Announcement from Allen Stanford

To the Stanford International Bank depositors, and clients of the global Stanford Financial Group

As this is the first statement from me since the February 17, 2009 destruction of the global Stanford companies, and my imprisonment for allegedly operating a fraud that has been referred to as a "Ponzi scheme", I want to be direct, clear and emphatic. The actions taken by the U.S. government against me and my companies and that resulted in such harm to so many of you, was baseless, opportunistically contrived and, most importantly, unlawful. To many of you, and especially those of you who believe in and trust the accuracy and veracity of the American media machine, for now I will simply advise you of the series of legal actions taken by me in recent months and ask that you look at them on line, read them carefully and then follow their progress through the American legal system. In the coming days and weeks, as these legal initiatives make their way through the courts I will be posting a daily message on this site to keep informed those of you who have been harmed.
Meanwhile, I want all of you to know, the many of you around the world who entrusted me and my companies with your investment monies, that it is my intent, and in fact my mission in this life, to restore my good reputation as an honest man, and to personally repay each and every one of you... in full ...each and every dollar that was so wrongfully taken from you by the Securities and Exchange Commission.
The manner in which I intend to achieve this will be made clear in the coming weeks.

Thank you,

R. Allen Stanford

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Anuncio de Allen Stanford

A los depositantes de Stanford International Bank y clientes del global Stanford FinancialGroup

Como éste es la primera declaración de mí parte desde la destrucción de 17 de febrero de 2009 de las empresas mundiales de Stanford, y mi encarcelación por presuntamente operar un fraude que se ha referido como un "esquema Ponzi", quiero ser directo, claro y enfático. Las medidas adoptadas por el gobierno de Estados Unidos contra mí y mis empresas y que dio lugar a un daño para tantos de ustedes, fue infundada, oportunamente ideado y, lo más importante fue ilegal. A muchos de ustedes y especialmente aquellos de ustedes que creen en y confían en la exactitud y veracidad de la maquinaría de los medios estadounidenses, por ahora simplemente le aconsejaréque revisen una serie de acciones legales tomadas por mí en los últimos meses, y lean atentamente y luego sigan su progreso a través del sistema legal estadounidense. En los próximos días y semanas, a medida que estas iniciativas legales hacen su camino a través de los tribunales, voy a publicar un mensaje diario en este sitio para mantener informado a aquellos que han sido perjudicados.

Mientras tanto, quiero que sepan,a todos ustedesalrededordel mundo quienes confiaron en mí y mis empresas con sus fondos de inversión, que es mi intención y de hecho mi misión en esta vida, restaurar mi buena reputación como un hombre honrado y para personalmente pagar todos y cada uno de ustedes... en su totalidad.. .cada y todo dólar que tan injustamente le fue quitado por la Securities and Exchange Commission.

La manera en la cual tengo la intención de lograr este objetivo se realizará en las próximas semanas.

Gracias

R. Allen Stanford

 

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Allen Stanford filed on 24 April 2014 a Motion to Vacate

Motion to Vacate filed on 24 April 2014, based on:
1) SEC lack of jurisdictional or regulatory authority over SIB
2) Denial of Due Process, and improper venue for their complaint
3) Blatant violation of Stanford’s Fourth Amendment right to protection from illegal search and seizure
4) Fraud upon de Court in this matter

Janvey did not have warrants to seize all documents found in Stanford’s office.

Violation of the U.S. Computer and Wire Act. Janvey hired the FTI consulting, who got access illegally to the database located in Antigua. Once it was discovered, the access was shut off.

Stanford was denied to access some documents for his defense. In addition the denied access to the “select” material which was “mysteriously” relocated to a warehouse in Washington D.C. (there was enough room in Houston to store all the material, why did they move it to Washington?).

Stanford alleges that “select” material was the detailed customer account records of SIB obtained by Janvey illegally via “hacking”, and that the Government, through the Receiver, had very purposefully places well out of defense counsel’s reach.

Davis quickly pled to, for two reasons (a) he had embezzled vast amounts of money from the company, and (b) he was offered a deal that would allow him to avoid prosecution on the embezzling...

Reading the Motion to Vacate; the oral deposition of Karyl Van Tassel, who (unlicensed) firm (FTI) was being paid tens of millions of dollars to produce a certain result:

Attorney Matthew Nielson:
Q. Who prepared the Declaration?
A. (Van Tassel) The Declaration was prepared between FTI and Baker Botts.
Q. Okay. Who did the initial drafting?
A. Baker Botts did.
Q. The entire thing?
A. Yes.

Attorney Michael Stanley:
Q. you mentioned how a database had been compiled that had over 40 terabytes of information and 2.5 million documents.
A. (Van Tassel) Yes.
Q. Where do those documents come from?
A. Well, we talked about the Temenos database.
Q. It is fair to say that there have always been investments made with SIB money? I’ll make it a little more clear. When money came in from the depositors, this didn’t sit in a big burlap bag under Allen Stanford’s desk, did it?
A. No.
Q. Okay. It was actually put into banks and investments were made with that money, right?
A. That’s correct.
Q. Okay. Now, when the depositors wanted to redeem their CD’s, sometimes those redemptions would come from available cash, right?
A. Yes.
Q. Okay. Did it - it came from cash they had in the accounts that had not been invested in private equity, right?
A. Or otherwise disseminated throughout the organization, yes.

Stanley started asking about the accounts located in other banks and Van Tassel could not answer how many accounts are, how much money was deposited, how much money is currently available... 

Stanley also asked about how many companies received money from SIB (as investment from Stanford). Van Tassel could not exactly answer that question.

Stanley asked her why she said it was a Ponzi scheme from the beginning. Van Tassel said she got that information from Davis’s testimony. Van Tassel did not make any research or looked at the balance sheets to confirm whether SIB was solvent or not.

Attorney Mark Goranson to Van Tassel:
Q. I want to talk a little bit about, you had experience, excluding the Stanford matter, on two other matters that involved Ponzi schemes; is that correct?
A. (Van Tassel) Yes.
Q. Okay. And one involved, I think you said, a computer reseller; is that right?
A. Yes.
Q. And who were you retained by?
A. A law firm and I can’t recall the name.
Q. And did you issue a written report in that case?
A. No.
Q. And the second matter, I believe you said, was a real estate matter.
A. Yes.
Q. And the name of the lawsuit?
A. I don’t recall.
Q. And who retained you?
A. I don’t remember the name of the law firm


Jim Davis was an admitted “crook”, “coward”, “fraudster”, “liar” and “thief” who, to avoid 30 years of hard time would have said and admitted to anything asked of him - up to an including, if necessary, the Kennedy assassination. Though not yet faced with prison time, Karyl Van Tassel, Senior Managing Director of FTI Consulting, had an equally compelling reason to “find”, “declare” and provide “attestations” consistent with the predeterminations contained in the SEC’s complaint...

In other words, in all of her “Declarations” in the Stanford matter, Ms. Van Tassel, CPA, was attesting to work performed by a firm that had no license to perform such work - and nowhere in any of the required locations did she or her firm (FTI) indicate by way of disclaimer that “This firm is not a CPA firm”, and that the forensic accounting and investigatory work they were performing was being done with total disregard to the applicable laws in Texas.

FTI aided and abetted the SEC and DOJ in their fraudulent pursuit of SIB, the concealment of an international crime, and ultimately, the purposeful denial of information that would have proven the solvency of SIB; and thus the innocence of RAS. Additional evidentiary support for this conclusion is found in the Receiver’s decision to employ both the unlicensed FTI, and the more widely known and reputable (and appropriately licensed) accounting firm Ernst & Young. As there can be no other reason for retaining both of these firms, and it is thus abundantly clear that the more accommodating and less reputable FTI was needed here to attest to the financial manipulations necessary to corroborate the SEC’s allegation of a Ponzi scheme.

Attorney Dick DeGuerin asked FTI’s lead forensic auditor, Jeffrey Ferguson the following question:
Q. This isn’t a Ponzi scheme, is it?
A. (Mr Ferguson FTI) I haven’t formulated an opinion on that.
(Mr. DeGuerin to the Court): “This is a gentleman who’s a certified fraud examiner, whose firm has [already] been paid $6 million dollars to look at records, and he cannot say under oath that this is a Ponzi scheme.

And then, 3 years later, after the thousands of media slanderings and the total destruction of his global company, his life and an untold number of other lives, based on Karyl Van Tassel’s findings of a “Ponzi scheme”...

BUT Van Tassel said she got that information (that it was a Ponzi scheme) from Davis’s testimony. Van Tassel did not make any research or looked at the balance sheets to confirm whether SIB was solvent or not.

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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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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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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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Cassidy, Deutch Introduce Improving SIPC Act of 2013

February 28, 2013
By Dr. Bill Cassidy

WASHINGTON, D.C. - This week, Congressman Bill Cassidy, M.D. (R-LA) and Congressman Ted Deutch (D-FL) re-introduced the Improving Security for Investors and Providing Closure Act, or Improving SIPC Act of 2013. The legislation would provide victims of Ponzi schemes a quicker path to financial restitution, including those harmed by R. Allen Stanford and the Stanford Financial Group.

"It has been four years since the Stanford Financial Group was placed in receivership and its victims learned their savings were gone," said Congressman Bill Cassidy. "Yet there are still victims who have not been given financial restitution. These are working men and women who cannot wait for the conclusion of a long, drawn-out legal process. This bill allows them to quickly recoup some of their losses. This is a common-sense plan which should be enacted."

"Every victim of the despicable Ponzi scheme orchestrated by the Stanford Financial Group of course has the right to pursue any and all litigation in this case," said Congressman Ted Deutch. "Yet those who cannot afford to continue this lengthy legal battle or simply want to move on with their lives deserve the opportunity to recoup some of their losses. This is a commonsense, bipartisan bill and I look forward to working with Congressman Cassidy to advance it in the 113th Congress."

This legislation creates an avenue for SIPC to offer individual Stanford victims a one-time payment of up to $500,000.00, to at least partially recoup them of their losses. Stanford victims who accept the offer would consequently exclude themselves from any further claims against the SIPC fund. Stanford victims who wish to continue their lawsuits against SIPC can bypass this option and continue those suits. In summary, this legislation allows both parties to settle on existing claims for a negotiated amount, as both SIPC and countless victims reportedly hoped to do as early as 2011.

Additionally, since all settlements for Stanford victims would come from the SIPC fund, no taxpayer money will be required to fund this legislation and no increase to the national debt will occur if enacted.

Source.

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The District Court Rules in Favor of the Receiver in His Claim to Recover Net Winnings Paid to Stanford "Net Winner" Investors

January 23, 2013
By U.S. Receiver (Ralph Janvey)

On January 23, 2013, the District Court entered a summary judgment order in favor of the Receiver finding that the Receiver is entitled to recover from Stanford investors any funds they were paid in excess of the principal they deposited in the Stanford fraud scheme. The Court ruled that the net winner investors' contracts with Stanford are void and unenforceable and that the investors did not provide value for amounts they received from Stanford in excess of the amounts they deposited. As a result, the Court held that that allowing the net winner investors "to keep their fraudulent above-market returns in addition to their principal would simply further victimize the true Stanford victims, whose money paid the fraudulent interest." Although the District Court's order is not a final judgment, the District Court certified the order for appeal, which means that it will likely be appealed in the near future to the US Court of Appeals for the Fifth Circuit.

The Receiver is pleased with the Court's ruling today that those investors who profited from the Stanford ponzi scheme do not have the right to retain those profits. This decision represents an important milestone in the very long and difficult process of unwinding the massive Stanford ponzi scheme. In his ruling, Judge Godbey agreed with the Receiver's position that the fictitious interest payments that Stanford made to investors on their Stanford International Bank certificates of deposit simply represented money taken from one set of investors and paid to another; it was just part of Stanford's efforts that kept the ponzi scheme going for well over a decade.

Based on his investigation, the Receiver identified over $220 million in net winnings or fictitious interest that was paid to over 800 investors. The Receiver intends to use this ruling to pursue recovery of these funds for the benefit of the thousands of investors who sustained significant losses on their Stanford CDs. Once recovered, these funds can be distributed to the victims of the Stanford fraud, which would be in addition to the $55 million that the Receiver has already proposed for distribution.

The Receiver is continuing to pursue recovery through litigation of other funds that can be distributed to victims, and he continues to work cooperatively with the U.S. Department of Justice and the Antiguan-appointed Liquidators to reach a final agreement to make available for distribution approximately $300 million in funds and assets currently frozen in foreign countries.

Click here to view the Order.

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Ex-Stanford executive gets 5 years in $7B swindle

January 22, 2013
By JUAN A. LOZANO

The star prosecution witness in the trial of convicted Texas financier R. Allen Stanford was sentenced Tuesday to five years in prison for helping to bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history.

James M. Davis had faced up to 30 years in prison after pleading guilty in 2009 to three fraud and conspiracy charges as part of an agreement with prosecutors.

"I am ashamed and I'm embarrassed," Davis said at the sentencing hearing at Houston federal court. "I've perverted what was right and I hurt thousands of investors. I betrayed their trust and also associates and neighbors and friends and my family."

Prosecutors say Stanford persuaded investors to buy certificates of deposit from his Caribbean bank, then used that money to bankroll a string of failed businesses and his own lavish lifestyle, including a fleet of private jets and yachts.

At Stanford's trial last year, Davis - the former chief financial officer of Stanford's companies - portrayed his ex-boss as the leader of the fraud who burned through billions of CD deposits. He testified that he and Stanford faked the bank's profits and fabricated documents to hide the fraud.

Stanford, a one-time billionaire, was convicted in March on 13 of 14 fraud-related counts. He was sentenced to 110 years in prison and is serving his sentence in a Central Florida prison.

Many of the dramatic details at Stanford's fraud trial - including testimony about bribes and blood oaths - came from Davis.

Stanford's defense attorneys accused Davis of being behind the fraud and tried to discredit him by calling him a liar and tax cheat. Davis, who was Stanford's roommate at Baylor University for a semester in 1973, said he realized he was party to fraud when he was asked to lie to a potential investor to say the bank had insurance.

Davis said he was "one of those liars" who faked the bank's numbers but that Stanford was "the chief faker."

Another top executive in Stanford's now-defunct empire - former chief investment officer Laura Pendergest-Holt - was sentenced to three years in prison in September after pleading guilty to one count of obstruction of a U.S. Securities and Exchange Commission proceeding.

Two other ex-executives - Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller - were convicted in November of conspiracy to commit wire fraud and nine counts of wire fraud. They are set to be sentenced Feb. 14.

A former Antiguan financial regulator was also indicted and awaits extradition to the U.S.

Source.

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STANFORD PONZI SCHEME VICTIMS TO RECOVER ONE PERCENT OF LOSSES

January 11, 2013
By U.S. Receiver (Ralph Janvey)

The Receiver requests that the Court order a first interim distribution of funds from the Receivership Estate for the benefit of defrauded investors in certificates of deposit ("CDs") issued by Stanford International Bank, Ltd. ("SIB"). These investors were the primary source of both the funds that fueled the Stanford Ponzi scheme and the funds recovered by the Receiver. They are also the primary victims of the Stanford fraud by both value and number of claims.

Treatment of Claims under the Interim Plan.

1. The Interim Distribution Amount shall be apportioned among Investor CD Claimants on a pro rata basis. Such Investor CD Claimants shall receive payments equal to a percentage (the "Distribution Percentage") of their Allowed Claim Amounts as reflected in their Notices of Determination. The Allowed Claim Amounts shall be based on the Investor CD Claimants' Net Losses. Any future distributions to Investor CD Claimants shall likewise be pro rata based on Investor CD Claimants' Allowed Claim Amounts.

2. The Distribution Percentage equals the Interim Distribution Amount divided by the sum of: (a) all Allowed Claim Amounts for non-deficient Investor CD Claims as of the filing of the Motion (the "Investors' Allowed Claim Amounts"), and (b) the Receiver's estimate of the Allowed Claim Amounts for all Investor CD Claims that are deficient (the "Investors' Deficient Claim Amounts"). The Distribution Percentage can be represented mathematically as:

Interim Distribution Amount
____________________________________________________________
(Investors' Allowed Claim Amounts) + (Investors' Deficient Claim Amounts)

3. As of January 2, 2012, the aggregate of the Investors' Allowed Claim Amounts equaled $4,237,737,851.75, and the aggregate of the Investors' Deficient Claim Amounts equaled $893,487,080.90. The Distribution Percentage, therefore, is calculated as follows:

$55,000,000.00
________________________ = 1%
$5,131,224,932.65

4. Investor CD Claimants will receive distributions under the Interim Plan equal to their Allowed Claim Amounts as reflected in their Notices of Determination multiplied by the Distribution Percentage. The amount of a given Investor CD Claimant's interim distribution can be represented mathematically as:

(Particular investor's Allowed Claim Amount) x (Distribution Percentage)

5. If an Investor CD Claimant serves and files a timely objection to a Notice of Determination, the Investor CD Claimant is not disqualified from receiving a distribution under the Interim Plan. However, the Investor CD Claimant shall participate in this interim distribution based initially on the original Allowed Claim Amount in the Notice of Determination. If the Investor CD Claimant ultimately succeeds in increasing the Allowed Claim Amount (either by stipulation with the Receiver or by Court order sustaining the Investor CD Claimant's objection), the claimant shall receive a supplemental payment representing 1% of the difference between the Allowed Claim Amount in the Notice of Determination and the Allowed Claim Amount after final resolution of the claimant's objection.

6. To the extent a claimant receives one or more collateral recoveries, the Receiver will reduce payments to such a claimant to the extent necessary to ensure that all the Investor CD Claimants are treated equally with respect to the percentage of their Allowed Claim Amounts they recover from all sources as of the date of the payments.

7. Each Investor CD Claimant's interim distribution shall be based solely on his Investor CD Claims and not on his other types of Claims, if any.

8. Nothing in this Order shall preclude future distributions to Investor CD Claimants or other Claimants under a different plan. Nor shall anything in this Order restrict the Receiver's authority to compromise and settle any Claim, or resolve any objection to a determination, at any time, as appropriate, without further order of this Court.

Source.

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Allen Stanford receiver sues Greenberg Traurig, Hunton & Williams and YOLANDA SUAREZ

November 16, 2012
By Terry Baynes

A representative for the victims of Allen Stanford's estimated $7 billion Ponzi scheme is suing two law firms he says helped the now-convicted swindler perpetrate his fraud.

The court-appointed receiver, the Official Stanford Investors Committee and individual investors sued Greenberg Traurig and Hunton & Williams on Thursday, claiming that lawyer Carlos Loumiet, who worked for both firms, was instrumental in Stanford's scheme.

"Stanford could not have perpetrated this global mass fraud on his own. He needed corrupt regulators in his chosen offshore jurisdiction of Antigua, shady accountants, and skilled and complicit lawyers to help him," the complaint said.

The lawsuit said Stanford relied on Loumiet, a Miami international banking lawyer who was Stanford Financial Group's outside counsel from 1988 to 2009. For the first 13 of those years, Loumiet was a partner at Greenberg Traurig before moving to Hunton & Williams in 2001.

Loumiet helped Stanford set up a safe haven in Antigua and established U.S. offices that sold certificates of deposit to Latin American investors, the complaint said. He also helped Stanford invest his profits in Caribbean real estate, venture capital investments and an unsuccessful movie project, it said.

"Loumiet counseled Stanford for over twenty years on how to evade U.S. laws and regulations while still operating primarily from U.S. soil," the suit said. He also recommended fellow lawyer Yolanda Suarez, who went on to become the general counsel of Stanford Financial Group. Suarez, but not Loumiet, is named as a defendant in the suit.

A lawyer for Yolanda Suarez did not immediately respond to requests for comment.

Loumiet said in an emailed statement that he has never helped any client commit any wrongdoing nor represented anyone he knew was engaged in illegal activity.

"After years of investigations by the federal government and months of trials involving Allen Stanford and his co-defendants, I have not been implicated in any wrongdoing," he said.

The law firms also denied having any responsibility for Stanford's fraud.

Hunton & Williams called the suit "an overreach by Stanford Financial Group's understandably frustrated investors attempting to recoup their unfortunate losses."

Greenberg Traurig said its work for Stanford occurred prior to 2001, three years before the sale of the CDs at the center of the suit.

"This is merely plaintiffs' newest attempt to pry open a deep pocket," Greenberg Traurig's lawyer Jim Cowles said in an emailed statement, noting 63 other individual lawsuits and 15 pending class action claims, including against other large law firms and accounting firms.

Similar suits against law firms Proskauer Rose and Chadbourne & Parke and insurance broker Willis Group Holdings Ltd are currently on appeal before the U.S. Supreme Court. The firms claim that the class actions brought under state law are barred by federal securities law. They say investors should not be able to go after deep-pocketed third parties only tangentially related to the fraud. The 5th U.S. Circuit Court of Appeals in New Orleans had allowed the cases to proceed in March.

A lawyer for the investors, Edward Snyder of Castillo Snyder, said in an email that Loumiet "worked hand in hand" with Stanford and others to design the basic architecture of the Ponzi scheme. Snyder also represents investors in the lawsuits against Proskauer and Chadbourne.

The latest suit alleges violations of the Texas Securities Act and claims over $1.8 billion in losses to the investor committee and at least $7 billion to the entire investor class, as well as punitive damages to be determined at trial.

Stanford was convicted in March of 13 charges including fraud and conspiracy for selling certificates of deposit from his bank in Antigua to thousands of investors in the United States and Latin America. He had already spent some of those proceeds on yachts, girlfriends, sponsorship of a cricket tournament and other accoutrements of a high-rolling life.

Stanford was sentenced to 110 years in prison in June.

The case is Janvey et al v. Greenberg Traurig et al, U.S. District Court, Northern District of Texas, No. 12-4641.

PLAINTIFFS' ORIGINAL COMPLAINT - CLASS ACTION.

Source.

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SEC MOTION TO INTERVENE AND TO SUSPEND THE MEMORANDUM OPINION AND ORDER OF JULY 3, 2012

August 22, 2012
By Matthew T. Martens

Applicant U.S. Securities and Exchange Commission ("SEC" or "Commission") respectfully submits this memorandum of law in response to Robert Cheatham's Motion To Intervene and To Suspend the Memorandum Opinion and Order of July 3, 2012 ("Motion To Intervene").

Mr. Cheatham contends that he may intervene as of right in this proceeding pursuant to Federal Rule of Civil Procedure 24(a)(2). That provision states that intervention must be granted as of right, "[o]n timely motion," to anyone who "claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest." In other words, the right of a party to intervene depends on the following four factors:

(1) the timeliness of the motion; (2) whether the applicant "claims an interest relating to the property or transaction which is the subject of the action"; (3) whether "the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest"; and (4) whether "the applicant's interest is adequately represented by existing parties.".

SEC Motion To Intervene and To Suspend the Memorandum Opinion and Order.

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Government accused of negligence in suit

July 3, 2012
By Edward J. Gonzales III

Seven Baton Rouge residents and firms are suing the federal government for negligence and misconduct they say caused their loss of approximately $3.5 million to the massive Ponzi scheme operated by Houston entrepreneur Robert Allen Stanford.

"You can't sue the government simply for making mistakes," attorney Edward J. Gonzales III said; "You can sue the government for negligence and deliberate misconduct," Gonzales added.

It is clear that the OIG report found violations of federal laws and regulations by Barasch. He violated those rules and duties to the investing public in general and to these plaintiffs in particular. In addition, Barasch may have committed multiple criminal violations of 18 U.S.C. § 1519 as well as other violations that facilitated Stanford's crimes and obstructed federal investigations. Had Barasch not done as he did, none of the plaintiffs would or even could have invested with SIBL - it's doors would have been shut - and the damages suffered by the plaintiffs would have been completely avoided. Like the federal employees in Limone v United States, 497 F. Supp. 2d 143 (D. Mass 2007); 579 F 3d 79 (2d 2009), who engaged in subordination of perjury and obstruction of justice in the course of their duties as federal agents, Spencer Barasch has by his conduct rendered the United States liable to the plaintiffs.

Alternatively, the conduct of Spencer Barasch referred to herein was negligent.

Additionally, the failure of Barasch's superiors to properly review and supervise his conduct - simply put, to find out that he was not making outside referrals as he said he was - was negligence, not an exercise of law enforcement discretion or policy discretion. They did not "decide to allow" this conduct. Rather, they should have discovered it and negligently failed to do so. Had they identified Barasch's misconduct, there is no doubt that the SEC and other agencies would then have acted differently and effectively against Stanford.

The plaintiffs purchased their investments, which have been determined to be without value by the Stanford Receiver. The government is therefore liable to the plaintiffs in the amounts they purchased. As further damages for loss of their opportunities to earn on their investments, the plaintiffs also claim as damages the interest that investments in legitimate CD accounts would have earned since the date the receivership was filed, until paid.

Plaintiffs bring this case on behalf of themselves and on behalf of all persons or entities, who have suffered losses of investments with Stanford International Bank, and file administrative response, excluding any class member who timely elects to be excluded from the Class ("the Class"). Plaintiffs allege that all such class members were damaged or sustained investment losses as a proximate cause and result of the negligence and deliberate misconduct by Spencer Barasch and the negligent supervision of Barasch by the SEC.

As of the present date, the United States of America has the administrative ability to identify all members of the Class, as it has received their claims.

Membership in the Class is so numerous as to make it impractical to bring all Class Members before the Court. The exact number of Class Members is unknown, but can be determined from the United States of America's claim records. Plaintiffs reasonably estimate and believe that there are approximately two thousand (2,000) in the Class. Although Plaintiffs do not presently know the names of all Class Members, their identities and addresses can be readily ascertained from the United States of America's records.

Plaintiffs and all Class Members have suffered similar damages as a result of the negligence and intentional misconduct of the United States of America's employee, Spencer Barasch, as well as the negligent supervision of its employees of the U.S. Government.

Federal TORT Claims ACT Class Action Complaint.

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Stanford Officer to Plead Guilty

	June 18, 2012 By VANESSA O'CONNELL Stanford Financial Group's top investment executive, Laura Pendergest-Holt, is expected to plead guilty to obstruction of justice Thursday for her alleged role in a $7 billion Ponzi scheme that was among the largest frauds in U.S. history, a person familiar with the case said. A spokeswoman for the Justice Department declined comment. The expected plea by Ms. Pendergest-Holt, Stanford's chief investment officer, follows the sentencing last week of convicted Ponzi schemer R. Allen Stanford to 110 years in prison. That punishment amounts to a life sentence for Mr. Stanford, 62 years old, who for years enjoyed the life of a billionaire aboard jets, yachts and in homes around the globe. He remains in federal custody until the U.S. Bureau of Prisons decides where he will serve the time.
Laura Pendergest-Holt
A Federal Bureau of Investigation affidavit filed in U.S. District Court in Dallas had alleged that Ms. Pendergest-Holt misled Securities and Exchange Commission investigators who took her testimony in the probe of alleged fraud at Stanford International Bank, Mr. Stanford's Antigua-based offshore bank. Ms. Pendergest-Holt was scheduled to go on trial in September. An obstruction charge can carry a three-year sentence.

Source.

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Stanford sentenced to 110 years over Ponzi scheme

June 14, 2012
By The Wall Street Journal

R. Allen Stanford, the once-highflying financier convicted of masterminding a $7 billion Ponzi scheme, was sentenced Thursday to 110 years in federal prison.

The punishment amounts to an effective life sentence for Stanford, who is 62 years old and used to live extravagantly aboard yachts, jets and homes around the world.

"I didn't run a Ponzi scheme, I didn't defraud anybody and there was never any intent to defraud anybody," Stanford, wearing a green prison jumpsuit, told US District Court Judge David Hittner before he was sentenced.

In a rambling statement, marked with long pauses as he choked up and wiped away tears, Stanford accused the government of using "Gestapo tactics" and blamed it for the billions of dollars in losses to his investors.

Stanford's sentence was 40 years less than the prison term given to Bernard Madoff, but 100 years more than his lawyers had asked for.

The sentence ends the three-year criminal prosecution of Stanford, who in March was convicted by a federal jury on 13 of 14 counts including fraud, obstructing investigators and conspiracy to commit money laundering.

Though investors continue to seek hundreds of millions of dollars from Stanford in a civil proceeding, the end of the criminal case closes a chapter on one of the most flamboyant figures in the annals of white-collar crime.

Source.

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