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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All victims should be entitled to the protections of the SIPA

February 10, 2012
By SIVG

LETTER TO THE HONORABLE JUDGE ROBERT L. WILKINS

The Honorable Judge
Robert L. Wilkins
US District Court for the District of Columbia
333 Constitution Avenue NW
Washington D.C. 20001
The United States of America

Ref. - SEC v SiPC (Case No.: 1:11-mc-00678-RLW)

Honorable Judge Wilkins:

The undersigned, non-US citizens, victims of the Stanford Ponzi scheme, very respectfully address this urgent letter to you, accompanied by evidences that we have collected with regard to marketing materials of the Stanford International Bank as well as other Stanford entities, which were used in the scam for sale of CDs by most financial advisors involved in this terrible crime defrauding thousands of people worldwide.

Stanford's victims are predominantly people who invested their life savings in the Stanford entities because they trusted U.S. legal regulations which seemed to support the Stanford businesses. Stanford's marketing portfolio generally included publications with the SEC, FiNRA and SiPC logos on.

The companies controlled and directly or indirectly owned by Allen Stanford operated in a highly interconnected fashion to advance the selling of SiBL CDs. In addition, Stanford's financial advisors relied on the apparent legitimacy offered by US regulation of Stanford's US brokerage subsidiary (SGC) in order to generate sales of SiBL CDs. Likewise, in order to buy CDs through the Stanford Financial Group of Companies (SFG), a global network of financial services companies based in Houston, Texas, innocent investors from different places and countries were made to submit an account application that bore the SiB logo and indicated that customers were entering into an agreement with SGC, an NASD/FiNRA and member of SiPC.

On the other hand, the SEC has alleged in its civil suit against Stanford et al., that, the SFG of Companies operated a massive Ponzi scheme; and, an entity that operates as a Ponzi scheme is a matter of law. Therefore, any insolvent entity cannot issue real securities and, the SiPC/SiPA has previously been used --Old Naples Securities-- to protect investors regardless of the fact that the securities were fictitious, as in the case of SiBL CDs.

Judge Wilkins, if the SiBL CDs had no value due to the fact that most of the money was stolen in a Ponzi scheme, then the SiBL CDs cannot be replaced, can they? Therefore, when missing securities cannot be replaced by SiPC, a client of the bank is entitled to compensation of his/her net equity investments; this is the CDs in our case. Besides, all victims' life savings were stolen by NASD/FiNRA-registered financial advisors, members of SiPC, mostly vice-presidents, as official representatives not only for the SGC, but also for the conglomerate of entities of the SFG, including the SiBL and the STCL in Antigua.

Finally, it is well documented that during more than a decade, Stanford Financial had printed and distributed to its Financial Advisors thousands of brochures offering SiBL CDs. Additionally, Stanford Financial launched an intensive TV advertising campaign in The United States to promote the sale of SiBL CDs. By 2008, Stanford Financial had distributed nearly 6,000 SiBL CD "Accredited Investor" packets to investors under the Reg. D offering.

With all due respect, the Stanford International Victims present the attached evidences to you, which we hope be considered in Court for the current litigation SEC v. SiPC.

Very truly yours,
The Stanford International Victims Group

February the 9th, 2012
Contact us at: www.sivg.org

Evidences supporting that all individuals who invested money through any of the Stanford entities should be entitled to the protections of the SIPA.

The following business cards show "different company's name" having the same Stanford logo/name, and the same Email-Domain "stanfordeagle.com". More Evidences.

Here is the letter delivered to Honorable Judge Wilkins, received and sealed by the US District Court.

LETTER TO Dr. BILL CASSIDY

Mr. Representative
Dr. BILL CASSIDY
Washington DC Office
1535 Longworth HOB
Washington, D.C. 20515
The United States of America

Ref. - SEC v SiPC (Case No.: 1:11-mc-00678-RLW)

Distinguished Dr. Cassidy:

The undersigned, non-US citizens, victims of the Stanford Ponzi scheme, very respectfully address this urgent letter to you, accompanied by evidences that we have collected with regard to marketing materials of the Stanford International Bank as well as other Stanford entities, which were used in the scam for sale of CDs by most financial advisors involved in this terrible crime defrauding thousands of people worldwide.

Stanford's victims are predominantly people who invested their life savings in the Stanford entities because they trusted U.S. legal regulations which seemed to support the Stanford businesses. Stanford's marketing portfolio generally included publications with the SEC, FiNRA and SiPC logos on.

The companies controlled and directly or indirectly owned by Allen Stanford operated in a highly interconnected fashion to advance the selling of SiBL CDs. In addition, Stanford's financial advisors relied on the apparent legitimacy offered by US regulation of Stanford's US brokerage subsidiary (SGC) in order to generate sales of SiBL CDs. Likewise, in order to buy CDs through the Stanford Financial Group of Companies (SFG), a global network of financial services companies based in Houston, Texas, innocent investors from different places and countries were made to submit an account application that bore the SiB logo and indicated that customers were entering into an agreement with SGC, an NASD/FiNRA and member of SiPC.

On the other hand, the SEC has alleged in its civil suit against Stanford et al., that, the SFG of Companies operated a massive Ponzi scheme; and, an entity that operates as a Ponzi scheme is a matter of law. Therefore, any insolvent entity cannot issue real securities and, the SiPC/SiPA has previously been used --Old Naples Securities-- to protect investors regardless of the fact that the securities were fictitious, as in the case of SiBL CDs.

Dr. Cassidy, if the SiBL CDs had no value due to the fact that most of the money was stolen in a Ponzi scheme, then the SiBL CDs cannot be replaced, can they? Therefore, when missing securities cannot be replaced by SiPC, a client of the bank is entitled to compensation of his/her net equity investments; this is the CDs in our case. Besides, all victims' life savings were stolen by NASD/FiNRA-registered financial advisors, members of SiPC, mostly vice-presidents, as official representatives not only for the SGC, but also for the conglomerate of entities of the SFG, including the SiBL and the STCL in Antigua.

Finally, it is well documented that during more than a decade, Stanford Financial had printed and distributed to its Financial Advisors thousands of brochures offering SiBL CDs. Additionally, Stanford Financial launched an intensive TV advertising campaign in The United States to promote the sale of SiBL CDs. By 2008, Stanford Financial had distributed nearly 6,000 SiBL CD "Accredited Investor" packets to investors under the Reg. D offering.

With all due respect, the Stanford International Victims present the attached evidences to you, which we hope be considered in your plans to file legislation to allow investors of R. Allen Stanford to individually opt out of a federal lawsuit for one-time buyouts of up to $500,000. Improving SiPC Act of 2012 legislation is firmly related to current litigation SEC v. SiPC.

Very truly yours,
The Stanford International Victims Group

February the 9th, 2012
Contact us at: www.sivg.org

Evidences supporting that all individuals who invested money through any of the Stanford entities should be entitled to the protections of the SIPA.

The following business cards show "different company's name" having the same Stanford logo/name, and the same Email-Domain "stanfordeagle.com". More Evidences.

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

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Stanford's donations still stain lawmakers' hands

December 8, 2011
By Loren Steffy

In the battle over insurance coverage for investors who lost money in the collapse of Stanford Financial's U.S. brokerage, it's difficult to know who's on investors' side.

Recently, 27 lawmakers sent a letter to the Securities Investor Protection Corp., which is funded by the brokerage industry and overseen by the government, demanding that SIPC cover investors for their losses. SIPC granted similar coverage to clients of Bernard Madoff and the recently bankrupted commodities trader MF Global.

The 23 Republicans and four Democrats threatened to convene hearings in Washington next week if SIPC didn't act. That, apparently, is easier than living up to their own shortcomings.

Seven of the lawmakers who signed the letter received campaign contributions from Stanford. Only two - Rep. Michael McCaul, R-Austin, and Rep. Rep. Charles Boustany, R-La. - returned the money. Five others - Republicans Pete Sessions of Dallas, Lamar Smith of San Antonio and Vern Buchanan and Ileana Ros-Lehtinen of Florida, as well as Democrat Steve Cohen of Tennessee - owe Stanford's estate money, according to the court-appointed receiver in the company's bankruptcy.

The firm's namesake, R. Allen Stanford, liked to spread cash around Washington. The receiver has been trying to recover political donations for almost two years. About $1.8 million remains outstanding, and only about $142,000, has been returned.

Even more disturbing, five committees of the two political parties - the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee, the National Republican Congressional Committee, the Republican National Committee and the National Republican Senatorial Committee - have refused to return a combined $1.6 million. Check please the complete list of Political contributions here.

In other words, while lawmakers are quick to call on the brokerage industry to insure the losses of Stanford's investors, they are far less willing to demand the same of themselves or their political parties.

Many of the elected officials who received campaign contributions from Stanford - including both Texas senators and Sessions - donated them to charity. That, however, doesn't let the politicians off the hook.

If Stanford was a fraud as the government contends, then the money is stolen. Donating stolen money doesn't eliminate the potential theft. Even if no theft is proved, the receiver is operating under a court order to recover money on behalf of investors, and donating it doesn't absolve lawmakers of the court's order.

Meanwhile, the Securities and Exchange Commission, which is charged with overseeing SIPC, ordered the fund to pay investors in June. So far, it hasn't. As recently as last week, SIPC's chairman sent a letter to one member of Congress saying SIPC disagrees with the SEC's decision.

Sen. David Vitter, R-La., had been trying to arrange some sort of settlement between the SEC and SIPC. Those efforts apparently fell through.

"The SEC needs to take definite action before the end of the year, and I'm afraid that's going to mean suing SIPC," he told SEC Chairman Mary Schapiro.

The SEC, of course, is making up for past mistakes. Having bungled earlier investigations into Stanford, it then took more than two years to reach a decision on SIPC coverage.

It may be getting tough now, but suing SIPC means investors, who have been strung along for almost three years, must wait even longer to find out if their losses are covered. Sadly, in this case, that's progress.

Source.

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Is SIPC afraid of lawsuits in the Stanford case?

December 2, 2011
By Loren Steffy

For years, almost 8,000 investors who lost money in the collapse of Stanford Financial's U.S. brokerage have been waiting for a decision on whether their losses will be covered by the Securities Investor Protection Corp. Back in June, the Securities and Exchange Commission said that they should. SIPC itself has yet to make a decision, and 18 members of Congress recently gave the insurance fund a Dec. 15 deadline for coming up with an answer.

Now, SIPC apparently is attempting to reach some sort of settlement with the SEC, though the details remain unclear. U.S. Sen. David Vitter, R-La., told the Advocate in Baton Rouge that in earlier discussions with him, SIPC Chairman Orlan Johnson "expressed concern that the organization could be sued in the Stanford matter by financial institutions who contribute to the fund, further delaying the compensation."

Vitter's press secretary, Luke Bolar, told me the senator has been working with SIPC and the SEC in hopes of reaching an agreement. SIPC is expected to present a settlement offer to the SEC next week, Bolar said. I haven't heard back from SIPC's spokeswoman yet.

The SEC, however, doesn't have to agree. It has the authority to sue SIPC and force it to comply with the commission's order in June. Presumably, some sort of agreement would speed any recovery to Stanford's investors, who have been waiting for almost three years. SIPC already is covering losses for victims of Bernard Madoff's Ponzi scheme and is planning to cover customers who lost money in the collapse of MF Global. Some of the brokerages that contribute to SIPC may be getting worried that they will be hit with big assessments to cover the payouts.

Unlike Madoff and MF Global, the Stanford case is more complicated. SIPC doesn't typically cover certificates of deposit, which is what most Stanford investors bought, but the CDs were sold though Stanford's SIPC-insured brokerage.

Meanwhile, Stanford Financial's founder, R. Allen Stanford, is scheduled to appear at a hearing later this month to determine if he's competent to begin his criminal trial, which is set to start in January.

Source.

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Letter to the Chronicle’s Editor Regarding the SEC’s Failure to Protect the Stanford Group’s Victims

Letters to the editor
HOUSTON CHRONICLE
March 15, 2011

Agencies failed

It has been more than two years since 1,290 Texans lost their life savings in the R. Allen Stanford debacle. Many of the victims were teachers, nurses and firefighters, and these losses reflect most, if not all, of the retirement funds they accumulated over many years of hard work. These Texans relied on the Securities Exchange Commission (SEC) to uphold its federal mandate to protect investors, and despite numerous warnings about Stanford Financial over several years, the SEC failed to act on behalf of investors.

In 2010, SEC Inspector General David Kotz revealed the SEC was aware as early as 1997 that Stanford investors’ funds were in jeopardy of being stolen. It wasn’t until 2004 — seven years after the SEC first became aware of problems at Stanford — that it opened an official investigation. By the time the SEC took action in this case, it was too late for the Stanford victims who had lost virtually everything.

To make matters worse, the Stanford investors were customers of Stanford Group Co. (SGC), a broker-dealer that was a member of the Securities Investor Protection Corp.(SIPC). SIPC allowed SGC to use its seal for brochures, promotional materials and correspondence to give investors additional confidence. “Member SIPC” was adorned on its correspondences to investors, yet to date SIPC, which is under SEC authority, has refused to provide any remedy for Stanford victims. Customers of the Stanford broker dealer have been denied coverage, despite previous cases where investors in similar situations were covered. Skip Swingle, a victim of SGC, aptly warned, “I don’t think it’s just Stanford victims that should be concerned about what’s going on, but everybody.”

On Monday I sent a letter to SEC Chairman Mary Schapiro asking again for an expedited review of this issue. No one can restore all that these victims lost. We cannot replace the trust that was violated, nor can we say that this fraud won’t happen again. What the SEC and SIPC can and should do is live up to the mandate of encouraging investment by establishing customer confidence. If they do not, brokerage firms across the country might reconsider the placement of the SIPC seal, and investors will see it as a symbol of caution, not protection.

— U.S. REP. JOHN CULBERSON,
7th Congressional District of Texas

Source.

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