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.

Read more: http://sivg.org/forum/view_topic.php?t=eng&id=255

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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 Escapes Stanford Victims' Suit Over $7B Ponzi Scheme

By Law360, New York

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

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

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

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

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

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

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

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

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

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

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

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

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

Read more: http://sivg.org/article/2013_SEC_Escapes_Stanford_Victims_Suit_Over_7B_Ponzi_Scheme.html

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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.

Read more: http://sivg.org/article/2012_Government_accused_of_negligence.html

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Former S.E.C. Official Said to Be Subject of Criminal Inquiry

	May 14, 2011 By EDWARD WYATT WASHINGTON -- A former Securities and Exchange Commission enforcement official who has been accused of repeatedly blocking efforts to investigate R. Allen Stanford, the Houston financier charged with running a $7 billion Ponzi scheme, is the subject of a federal criminal inquiry for having done legal work for Mr. Stanford after leaving the S.E.C., government officials said Friday.
Andrew Harrer/Bloomberg News H. David Kotz, the S.E.C. inspector general, left, and Robert Khuzami, director of enforcement.
The former official, Spencer C. Barasch, is now a private-sector lawyer in Texas. He has represented clients dealing with the agency, including a defendant charged last month with financial fraud by the S.E.C. in federal court in Dallas. Those disclosures came Friday at a Congressional hearing into the S.E.C.'s failures to stop the Stanford Ponzi scheme. Mr. Barasch led the enforcement bureau in the S.E.C.'s Fort Worth office and played "a significant role" in numerous decisions by the office not to investigate Mr. Stanford despite repeated accusations of fraudulent behavior, according to a report the S.E.C.'s inspector general released last year. After leaving the agency, Mr. Barasch did legal work for Mr. Stanford despite being told multiple times by the S.E.C.'s ethics office that it was improper, S.E.C. officials said at the hearing. Mr. Stanford was eventually charged with fraud and is scheduled for trial later this year. He has denied the charges. Mr. Barasch's law firm said he had not acted unethically or violated any laws. Members of the House Financial Services Committee's oversight and investigations subcommittee expressed shock that Mr. Barasch, who the inspector general said had blocked efforts to pursue Mr. Stanford at least six times over seven years, continued to practice securities law before the commission. The S.E.C. can, after an administrative proceeding, bar lawyers from practicing before the commission should it find sufficient wrongdoing. The commission declined on Friday to say whether such a proceeding was under way. "This is not even defensible," Representative Randy Neugebauer, Republican of Texas and head of the House subcommittee, said at the conclusion of the hearing. "It is extremely disturbing that we had a culture in agencies that demand high levels of disclosure and integrity, that within that very agency there wasn't a similar amount of integrity," Mr. Neugebauer said. "It's inexcusable." H. David Kotz, the S.E.C. inspector general, and Robert Khuzami, the director of the division of enforcement, told the House panel on Friday that Mr. Barasch had become the subject of a criminal investigation by the Federal Bureau of Investigation and the Justice Department after Mr. Kotz's report was issued in March 2010. The S.E.C. also referred Mr. Barasch to the ethics boards of the bar associations in Texas and Washington, Mr. Khuzami said at the hearing. Mr. Barasch did not respond to a request for comment. Robert V. Jewell, the managing partner of Andrews Kurth, the Texas law firm where Mr. Barasch is the leader of the corporate governance and securities enforcement team, said in a statement that he believed that Mr. Barasch "did not violate conflicts of interest." "Spencer Barasch served the S.E.C. with honor, integrity and distinction," the statement said. "We disagree with the characterization of Mr. Barasch's involvement put forth by the inspector general in his report last year in regard to the Stanford Financial Group matter. We believe he acted properly during his contacts with the Stanford Financial Group and the Securities and Exchange Commission." He continued: "We continue to stand by Spencer Barasch; he is and will remain a valued member of the Andrews Kurth team, where he provides our clients with the highest possible quality of advice and counsel." Asked by Mr. Neugebauer at the hearing whether he thought Mr. Barasch had engaged in unethical behavior, Mr. Khuzami, the enforcement chief, said yes. "Clearly the rules prohibited him from representing Mr. Stanford," Mr. Khuzami said. "So my personal conclusion would be certainly the evidence appears to be the case." Rule 102(e) of the S.E.C.'s rules of practice says that the commission can bar a lawyer who is found "to be lacking in character or integrity or to have engaged in unethical or improper professional conduct." But such a finding requires a formal hearing, and the S.E.C. has not initiated a hearing on Mr. Barasch, said John Nester, an S.E.C. spokesman. Mr. Nester declined to comment on whether "any enforcement investigation, including one that might result in an administrative enforcement proceeding against an attorney, is ongoing." The Congressional hearing once again brought to light problems that the S.E.C., like many government agencies, faces with the "revolving door" of people who go back and forth between government and the private sector. On Friday, the Project on Government Oversight, a watchdog group, released a study showing that between 2006 and 2010, 219 former S.E.C. employees filed 789 postemployment statements indicating their intent to represent an outside client before the S.E.C. "The revolving door to high-paying jobs representing Wall Street can undermine the integrity of the S.E.C.," said Michael Smallberg, the investigator for the oversight watchdog group who created the database. "It's not a stretch for the public to wonder whether the promise of future employment affects how S.E.C. regulators treat certain firms." The study, which used documents obtained from the S.E.C. under the Freedom of Information Act, also found that some former employees had filed the statements within days of leaving the commission. One employee's filing came within two days of leaving; another former employee filed at least 20 statements. Mr. Nester said the S.E.C. had "a rigorous program to help departing employees meet not just the letter, but also the spirit of the law" on conflicts of interest after they leave the agency. The Government Accountability Office is conducting a review of post-employment rules, he said, which the S.E.C. is assisting.

Source: http://sivg.org/article/SEC_criminal_inquiry.html

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FBI probing ex-SEC official on Stanford matter

May 13, 2011
By Sarah N. Lynch

WASHINGTON, (Reuters) - Federal criminal authorities are investigating whether a former U.S. securities regulator inappropriately represented alleged fraudster Allen Stanford after he left the agency in 2005.

Spencer Barasch, former head of enforcement for the U.S. Securities and Exchange Commission in Fort Worth, Texas, is being probed by the U.S. Attorney's Office and Federal Bureau of Investigation, SEC enforcement director Robert Khuzami and SEC.

Inspector General David Kotz told lawmakers Friday.

The criminal probe follows SEC internal findings that Barasch made numerous requests after he left the SEC to represent Stanford and was turned down each time.

Barasch persisted in his requests even though he directly dealt with Stanford matters while at the SEC and was partly responsible for ignoring repeated red flags SEC examiners raised about Stanford as early as 1997, Kotz found in a 2010 report. He later eventually did provide some legal counsel to Stanford in 2006, the report found.

"The rules clearly prohibited [Barasch] from ... in my view, representing Mr. Stanford," Khuzami told a House Financial Services oversight subcommittee Friday. "We made a referral to criminal authorities."

In addition, Kotz and Khuzami said they had also referred the matter for investigation to the Texas and Washington, D.C. bars.

Republican lawmakers called the hearing to investigate why it took the SEC so long to probe Stanford, a Texas financier, despite repeated attempts by SEC examiners to bring the matter to the enforcement division's attention.

The agency finally filed civil charges against Stanford in February 2009. Stanford was arrested in June 2009 and criminally charged with fraud in connection with a $7 billion scheme linked to certificates of deposit issued by his Antigua-based banking company. Stanford has denied any wrongdoing.

REVOLVING DOOR
After leaving the SEC, Barasch became a partner at law firm Andrews Kurth. In response to an inquiry from Reuters earlier this week, Andrews Kurth Managing Partner Bob Jewell said Barasch had not done anything wrong.

"We disagree with the characterization of Mr. Barasch's involvement put forth by the Inspector General in his report last year," he said. "We believe he acted properly during his contacts with the Stanford Financial Group and the Securities and Exchange Commission. He did not violate conflicts of interest."

The testimony about Barasch came on the same day the Project on Government Oversight, a government watchdog group, issued a report about the "revolving door" at the SEC. It found that 219 former officials at the SEC have left since 2006 to help clients with business before the agency.

Federal laws place certain restrictions on many SEC and other government employees once they return to the private sector. In addition to a one-year cooling off period, they are generally prohibited from representing a client before a government agency on any matter in which they were personally and substantially involved.

Some lawmakers say stricter policies are needed.

Republican Randy Neugebauer, the chairman of the panel, claimed Barasch represented a client before the SEC in a legal matter as recently as last Friday.

"One of the things that hopefully comes out of this is there are some tighter rules," he said. "It is obviously very alarming." 

Source: http://sivg.org/article/FBI-SEC_official.html

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SEC Missing Stanford Fraud Not Excused by Law

May 10, 2011

The U.S. Securities and Exchange Commission’s delay in cracking down on R. Allen Stanford’s alleged Ponzi scheme isn’t excused by a law that protects regulators’ discretionary decisions, Stanford’s investors claim.

While U.S. law may shield the agency from poor policy choices, it doesn’t protect against allegations of official misconduct and abuse of office, lawyers for the investors said today in a court filing in federal court in Dallas.

Eight Stanford investors sued the SEC in March on claims that Spencer Barasch -- the former head of the SEC’s Fort Worth- Dallas office -- allowed Stanford’s alleged fraud to flourish for years by repeatedly blocking investigations into the financier’s operations.

This case "is about misconduct, and has nothing to do with disgruntled citizens second-guessing SEC 'policy judgments'," Edward Gonzales, the investors’ lawyer, said in today’s filing. "It is discretion that may be abused, not one’s office."

The SEC seized Stanford’s operations in February 2009 on suspicion of fraud. Four months later, prosecutors indicted Stanford and three of his top officers for running what they claim was a $7 billion Ponzi scheme built on bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

Stanford Denies Wrongdoing

Stanford, who denies all wrongdoing, has been imprisoned as a flight risk until he can be tried.

Last month, the government asked a Dallas judge to throw out the investors’ lawsuit, which seeks to force the SEC to cover their losses on Stanford CDs.

The investors based much of their complaint on a 2010 report by the SEC’s inspector general, who faulted Barasch for declining to act on agency recommendations to investigate Stanford for years. The report also criticized Barasch for trying to act as Stanford’s lawyer after he left the agency in 2005.

"The unethical conduct of Spencer Barasch and negligent supervision by his superiors both make the government liable here," Gonzales said in the filing.

Barasch, who isn’t personally sued by the investors, has denied acting improperly before or after leaving the SEC. Ashley Nelly, a spokeswoman for Andrews Kurth LLP, the law firm where Barasch now works, didn’t immediately return a call seeking comment on today’s filing.

Kevin Callahan, SEC spokesman, didn’t immediately return a call or e-mail after regular business hours.

The case is Robert Juan Dartez LLC v. United States, 3:11- cv-0602, U.S. District Court, Northern District of Texas (Dallas).

The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas). 

Source: http://sivg.org/article/SEC_not_excused.html

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Stanford Investors Sue SEC for Losses in Alleged Swindle

	March 25, 2011 The U.S. Securities and Exchange Commission was sued by eight of indicted financier R. Allen Stanford's investors, who claim regulators' negligence and misconduct caused their losses. The investors, in a lawsuit filed yesterday in federal court in Dallas, said regulators should have investigated Stanford earlier and detected what the agency later concluded was a "massive" Ponzi scheme. The SEC's inspector general, in a report issued last year, faulted the agency's Fort Worth, Texas, office and some of its employees for failing to take action against Stanford sooner. "But for the negligent acts and omissions, misconduct and breaches of duty by Spencer Barasch, a former SEC regional enforcement director, the negligent supervision of Barasch by his SEC supervisors, and other inexcusable acts of negligence by SEC employees, the plaintiffs would not have made, and lost, their investments," according to the complaint filed by the investors' lawyer, Edward Gonzales III in Baton Rouge, Louisiana.
Indicted financier R. Allen Stanford, accused of leading a $7 billion investment fraud scheme, arrives for a hearing at the Bob Casey Federal Courthouse in Houston on Jan. 6, 2011. Photographer: F. Carter Smith/Bloomberg
U.S. securities regulators seized Stanford's operations in February 2009 on suspicion of fraud. Investors who bought certificates of deposit at the financier's Antigua-based Stanford International Bank Ltd. lost more than $7 billion, according to a lawsuit filed by the SEC. Barasch, who left the SEC's Fort Worth office in 2005 and is now a lawyer in private practice, didn't immediately return a call to his Dallas law firm today. Kevin Callahan, an SEC spokesman, declined comment on the lawsuit. Stanford, 61, who is in jail awaiting trial on criminal charges, has denied any wrongdoing. Most of the eight investors who filed the lawsuit live in southern Louisiana, where Stanford had a large trust operation. They claim combined losses of more than $18.7 million, according to their complaint. The SEC failed to conduct a meaningful probe of Stanford until 2005 even though examiners suspected him of operating a Ponzi scheme eight years earlier, SEC Inspector General H. David Kotz wrote in an internal report in April. The agency's Forth Worth office conducted four reviews of Houston-based Stanford Financial Group Co. starting in 1997 and determined after each one that Stanford's purported returns on certificates of deposit were highly unlikely, Kotz said in the report. Ethics Office Kotz also said in the report that Barasch, after he left the SEC, tried to represent Stanford on three separate occasions, until the agency's ethics office blocked it. Barasch told Kotz's investigators that he felt it wasn't necessary for his office to act against Stanford because he had informed other regulatory agencies about the potential fraud, according to the report. Kotz said he found no evidence of such referrals in his investigation. Kotz's report singled out Barasch as having "played a significant role in multiple decisions over the years to quash investigations of Stanford," Gonzales said in the complaint. "Through its negligent actions and inactions, the SEC caused Stanford's scheme to continue and expand, eventually resulting in billions in losses by investors," Gonzales said. The case is Robert Dartez LLC v. U.S., 3:11-cv-00602, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). Source.

Related article:
KLS complaint against the U.S. Government/SEC

FINAL JUDGMENT

The Court has granted Defendant's motion to dismiss for lack of subject matter jurisdiction. Accordingly, it is ordered that Plaintiffs' claims are dismissed without prejudice for lack of subject matter jurisdiction. Court costs are taxed against Plaintiffs. All relief not expressly granted is denied. This is a final judgment.

Signed November 14, 2011.
/s/ David C. Godbey
David C. Godbey
United States District Judge

Read the complete Order by David C. Godbey here.

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