$83.5M Suit Says Willis Group Aided Stanford Fraud

By Law360

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Read the Willis Group NOTICE OF REMOVAL.

Read the Willis Group Exhibit A.

Read more: http://sivg.org/article/2013_64_victims_Say_Willis_Group_Aided_Stanford_Fraud.html

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

Cassidy, Deutch Introduce Improving SIPC Act of 2013

February 28, 2013
By Dr. Bill Cassidy

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

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

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

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

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

Source.

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

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

Ex-Stanford Executives Get 20-Year Sentences

February 14, 2013
By DEBBIE CAI

Two former Stanford Financial Group executives were each sentenced to 20 years in prison for aiding convicted financier Robert Allen Stanford in perpetuating a massive Ponzi scheme, the Department of Justice said.

Gilbert T. Lopez Jr., former chief accounting officer of Stanford Financial Group Co., and Mark J. Kuhrt, former global controller of Stanford Financial Group Global Management, were convicted by a Houston federal jury in November of last year.

The men, both from Houston, were convicted of one count of conspiracy to commit wire fraud and nine counts of wire fraud, the DOJ said.

Judge David Hittner of the Southern District of Texas, who presided over the trial, sentenced Mr. Lopez and Mr. Kuhrt to serve three years of supervised release and ordered Mr. Lopez to pay a $25,000 fine, along with the prison terms. He also found that both men committed perjury at trial.

Evidence presented at the trial showed that Mr. Lopez and Mr. Kuhrt were aware of and tracked Stanford's misuse of Stanford International Bank's assets, kept the misuse hidden from the public and from almost all of Stanford's other employees, and worked behind the scenes to prevent the misuse from being discovered, the DOJ said.

Jack Zimmermann, lead counsel for Mr. Lopez, told Dow Jones Newswires that he is "very disappointed." The sentence was expected to be closer to that of James Davis, former finance chief of Stanford Financial who last month was given five years in jail for his role in the scheme. Mr. Zimmermann described Mr. Davis as the architect of the fraud. He plans to appeal the conviction.

Lawyers for Mr. Kuhrt weren't immediately available for comment.

Former Texas businessman Mr. Stanford is serving a 110-year sentence for stealing billions of dollars in investors' money and investing much of it in unprofitable private businesses he controlled. Laura Pendergest-Holt, Stanford's former chief investment officer, is serving a three-year sentence.

Source.

Read more: http://sivg.org/article/2013_ExStanford_Executives_Get_20Year_Sentences.html

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

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

November 16, 2012
By Terry Baynes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stanford was sentenced to 110 years in prison in June.

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

PLAINTIFFS' ORIGINAL COMPLAINT - CLASS ACTION.

Source.

More Info: http://sivg.org/article/2012_Lawsuit_Greenberg_Hunton_SUAREZ.html

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

Stanford Officer to Plead Guilty

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

Source.

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

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

Stanford investors have until Sept. 1 to file claims

May 4, 2012
By US District Judge David C. Godbey

After holding a hearing on the motion, considering all objections, and reviewing the Receiver's cost estimate [1583], the Court overrules the objections and grants the motion in full, except that it alters the language of section twelve (12) of the proposed Notice of Bar Date and Procedures for Submitting Proofs of Claim form, Amend. Mot., Ex. 3, at 7 [1546-3], to include "relating to this claim" after "for all purposes," so that the clause reads: "If you submit a Proof of Claim Form in this case, you consent to the jurisdiction of the District Court for all purposes relating to this claim and agree to be bound by its decisions..."

Accordingly, the Court orders that:

1. The Amended Motion is granted as described herein.

2. Objections Overruled. All objections not withdrawn or resolved by this Order are overruled in all respects.

3. Retention of Claims Agent and Other Professionals. The Receiver is hereby authorized to retain Gilardi & Co. LLC as its claims agent ("Claims Agent"), and the engagement agreement between the Receiver and Gilardi & Co. LLC, Order, Ex. 1, is hereby approved. The Receiver is further authorized to retain FTI Consulting, Inc. ("FTI") to provide consultation and analysis concerning claims reconciliation and related matters, and the engagement agreement between the Receiver and FTI, Order, Ex. 2, is hereby approved.

Order from US District Judge David C. Godbey.

Stanford Financial U.S. Receiver Announces Notice of Bar Date to Submit Claims Against Stanford Financial Receivership Entities

PLEASE TAKE NOTICE THAT the United States District Court for the Northern District of Texas has entered an order establishing September 1, 2012, at 11:59 p.m.(prevailing Central Time) (the "Bar Date") as the last date for each person or entity (including individuals, partnerships, corporations, joint ventures estates, trusts and governmental units) who asserts a claim (collectively, "Claimants", as more specifically defined below) against any of the Receivership Entities listed in the box below to submit a Proof of Claim Form.

Receivership Entities Stanford International Bank, Ltd. Stanford Trust Company Stanford Group Company Stanford Financial Group Company Stanford Capital Management, LLC Stanford Coins & Bullion, Inc. The list above contains only the more significant of the Receivership Entities. A complete list of the Receivership Entities is available at www.stanfordfinancialclaims.com

Complete Notice issued by the Stanford Financial U.S. Receiver.

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

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

Trial Set for Financier Accused in Decades-Long Ponzi Scheme

	January 18, 2012 By CLIFFORD KRAUSS A federal judge ruled on Wednesday that R. Allen Stanford, the Texas financier accused of defrauding thousands of investors in a $7 billion Ponzi scheme, will go on trial next week, nearly three years after his arrest. At the hearing, Mr. Stanford's lawyers said he would testify at the trial, giving him an opportunity to describe how he was beaten so seriously by a fellow inmate while in custody in Texas that his memory and ability to prepare for trial was impaired. United States District Judge David Hittner in recent weeks ruled against motions by Mr. Stanford's lawyers that their client was not mentally competent to stand trial and that the trial should be postponed because they had not had enough time to prepare a defense. "My finding still remains that he is competent and ready to go," Judge Hittner said Wednesday.
Three years after his arrest, R. Allen Stanford will face a jury.
Defense lawyers for Mr. Stanford argued again this week that they needed a delay in the trial. They said that they needed more time to study possible testimony from expert witnesses on accounting procedures and that one of their contract workers involved in document preparation needed cancer surgery and would be unavailable to work for at least several weeks. Mr. Stanford, 61, pleaded not guilty to a revised 14-count indictment charging him with defrauding nearly 30,000 investors from 113 countries in a Ponzi scheme involving bogus high-interest certificates of deposit at the Stanford International Bank, which is based on the Caribbean island of Antigua. At the hearing Mr. Stanford, who wore a green prison suit, appeared relaxed while talking with his lawyers. He closed his eyes at times while listening to the lawyers review the procedures for the trial, to start Monday. Mr. Stanford and three other senior executives of the Stanford Financial Group are accused of lying about the growth of bank assets in investor reports, diverting more than $1.6 billion into personal loans to Mr. Stanford and engaging in wire and mail fraud and conspiracy to obstruct a Securities and Exchange Commission investigation. According to prosecutors, Mr. Stanford skimmed money from investor funds to live lavishly, with mansions and yachts, essentially converting Antigua into a private playground. What began as a financial scandal second only to the Bernard L. Madoff pyramid scheme that unfolded as financial markets collapsed in 2008 has devolved into a messy, slow-moving soap opera. Mr. Stanford has been represented since his arrest in 2009 by about a dozen lawyers, many of whom have either quit or were fired for various reasons. Even his current legal team has tried to resign. Once estimated to have had a personal fortune of more than $2 billion, Mr. Stanford is now considered an indigent defendant deserving of a taxpayer-financed defense since all his assets are frozen by court order. Mr. Stanford's latest team of four court-appointed lawyers filed a motion last week to leave the case, explaining that they did not have sufficient resources or time to organize a proper defense. They also said their efforts had been held back when contractors preparing documents for the defense quit at the end of last year because they had not been paid for several months. The lawyers had argued that they should be given three more months to prepare. Judge Hittner repeatedly rejected the bid, arguing that the defense team had had more than a year to prepare. Meanwhile, the contractors have returned to work after an appellate court ordered them to do so and granted them some back pay. During a break at the hearing, Ali R. Fazel, a defense lawyer, said he was disappointed with the judge's decision that the trial would begin on Monday. At the hearing, defense lawyers gave some clues about their strategy. They said investors had received payments from their Stanford bank certificates of deposit on schedule until the S.E.C. sued the Stanford Financial Group. Mr. Stanford has long argued that the federal government was responsible for a run on his firm's assets. Robert A. Scardino Jr., another defense lawyer, said, "We fully intend for Mr. Stanford to take the stand." Mr. Stanford was declared incompetent to stand trial last January because he had become addicted to anti-anxiety medication prescribed to him while in detention in a federal facility outside of Houston. Psychiatrists said the drug, prescribed after he had a fight with a fellow inmate over use of a telephone, probably contributed to fits of delirium. Psychiatrists who testified for the prosecution and defense last year suggested that Mr. Stanford had become mentally incapacitated because of depression, possible brain injury suffered in the fight and addiction to medication prescribed after the beating. Over the last year, Mr. Stanford has undergone evaluation and drug rehabilitation. He was declared competent in December to stand trial, though his lawyers say he has not had enough time to review thousands of documents to participate in his defense. Mr. Stanford says he cannot recall events that happened before the fight. But prosecutors and doctors at the North Carolina facility say Mr. Stanford has been faking memory loss. Gregg Costa, the lead federal prosecutor, has said that Mr. Stanford is trying to "game the system." As the trial proceeds, the leading witness for the prosecution will be James M. Davis, the former chief financial officer of the Stanford Financial Group, who has pleaded guilty to fraud and conspiracy charges. In a plea agreement, Mr. Davis said Mr. Stanford ordered him to report false revenue and false investment portfolio balances to banking regulators as far back as 1988. Mr. Davis and the two other former Stanford executives who have been charged in orchestrating the Ponzi scheme face separate proceedings. The prosecution and other lawyers involved in the case said the trial should last at least three weeks. His lawyers continued to contend on Wednesday that he is not competent to stand trial. "You're still pushing that?" Judge Hittner responded incredulously when he heard from the defense lawyers that Mr. Stanford was unable to participate fully in his defense.

Source.

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

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

SEC Said to Prepare Vote on Cases Against Ex-Stanford Execs

January 10, 2012
By Joshua Gallu

U.S. Securities and Exchange Commission investigators have proposed sanctions against at least five former Stanford Financial Group Co. executives and brokers for their roles in selling investments that fueled R. Allen Stanford's alleged $7 billion Ponzi scheme, according to two people with knowledge of the matter.

The SEC's five commissioners are scheduled to vote Jan. 12 on whether to authorize the enforcement actions, which target brokers and senior executives at Stanford's Houston-based brokerage, the people said, speaking on condition of anonymity because the matter isn't public. The vote by the commissioners could still be delayed or tabled, the people said.

The actions, which seek to bar the executives and brokers from working in the industry and claw back sales commissions, come almost three years after the SEC sued Stanford and a federal grand jury indicted him on 21 criminal counts alleging he used his U.S. brokerage to sell bogus certificates of deposits for his Antigua-based bank.

The SEC lawyers claim the employees ignored red flags signaling that they were selling fraudulent products, such as above-market returns promised on the CDs and outsized commissions to the brokers who sold them, one of the people said.

The investigators are treating the cases as a legal test of whether they can sanction brokers for failing to conduct due diligence on in-house products, the people said. If successful, the cases could be replicated against more ex-Stanford brokers over time, said the person.

Former NASD Official

One of the former Stanford employees whose actions were reviewed by investigators was Bernerd Young, the former regulator who later became Stanford's chief compliance officer. Young received a notice in June 2010 from SEC investigators that they planned to recommend an enforcement action against him for his role in the Stanford matter, according to his broker records.

Young became the top compliance official at Stanford's brokerage in 2006 after having worked for nearly two decades at the National Association of Securities Dealers, which later became the Financial Industry Regulatory Authority, the brokerage industry's self-regulator. He headed the NASD's Dallas office from 1999 to 2003, Finra said in a 2009 report. Young now works at Magnolia, Texas-based MGL Consulting LLC.

"Aggressive Defense"

"If the Commission authorizes the Staff to bring a formal action against Bernie, it will be met with a fierce and aggressive defense," Melinda G. LeGaye, founder and president of MGL Consulting, said in a statement today. The SEC staff "has repeatedly changed its focus in an attempt to secure Commission authorization to bring a formal action against him."

Young "has continued to cooperate and provide documentation and detailed explanations to not only refute the Staff's allegations but also to assist in their understanding of events while Bernie was at Stanford Financial Group," LeGaye said.

Randle Henderson, an attorney for Young, said in a phone interview that he didn't know whether the SEC was considering sanctions against Young. He said he has submitted multiple briefs to the SEC in defense of his client.

Trial Date

Stanford, 61, has denied the fraud allegations and last month requested that his Jan. 23 trial date be delayed by three months after his expert witnesses quit because they weren't being paid. He is being held without bail. Stanford's former accountants and heads of finance and investment also face criminal and civil claims.

The SEC has been reviewing the case for more than two years as Stanford customers and lawmakers criticized investigators for not catching the alleged scheme sooner. The SEC's inspector general said the agency didn't conduct a meaningful probe of Stanford's business until 2005, even though examiners suspected fraud eight years earlier.

Source.

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

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

2 former Stanford brokers say SEC let them down

January 5, 2012
By Purva Patel, HOUSTON CHRONICLE

Former Stanford Financial Group brokers Charles Rawl, left, and Mark Tidwell say SEC attorneys promised them legal protection, but the receiver appointed to recover assets in the case sued both of them for hundreds of thousands of dollars. Photo: James Nielsen / © 2011 Houston Chronicle

Former Stanford Financial Group brokers Charles Rawl and Mark Tidwell say they helped regulators build a fraud case by supplying the government with emails, testimony and names of people to question.

They answered questions when Securities and Exchange Commission investigators camped out at the Stanford offices near the Galleria before shutting down the firm in February 2009.

All along, they say, SEC attorneys promised them legal protection to quell their concerns about retaliation by Stanford or being lumped together with anyone implicated in the investigation.

By the end of the year, however, the receiver appointed to recover Stanford's assets sued both brokers for hundreds of thousands of dollars in earnings the receiver claims are related to the sale of Stanford financial products.

"We've been totally shafted by the system," said Rawl, who has testified about his predicament before the House Financial Services Subcommittee on Oversight and Investigations.

The former head of the Houston firm, R. Allen Stanford, is scheduled for trial later this month on charges that he swindled investors who bought CDs issued by Stanford's bank in the Caribbean island nation of Antigua.

Three other former company executives are to be tried later. A Houston federal judge on Thursday denied the latest of several attempts by Stanford's lawyers to delay his trial.

The receiver is suing Rawl for $732,946 and Tidwell for $1.1 million. Neither has anything in writing from the SEC promising protection, though their attorney confirms being told his clients would be protected. An SEC spokeswoman declined to comment.

Kevin Sadler, an attorney for receiver Ralph Janvey, said the receiver was not a party to whatever discussions the brokers may have had with the SEC.

Loss of billions

"Rawl and Tidwell were compensated well for selling CDs that were fraudulent, and they have no legal, equitable or moral right to keep the bonuses and commissions they were paid for selling CDs," he said. "These two brokers still have that money, while thousands of investors have lost billions."

None of the more than 300 former Stanford employees the receiver has sued for about $215 million in CD-related proceeds has returned any of the money made from CD sales, he said.

Other lawyers who deal with receivers noted that receivers are appointed by the court and work for the court, even if regulators suggest them for appointment.

"It would certainly be in the receiver's purview because the receiver has an independent fiduciary duty to look out for the interest of all of the creditors and other parties who may have an interest in that property," said Michael Good, a California bankruptcy attorney.

Unless Rawl and Tidwell have written documentation of an agreement with the receiver, they may not have much of a case, Houston bankruptcy lawyer Wayne Kitchens said.

Witness protection?

It would be unusual for the SEC to offer a witness any protection except from action by the SEC itself, he said.

Rawl and Tidwell say they assumed they would be protected at all levels. They say they risked their jobs by alerting Stanford management about their complaints and taking their concerns to the SEC after resigning from the firm in 2007.

It wasn't until after they filed a lawsuit in state court and news of the Bernard Madoff fraud case broke in 2008 that the SEC sought more information about Stanford, the pair said.

Rawl and Tidwell, who had adjacent offices at Stanford Financial, started their own firm in 2007. But the pending lawsuit makes it difficult to get new business or licensing in other states, they said, and the litigation prompted the Certified Financial Planners Board of Standards to open inquiries into their certifications.

Lawsuits between the pair and Stanford Financial before the firm was shut down also fueled rumors that the two were responsible for the company's downfall.

In litigation that has since been put on hold as the government proceeds with its case against the firm, the pair said they were forced to resign because they didn't want to comply with certain business practices they found alarming. The firm countered with its own suit, calling them disgruntled employees who were fired and owed the company hundreds of thousands in loans that were part of their compensation packages.

"I did exactly what I was supposed to do. I did it without any protection from the law, and I'm the bad guy," Tidwell said. "It's disheartening to know that American citizens are relying on this system to protect them, and they're going to be more than disappointed."

Source.

Related article: How the SEC really treats "Whistleblowers" - Second Part.

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

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

SIPC Rebuffs Stanford Investors Demands to Cover Losses

December 7, 2011
By Scott Cohn

The agency that insures U.S. brokerage accounts has again rebuffed demands it provide coverage to investors in Allen Stanford's alleged $7 billion Ponzi scheme, making it increasingly likely the issue is headed to court.

In a December 2 letter to members of Congress, obtained by CNBC, the head of the Securities Investor Protection Corporation (SIPC) says the organization has a "fundamental disagreement" with the Securities and Exchange Commission, which demanded in June that SIPC pay the investors or be sued.

Thousands of investors lost everything in the 2009 collapse of Stanford Financial Group, which the SEC alleges was a global Ponzi scheme involving bogus certificates of deposit.

In the letter to members of Congress, SIPC Chairman Orlan Johnson says providing the coverage would be "unprecedented," because the investors "chose to purchase CDs issued by an offshore bank in Antigua," which is not covered by SIPC.

The investors have countered that most of the CDs were purchased through Stanford's U.S. broker-dealer, a SIPC member.

In June, the SEC sided with the investors and threatened to sue SIPC to force the coverage, which provides as much as $500,000 per account.

SIPC promised to reconsider its position at its September board meeting, but instead has remained publicly silent on the issue.

In the letter to Congress, Johnson claims that privately, SIPC and the SEC have been working "in good faith" to resolve their disagreement.

Neither SIPC nor the SEC would comment on the discussions, which apparently are aimed at settlement to avert a lawsuit by offering a partial payout to investors.

Meantime, patience among the investors and members of Congress is wearing thin.

On Tuesday, Sen. David Vitter, Republican from Louisiana, urged SEC Chairwoman Mary Schapiro to make good on the threat to sue.

"This again is dragging on, six months after your positive, concrete action," Sen. David Vitter, told Schapiro at a Senate Banking Committee hearing.

"I think the SEC needs to take definite action again before the end of the year in a positive way, and I'm afraid that's going to mean suing SIPC," Vitter said.

"I share deeply your concern about this and that we not take longer than is absolutely necessary," said Schapiro in response. But she was non-committal about filing suit. Schapiro said the SEC is working on "the best possible result for victims."

But the main group representing Stanford's 28,000 investors says they are entitled to full coverage, and in a letter to the SEC's general counsel this week, the Official Stanford Investors Committee echoed Vitter's call for the SEC to go through with the court action.

SIPC is essentially caught between the SEC and its own members--brokerage firms that would bear the cost of any payout while they are already compensating customers of Bernard Madoff and MF Global.

Wall Street's main trade group, the Securities Industry Financial Markets Association (SIFMA), has come out against coverage for Stanford investors. SIFMA argues SIPC coverage does not extend to fraud, but only guarantees the return of investors' cash and securities. In the case of Stanford, SIFMA contends, those securities are the certificates of deposit which are now worthless.

A SIFMA spokesperson would not comment on the possibility of a partial payout to investors.

The SEC sued Stanford and his companies in February 2009, putting them out of business. Stanford, 61, has denied wrongdoing.

Source.

SIPC Chairman Orlan Johnson's Letter to Congressman Cassidy

Dear Congressman Cassidy:

This is in reply to your letter dated November 22, 2011, concerning the certificates of deposit ("CD") issued by the Stanford International Bank Ltd. in Antigua ("Stanford Antiguan Bank") to your constituents and others...

Read the complete letter here.

Letter to Securities Industry and Financial Markets Association (SIFMA)

The SIB CDs did not exist as anything more than a vehicle to steal customer funds. By all definitions, the SIB CDs were never legitimate securities, and customer funds never went to SIB in Antigua. SGC customers had the legitimate expectation they were purchasing actual securities and instead, as the SEC and DOJ have alleged, their funds were stolen in a Ponzi scheme. SGC management, including Chief Financial Officer James Davis, were fully aware of the misappropriation of customer funds and that the CDs were entirely fictitious, yet enticed its Registered Representatives to sell the SIB CDs in order to fund SGC's operations and pay previous customers.

The SEC has alleged in its civil suit against Stanford, et al, the Stanford Financial Group of Companies operated a "massive Ponzi scheme." Additionally, the SEC has taken the position in litigation related to the Stanford Receivership that an entity that operates as a Ponzi scheme "is, as a matter of law, insolvent from its inception." An insolvent entity cannot issue real securities and the SIPA has previously been used to protect investors "regardless of the fact that that the securities were fictitious."

SGC was an insolvent broker dealer and SIPC member that misappropriated customers' funds for more than a decade. SGC sold its customers fictitious securities, then acquired its customers' funds to pay for commissions and bonuses for the Registered Representatives who sold the CDs; SGC's marketing and advertising; professional endorsements for SGC; and generally all of the expenses of the SIPC member.

In Old Naples Securities, the court reasoned that whether a claimant deposited cash with the debtor "does not … depend simply on to whom the claimant handed her cash or made her check payable, or even where the funds were initially deposited." Rather, the issue was one of "'actual receipt, acquisition or possession of the property of a claimant by the brokerage firm under liquidation.'"

SGC customers did not simply make a bad investment; a SIPC member stole our funds. We understand that SIPC was not created to protect investors from worthless securities or securities that decline in value; however, the SIB CDs have no value because the funds were stolen in a Ponzi scheme.

The SIB CDs did not exist and cannot be replaced. When missing securities cannot be replaced by SIPC, a customer is entitled to compensation of their net equity investments.

Source.

Investors Committee's Letter to SEC

Dear Mark:

As you know, it has been several months since the Securities and Exchange Commission ("SEC"), by a vote of the Commissioners, made a formal request to the Securities Investor Protection Corporation ("SIPC") Board of Directors to institute a liquidation proceeding of Stanford Group Company ("SGC") under the Securities Investor Protection Act of 1970 ("SIPA") and pay net equity claims to SGC customers who purchased Stanford International Bank certificates of deposit ("SIB CDs").

Despite an initial announcement by SIPC that its Board of Directors would vote on this matter at its September 15 meeting, a decision has apparently been indefinitely postponed. The continued delay by the SIPC Board to respond to the SEC has unnecessarily left the victims in limbo. Additionally, as members of our Committee have discussed with your staff in Washington, we anticipate a significant degree of coordination with a SIPC Trustee will be necessary to prevent unnecessary complications, delays and expenses related to the winding down of other Stanford entities.

In order to provide SGC customers with their mandated protections under SIPA, and to expedite the coordination of additional parties in the multiple legal proceedings, the Investors Committee asks the SEC to immediately exercise its plenary authority over SIPC by filing an application in the Federal District Court in Washington, D.C., to compel SIPC to properly discharge its statutory responsibilities under the SIPA by initiating a liquidation of SGC and paying net equity claims to investors who purchased SIB CDs from SGC.

Read the complete letter here.

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

Allen Stanford Investors Sue His Accounting Firm

	May 26, 2011 Nearly two years after Texas financier Allen Stanford was indicted in an alleged massive Ponzi scheme, investors have just filed a $10 billion proposed class action suit against his auditor-the giant accounting firm BDO. The suit-filed Thursday in federal court in Dallas-says BDO did not only aid and abet the $7 billion dollar fraud...it was a "co-conspirator."
Indicted financier R. Allen Stanford, accused of leading a $7 billion investment fraud scheme.
"BDO's cozy relationship with the Stanford Financial Group was steeped in conflicts of interest and required ongoing deceptive and duplicitous manipulation of the facts to allow the Ponzi scheme's exponential growth for over a decade," the complaint says. "The result of this deception is the loss of thousands of investors' life savings." BDO not only audited Stanford's U.S. operations, it also did critical work in Antigua, where the alleged fraud was based. Before his indictment in 2009, Stanford told CNBC about a task force he put together-including a "major accounting firm" to rewrite Antigua's banking laws. "Back in the early '90s, I was asked by the then-government if I would put together a civilian team of professionals, which I got," Stanford said. "Ex-FBI, ex-DEA, an ex-U.S. Attorney…a major accounting firm and others to come up with a strong, if not the strongest platform for international banking." Authorities and investors say that platform paved the way for the fraud. Stanford has denied wrongdoing. He faces a trial currently scheduled for September 12 on 14 criminal counts. BDO has not had a chance to respond to the suit, but for months it has been fighting a civil subpoena for documents filed by the court-appointed receiver in the SEC's lawsuit against Stanford. In a court filing in April, BDO attorneys said the firm "has no clue as to what it may have done wrong." The filing called the subpoena "a fishing expedition." Stanford's 30-thousand investors have so far recovered just pennies on the dollar. PLAINTIFFS' ORIGINAL CLASS ACTION COMPLAINT X. ACTUAL DAMAGES 113. Plaintiffs and the First Class have suffered the loss of at least $7.2 billion that was proximately caused by the wrongful conduct of BDO as described herein. Plaintiffs and the Second Class have suffered the loss of approximately $3.5 billion that was proximately caused by the wrongful conduct of BDO as described herein. BDO is jointly and severally liable to Plaintiffs and both Classes for the injuries caused by the Stanford Financial Group, including SGC, STC, SFIS, and SIBL, under Texas common law of joint and several liability, as well as under the Texas Securities Act. Read the complete CLASS ACTION COMPLAINT here!

Source.

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

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

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

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.

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

How the SEC really treats "Whistleblowers"

March 24, 2011
By Charles W. Rawl

Dear Senator Grassley:

Madoff whistleblower Harry Markopolos' book, They Wouldn't Listen, describes his experience of trying to get the SEC to see a multi-billion dollar Ponzi scheme growing by leaps and bounds each year right before their eyes. Three years ago, my business partner, Mark Tidwell, and I "blew the whistle" on the Stanford Financial Group's (Stanford's) multi-billion dollar Ponzi scheme growing by leaps and bounds each year right before the SEC's eyes. "They" DID listen to us, and used our evidence and testimony to support a civil lawsuit against Stanford and take a global network of companies into receivership on February 17, 2009.

Unfortunately, Mark Tidwell and I have had a very one-sided relationship with the SEC, and the Commission's failed promise of protection in return for cooperation and assistance in their case sends a message to the entire financial industry that being an SEC whistleblower is a dangerous and absurdly misguided endeavor.

Given the record of failure by the SEC and FINRA to adequately regulate the financial sector, it is critically important that whistleblowers be protected and compensated for delivering crucial information to authorities to help stop predatory and criminal enterprises like Stanford. Law-abiding citizens like Mark and I should be able to trust and depend on the SEC's assurances of protection. Instead, we have become the perfect examples of why NOT to blow the whistle.

Mark and I were promised protection when we risked our careers, our reputations and even our families' security to blow the whistle on Stanford. The SEC's promises have been broken in a very blatant manner and I firmly believe that when our story becomes public, it will be counter-productive to the admirable efforts of our nation's leaders like you who encourage citizens to do the right thing and come forward to report fraudulent conduct in corporate America.

I am writing you because of your long-term advocacy for whistleblowers and I am confident you will be appalled to learn some of the shocking details of my experience as a Stanford whistleblower. As the SEC is in the rule-making process for its recently expanded whistleblower program, I feel it is very important Congress truly understands the Commission's CURRENT treatment of whistleblowers so that appropriate legislative support is in place to force the SEC to comply with some very critical provisions to protect whistleblowers.

Source.

Stanford: What's the hold up? http://sivg.org/article/SEC_Whistleblowers.html

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

Dismay as official Stanford Investors Committee file lawsuit against St Jude's children's cancer hospital charity

February 16, 2011

On this day today, the second anniversary of the civil action by the SEC against the Stanford Financial Group, wholly owned by Allen Stanford awaiting trial on 23 counts of fraud in Texas, allegedly too incompetent to stand trial after being beaten-up in prison and fed a cocktail of anti-depressants. What have we learned?

Firstly Allen Stanford is apparently competent enough today to file a lawsuit against the US prosecutors, the FBI and SEC, accusing them of "abusive law enforcement" and seeking $7.2bn in damages. Since he was declared indigenous after Lloyds of London contested their officer's insurance policy, following the hiring and firing of a carousel of well tailored attorneys, he is now represented by two public defenders. It begs the question who is paying for his lawsuit, and how did he miraculously recover well enough to instruct them.

Now he has recovered, please let the criminal trial begin, and that $7.2bn would also be the same amount the innocent victims of the alleged Stanford fraud have lost. If he's so innocent, where's the money?

On this day today, the Statute of Limitations for any lawsuits in connection with the Stanford case also expired.

Three months ago we woke up to the fact the so-called (SIC) Stanford Investors Committee was going to do nothing very much to help us, so we found a new attorney and launched our own campaign to file FTCA claims against the Securities and Exchange Commission (SEC), for their negligence in not closing down Stanford sooner. They knew he was a fraud 13 years ago. Some of the SEC were merely asleep on the job, while others were caught with their pants down watching porn on their computers. The campaign has been a resounding success, and several thousand Stanford investors have now filed claims.

On this day today, we also anticipated a flood of claims from the receiver and the (SIC) Stanford Investors Committee, who have reportedly been toiling away tirelessly for several months in total secrecy, all in our best interests.

We anticipated a plethora of lawsuits against, amongst others;

BDO Seidman, one of the worlds largest accounting firms, who audited Stanford Group Company, and who fudged their accounts four years running to hide from SIPC it was insolvent and only being supported by tainted funds from SIB in Antigua.

FINRA, who twice fined Stanford for misleading investors, a mere slap on the wrist, but despite all the red flags, could see no further.

The State of Florida, who through their Dept of Banking and Finance granted the newly formed (in 1998) Stanford Fiduciary Investor Services, the illegal right to move vast amounts of money offshore without the reporting a penny to regulators. Yes, Jeb Bush the brother of former President George W Bush became Governor of Florida earlier that same year, and both were recipients of generous campaign donations from Allen Stanford.

Greenburg Traurig, the deep pocketed Miami lawfirm who lobbied endlessly to set up Stanfords Florida deal, and who have been implicated in numerous other murky transactions.

Forbes, and who could forget their endorsement of Stanford as one of Americas 40 richest billionaires with $50bn under management. They gave Stanford his greatest aura of credibility.

One would have anticipated, with four experienced attorneys on the (SIC) Stanford Investors Committee; together with the examiner, the receiver, and Angela Shaw Kogutt, the director and founder of the SVC; these would all be rich pickings; but did they choose to file any suits against any of these? No, not one.

On this day today, sadly, we learned they chose instead to file a suit against St Jude's, the children's cancer research hospital charity who give hope to sick children and their families. Allen Stanford donated $7m towards St Jude's, quite possibly the only truly good deed the "Knight" ever did. No matter where those funds came from, there is one indisputable fact; St Jude's received and spent them in good faith to keep a lot of sick kids alive, and who can begrudge them that?

On this day today, it should have been the day we were all celebrating having made the first step towards recovery from the US Government, who knew for 13 years that Allen Sanford was a fraud, but did nothing. Instead I am sickened that the Stanford Investors Committee, who supposedly act in our best interests, could have instigated such a callous and insensitive action against such a deserving institution as St Jude's without our knowledge, and without our consent.

To all the Stanford investors reading this, I urge you to write or email the Stanford Investors Committee members to withdraw this suit against St Jude's. In the eyes of the world we are all as equally guilty as those undeserving members of the committee who are behind it. Please let us do one good thing and make this right.

Thank you.
Stanford's victim.

Group that lost money in Stanford ponzi scheme sues St. Jude, Le Bonheur

Investors trying to retrieve billions they lost in Stanford Financial Group's Ponzi scheme have sued St. Jude Children's Research Hospital, its fundraising arm American Lebanese Syrian Associated Charities Inc. and Le Bonheur Children's Medical Center Foundation for more than $7.37 million Stanford had donated.

The "Official Stanford Investors Committee" filed suit late Tuesday in the U.S. District Court for the Northern District of Texas, Dallas Division.

The claim represents the Ponzi scheme's latest fallout for Memphis.

Stanford Financial assumed a major profile in town in 2007 and 2008 as title sponsor of Memphis' PGA Tour golf tournament, which benefits St. Jude.

Earlier this month, the investors and the court-appointed receiver also sued the PGA Tour for $12.9 million, an amount that may be related to Stanford Financial's sponsorship of the tournament in 2007-08.

In the hospitals' case, the money that investors are trying to get back was given when Stanford Financial was insolvent and R. Allen Stanford operated the company "in furtherance of his fraudulent scheme," the suit states.

The sum in the suit, however, will be adjusted if the committee finds any additional payments made to the groups from Stanford, according to the lawsuit.

Since the litigation is pending, ALSAC/St. Jude could not reveal a precise amount Stanford gave to the charities, Emily Callahan, chief marketing officer for ALSAC/St. Jude, said in a statement.

But she said, "Our records show that we received less than the amount named in the suit."

The money, she said, was received "in good faith directly from Stanford Financial Group" and was spent immediately "on our mission of saving kids' lives in the U.S. and around the world and finding cures for catastrophic diseases in children...

"While our hearts go out to those impacted by the Stanford investment issues, it would hurt our charitable mission to have to return the money already spent directly on clinical care and support for children suffering from cancer and other deadly diseases, including bone marrow transplants, chemotherapy treatments, on education and training of doctors and nurses who help kids worldwide, and on groundbreaking research," Callahan said in a prepared statement.

Before authorities cracked down in February 2009, Stanford also had contributed a substantial portion of its $2.5 million pledge to Le Bonheur Children's Medical Center's campaign for a new $327 million hospital.

The suit states Stanford donated to ALSAC, St. Jude and the Le Bonheur foundation $2.56 million in 2006, $2.14 million in 2007 and $2.62 million in 2008 and $35,174 in 2009.

Investors who lost an estimated $7 billion to Stanford Financial want as much of their money back as they can retrieve, and some of their other recent "clawback" lawsuits apparently have Memphis ties.

They filed a $12.9 million suit Feb. 7 against the PGA Tour.

The suit says Stanford Financial parties paid the PGA Tour $5.9 million in 2007 and $6.9 million in 2008. Although the suit didn't mention the Memphis tournament, those were the years Stanford was its title sponsor.

This past year, FedEx took over as title sponsor of the FedEx St. Jude Classic.

As he does in his filings against all defendants in the clawback suits, receiver Ralph Janvey claims the PGA received the money from Stanford without providing any services or anything of equivalent value.

The PGA Tour says it doesn't respond in the media to lawsuits.

However, Ty Votaw, the organization's vice president for communications, told The Commercial Appeal on Wednesday that Stanford, as title sponsor of the Memphis event, "received all the rights, benefits and privileges associated with that."

Stanford, like any such tournament sponsor, received such benefits as "naming rights, commercial inventory in the four-day telecast, the benefit associated with being title sponsor of a sporting event that had over 12 hours of television coverage, pro-am spots, hospitality.

"How they use those, I can't comment on," Votaw said.

"We did provide value."

For example, the international TV coverage encompasses 225 countries and 589 million homes, he said.

Stanford is accused of creating a huge pyramid scheme by guiding clients to invest more than $7 billion in certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua and then misusing the money.

Staff reporter Tom Bailey Jr. contributed to this story.

Source.

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