Interesting Facts:
Thief who steals thief has one hundred years of pardon.
Lying and stealing are next door neighbors.

Las víctimas olvidadas de Stanford, ahora disponible en español en:

Wednesday, December 4, 2013

Receiver files 7th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan


Receiver files 7th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan - On December 4, 2013, the Receiver filed his 7th Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 7th Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed. To view a copy of the 6th. Schedule, please click here.

What happened with the IRS?
Let’s remember the eagerness of some victims to manipulate and deceive the rest of the victims:





Shame you!!!

Who have their own agenda? Oh yeah! The others... Only the others...



What is built with lies and evil intention will collapse sooner or later.



For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Wednesday, November 27, 2013

CRT Offer to Buy Stanford International Bank Investor Claims



(Caracas, November 26 - Noticias24) -. CRT Special Investments announced Tuesday through a press release that it would buy claims from Stanford International Bank (SIB) to investors, who can "receive their money within weeks instead of having to wait years and face the uncertainty of recovery, "said Joe Sarachek, General Director of the CRT.

 Following is the full text of the statement: http://sivg.org/forum/view_topic.php?t=eng&id=165

Participante líder en la venta y compra de reclamos de Stanford Proporcionando a Vendedores(Inversionistas) Liquidez Garantizada

Nueva York, Nueva York, noviembre de 2013 – CRT Special Investments LLC (” CRT Special Investments “) ha anunciado hoy que está enfocado en proporcionar liquidez a los ex depositantes de Stanford International Bank en América Latina con un staff dedicado de habla hispana y cuenta con sitio web.

Stanford International Bank (” SIB “) era un banco con sede en Antigua, que operó desde 1986 hasta el 2009, con sede en Houston, Texas. Los depositantes de SIB recibieron certificados de depósito. Aproximadamente $ 7 mil millones fueron depositados en SIB. En febrero del 2009, la Securities and Exchange Commission de los EE.UU. obtuvo una orden para congelar todos los activos personales y corporativos de Stanford en los EE.UU. y un receptor para Stanford. Hasta la fecha, aproximadamente $ 500 millones en activos líquidos han sido identificados por el Síndico y Liquidadores Conjuntos, dejando a los ahorradores con una pérdida substancial proyectada.

El Administrador Judicial ha comenzado recientemente a hacer una distribución del 1 % a los inversionistas, pero más distribuciones son inciertas.

Un procedimiento paralelo al procedimiento de EE.UU. se inició en febrero de 2009 en Antigua. Los depositantes también han presentado reclamos con Grant Thornton, que ha sido designado como Liquidador Conjunto en Antigua. Hasta la fecha, ninguna distribución se ha realizado en Antigua. Debido al hecho de que no se sabe cuándo se harán nuevas distribuciones o el momento de la distribución, los depositantes que buscan liquidez se enfrentan a la elección de la venta de los compradores en el mercado secundario.

El proceso de transferencia de reclamos es extremadamente lento, ya que requiere la presentación de documentos en dos jurisdicciones separadas, Dallas y Antigua. “Ninguna otra compañía tiene la experiencia y la dedicación para el mercado de América Latina en Stanford “, dijo Joe Sarachek , Director General de la CRT Special Investments. “Nuestro objetivo es proporcionar recuperación garantizada y liquidez para los clientes de Stanford lo más rápido posible. ” Sarachek añadió ” Si usted vende su reclamo a CRT, usted podrá recibir su dinero en cuestión de semanas en lugar de tener que esperar años y enfrentarse a la incertidumbre de la recuperación. ”

CRT Special Investments, ha sido un participante líder en el mercado de reclamos de Stanford , cuenta con la experiencia y conocimiento del mercado , no sólo para ofrecer liquidez a los clientes que buscan vender , sino también para estructurar préstamos y negociaciones para aquellos clientes que aún no están listos para vender sus reclamos. CRT Special Investments es una filial de CRT Capital Group LLC ( “CRT “), una sociedad de valores con sede en Stamford , Connecticut, EUA que ha mantenido a los clientes institucionales desde hace más de 20 años. CRT proporciona investigación a profundidad sobre el procedimiento de quiebra de MF Global y compra venta de reclamos.

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org

Sunday, November 24, 2013

Stanford Victims Coalition Update Regarding SIPC

Dear SVC Members,

 I apologize for the gap in time between updates, but I have some very exciting news today about a project I have been working on full-time all year—a legislative remedy that should get us SIPC if the bill is passed—regardless of the outcome of the SEC vs. SIPC appeal (which could still go our way). “The Restoring Main Street Investor Protection and Confidence Act,” is being introduced in the House today with a Senate companion bill to follow. A hearing of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises is set for Thursday, November 21 (victims are encouraged to attend and I will be testifying along with another Stanford victim). A Senate Banking Committee hearing will be held as well, but a date has not been set.............


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Thursday, November 21, 2013

U.S. lawmakers seek fix to help investors file claims against brokers

Nov 20 (Reuters) - A bipartisan group of U.S. House and Senate members is seeking to make it easier for investment fraud victims to seek compensation, after investors in Allen Stanford's Ponzi scheme were deemed ineligible under current law to file claims.

The bill, introduced by Louisiana Republican Senator David Vitter, New York Democratic Senator Charles Schumer, New Jersey Republican Rep. Scott Garrett and New York Democratic Rep. Carolyn Maloney, would bestow U.S. securities regulators with greater powers to oversee the process of determining whether customers of failed brokerages qualify for compensation.

The legislative proposal comes as the Securities and Exchange Commission awaits a crucial decision from a U.S. appeals court over the fate of the Stanford victims.

The SEC is trying to get the court to force an industry-backed fund that protects investors to start court proceedings so Stanford victims can file claims to recover a least a portion of the millions they lost.

The Securities Investor Protection Corp., or SIPC, which administers the fund, has refused the SEC's request, saying Stanford investors do not meet the legal definition of "customer" under the federal law designed to protect investors if their brokerage collapses.

SIPC uses funds paid by the brokerage industry to compensate investors in the event of a bankruptcy, such as the one that occurred at Lehman Brothers in 2008.

 Allen Stanford was sentenced in 2012 to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

Many of the investors who purchased the products, however, did so through his Houston, Texas-based brokerage, Stanford Group Co.

SIPC argues that investors in the scheme entrusted their money to the offshore, unregulated Antiguan bank and not to the U.S. broker-dealer. Moreover, it says that Stanford's investors actually did receive their certificates of deposit, as promised, even though they turned out to be virtually worthless.

A federal district judge agreed with SIPC's legal position in July 2012, and tossed out the SEC's lawsuit.

The SEC appealed the ruling before the U.S. Court of Appeals for the District of Columbia in October, and is awaiting a decision.

 SIPC's refusal to let Stanford victims file claims has frustrated many lawmakers on Capitol Hill, including Vitter, who has been among the most vocal in fighting for the Stanford victims.

"The Stanford Ponzi scheme devastated many Louisiana families who invested their hard-earned savings in good faith that it would be there for them when they retire," Vitter said in a statement issued on Wednesday.

"Our bill will fix a key problem we've seen with the system, which currently allows SIPC's Wall Street members to benefit economically from the SIPC guarantee while denying the claims of legitimate victims," he added.

The legislative proposal by the four lawmakers will be vetted in a hearing before a subcommittee of the House Financial Services Committee on Thursday.

Among the witnesses scheduled to testify are Stephen Harbeck, the president of SIPC, a representative from Wall Street's leading brokerage trade group, and Angie Kogutt, a Stanford victim in charge of the Stanford Victims Coalition.

The 19-page bill would amend the definition of "customer" to ensure that investors who deposit cash to buy securities can still be covered by SIPC protection, even if the money is initially given to a firm that is not a SIPC member.

 It would also give the SEC more authority to force SIPC to act without the need for court approval.


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Wednesday, November 13, 2013

LEGISLATIVE ALERT 11/12

LEGISLATION TO BE INTRODUCED IN HOUSE, HEARINGS SET  BILL ALSO BEING PREPARED IN SENATE!

    * Garrett & Maloney to introduce legislation in House. Senator Vitter current lead sponsor in Senate
    * House hearings set for 11/21
    * Selective grassroots to commence
    * 5th Anniversary media needs victims willing to be interviewed by media

Dear NIAP Member & Madoff Investor,

 Greetings.  I am excited to announce that SIPC legislation is to be introduced later this week or early next followed by Congressional hearings on Thursday, Nov 21. The legislation is to be jointly introduced by Congressman Garrett (NJ) and Congresswoman Carolyn Maloney (NY).  Similar legislation is expected to be introduced shortly in the Senate as well, consistent with the strategy laid out by Congressman Garrett in the last Congress.

The intention is to have the legislation introduced by approximately 15 co-sponsors, and followed by an extensive outreach effort via Garrett’s and Maloney’s offices, our lobby team and our own grassroots efforts to ramp up sponsorship numbers.

 The specific bill language is still going through final stages, and a bill number and title will be finalized shortly. We will make the bill public as soon as we receive the final version.  As you probably know, it prevents clawback of the innocent, insures SIPC payments to $500,000 based on account statements, and gives the SEC authority over SIPC.

 After hearings, the bill will be moved to a mark-up session in the House Subcommittee on Capital Markets, voted on and moved to the Financial Services Committee.

  Next Steps on Grassroots. We will want to focus our House grassroots efforts on key Financial Services Committee members, as well as other influential House members, particularly those in districts or states with sizeable Madoff and Stanford victim constituents.  Our Senate strategy will focus on Senate members on the Senate Banking Committee and other key Senate members.

  The first wave of Grassroots letters and communications however will go out to those who are sponsoring the legislation at introduction, thanking them for their support and encouraging their reaching out to their colleagues to do the same.

 Stay Tuned!  In the coming days we will be providing more detailed information, as well as laying out the details for the grassroots outreach.  We will also undertake a rapid fundraising campaign to assist costs of Congressional hearings and grassroots support.

  We look forward to working with all previous and current leaders in this effort as well.

  Game on!
  Most sincerely,
 Ron Stein, CFP
 President, NIAP

CONTACT INFORMATION:

Victims Needed for Media interviews & Congressional testimony

Volunteers and Funds Needed. Please assist us in whatever way you can!

Email us at: djmionis@investoraction.org
              rstein@investoraction.org

Call us at: 800-323-9250

www.investoraction.org
www.fixsipcnow.com

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Thursday, November 7, 2013

Is the SEC Here to Help Defrauded Victims in a Ponzi Scheme, Or Not?

Posted by Kathy Bazoian Phelps

 The Securities Exchange Commission (SEC) plays an active role in protecting the rights of investors. Its own mission statement is:

    The mission of the Securities and Exchange Commission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

Yet, in the high-profile Ponzi scheme case of R. Allen Stanford and Stanford Financial Bank, the SEC is finding itself aligned both for and against efforts to recover funds for the benefit of the defrauded victims. Positions taken by the SEC in two different pending litigation matters in the Stanford case may have polar opposite effects on the financial outcome for defrauded investors.

 One case, SEC v. SIPC, now pending in the Circuit Court for the District of Columbia, involves a battle between the SEC and the Securities Investor Protection Corporation (SIPC) over whether the defrauded victims are “customers” under the Securities Investor Protection Act (SIPA) and therefore entitled to payment from SIPC. This is the first time that the SEC has ever commenced an action seeking SIPC coverage for investors. The lower court found that the Stanford investors are not entitled to SIPC coverage, but the SEC continues to champion the cause of the investors in the Circuit Court seeking SIPC coverage for them.

 The other case, Chadbourne & Park LLP v. Troice et al., involves an appeal to the U.S. Supreme Court over the issue of whether Securities Litigation Uniform Standards Act of 1998 (SLUSA) bars lawsuits by a class of victims against third parties to recover their losses from alleged wrongdoers. The Fifth Circuit held that the claims against two law firms, an insurance brokerage firm and a financial services firm could proceed despite SLUSA. The U.S. Government, on behalf of the SEC and other agencies, filed an amicus brief with the Supreme Court arguing that the investor claims should be barred under SLUSA. If the Government’s position prevails, defrauded victims will be denied recovery on their claims.

 In what would be a worst case scenario for the investors, the SEC will lose in SEC v. SIPC so that investors will be denied “customer” status and protection, and the Government’s position in the Chadbourne & Park case will prevail, denying investors the ability to use self-help to sue alleged wrongdoers.

 At a quick glance, it seems that the SEC is on the wrong side of the SLUSA fight in Chadbourne & Park, given the potentially adverse consequences for investors if the SEC’s position is adopted. But perhaps the issue has more do with the way that the applicable statutes are written and interpreted than with any intent on the part of the SEC.

 In Chadbourne & Park, the principal question to be considered by the Supreme Court is:

    Does the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), 15 U.S.C. 77p(b), 78bb(f)(1), prohibit private class actions based on state law only where the alleged purchase or sale of a covered security is “more than tangentially related” to the “heart, crux or gravamen” of the alleged fraud?

SLUSA prohibits a state law class action alleging a purchase or sale of a covered security “in connection with” an untrue statement or omission of material fact. A “covered class action” is a lawsuit in which damages are sought on behalf of more than 50 people, and a “covered security” is a nationally traded security that is listed on a regulated national exchange. So the question remaining is: What does “in connection with” mean?

The target defendants in the litigation at issue argue that “in connection with” covers the following two factual scenarios that touch “covered securities” in the Stanford case: (1) that Stanford lied to purchasers of CDs and told them that the CDs were backed by investments in stocks; and (2) that some of the CD purchasers must have liquidated stocks in order to purchase the CDs.

 The Fifth Circuit did not agree that either of these two scenarios were sufficient to bar claims under SLUSA, holding that the purchase or sale of a covered security must be more than tangentially related “to the ‘heart,’ ‘crux,’ or ‘gravamen’ of the defendants’ fraud.”  The Fifth Circuit held that the claims against the defendants could proceed.

 The Government, on the other hand, has taken the position in its amicus brief to the Supreme Court that the relevant language of SLUSA was taken from the Securities Exchange Act of 1934 and should be read consistently with similar language in Section 10(b) of the Act.  In urging a broad reading of the words “in connection with,” the Government contends that:

    [A] broad reading is essential to the achievement of Congress’s purpose in enacting both Section 10(b) and SLUSA.  Under Section 10(b), it enhances the SEC’s ability to protect the securities markets against a variety of different forms of fraud. Under SLUSA, it furthers Congress’s objective of preventing the use of state-law class actions to circumvent the restrictions by the PSLRA [Private Securities Litigation Reform Act] and by this Court’s decisions constraining private securities-fraud suits.

In an amicus brief taking the contrary position, 16 law professors directly challenge the concept of broadening the application of SLUSA to include the certificates of deposit purchased by the Stanford investors. They note that the certificates of deposit are not themselves covered securities and argue that therefore SLUSA should be “interpreted in a way that does not preclude investors from using state courts to pursue claims seeking traditional state law remedies for acts that do not involve covered securities within the meaning of the federal securities laws.”

 To stress their position that SLUSA should not apply to non-covered bank-issued securities that may be potentially backed by covered securities, the 16 law professors float the following hypothetical class action claims, among others, that they contend would improperly be prohibited under SLUSA if interpreted that broadly:

    * "A car dealer who lies to customers about the terms of a car loan, where the car loans are securitized in a pool and interests in the pool are sold off as covered securities."
    * "A credit card company that securitizes credit card balances fails to pay appropriate wages to telephone operators and answering card holder questions, and the operators file a state class action alleging violations of state wage and hour laws."
    * "A nationally-traded securities clearing firm engages in sex discrimination in compensating clerical workers for work done in the securities office, and the workers file a sex discrimination class action law suit."

In summary, where the Supreme Court draws the lines on the application of SLUSA could have a significant impact on a variety of state law claims that may or may not have much to do with securities. The SEC stands behind a broad reading of SLUSA under the pretense of protecting the securities market, but its position appears to have the consequence of harming, not helping, defrauded victims by blocking state law damage claims.

 The issues are undoubtedly complicated, and there are a variety of competing considerations. From the investors’ perspective, however, they can just add this to the list of roadblocks to getting their money back.

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Monday, November 4, 2013

Receiver files 6th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan


Receiver files 6th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan - On November 4, 2013, the Receiver filed his 6th Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 6th Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed. To view a copy of the 6th. Schedule, please click here.

And what happened with the IRS?
Let’s remember the eagerness of some victims to manipulate and deceive the rest of the victims:





Shame you!!!

And who have their own agenda? Oh yeah! The others... Only the others...



What is built with lies and evil intention will collapse sooner or later.



For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Thursday, October 31, 2013

Stanford 20/20 for 20: Reliving Embarrassing Moment in England's Cricket History

BY FREDDIE WILDE (FEATURED COLUMNIST) ON OCTOBER 31, 2013
Five years ago today, a Kevin Pietersen-led England played against a team called the "Stanford Superstars," which was made up of West Indian cricketers in a Twenty20 match in which the winners would pocket $20 million.
The extravaganza was funded by Allen Stanford, a multi-millionaire who lived in the Caribbean
The match was intended to be the first of five—one played annually—but when Stanford was arrested for fraud and sentenced to 110 years in prison, the ECB terminated their contract with the financier and the tournament was consigned to the annals of history. 
Five years on from one of the most embarrassing sagas in English cricket history, B/R takes a look back at the whole gruesome escapade. 
The ECB were keen to enter in a deal with Stanford to help find a solution to the growing problem of the Indian Premier League. 
The T20 league in India offered English players unparalleled riches, and the ECB were concerned about losing control of their players during the six-week tournament that clashed with the beginning of the English season.
The Stanford Super Series therefore posed a handy alternative that offered England's players the opportunity to earn significant sums of money in an ECB-endorsed tournament that could be played at a time in the calendar in which there were few schedule clashes. 
In light of what happened later, with Stanford's arrest, his gratuitous welcome onto the Nursery Ground with his helicopter at Lord's, the Home of Cricket, was cringeworthy and embarrassing.  

Flanked by ECB chairman Giles Clarke and West Indian cricket legend Sir Gary Sobers, Stanford prowled around the Lord's Nursery Ground. 
He had been involved in West Indian cricket before the launch of the Stanford Super Series—running the domestic T20 tournament in the Caribbean and putting together a group of "legends" to endorse his project. 
West Indian cricket has a rich heritage. The fact that legends such as Sobers and Sir Viv Richards were drawn into the whole facade is a huge shame.  
Perhaps the most enduring image of the saga will be Stanford flanked by cricketing head-honchos and former players, standing tall, and beaming behind a glass box of $20 million. Whether the money was even real is unknown, in the light of the fraud scandal, but it was a grotesque show of wealth and power. 
Stephen Brenkley, writing prior to the tournament in The Independent, was prescient in his assessment of the series:
Of all the short-form matches currently being organised, the conclusion is easily reached that Stanford Superstars v England is the most offensive. It has no context as a proper sporting competition, it is neither country versus country, club versus club or invitation XI versus invitation XI. It is a rococo hybrid. It has money but nothing else going for it. 
When the series eventually got underway, the walking, talking disaster continued. 
The pitches were poor, the cricket was shoddy and the show was horribly stage-managed. Cricket was Stanford's toy and he was enjoying playing with it. 
Perhaps the most embarrassing moment of the tournament was when Emily Prior—wife of England wicket keeper Matt Prior—was seen bouncing on the knee of Stanford. who looked like the cat who had got the cream. 
To top the whole thing off, England lost the $20 million match, thus taking home nothing and rendering the initial point of getting involved unfulfilled. 
It wasn't even a close match, with the Stanford Superstars romping home by 10 wickets. England looked disenchanted, fed up and wholly unimpressed with the occasion. And who could blame them? 

The Stanford Saga should be remembered as one of the most embarrassing moments in cricket history, and an accurate reflection of an era dictated to by money and greed. 


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Friday, October 25, 2013

Receiver files 5th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan


Receiver files 5th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan - On October 25, 2013, the Receiver filed his 5th Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 5th Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed. To view a copy of the 5th. Schedule, please click here.

And what happened with the IRS?
Let’s remember the eagerness of some victims to manipulate and deceive the rest of the victims:





Shame you!!!

And who have their own agenda? Oh yeah! The others... Only the others...



What is built with lies and evil intention will collapse sooner or later.



For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Thursday, October 17, 2013

Receiver files 4th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan


Receiver files 4th Schedule of Payments to be Made Pursuant to the Interim Distribution Plan - On October 17, 2013, the Receiver filed his 4th Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 4th Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed. To view a copy of the 4th. Schedule, please click here.

And what happened with the IRS?
Let’s remember the eagerness of some victims to manipulate and deceive the rest of the victims:





Shame you!!!

And who have their own agenda? Oh yeah! The others... Only the others...



What is built with lies and evil intention will collapse sooner or later.



For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

SEC Lawyer Argues Stanford Victims Were SIPC Customers

The Securities Investor Protection Corp., an industry fund that covers losses from brokerage firm failures, must compensate victims of Allen Stanford’s $7 billion Ponzi scheme because they were customers of a U.S.-based brokerage, a government lawyer told an appeals court.

“We’re not claiming that anyone is covered who did not have a brokerage account” with Houston-based Stanford Group Co., U.S. Securities and Exchange Commission attorney John Avery told a panel of the U.S. Court of Appeals today in Washington. “That’s how they got sucked into this scheme.”

The SEC is seeking to overturn a lower court ruling that blocked the agency from ordering SIPC to cover the Stanford victims, who invested in phony certificates of deposit. U.S. District Judge Robert Wilkins in July 2012 ruled the SEC had failed to show the 7,000 investors in the scheme met the definition of “customer” under the Securities Investor Protection Act, which set up the nonprofit fund run by the brokerage industry.

The Stanford case is the first time the SEC has gone to court to force SIPC to extend coverage.

Michael McConnell, an attorney for SIPC, urged the judges to uphold the ruling.

In Stanford’s swindle, his brokerage clients were directed to buy the CDs at his Antigua-based Stanford International Bank LLC, which was not a SIPC member, McConnell said.

‘No Basis’

“There was no deposit of money with SGC in this case” and thus no basis for extending coverage to its clients, McConnell told circuit judges Merrick Garland and Sri Srinivasan. A third judge, David Sentelle, was absent and will listen to a recording of arguments.

Much of the hour-and-20-minute hearing was consumed by debate over the legal definition of “customer” and whether the SEC has authority to force SIPC to amend its rules to broaden the meaning to include victims when a collapse involves both member and non-member companies.

Garland said that in some cases, “the courts have thought it reasonable to consolidate the covered with the non-covered.”

Stanford was convicted of multiple counts of wire fraud, mail fraud and other charges in March 2012 and was sentenced to 110 years in prison.

SIPC, a congressionally chartered corporation, oversees liquidation of failed brokerages and through an industry-financed fund may also pay claims of as much as $500,000 a client for missing money and securities.

Madoff Victims

SIPC agreed to pay victims of Bernard Madoff’s Ponzi scheme, in which $17 billion of principal disappeared according to the U.S., as well as investors who lost money in the collapse of Lehman Brothers in September 2008 and the MF Global Holdings Inc. commodities brokerage in October 2011.

The SEC argued that the denial of coverage didn’t consider the relationship between Stanford’s bank and brokerage.

“It’s very difficult to draw and distinction, a meaningful distinction, between any of these Stanford entities,” Avery said in court.

Money spent on the CDs from the Antiguan bank came back to Stanford-controlled entities in the U.S., he said.

“This was a Ponzi scheme based in the United States,” he said.

The SIPC fund contains about $1.9 billion and exposure from Stanford victims is “potentially in the billions,” Dan McGinn, a spokesman for SIPC, said in an interview last week.

‘Unwarranted Expansion’

Former SEC commissioners Joseph Grundfest and Paul Atkins filed a friend of the court brief urging rejection of the SEC request because it represents an “unwarranted expansion” of the term “customer” that would “substantially increase the exposure of the SIPC fund.”

“The SEC’s proposed expansion of SIPC protection, absent even the most rudimentary consideration of any financial consequences, would radically transform the SIPA and threaten SIPC’s ability to function as Congress intended,” they wrote.

John Coffee Jr., a professor of securities law at Columbia University, said deciding how far to extend SIPC coverage is a fundamental question that should be addressed by Congress “rather than through judicial lawmaking.”

“Legislation is the better way to go rather than to try to extend SIPC coverage retroactively,” Coffee, who has no involvement with the case, said in a telephone interview.

The case is Securities and Exchange Commission v. Securities Investor Protection Corp., 12-5286, U.S. Court of Appeals, District of Columbia (Washington).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Wednesday, October 16, 2013

U.S. SEC battles with industry fund over Stanford victims' claims: Oct 16, 2013

U.S. SEC battles with industry fund over Stanford victims' claims
Text Size

Published: Wednesday, 16 Oct 2013 | 5:03 PM ET
By: Sarah N. Lynch


WASHINGTON, Oct 16 (Reuters) - U.S. regulators sought to overturn a 2012 court ruling that prohibited victims of Allen Stanford's $7 billion Ponzi scheme from seeking compensation, in an unprecedented legal battle between the government and an industry-backed fund that protects investors.

In oral arguments on Wednesday, a lawyer for the U.S. Securities and Exchange Commission urged the U.S. Court of Appeals for the District of Columbia to force the fund to start court proceedings so that victims can file claims to recover at least a portion of the millions of dollars they lost.

The Securities Investor Protection Corp (SIPC), which administers the fund, has refused to do so, saying it believes Stanford investors do not meet the legal definition of "customer" under a federal law that is designed to protect investors if their U.S. brokerage collapses.

SIPC uses funds paid for by the brokerage industry to compensate investors if that happens.

A federal district judge agreed with SIPC's position in July 2012, and tossed out the SEC's lawsuit.

But pressure from a well-organized group of investors who lost money in the scheme and some members of Congress has helped keep the fight alive.

Two of the judges on the panel put lawyers representing the SEC and SIPC through a series of rigorous and difficult questions, often playing devil's advocate with each side. A third judge on the panel was not present for the arguments.

The judges gave no strong hints on how they may rule.

However, Chief Judge Merrick Garland asked a series of questions about whether the SEC could simply write new rules that would compel SIPC to act, as opposed to seeking a resolution in court.

The SEC, as SIPC's regulatory supervisor, has argued that it has the legal authority and discretion to force the fund to take action.

"Is there anything stopping the SEC from issuing a rule defining 'customer' the way that you want to define it here?" Garland asked.

"I don't believe so," replied John Avery, the attorney arguing the SEC's case. But if it were challenged, he added, the SEC would land right back in court again.

Allen Stanford was sentenced in 2012 to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

Many of the investors who purchased these products, however, did so through his Houston, Texas-based brokerage, Stanford Group Co.

At the heart of the case is the question of whether the victims of Allen Stanford's Ponzi scheme meet the legal definition of "customer."

SIPC argues that the investors in the scheme entrusted their money to the offshore, unregulated Antiguan bank and not to the U.S. broker-dealer.

Moreover, they say that Stanford's investors actually did receive their certificates of deposit as promised, even though they turned out to be virtually worthless.

The law, they said, is not designed to combat fraud or guarantee an investment's value.

The SEC, however, says the location of the Stanford bank is irrelevant because the entire business organization was operating one massive fraud, and that in fact no actual certificates of deposit truly existed.

"It's very difficult to draw a meaningful distinction between any of these Stanford entities, which were all part of the scheme, they were all in on the scheme, they didn't follow corporate formalities and the money was commingled," SEC attorney John Avery argued. "We believe the money, at least constructively, stayed with SGC."

SIPC's attorney Michael McConnell urged the court not to allow the SEC to simply lump the Stanford business entities together so the investors can file claims.

He added that the investors received disclosures explicitly telling them the Antiguan bank was not SIPC-protected or U.S.-regulated.

"You have people who in the face of disclosure statements clearly to the contrary, go off to an offshore bank seeking ... outlandishly high rates of return knowing that it is not covered by the securities laws," he said.

"Effectively, what the SEC is telling us is that SIPC should implicitly give free insurance coverage to a fly-by-night organization."


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Obama campaign pocketed Ponzi schemer cash: Oct 16, 2013

Obama campaign pocketed Ponzi schemer cash
Thirty-nine political candidates, committees have not returned R. Allen Stanford contributions

President Barack Obama received $4,600 in campaign contributions from R. Allen Stanford less than a year before the Texan was arrested in 2009 for running one of the biggest Ponzi schemes in U.S. history.

Despite repeated requests, the Obama campaign has not returned the money to the court-appointed receiver tasked with recovering money from the fraud and returning it to Stanford’s victims. The campaign still has $5.4 million in its coffers even though the president won't be running in another election.

(Update, Oct. 16, 2013, 1:39 p.m.: The Obama campaign's new 3rd quarter filing indicates it has $372,549 remaining.)

Obama isn’t the only politician who has declined to return Stanford campaign contributions to help make Stanford’s defrauded investors whole. A total of 39 candidates and committees have kept their campaign funds despite the pleas by the receiver, Texas Lawyer Ralph Janvey, to return the money.

A spokesman for the Democratic National Committee, which now speaks for the Obama campaign, did not immediately comment.

Rep. Pete Sessions, R-Texas, has the largest outstanding contribution that hasn’t been returned — $10,000 — according to the web site of the receiver. The New Jersey Democratic State Committee also received $10,000 from Stanford and his companies, the web site says.

Other members of Congress on the receiver’s list include Sen. John Cornyn, R-Texas, and Rep. Richard Neal, D-Mass.

Stanford was sentenced in 2012 to 110 years in prison for bilking investors out of $7.2 billion. The Texan ran an investment firm that sold fraudulent certificates of deposit in an Antigua-based bank that he owned called Stanford International Bank Ltd.

Five Democratic and Republican national campaign committees, which had received more than $1.6 million from Stanford and his companies, fought attempts by Janvey to recover those contributions. In October 2012, a federal appeals court ordered the committees to turn over the money and pay the receivership’s attorney fees.

Janvey has not sued Obama’s campaign, or the other 38 committees who haven’t returned their contributions, because the cost of a suit would be more than the amount recovered, said Kevin Sadler, a lawyer with Baker Botts that represents the receivership.

Many members of Congress and presidential candidates returned the ill-gotten contributions voluntarily. Former Sen. Christopher Dodd (D-Conn.) returned a total of $27,500 and Sen. Richard Shelby, R-Ala., reimbursed the receivership $14,000.

Janvey was appointed in February 2009 to wind down Stanford’s web of companies and try to recover as much money as possible to return to the investors who were defrauded in the scheme.

To date, he has recovered $234.4 million. However, the costs of winding down the companies, and of lawsuits trying to recover money, have eaten up more than half that amount.

Stanford investors last month began receiving their first checks since the receivership was created in amounts that totaled about a penny for each dollar lost.


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Tuesday, October 15, 2013

Madoff Trustee Asks Supreme Court to Let Him Sue Banks

By PETER LATTMAN
Irving H. Picard is seeking to recover money for the victims of Bernard L. Madoff’s fraud, whose paper losses total $64 billion.
Updated, 7:27 p.m. | The trustee seeking to recover money for the victims of Bernard L. Madoff’s Ponzi scheme asked the Supreme Court on Wednesday to review a ruling that prohibits him from suing several of the world’s largest banks that he contends aided the fraud.
In June, a federal appeals court in Manhattan decided that the trustee, Irving H. Picard, did not have standing to sue JPMorgan Chase, UBS, HSBC and UniCredit Bank Austria on claims that they abetted the multibillion-dollar fraud, which lasted decades. That opinion upheld a lower-court ruling by Judge Jed S. Rakoff of Federal District Court in Manhattan.
On Wednesday, lawyers for Mr. Picard filed a petition to the Supreme Court requesting that it hear an appeal of the case.
“Bernard L. Madoff did not act alone,” Mr. Picard’s lawyers said. The scheme “could not have persisted for so long, or defrauded so many of so much, without a network of financial institutions, feeder funds and individuals who participated in his fraud or acquiesced in it — just like any large-scale financial fraud.”
In a statement, the lawyers for the trustee said the ruling by the United States Court of Appeals for the Second Circuit contradicted the decisions of other appeals courts across the country.
Such conflicts often provide an impetus for the Supreme Court to hear a case, though it accepts only a fraction of appeal requests. The court receives about 10,000 petitions for a so-called writ of certiorari each year, yet grants only about 75 to 80 of those cases, according to its Web site.
The legal issue in the Madoff case centers on whether the trustee has the right to pursue claims against a third party, like a bank, that collaborates with a broker — in this case Mr. Madoff — to defraud customers. The appeals court ruled that under the law, the trustee “stands in the shoes” of Mr. Madoff’s firm and thus cannot sue the banks for losses caused by Mr. Madoff’s fraud.
Mr. Picard’s lawyers said the appeals court ruling undermined the intent of the Securities Investor Protection Act.
“If this decision is allowed to stand, the law governing S.I.P.A. liquidations will be in turmoil, making collaboration with future Madoffs risk-free for big financial institutions,” wrote David B. Rivkin Jr., a lawyer for Mr. Picard at Baker Hostetler. “In other words, the bad guys win.”
Mr. Picard is trying to recover billions of dollars from the banks that he said turned blind eyes to clear warning signs of the Madoff fraud. He contends, for instance, that JPMorgan was “thoroughly complicit” in the fraud, having obtained many indications of misconduct and failed to report the suspicious activity.
The lawsuit filed against JPMorgan highlights several examples in which JPMorgan officials expressed concerns about Mr. Madoff’s business. On June 15, 2007, a senior risk-management officer at the bank e-mailed colleagues to report that another bank executive “just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme.”
In another e-mail, a top private wealth management executive at the bank was routinely urging clients to avoid investments with exposure to Mr. Madoff because his “Oz-like signals” were “too difficult to ignore.”
Federal prosecutors continue to investigate whether JPMorgan failed to properly alert regulators about Mr. Madoff’s business, said people briefed on the investigation. A JPMorgan spokesman declined to comment.
Cash losses from the fraud are estimated at about $17 billion, but the paper wealth that was wiped out totaled more than $64 billion. Mr. Picard has thus far recovered about $9.4 billion and continues to pursue lost money.
Mr. Madoff is serving a 150-year sentence in a federal prison in North Carolina after pleading guilty in March 2009.
While the trustee’s lawyers at Baker Hostetler try to pursue a case against JPMorgan, they have another legal connection to the banking giant. Mr. Rivkin and Oren J. Warshavsky are representing Bruno Iksil, the JPMorgan trader nicknamed the London Whale, who is cooperating with the government in its investigation into the bank’s record trading loss.
In addition, jury selection for the first criminal trial related to the Madoff case is under way in federal court in Manhattan. Five former employees of Mr. Madoff, including his longtime personal secretary and two computer programmers, are fighting charges that they helped their boss carry out his fraud. The trial is expected to take as long as five months.


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Saturday, October 12, 2013

Madoff Trustee Asks Supreme Court to Let Him Sue Banks

By PETER LATTMAN
Updated, 7:27 p.m. | The trustee seeking to recover money for the victims of Bernard L. Madoff’s Ponzi scheme asked the Supreme Court on Wednesday to review a ruling that prohibits him from suing several of the world’s largest banks that he contends aided the fraud.

In June, a federal appeals court in Manhattan decided that the trustee, Irving H. Picard, did not have standing to sue JPMorgan Chase, UBS, HSBC and UniCredit Bank Austria on claims that they abetted the multibillion-dollar fraud, which lasted decades. That opinion upheld a lower-court ruling by Judge Jed S. Rakoff of Federal District Court in Manhattan.
On Wednesday, lawyers for Mr. Picard filed a petition to the Supreme Court requesting that it hear an appeal of the case.

“Bernard L. Madoff did not act alone,” Mr. Picard’s lawyers said. The scheme “could not have persisted for so long, or defrauded so many of so much, without a network of financial institutions, feeder funds and individuals who participated in his fraud or acquiesced in it — just like any large-scale financial fraud.”

In a statement, the lawyers for the trustee said the ruling by the United States Court of Appeals for the Second Circuit contradicted the decisions of other appeals courts across the country.

Such conflicts often provide an impetus for the Supreme Court to hear a case, though it accepts only a fraction of appeal requests. The court receives about 10,000 petitions for a so-called writ of certiorari each year, yet grants only about 75 to 80 of those cases, according to its Web site.

The legal issue in the Madoff case centers on whether the trustee has the right to pursue claims against a third party, like a bank, that collaborates with a broker — in this case Mr. Madoff — to defraud customers. The appeals court ruled that under the law, the trustee “stands in the shoes” of Mr. Madoff’s firm and thus cannot sue the banks for losses caused by Mr. Madoff’s fraud.

Mr. Picard’s lawyers said the appeals court ruling undermined the intent of the Securities Investor Protection Act.
“If this decision is allowed to stand, the law governing S.I.P.A. liquidations will be in turmoil, making collaboration with future Madoffs risk-free for big financial institutions,” wrote David B. Rivkin Jr., a lawyer for Mr. Picard at Baker Hostetler. “In other words, the bad guys win.”

Mr. Picard is trying to recover billions of dollars from the banks that he said turned blind eyes to clear warning signs of the Madoff fraud. He contends, for instance, that JPMorgan was “thoroughly complicit” in the fraud, having obtained many indications of misconduct and failed to report the suspicious activity.

The lawsuit filed against JPMorgan highlights several examples in which JPMorgan officials expressed concerns about Mr. Madoff’s business. On June 15, 2007, a senior risk-management officer at the bank e-mailed colleagues to report that another bank executive “just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme.”

In another e-mail, a top private wealth management executive at the bank was routinely urging clients to avoid investments with exposure to Mr. Madoff because his “Oz-like signals” were “too difficult to ignore.”

Federal prosecutors continue to investigate whether JPMorgan failed to properly alert regulators about Mr. Madoff’s business, said people briefed on the investigation. A JPMorgan spokesman declined to comment.

Cash losses from the fraud are estimated at about $17 billion, but the paper wealth that was wiped out totaled more than $64 billion. Mr. Picard has thus far recovered about $9.4 billion and continues to pursue lost money.

Mr. Madoff is serving a 150-year sentence in a federal prison in North Carolina after pleading guilty in March 2009.

While the trustee’s lawyers at Baker Hostetler try to pursue a case against JPMorgan, they have another legal connection to the banking giant. Mr. Rivkin and Oren J. Warshavsky are representing Bruno Iksil, the JPMorgan trader nicknamed the London Whale, who is cooperating with the government in its investigation into the bank’s record trading loss.

In addition, jury selection for the first criminal trial related to the Madoff case is under way in federal court in Manhattan. Five former employees of Mr. Madoff, including his longtime personal secretary and two computer programmers, are fighting charges that they helped their boss carry out his fraud. The trial is expected to take as long as five months.


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Friday, October 11, 2013

Court receiver Marika Tolz begins serving prison sentence

Court receiver Marika Tolz begins serving prison sentence
View Slideshow
Marika Tolz


South Florida Business Journal
Another Miami judge on Friday sentenced court receiver and bankruptcy trustee Marika Tolz, after which she reported to authorities to begin serving her time.
Miami-Dade Circuit Judge Matthew Destry on Friday sentenced Tolz to 81 months – the same sentence she received in her federal case – to be served at the same time as the federal sentence.
Tolz spent years as a trusted fiduciary for the federal and state court systems, but was hit with federal charges in March for misappropriating $16 million and pocketing about $2.4 million.
In July, she became the second receiver in South Florida to be imprisoned for fraud in a year. In 2010, receiver Lewis Freeman was sentenced to eight years and four months for using his position to misappropriate almost $7 million over 11 years, pocketing about $2.6 million.
Tolz’s state case mirrored the federal charges, but revolved around a more specific set of circumstances, where Tolz misappropriated money from the estate of a deceased man, James Christensen, which she was supposed to be overseeing.
Destry also ordered her to repay $550,000 missing from that account and $200,000 for attorneys fees from the case. She was previously ordered to repay all the missing funds as part of her federal sentence.
Tolz’s attorney, Benedict P. Kuehne, said she reported to authorities after the state sentence was handed down late Friday afternoon.
“Tolz is now in custody, having commenced the service of her concurrent sentences. She anticipates being transferred to her federal prison designation soon. She fully anticipates the restitution she has tendered to the United States Attorney’s Office will be sufficient to repay all funds in full,” Kuehne said. “[She] … has done all she could to correct the consequences of her wrongful conduct, and now looks forward to her return to the community, where she will endeavor to return to her life of good works and family.”
Tolz and Kuehne have said that she began dipping into accounts when her mother fell ill years ago.


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Investors fleeced in $6B Stanford scheme get a penny on the dollar from court-appointed receiver: Oct 11. 2013

WHITE-COLLAR CRIME
Investors fleeced in $6B Stanford scheme get a penny on the dollar from court-appointed receiver
Posted Oct 11, 2013 11:10 AM CDT
By Martha Neil


Investors fleeced of $6 billion by now-imprisoned swindler R. Allen Stanford have gotten restitution checks from a court-appointed receiver.

They range from $2.18 to $110,000, amounting to less than a penny of recovery for each dollar lost, reports the Center for Public Integrity.

The receiver, Ralph Janvey, and his team recovered $234.9 million from Stanford's bankrupt company and charged about $124 million for doing so.

Attorney Kevin Sadler of Baker Botts is working with Janvey on the recovery effort, and said unwinding the 18-year operation was a complex undertaking. At one time, companies in the Texas-based Stanford Financial Group had offices in 23 states and 13 foreign countries, and over 3,000 employees


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Thursday, October 10, 2013

Majority of funds recovered in Stanford Ponzi scheme spent by receiver: Oct 10, 2013

Majority of funds recovered in Stanford Ponzi scheme spent by receiver
Defrauded investors collect less than a penny on the dollar
By Lauren KygeremailAlison Fitzgeraldemail 3 hours, 23 minutes ago Updated:


When 18,000 people got fleeced in Allen Stanford’s $7.2 billion Ponzi scheme, the court appointed a receiver in 2009 to recover as much money as possible from Stanford’s failed companies to return to investors.

After four-and-a-half years, the receiver, Ralph Janvey, began mailing checks ranging from $2.81 to $110,000 to hundreds of investors. That amounts to about $55 million of the $6 billion lost in the scheme, less than a penny on the dollar.

Unlike the investors, Janvey, who has billed from $340 to $400 an hour for his services, is making out quite well. To date, Janvey and his team have recovered $234.9 million from the bankrupt Stanford Financial Group and spent more than half the total — approximately $124 million — on personnel and other expenses.

“From the victims’ point of view there is no way, shape or form that the receivership could be viewed as successful,” said Angela Kogutt, whose extended family lost a total of $4.9 million investing with Stanford. “This has been one of the biggest failures of a liquidation in history.”

The largest chunk of the Janvey team’s expenses — $67.1 million — was spent on “receivership’s professional fees and expenses,” according to court documents. Those fees and expenses add up to more than 28.5 percent of the money recovered from Stanford’s assets so far.

Janvey has “complete and exclusive control, possession, and custody” of the assets left behind by Stanford’s business, according to the court order that named him receiver on Feb. 17, 2009.

Janvey’s attorney, Kevin Sadler of Houston law firm Baker Botts, said the high costs are an unfortunate downside of unwinding Allen Stanford’s 18-year financial house of cards, which had offices in 23 states and 13 countries and more than 3,000 employees.

Worldwide tug of war

Sadler said Janvey has been fighting a “worldwide tug of war over what was left of Stanford’s assets,” involving multiple national governments and liquidators in Antigua where Stanford International Bank was located. In March, Janvey reached a settlement to recover about $300 million worth of Stanford’s assets that have been frozen in Switzerland, Canada and the United Kingdom.

Sadler said such lawsuits are now the best hope for getting more money back for Stanford’s victims.

Janvey has been enmeshed in controversy regarding the Stanford liquidation. The Securities and Exchange Commission, which nominated Janvey and rarely has public disputes with receivers, won a motion to rein in some of his spending in June 2009 after the first fee applications were submitted.

The expenses included a $160,000 payment to a public relations firm called Pierpont Communications for three months of reviewing, sorting and forwarding emails in 2009. In a written objection to the fee application, court-appointed examiner, John Little, said he had “significant doubt that Pierpont has created any benefit for the Receivership Estate.”

FTI Consulting — a forensic accounting firm — billed more than $528,000 in airfare, parking, hotels, taxi, and subway costs to the estate for its first 56 days on the job. Little objected, pointing out that this amounted to “$9,439 in travel-related expenses per day, every day, during the first 56 days.”

A large part of the receivership’s early spending — $48 million — went to winding down the more than 100 companies in the Stanford Group, costs that were unavoidable, Sadler says.

Today, Little says Janvey’s spending has slowed. In the 12 months ended June 30, he’s spent $9.1 million, compared to $20 million spent in the first two months of the receivership in 2009.

U.S. District Judge David C. Godbey denied a 2011 request by unhappy investors to intervene in the case because they believed Janvey was spending too much money. Godbey noted that “the rate of expenditures on professional fees has decreased markedly over time, with the bulk of such expenses incurred relatively early in the receivership.”

Guaranteed income

When large Ponzi schemes or companies go bankrupt, court-appointed receivers often find themselves employed for long stretches of time with a guaranteed income. There are no clear rules or guidelines dictating how a receiver should go about unwinding a failed or fraudulent business or recovering its assets, Sadler said.

That allows receivers like Janvey to work full-time for years on an estate, billing either investors or the congressionally chartered Securities Investor Protection Corp. (SIPC).

Allen Stanford’s $7 billion scam was just one of many Ponzi schemes to fall apart within the past five years. Most notably, Bernard Madoff was sentenced to 150 years in prison for operating a $50 billion Ponzi scheme that cost investors more than $17 billion.

Irving Picard, the Madoff receiver who was appointed in December 2008, says he has spent about $850 million trying to recover money for investors. The number is huge but it’s less than 10 percent of the $9.5 billion he’s returned to Madoff’s victims. He’s distributed $4.9 billion.

He declined to say whether he believes Janvey’s costs are too high.

“I don’t know enough about the specifics about what he had to do,” Picard said in an interview.

Like Janvey, Picard kept Madoff’s firm open to determine whether he should sell it before winding it down, and he paid all the employees for a short period. “You don’t jump in and automatically say. ‘Boom, you’re gone,’” he said. “And by the way, it was Christmastime. You’ve got to look at that.”

Picard has also sued hundreds of people and is working in more than 20 countries to recover money.

As he describes his work, Picard speaks repeatedly about the cost-benefit analyses he makes for each decision. “You do it for every decision,” he said. “And then perhaps you drop it.”

Sadler said Madoff’s scheme was a “compact operation to wind down” in comparison to Stanford’s, which involved more than 100 different interconnected companies.

Like Picard, he said, Janvey watches his costs.

“We’ve been pretty sensitive to the fact that we can’t spend $10 to recover $10 — or even $5,” he said.

Suing the employees

Janvey has sued about 1,800 former Stanford employees and customers whom he says got money from the company — either in salary, bonuses or investment returns — that rightfully belongs to the defrauded investors.

“Everyone we have sued, we have sued because in both fact and law we believe they received money they were not entitled to,” Sadler said.

He said the total amount Janvey could recover from these lawsuits is $1 billion, the only remaining source of money for the defrauded investors. Most of the former employees and clients are fighting the suits because they believe they only got money they were entitled to. Such lawsuits are now the best hope for getting more money back for Stanford’s victims, he said.

Susan Jurica was a fixed-income portfolio manager at the company. In 2008, about a year before the SEC shut down the company, her entire team was let go. Jurica took a lump sum severance of $50,000 rather than opt for monthly payments. When Janvey took over, she says, he looked for any person who got a payment of $50,000 or more and went after the money on behalf of investors.

At the heart of the fraud were certificates of deposit that were sold to victims, which Jurica says she did not profit from.

“I was very surprised that they had the gall to try to tell us that we were being paid with proceeds from CDs,” Jurica said in an interview. “We never bought any of the Stanford CDs.”

Jurica is still fighting the lawsuit in a Texas court.

Janvey has sued thousands of people but he has forgone many lawsuits because the return wasn’t worth it. For example, Janvey sued the Democratic and Republican national party committees to recover Stanford’s contributions. He also sent letters to the more than 50 senators and House members who received Stanford contributions but did not go to court.

Fewer than 20 returned the money, he said.

Picard’s fees are not taken directly out of the estate, but are paid off by the SIPC at a 10 percent discount off his usual rate. Janvey, on the other hand, is paid directly by the estate at a 20 percent discount because the Stanford case was turned down by the SIPC. The SEC sued SIPC over the decision not to protect Stanford investors, but lost. It will appeal that decision this fall.

The SIPC said it does not cover the Stanford investors because the Securities Investor Protection Act “does not authorize SIPC to protect monies invested with offshore banks or other firms that are not SIPC members. The Act also does not protect investors against a loss in value of a security, including because of mismanagement or fraud,” according to its website.

Another receivership backed by SIPC was the Lehman Brothers Holdings Inc. bankruptcy.

The expenses billed by the receiver in that case, James W. Giddens, including administrative, professional, consulting and operational costs total more than $1.8 billion since the filing date in 2008, according to court documents. The returns have been big.

“Customer distributions will exceed $105 billion, by far the largest customer distribution in history,” Giddens’ ninth interim report states.

Janvey has been widely criticized for spending too much, but Sadler insists it’s the only way to resolve a major fraud.

“When these things collapse, they just cost a lot of money to clean up,” he said.

Meanwhile, Stanford’s investors are still waiting.

John Wade of Covington, La., was looking to sell his business and retire when he started doing business with Stanford. The veterinarian and his partner decided to invest $2.5 million in pension funds and personal savings with a Stanford Financial Group financial advisor as they prepared to put their business, which provides microchip IDs for pets, on the block.

“We worked hard for many years and put money away. It was time,” Wade said, “I had just bought a boat and a guitar and I was off to go fishing.”

Instead, seven years later, Wade is “just trying to rebuild the retirement nest egg.”


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Tuesday, October 8, 2013

Justices Hear Case Tied to Stanford: Wall Street Journal report 10/8/13

Justices Hear Case Tied to Stanford
Plaintiffs Argue Financial and Law Firms Helped Aid $7 Billion Ponzi Scheme

By JESS BRAVIN CONNECT
WASHINGTON—A case brought by victims of R. Allen Stanford's $7 billion Ponzi scheme posed a quandary for Supreme Court justices, in part because the Securities and Exchange Commission argued that siding with the victims would hamstring federal oversight of the stock markets.


R. ALLEN STANFORD

The plaintiffs want to sue law and financial firms that worked with Stanford Investment Bank, alleging they aided Mr. Stanford's scheme.

In 2006, the justices held that federal law blocks class-action lawsuits over fraud related to securities sales if those sales fell under the regulatory authority of the SEC. In order to maintain broad authority over the markets, the SEC has argued for an expansive reading of its jurisdiction, which the court has held includes misrepresentations "in connection with the purchase or sale of a covered security."

That legal position made the SEC a strange bedfellow of companies that worked with Mr. Stanford's operation, including SEI Investments Co. SEIC -1.88% and Willis Group Holdings, WSH -1.14% and the law firms Proskauer Rose LLP and Chadbourne & Parke LLP. These firms, which deny wrongdoing, are seeking to have the victims' lawsuit dismissed under the 1998 Securities Litigation Uniform Standards Act, which bars class-action claims filed under state law.

The Ponzi scheme worked by selling investors fixed-rate certificates of deposit in Mr. Stanford's Antigua-based bank. Investors were falsely told that the certificates were backed by safe, liquid investments in the stock market.


In fact, the fraud depended on using funds from new investors to pay off earlier ones who withdrew their money.

On Monday, the first day of the Supreme Court's 2013-14 term, a lawyer representing the defendants, Paul Clement, told the justices that the Stanford CDs were, in effect, sold as a vehicle by which to reap returns from stocks. The lawsuit was therefore barred under the high court's precedents, he said.

If Mr. Stanford falsely promised to purchase covered securities for the benefit of the plaintiffs, Mr. Clement said, then that would meet the standard for SEC jurisdiction, namely that the fraud happened "in connection with" a security sale.

But several justices suggested they were worried about adopting a definition that was too broad. Justice Elena Kagan offered an example of a prenuptial agreement in which one spouse promised to sell Google Inc. GOOG -1.39% stock to buy a home. "Is that covered by the securities laws now?" she asked.

Elaine Goldenberg, representing the government, told the court that the SEC's jurisdiction was triggered by frauds that diminish investor confidence, something essential for the stock markets to operate.

Justice Anthony Kennedy suggested that many actions might diminish investor confidence without properly triggering an SEC investigation. "If you went to church and heard a sermon that there are lots of people that are evil, maybe then you wouldn't invest," he said.

A lawyer for the plaintiffs, Thomas Goldstein, argued that the Stanford fraud wasn't "in connection with" the sale of securities because the victims weren't the ones who would have bought the fictitious shares. But some justices suggested that such a rule could effectively immunize some frauds from SEC enforcement.

"If someone tells me…'Give me the money, I will buy securities for myself and give you a fixed rate of return later,' I think that's 'in connection with' the purchase and sale of securities even though it's not legally purchased for my benefit," said Justice Sonia Sotomayor.

A decision is expected before July.


For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/