Stanford Ponzi Investors Ordered to Return $2M

Two dozen investors in R. Allen Stanford’s $7 billion Ponzi scheme must return approximately $2 million in profits they received, a Dallas federal judge ruled Tuesday.

U.S. District Judge David C. Godbey granted in part court-appointed receiver Ralph S. Janvey’s motions for partial summary judgment in six lawsuits filed in 2009 and 2010 against investors who received more money than what they invested.

“The court previously granted the receiver’s motion for summary judgment against similarly situated net-winner defendants,” the 11-page order said. “The court found that the receiver had established Stanford operated a Ponzi scheme, and that the net-winner defendants had not provided ‘value’ to the Stanford entities for the interest payments they had received. Based on those conclusions, the court granted the receiver’s motion as to net winner defendants whose interest payments had been factually established. The Fifth Circuit subsequently affirmed the court’s orders.”

The appeals court ruled in Sept. 2014 that allowing net-winner investors to keep their profits would “further the debtors’ fraudulent scheme at the expense of other” investors. It concluded that any recovery would be paid out of money “rightfully belonging” to the other victims of the Ponzi scheme, not from the Stanford entities’ own assets “because they had no assets they could legitimately call their own.”

Relying on that ruling, Godbey wrote the defendants “have not suggested that the court’s analysis should be any different here” regarding their alleged failure to provide “value” for the payments.

The defendants include Anibal Morgado, David Morgado, and Vasco M. Diniz Morgado, who were ordered to return over $672,000. Chloee K. Poag and G. Dan Poag Jr. were ordered to repay over $247,000. The remaining individual defendants were ordered to repay $23,000 to $178,000.

Godbey also ruled that Janvey cannot recover $181,000 from Joyce S. Erfurdt and T. Mark Kelly, having addressed their objections to the receiver’s claims in a separate order.

He also declined to order payment from George and Dolores Rollar, concluding there is still an unresolved issue of fact over whether Janvey acted diligently in serving them.

Janvey has filed approximately 50 lawsuits against Stanford money recipients since his appointment.

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Stanford Receiver Faces Uphill Battle In 1st Insider Trial

Law360, Dallas (February 06, 2015, 8:02 PM ET) — Trial begins Monday in the first fraudulent transfer suit against an alleged insider of convicted Ponzi schemer R. Allen Stanford, but Dallas jurors may be reluctant to penalize the former U.S. diplomat who worked as a consultant for Stanford if he can show he provided honest services in good faith, white collar experts say.

 The trial, before U.S. District Judge David Godbey, is the first time jurors will hear the receiver’s theory that Stanford was only able to pull off his $7 billion fraud by surrounding…

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Greenberg, Hunton Can’t Buck Stanford Fraud Class Action

Law360, New York (February 05, 2015, 7:54 PM ET) — A Texas federal judge on Wednesday kept intact the bulk of a putative class action brought by investors accusing Greenberg Traurig LLP and Hunton & Williams LLP of assisting Robert Allen Stanford in a $7 billion Ponzi scheme, saying that the investors had made the factual allegations necessary to move forward.

U.S. District Judge David C. Godbey tossed a limited number of claims brought under the Texas Securities Act that he said were barred by a statute of repose, but denied the remainder of the firms’…

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Net Winners in Stanford Ponzi Scam Lose Appeal

Profits seen by some investors in R. Allen Stanford’s Ponzi scheme may face seizure by the court-appointed receiver trying to make victims whole, the 5th Circuit ruled.

Ralph Janvey, with Krage Janvey in Dallas, has filed more than 70 federal fraudulent-transfer suits in Dallas since his appointment. He has targeted former Stanford entities and employees, individual investors and third-party recipients of Ponzi scheme proceeds – included the Republican National Committee, the Democratic Congressional Campaign Committee, Miami Heat basketball team, the Tiger Woods Foundation, Texas A&M University, the University of Miami, the PGA Tour and the ATP Tour.

In a partial summary judgment for Janvey early last year, U.S. District Judge David Godbey said the hundreds of “net winners” who received interest on top of their principal would still be “in far better shape” after paying back the interest than most other Stanford victims “who lost everything.”

A three-judge panel with the 5th Circuit affirmed Godbey’s ruling on Thursday, concluding the net winners have no valid claim to the interest on their phony certificates of deposit (CDs).

“Here, we conclude that there is no valid claim for interest,” the 22-page opinion states. “The CDs issued by [the Stanford International Bank] are void and unenforceable. This is because ‘[t]o allow and [investor] to enforce his contract to recover promised returns in excess of his undertaking would be to further the debtors’ fraudulent scheme at the expense of other [investors].'”

Any recovery would be paid out of money “rightfully belonging” to the other victims of the Ponzi scheme, not from the Stanford entities’ own assets “because they had no assets they could legitimately call their own,” Judge Patrick Higginbotham wrote for a three-member panel in New Orleans.

The appeals court also affirmed that principal payments made to the net winners are off-limits to Janvey and not subject to fraudulent-transfer claims.

“Unlike interest payments, it is undisputed that the principal payments were payments of an antecedent debt, namely fraud claims at the investor-defendants have as victims of the Stanford Ponzi scheme,” Higginbotham wrote.

Net winners who tried to shelter their profit in individual retirement accounts that are exempted by the Texas Property Code are also not entitled to an exemption, the court found.

“As we recently explained, to claim this exemption, a defendant ‘must establish that she has a legal right to the funds in the IRA,'” the opinion states. “The investor-defendants have offered no evidence to the district court that they have a legal right to the funds despite those funds being the product of a fraudulent transfer. The district court did not err in denying this exemption.”

Janvey could not be reached for comment Thursday evening.

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For a full and open debate on the Stanford receivership visit the Stanford International Victims Group – SIVG official Forum

Judge Won’t Compel Arbitration in Stanford Case

U.S. District Judge David Godbey of Dallas has ruled that the receiver he appointed to recover millions of dollars taken in R. Allen Stanford “massive Ponzi scheme” cannot be compelled into arbitration to collect funds the now-imprisoned Houston financier paid stockbrokers who worked for his companies.

To do otherwise, Godbey ruled in a July 30 order in the highly litigated Ralph S. Janvey v. James R. Alguire, “would frustrate a central purpose of federal equity receivership’s.”

Godbey has presided over litigation involving the U.S. Securities and Exchange Commission’s civil receivership action over Stanford-related entities for more than five years. Stanford is currently serving a 110-year prison sentence after a Houston federal jury convicted him of fraud for running the Ponzi scheme. Stanford has appealed.

Early in the receivership action, Godbey appointed Ralph S. Janvey, a partner in Dallas’ Krage & Janvey, to serve as receiver over the Stanford entities to trace any assets owned by the receivership estate. Janvey then sued numerous former employees of the Stanford entities to recover the funds, but more than 100 stockbrokers filed motions to compel arbitration in the case, pointing to agreements they signed with Stanford.

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For a full and open debate on the Stanford receivership visit the Stanford International Victims Group – SIVG official Forum


‘They’re fighting over our money’



Those searching for Stanford dollars get twice as much as victims 

June 23, 2014 

Court-authorized professionals cleaning up the debris of one of the largest Ponzi schemes in U.S. history have been paid $64.2 million — more than twice the amount returned so far to victims — and are seeking more compensation.

Those professionals have recovered less than $300 million of the estimated $5.5 billion to $7 billion stolen from thousands of victims in Louisiana and in places as distant as Venezuela by convicted Houston swindler Robert Allen Stanford, whose company operated an office in Baton Rouge.

Attorneys, accountants and investigators searching since February 2009 for the mountains of money had been paid $64.2 million of the victims’ money recovered by the end of 2013.

Expenses incurred in the search by the court receivership team cost another $54.7 million, federal court records show.

That’s $118.9 million of victims’ money spent on the search for Stanford’s swindled dollars out of a total of $240.9 million recovered by Dec. 31 in the five-year effort.

Victims have received a combined $30 million — paid last year as a first distribution to some of the thousands of Stanford’s victims in Louisiana and other states. Another $25 million authorized by a judge for payment to victims has yet to be distributed.

Now, Dallas attorney Ralph S. Janvey, the court-appointed receiver in charge of the search, is asking U.S. District Judge David C. Godbey for permission to withdraw $5.8 million from a disputed pot of $17.3 million in fees for payment to members of his search team.

Don’t do it, a court-appointed examiner and the U.S. Securities and Exchange Commission have implored Godbey.

In Louisiana, some of Stanford’s victims have the same response.

Kathy and Louis Mier, of Zachary, were defrauded of $240,000 they invested with Stanford.

“Janvey, from day one, was trying to make money off us,” Kathy Mier, a 66-year-old retired schoolteacher, said. “We resent the fact that those lawyers take advantage of us. They’re fighting over our money.”

Richard Cochran, 82, of Baton Rouge, who declined to specify his total loss, noted that he received 21.7 percent of his investment in the form of interest payments before the SEC shut down Stanford’s operations in February 2009.

Now, the Korean War veteran said, Janvey’s team has demanded that he make payments into the Stanford receivership equal to that 21.7 percent.

Cochran said he refused, noting that compliance would increase his Stanford loss to 100 percent.

“Janvey said in the beginning all we’re going to get is pennies on the dollar,” Cochran recalled. “He’s making that come true.”

Added Cochran: “He (Janvey) probably ought to get what we get on our claims — 1 percent.”

In his filings in Dallas, Janvey has told the judge his team should receive $5.8 million of the disputed $17.3 million that Janvey contends has already been earned.

By the middle of March, Janvey reported to Godbey, the receivership had recovered another $23 million in stolen investor funds.

John J. Little, a Dallas attorney who has served as court-appointed examiner of the Stanford receivership for the past five years, argued June 9 that the judge should not release any portion of the $17.3 million to Janvey’s team.

“What we know at present is that the receiver and his professionals have not identified any significant Stanford assets or accounts that were not identified in the earliest days of the receivership,” Little said.

In addition, Little told Godbey, Janvey has not distributed $25 million of $55 million the judge authorized for pro rata payment last year to Stanford victims.

Janvey’s 2009 demand was opposed by both the SEC and the investors lucky enough not to have lost all their money.

The receiver’s motion for seizure of their remaining money also was denied by Godbey after SEC officials said commission policy is not to recover money from innocent fraud victims who lost more money than they received from a bogus investment operation.

But Janvey, spending recovered Stanford funds, appealed the decision to the 5th U.S. Circuit Court of Appeals in New Orleans, where he lost.

Both Little and the SEC now argue that the receivership’s record should be much closer to completion before the judge considers release of any of the $17.3 million withheld from Janvey’s team over the past five years.

“What has actually been distributed to Stanford’s investors — approximately $30 million — is less than half what has already been paid to the receiver’s professionals,” Little added.

Little said no more investor money should be paid to Janvey’s team until the total paid to the victims “significantly exceeds the amounts paid to the receiver and his professionals.”

Said SEC attorney David B. Reece: “The question is not whether the receiver and supporting professionals should receive compensation. The receiver’s team has been paid.”

Reece noted Janvey’s team has been paid $34 million more than Stanford’s victims.

“There is no reason to release further funds,” Reece told the judge.

Meanwhile, Stanford, 64, continues to maintain he is innocent of all charges for which he is serving a prison sentence of 110 years. He has filed an appeal in an effort to reverse his conviction.

The SEC and Godbey have concluded that Stanford and his companies operated a giant Ponzi scheme from the beginning of their operations.

Few, if any, investments are actually made in a Ponzi scheme. Instead, operators of the scheme skim most of the money that is put in by victims on the basis of false information provided by the criminals.

Some of the early investors receive small portions of their own money and that of later investors. While those investors believe the money is profit from actual operations, it is simply seed money designed to attract additional cash from people hearing of the program’s reputed success.

Stanford Group Co., insured by the federally chartered and industry-funded Securities Investor Protection Corp., received billions of dollars that victims were told would be secure at Stanford International Bank in the Caribbean nation of Antigua.

Instead, a Houston jury concluded, the majority of the money went to Stanford and several of his associates.

The SEC, in effect, directed SIPC to cover individual Stanford investor losses up to $500,000.

SIPC officials refused and won a judgment from a federal district judge in Washington, D.C. The SEC is appealing that decision.

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For a full and open debate on the Stanford receivership visit the Stanford International Victims Group – SIVG official Forum