R.
Allen Stanford’s Antiguan-
appointed liquidators agreed to stop seeking control of the
convicted financier’s assets in a deal that may allow defrauded
investors to recover some of the $300 million Stanford stashed
in accounts outside the U.S.
Receivers appointed by the U.S. and the Antiguan courts
have battled for four years to control assets recovered from
Stanford’s financial-services empire. Stanford, 62, was
convicted last March of leading a $7 billion investment fraud
based on bogus certificates of deposit at his Antigua-based
bank. He was sentenced to 110 years in prison.
“The funds that are the subject of this agreement
represent the largest available source of investor money that
Allen Stanford had not already spent by the time his
Ponzi
scheme collapsed,” Kevin Sadler, lead attorney for U.S.
receiver Ralph Janvey, said in an e-mail today. “In the absence
of this agreement, these funds would remain out of reach of the
Stanford victims for years to come.”
For dropping their dispute with Janvey and the U.S.
Justice
Department, the Antiguan liquidators will receive fees of $36
million from Stanford’s frozen funds in the U.K., according to a
statement jointly released by both receivers today.
Professional Fees
The Antiguan liquidators have already received $20 million
from the U.K. accounts, so the additional payment will boost
their professional fees to $56 million -- almost as much as
Janvey’s receivership team has been paid since U.S. securities
regulators seized Stanford’s operations in February 2009.
Janvey’s professionals had been paid $63.3 million in fees
and expenses as of Feb. 7, according to his latest status
report. That represents about a quarter of the $230.2 million
Janvey has recovered for the estate. He has paid out an
additional $53.3 million in costs to wind up Stanford’s business
interests.
Janvey recently proposed a $50 million interim distribution
be paid to investors, pending court approval.
Angie Shaw, a founder of the Stanford Victims Coalition,
denounced the agreement as “ransom” that rewards the Antiguan
liquidators at the investors’ expense.
“While the agreement does end a four-year international
turf war that has cost the victims untold millions of dollars,
the only true beneficiary of the agreement is the Antiguan
liquidators,” Shaw said in an e-mail today. “The Antiguan
liquidators are essentially getting a ransom fee in exchange for
dropping their litigation for control over the frozen foreign
accounts holding what is left of the victims’ life savings.”
Dallas Judge
While Janvey was awarded control over all Stanford assets
by the Dallas judge in charge of the U.S. Securities and
Exchange Commission case against Stanford, courts in the U.K.,
Switzerland and Canada initially awarded control of about $320
million in foreign accounts to Antiguan court-appointed
liquidators Marcus Wide and Hugh Dickson of
Grant Thornton.
The Justice Department placed an administrative hold on the
European funds, and it has been trying to repatriate the money
since Stanford and his co-conspirators were convicted last year.
The Antiguan liquidators have fought to retain control and
have filed some asset-recovery lawsuits that duplicate actions
already initiated by Janvey, according to court filings. Wide
and Dickson haven’t publicly stated how much they’ve been able
to recover for Stanford’s investors.
Stanford Victims
Edward H. Davis Jr., one of the Antiguan liquidators’
attorneys, said in an e-mail today that Dickson and Wide have
already recovered and frozen more than $227 million in Stanford
assets “independent of the amounts recovered by Janvey and in
addition to the approximately $300 million frozen” in overseas
accounts.
“The joint liquidators have conducted intensive
investigations and lodged claims and are in the process of
launching additional lawsuits that have the potential to yield
billions of dollars in recoveries to pay the victim creditors,”
Davis said. “To suggest that the joint liquidators held the
estate for ransom demonstrates a fundamental misunderstanding
about how a liquidation process maximizes recoveries for victim
creditors.”
Peter Morgenstern, a lawyer who sits on the Official
Stanford Investors Committee, said the investors should be
allowed to decide whether the Antiguan liquidators receive more
fees or whether the U.S. government should continue fighting to
recover Stanford’s frozen European funds through international
accords designed to recover criminal proceeds.
‘Significant Assets’
“The issue is how significant assets recovered by the U.S.
government for the benefit of Stanford victims should be
spent,” Morgenstern said in an e-mail. Much as creditors have a
say in how bankruptcy proceeds are distributed, he said, the
defrauded investors should also be consulted before such a large
part of the estate is paid in professional fees.
Janvey has asked U.S. District Judge David Godbey in
Dallas
to hold a hearing at which investors can express their opinions
of the deal. No hearing has been set.
Under terms of the agreement announced today, the Antiguan
liquidators will distribute the $44 million remaining in the
U.K. accounts to investors after the liquidators have received
their $36 million in working capital. Wide and Dickson will also
distribute about $60.5 million of the funds currently frozen in
Switzerland, according to the joint statement.
Fund Transfers
About $23 million in Canadian funds and $132.5 million in
Swiss funds will be transferred to the Justice Department and
Janvey for distribution to investors through a system the U.S.
receiver is establishing, according to the joint statement.
The agreement “creates a plan for the distribution of
almost 90 percent of the frozen assets from the U.K.,
Canada and
Switzerland pursuant to which distributions will be made as soon
as the necessary approvals are obtained from the pertinent
authorities in those countries,” the Antiguan liquidators said
in the joint statement.
Courts in the U.S., Antigua and the U.K. must still sign
off on the deal before any funds are transferred, according to
the statement.
Sadler, the U.S. receiver’s attorney, said the deal was the
result of months of negotiations involving officials in five
nations.
“This agreement is one of the most complex undertakings of
its kind,” he said in an e-mail. “This was no easy task.”
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).
For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/
