership team has been paid since U.S. securities regulators seized Stanford's operations in February 2009.

Janvey's professionals had been paid $63.3 million in fees and expenses as of Feb. 7, according to his latest status report. That represents about a quarter of the $230.2 million Janvey has recovered for the estate. He has paid out an additional $53.3 million in costs to wind up Stanford's business interests.

Janvey recently proposed a $50 million interim distribution be paid to investors, pending court approval.

Angie Shaw, a founder of the Stanford Victims Coalition, denounced the agreement as "ransom" that rewards the Antiguan liquidators at the investors' expense.

"While the agreement does end a four-year international turf war that has cost the victims untold millions of dollars, the only true beneficiary of the agreement is the Antiguan liquidators," Shaw said in an e-mail today. "The Antiguan liquidators are essentially getting a ransom fee in exchange for dropping their litigation for control over the frozen foreign accounts holding what is left of the victims' life savings."

Dallas Judge

While Janvey was awarded control over all Stanford assets by the Dallas judge in charge of the U.S. Securities and Exchange Commission case against Stanford, courts in the U.K., Switzerland and Canada initially awarded control of about $320 million in foreign accounts to Antiguan court-appointed liquidators Marcus Wide and Hugh Dickson of Grant Thornton.

The Justice Department placed an administrative hold on the European funds, and it has been trying to repatriate the money since Stanford and his co-conspirators were convicted last year.

The Antiguan liquidators have fought to retain control and have filed some asset-recovery lawsuits that duplicate actions already initiated by Janvey, according to court filings. Wide and Dickson haven't publicly stated how much they've been able to recover for Stanford's investors.

Stanford Victims

Edward H. Davis Jr., one of the Antiguan liquidators' attorneys, said in an e-mail today that Dickson and Wide have already recovered and frozen more than $227 million in Stanford assets "independent of the amounts recovered by Janvey and in addition to the approximately $300 million frozen" in overseas accounts.

"The joint liquidators have conducted intensive investigations and lodged claims and are in the process of launching additional lawsuits that have the potential to yield billions of dollars in recoveries to pay the victim creditors," Davis said. "To suggest that the joint liquidators held the estate for ransom demonstrates a fundamental misunderstanding about how a liquidation process maximizes recoveries for victim creditors."

Peter Morgenstern, a lawyer who sits on the Official Stanford Investors Committee, said the investors should be allowed to decide whether the Antiguan liquidators receive more fees or whether the U.S. government should continue fighting to recover Stanford's frozen European funds through international accords designed to recover criminal proceeds.

Significant Assets

"The issue is how significant assets recovered by the U.S. government for the benefit of Stanford victims should be spent," Morgenstern said in an e-mail. Much as creditors have a say in how bankruptcy proceeds are distributed, he said, the defrauded investors should also be consulted before such a large part of the estate is paid in professional fees.

Janvey has asked U.S. District Judge David Godbey in Dallas to hold a hearing at which investors can express their opinions of the deal. No hearing has been set.

Under terms of the agreement announced today, the Antiguan liquidators will distribute the $44 million remaining in the U.K. accounts to investors after the liquidators have received their $36 million in working capital. Wide and Dickson will also distribute about $60.5 million of the funds currently frozen in Switzerland, according to the joint statement.

Fund Transfers

About $23 million in Canadian funds and $132.5 million in Swiss funds will be transferred to the Justice Department and Janvey for distribution to investors through a system the U.S. receiver is establishing, according to the joint statement.

The agreement "creates a plan for the distribution of almost 90 percent of the frozen assets from the U.K., Canada and Switzerland pursuant to which distributions will be made as soon as the necessary approvals are obtained from the pertinent authorities in those countries," the Antiguan liquidators said in the joint statement.

Courts in the U.S., Antigua and the U.K. must still sign off on the deal before any funds are transferred, according to the statement.

Sadler, the U.S. receiver's attorney, said the deal was the result of months of negotiations involving officials in five nations.

"This agreement is one of the most complex undertakings of its kind," he said in an e-mail. "This was no easy task."

Source.

Press release settlement (Spanish version).

Press release settlement (English version).

Agreement Janvey - JLs (English version).

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