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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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 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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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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Stanford Investors Sue Antigua, Caribbean Central Bank

February 18, 2013
By Laurel Brubaker Calkins

R. Allen Stanford's receiver and investors' committee sued Antigua, the Eastern Caribbean Central Bank and 23 former Stanford Financial Group Co. executives over allegations they aided the financier's $7 billion fraud.

The Official Stanford Investors Committee seeks repayment of at least $90 million in documented loans Stanford made to the dual-island nation of Antigua and Barbuda and accuses its elected officials of having been "Stanford's partners in crime." The nation's leaders shielded Stanford's scheme and traded choice real estate for as much as $230 million in loans that haven't been repaid, according to the lawsuit.

"Antigua knowingly provided necessary assistance to Stanford's $7 billion Ponzi scheme and, in exchange, received millions of dollars in loans whose repayment terms Stanford did not enforce," the committee said in a complaint filed in Dallas federal court on Feb. 15. "For well over a decade, Antigua was a prime participant in, and beneficiary of, the Stanford Ponzi scheme, and actively protected and shielded Stanford's criminal enterprise from real regulatory scrutiny."

Stanford, 62, was convicted in March of masterminding a Ponzi scheme that defrauded investors through the sale of bogus certificates of deposit at his Antigua-based Stanford International Bank Ltd. He is serving a 110-year sentence in a Florida federal prison as he appeals his verdict and sentence.

Falsified Audits
Evidence at Stanford's trial showed he bribed Antiguan banking regulator Leroy King to falsify audits certifying the bank's investment returns and mislead U.S. securities regulators investigating the former Texas billionaire's operations. Stanford was also allowed to underwrite and participate in banking reform legislation that Antigua claimed had cleaned up its corrupt offshore banking industry, according to trial evidence. Antigua has so far failed to extradite King to face criminal charges in the U.S.

The investors on Feb. 15 separately sued the Eastern Caribbean Central Bank, which nationalized Stanford's other island financial institution, the Bank of Antigua, after the U.S. Securities and Exchange Commission seized Stanford's enterprise on suspicion of fraud in February 2009.

The ECCB in turn parceled out ownership in the bank to the government of Antigua and to other Caribbean banks in what the investors called "a second act of brazen thievery." The head of ECCB's monetary council at the time was Antiguan Minister of Finance Errol Cort, who was both King's supervisor and one of Stanford's personal attorneys, according to court papers.

Rightful Owners
"The considerable value of the Bank of Antigua, believed to be in the tens or hundreds of millions of dollars, should be distributed as compensation to its rightful owners, Stanford's victims and creditors," the committee said in court papers.

Recent comments by Antiguan elected officials indicate the country intends to repay the bank instead of the defrauded investors, Peter D. Morgenstern, a lawyer for the investors' committee, wrote, meaning that "in essence, Antigua intends to use CD investors' money to pay itself."

Tom Bayko, Antigua's attorney, didn't immediately respond to voice or e-mail messages seeking comment on the lawsuit. In an earlier suit, Bayko said Antigua was protected from such litigation by foreign sovereign immunity.

Officials at the ECCB didn't immediately return telephone or e-mail messages seeking comment on the lawsuit.

Ralph Janvey, Stanford's court-appointed receiver, filed another lawsuit on Feb. 15 claiming breach of fiduciary duty lawsuit by 23 former directors and officers of Stanford's operations, including three executives convicted of furthering the fraud scheme. The suit seeks return of all compensation from these individuals, some of whom have been previously sued by the receiver on similar claims.

"Many directors and officers simply looked the other way, while others actively assisted Stanford in defrauding thousands of people out of billions of dollars," Kevin Sadler, Janvey's lead lawyer, said in the filing in Dallas federal court. They "put their continued employment and substantial compensation ahead of the best interests of the entities they were hired to serve," he said.

The cases are The Official Stanford Investors Committee v. Antigua and Barbuda, 3:13-cv-0760; The Official Stanford Investors Committee v. Bank of Antigua, 3:13-cv-0762; Janvey v. Alvarado, 3:13-cv-0775. All are in U.S. District Court, Northern District of Texas (Dallas).

The main criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).

Source.

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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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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

September 7, 2012
By Dr. Gaytri D. Kachroo

THIS MATTER is before the Court on the Defendant's Motion to Dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) (ECF No. 12). For the reasons explained in this Order, the Motion to Dismiss is granted in part and denied in part.

A. The Plaintiffs Have Adequately Alleged That The Securities and Exchange Commission Failed To Comply With a Nondiscretionary Duty to Report Stanford's Company To The Securities Investor Protection Corporation, Pursuant to 15 U.S.C. § 78eee(a)(1).

B. The Plaintiffs Have Not Adequately Alleged That The Securities and Exchange Commission Failed To Comply With a Nondiscretionary Duty Regarding Stanford's Company Re-Registration As an Investment Advisor, Pursuant to 15 U.S.C. § 80b-3(c).

While the determination of whether a broker/dealer is in or approaching financial difficulty is inherently discretionary, once the SEC concludes that a broker/dealer is in or approaching financial difficulty a nondiscretionay duty to report this information to the SIPC arises. However, the SEC's treatment of an investment advisor's amendment to its Section 80b-3 registration application involves an element of judgment grounded in policy considerations, and thus falls under the discretionary function exception of the FTCA.

For the reasons detailed in this Order, the Defendant's Motion to Dismiss (ECF No. 25) is DENIED in part with regard to the Plaintiffs' claims relating to the SEC's alleged breach of its duty under 15 U.S.C. § 78eee(a)(1). The Motion to Dismiss is GRANTED in part regarding the Plaintiffs' claims relating to the SEC's alleged breach of its duty under 15 U.S.C. § 80b-3(c). The Plaintiffs shall file an Amended Complaint on or before September 21, 2012, consistent with this Order. The Defendant's answer is due fourteen days after the Plaintiffs' Amended Complaint is filed.

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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MEMORANDUM OPINION AND ORDER, SEC v. SIPC

July 3, 2012
By U.S. District Judge ROBERT L. WILKINS

The Court is truly sympathetic to the plight of the SGC clients who purchased the SIBL CDs and now find themselves searching desperately for relief. Robert Allen Stanford's 110 year sentence may bring some measure of justice to the SGC clients, but it will not make them financially whole. But this Court has a duty to apply the SIPA statute as written by Congress, and, as other courts have done, this Court also has a duty to construe narrowly the "customer" definition of the statute. For the foregoing reasons, the SEC has failed to meet its burden, by a preponderance of the evidence, of proving that SIPC has "refus[ed] . . . to commit its funds or otherwise to act for the protection of customers of any member of SIPC." Indeed, because the issue turns on uncontested facts and an interpretation of law10, the Court holds that the SEC would have failed to meet even the lesser burden of probable cause. The Application of the SEC is therefore denied. An Order accompanies this Memorandum.

Source.

ORDER

Upon consideration of the Application of the Securities and Exchange Commission to compel Respondent, Securities Investor Protection Corporation, to commence a liquidation proceeding (Docket No. 1), the oppositions and replies thereto, and oral argument, and for the reasons set forth in the accompanying Memorandum Opinion, it is hereby ORDERED, that:
The Application of the Securities and Exchange Commission is DENIED; and it is, FURTHER ORDERED that this case is dismissed with prejudice.

Source.

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Opposition to the USA's motion to dismiss the complaint

April 6, 2012
By Dr. Gaytri D. Kachroo

Plaintiffs hereby oppose the United States of America's Motion to Dismiss the Complaint (the "Motion"). This Court has subject matter jurisdiction over this action because the government fails to demonstrate that the discretionary function exception shields from liability the Securities and Exchange Commission's ("SEC") negligent failure to follow statutorily prescribed courses of action in the wake of its discovery of Robert Allen Stanford's Ponzi scheme.

The government's strategy on this Motion is to paint with a very broad brush. Thus, the government argues that "the manner in which the SEC chooses to regulate the securities industry" is discretionary conduct protected by the discretionary function exception in the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 2680(a). Generalized this way, the government's argument obviously cannot be contested. But framing the issue this way only creates a paper tiger. The conduct challenged in this case is not the SEC's regulation of the industry writ large, but rather its failure to comply with two specific, non-discretionary mandates. The government's over-generalization of the issue is an effort to move the battle to safer ground. This misdirection does not survive scrutiny.

Moreover, such a macro approach to the discretionary function exception results in the reverse of what Congress intended, which was to construe the remedial provisions of the FTCA liberally and the exceptions narrowly. If every claim against the SEC were to be construed as an attack on "the manner in which the SEC chooses to regulate the securities industry," then this narrow exception would swallow the general waiver and afford the SEC virtual immunity, contrary to Congress' intent. Indeed, as the government itself points out, Congress considered exempting the SEC from the FTCA entirely, but ultimately, did not do so.

Thus, the crucial first step in determining whether the exception applies is to isolate the specific conduct actually being challenged. Here, the Complaint does not make a broad attack on the manner in which the SEC regulates the securities industry, but rather, challenges two specific instances of SEC inaction: (1) a failure to notify the Securities Investor Protection Corporation ("SIPC") that U.S. registered broker-dealer Stanford Group Company "SGC") was in financial difficulty, after concluding that it was; and (2) a failure to deny continued registration to SGC as an investment advisor in light of the SEC's determination that SGC failed to satisfy registration requirements.

These negligent omissions violated statutorily mandated duties to take prescribed courses of action and thus, were not and could not have been permissible policy choices. As the Supreme Court has explained and courts have consistently held, where there exists a mandatory responsibility, there is no room for a policy choice. Moreover, even if the government could show that the SEC's negligent omissions involved the exercise of judgment, the government also fails to demonstrate, as it must, that such judgment was grounded in considerations of public policy.

Source: PLAINTIFFS' OPPOSITION TO THE UNITED STATES OF AMERICA'S MOTION TO DISMISS THE COMPLAINT

Related documents:

Motion to dismiss plaintiffs' complaint and incorporated memorandum of law.

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Stanford verdict could boost civil claims

March 7, 2012
By Leigh Jones

The conviction of Allen Stanford on Tuesday for orchestrating a $7 billion Ponzi scheme could be bad news for two prominent law firms and an attorney facing civil lawsuits arising out of the Texas financier's crimes.

Attorney Thomas Sjoblom and New York-based law firms Chadbourne & Parke and Proskauer Rose are defendants in several class actions and other lawsuits brought by Stanford Financial investors, who claim they lost hundreds of millions of dollars as a result of the fraud.

Filed mostly in Texas, the lawsuits allege that Sjoblom, who worked at Chadbourne & Parke from 2002 to 2006 and at Proskauer Rose from 2006 to 2009, helped Stanford cover up the Ponzi scheme and evade authorities. Investors claim that the firms failed to properly supervise Sjoblom and were negligent in hiring him.

Sjoblom and the law firms also are defendants in a $1.8 billion lawsuit filed in January in Washington, D.C., federal court by the receiver for Stanford Financial, who alleges claims similar to those filed by the investors.

Legal experts said that Tuesday's jury verdict against Stanford on 13 counts of fraud could bolster the class actions and individual cases against the firms and Sjoblom.

"We now know there were bad actors and people suffered. The only question left is who should pay for it," said Michael Downey, a legal malpractice attorney with law firm Armstrong Teasdale who is not involved in the Stanford matter. "The issue will be 'should we make these poor innocent investors bear the losses or the lawyers who helped make it all happen.'"

Daniel Richman, an evidence professor at Columbia Law School, said the criminal conviction does not guarantee a win in the civil actions. But the verdict could mean that information favorable to the civil cases about the scheme will "shake out," he said.

"It may well reveal the nature of any co-conspirators," he said.

Sjoblom did not respond to messages seeking comment. Prior to private practice, he was an attorney with the U.S. Securities and Exchange Commission's enforcement division. He is now a solo practitioner in Washington.

Proskauer Rose, which has about 650 attorneys, did not respond to a request for comment. Chadbourne & Parke, which has about 440 lawyers, declined to comment.

BETTER POSITION

Stanford was accused of defrauding about 30,000 investors for more than 20 years in 113 countries with high-interest certificates of deposit at Stanford National Bank, based in Antigua. He denied the allegations, but the jury on Tuesday convicted him of fraud, conspiracy and obstructing an investigation by the SEC. He was found not guilty on one count of wire fraud. He could face up to nearly 20 years in prison.

Edward Valdespino, an attorney representing some of the investors suing the law firms and Sjoblom, said that the conviction likely will give him better access to employees at the firm who were questioned by prosecutors in the criminal case but who were unable or unwilling to talk to him.

"It puts us in a better position," Valdespino said.

And Jesse Castillo, a lawyer representing about 350 plaintiffs in class actions against Sjoblom and the firms, said the criminal conviction "reinforces" his cases.

"It's satisfying to our clients," he said.

Source.

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Judge Hands SEC Initial Victory in Suit Against Insurance Fund

February 10, 2012
By ANDREW ACKERMAN

A federal judge Thursday handed the Securities and Exchange Commission a partial victory in its suit against an agency that insures U.S. brokerage accounts to force it to pay investors in R. Allen Stanford's alleged $7 billion Ponzi scheme.

U.S. District Court Judge Robert Wilkins ruled the SEC didn't need to go through a full-fledge civil trial to force the Securities Investor Protection Corp. to start a liquidation proceeding to begin compensating Mr. Stanford's victims.

Judge Wilkins ruled that a trial, which SIPC sought, didn't comport with the agency's purpose of providing "prompt, summary proceedings" when a securities firms fails. Instead, he ordered a "summary proceeding," that would be fully briefed by the end of February.

But it wasn't a total legal victory for the SEC. The agency had essentially argued that it could determine on its own if SIPC had failed in its responsibilities. "This contention is untenable," Judge Wilkins wrote. "This determination must be made by the court, not unilaterally by the SEC."

In a statement, SEC Chief Litigation Counsel Matthew Martens said the agency is pleased with the judge's decision to expedite the case in lieu of "full-blown litigation that could drag on for years and greatly delay relief to the Stanford investors."

"We look forward to a prompt resolution of this important matter so that claimants can have the chance to seek judicial review of their claims," he said.

A spokesmen for SIPC couldn't be reached for comment.

Federal prosecutors and the SEC charged Mr. Stanford in 2009 with fabricating high returns to lure investors around the world to buy about $7 billion of fictitious certificates of deposit from Stanford International Bank Ltd. in Antigua, the island where he was knighted. Mr. Stanford is alleged to have misappropriated billions of dollars of investor money and invested an undetermined amount in unprofitable private businesses he controlled. He has denied the charges and his trial began last month.

The SEC filed its lawsuit against SIPC in December, after negotiations between the two agencies reached an impasse on the Stanford matter. It is the SEC's first lawsuit against SIPC in the insurance fund's 42-year history.

The dispute hinges on how SIPC's mission is interpreted and builds on the SEC's bid to protect investors more aggressively in the wake of several high-profile missed cases. SIPC maintains a special reserve fund authorized by Congress to compensate investors who lose money in failed brokerage firms.

The SEC, several lawmakers and numerous Stanford customers contend SIPC should use its powers to help Mr. Stanford's alleged victims. SIPC says it can't do so because Mr. Stanford's alleged victims didn't lose money in a failed brokerage firm; they bought CDs issued by a bank and continue to hold those assets, even if they are worthless.

The SEC said in June that it disagrees with SIPC's stance and authorized the lawsuit if SIPC didn't begin a liquidation of Stanford Group, a U.S.-based broker-dealer through which Mr. Stanford sold the certificates to American investors.

Roughly 7,800 people bought their CDs through Stanford Group, which is a SIPC member, according to estimates by the court-appointed receiver in the case, Ralph Janvey. In its June analysis, the SEC argued that SIPC's position elevates form over substance and ignores the fact that Stanford allegedly structured the various entities of his financial empire principally to carry out a single fraudulent Ponzi scheme.

Even if the SEC ultimately prevails in its suit against SIPC, Judge Wilkins signaled Thursday it wouldn't immediately lead to relief for Mr. Stanford's victims. A Texas court overseeing Mr. Janvey would ultimately decide on the merits of any claims filed by former customers, Judge Wilkins said.

Source.

You can find here the complete information in pdf file:

Judge Wilkins Opinion regarding SEC SIPC Order.

Order to SIPC to Show Cause.

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Accountant details Stanford investment spending

February 1, 2012
By Associated Press

An accountant who worked for Texas tycoon R. Allen Stanford testified Wednesday that he grew increasingly concerned that the financier wouldn't be able to return the $2 billion he secretly borrowed from investors to pay for business and personal expenses, including millions to maintain his yachts and private jets.

Henry Amadio told jurors at Stanford's federal fraud trial in Houston that various businesses into which Stanford sunk funds were basically a money pit that ate up investor dollars and didn't turn a profit. The money Stanford borrowed included $330 million for two airlines and a $20 million prize for a cricket tournament, Amadio said.

"As it continued to grow ... the concern was: Was it (investors' money) ever going to be paid back?" he said.

Amadio told jurors he faults himself for not leaving Stanford's company after realizing what the financier was doing. "I'm not proud. I regret looking the other way," said Amadio, whose voice choked with emotion.

Prosecutors allege Stanford masterminded a fraud in which he bilked investors out of more than $7 billion in a massive Ponzi scheme centered on the sales of certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua. Authorities allege he used depositors' money to fund his businesses as well as his lavish billionaire lifestyle and that he lied to depositors by telling them their funds were being safely invested.

Stanford's attorneys contend the financier was a savvy businessman whose financial empire, headquartered in Houston, was legitimate. They have suggested James Davis, the ex-chief financial officer for the financier's company, is behind the fraud. Davis has pleaded guilty in the case and is expected to be called by prosecutors this week.

Stanford is on trial for 14 counts, including mail and wire fraud, and faces up to 20 years in prison if convicted.

Amadio said Davis also expressed concern about the growing amount of CD funds that kept Stanford's businesses afloat, even making the comment on two occasions that "the emperor has no more clothes."

"I interpreted that (comment to mean) that Mr. Stanford didn't have any money to cover these debts," Amadio said.

The accountant told jurors the profits the bank purported it was making were not enough to cover the $2 billion Stanford had borrowed by 2009.

"Was it even close?" prosecutor Gregg Costa asked.

"No," replied Amadio, who worked six years for the Stanford Financial Group Co. in Houston.

Amadio detailed for jurors the investor funds the financier allegedly poured into his many companies. They included $30 million for expenses related to Stanford's six private jets; more than $346 million for construction projects on Antigua; $11 million for a newspaper on the island; nearly $19 million to maintain Stanford's yachts.

Amadio also testified that in 2006, he was ordered to remove various documents he prepared, including a monthly report that tracked the amount of CD deposits going to Stanford's businesses, from the company's network drive and place them on an external drive and that this information would be held at the bank in Antigua.

Amadio said he was not aware that around the time this request had been made, the U.S. Securities and Exchange Commission had begun investigating.

The accountant described a working environment full of secrecy where "everything was on a need to know basis" and where he could be fired if the monthly reports he prepared tracking investor funds were made public.

Amadio said one of the secrets he stumbled onto was a Swiss bank account with Societe Generale belonging to Stanford that detailed payments made to the outside auditor for Stanford's bank. Bank statements shown to jurors indicated payments of $100,000 and $125,000 made to the auditor in 2005 and 2006. Prosecutors allege Stanford used the account to bribe the auditor with millions of dollars to hide the bank's fraud.

While questioning Amadio, Robert Scardino, one of Stanford's attorneys, told jurors Stanford was a "risk taker" and that some of his businesses made money and some didn't. Scardino said despite the economic crash of 2008, Stanford continued paying depositors who withdrew their CDs until his businesses were put in receivership.

Amadio, who acknowledged he fainted after first speaking with FBI agents when authorities shut down his office in 2009, said an agreement he has with prosecutors doesn't prevent him from being charged.

"If you testified to something that is different than what the prosecutors think is the truth, you are in trouble aren't you?" Scardino asked.

"I'm here to tell the truth," Amadio said.

Stanford was once considered one of the United States' wealthiest people, with an estimated net worth of more than $2 billion. He's been jailed without bond since being indicted in 2009.

Source.

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