2013.05.24.SEC.replyBrief by Catherine Burnell


Provisional Liquidators to Stanford Development Company (“SDC”) Explain Provisional Liquidation Process

Marcus Wide of Grant Thornton (British Virgin Islands) Limited and Hordley Forbes of Forbes and Associates (Antigua) were appointed as Provisional Liquidators of SDC. Within that role, they have taken over the company and are duty-bound to preserve its assets. Further, until further notice, SDC’s former directors’ powers are withdrawn and there is a stay of proceedings in place as to any actions that may be commenced against SDC without a court order.

The next step is likely the resolution of an application to wind up SDC. Though the result is not known, in most instances, the company will transition from provisional liquidation to liquidation at which point a liquidator(s) will be appointed. The role of the liquidators will be to wind up the company and settle all debts.

In the interim, the Provisional Liquidators continue to confer with creditors, the Antiguan government and other interested parties to bring a speedy resolution to SDC’s provisional liquidation by, among other things, paying creditors and getting SDC’s books and records in order. Notably, since a provisional liquidation does not involve a claims process, there is no need to submit a claim at this time.

For further information related to SDC, please see the SDC tab at for information posted by the Provisional Liquidators.

For a full and open debate on the Stanford Receivership visit:

The Stanford International Victims Group Forum

Victims Check your claims!!

I was recently contacted by several victims asking for help regarding their claims with Janvey – or the company that is dealing with the claims (Gilardi) for Janvey.

They informed me that their claims had been overwritten by a law company called Butzel Long. These are victims that had submitted their own claims and they wanted to know who Butzel Long were and why they had registered a claim in their name.

After making contact with Gilardi, I was shocked to find out that my own claim had been hijacked by Butzel Long, and they had submitted claims for hundreds of victims. I explained to them that:

1) I had never heard of Butzel Long.
2) I had already submitted my own claim
3) I did not have a law firm working for me.

The information I was given was that any payment in my name would be paid to Butzel Long and it would be up to me to make contact with them and get the money transferred into my name!!!

I then went onto Google and found out that Butzel Long is a law practice in New York. I made contact with this law firm and spent several hours trying to speak to someone about why they had submitted a claim for me and the other victims that had contacted me. After many phone calls and many hours spent on the phone I had not managed to speak to anyone but the receptionist who said she had no idea who was dealing with this matter, why they had filed a claim in my name and despite repeatedly trying I had only been put through to voice mails, where I left messages. Guess what, no one bothered to phone me back and explain the situation. What I did manage to find out was that a certain Peter Morgenstern is associated with Butzel Long and it would seem that my name -along with several hundred other names – came from Peter Morgenstern.

It has taken me weeks of telephone calls, many emails and threats of legal action to get Gilardi to remove Butzel Long from my claim and make sure that any payment comes to me and not to a third party.

I also made contact with Grant Thornton who informed me that Butzel Long had also filed claims for hundreds of victims, many of whom had already filed their own claims. The difference was that Grant Thornton wrote back and said they would only consider claims from Butzel Long where the claims were accompanied with a signed declaration of consent.

I would advise anyone who has ever made contact with Peter Morgenstern or any other lawyer to check with Gilardi and make sure that they have not hijacked your claim. Remember these lawyers do notwork for free and if they have submitted a claim on your behalf, they will not be doing it for free!!


For a full and open debate on the Stanford Receivership visit:

The Stanford International Victims Group Forum

SEC Can’t Force Help For Stanford Victims, DC Circ. Told

The Securities Investor Protection Corp. asked the D.C. Circuit on Monday to affirm a landmark district court ruling declaring it doesn’t owe compensation to victims of Robert Allen Stanford’s $7 billion Ponzi scheme, suggesting the U.S. Securities and Exchange Commission succumbed to political pressure in bringing the suit.

The SIPC asked the appeals court to affirm U.S. District Judge Robert L. Wilkins’ decision dismissing the agency’s application to compel the SIPC to pay the fraud victims’ claims through a liquidation proceeding.

A top agency official had originally agreed that the SIPC did not owe funds under the Securities Investor Protection Act, SIPC claims, but that changed after U.S. Senator David Vitter, R-La., threatened to block the nominations of two SEC officials in June 2011, the SIPC said.

“The record shows that the SEC’s general counsel agreed that SIPA did not apply to the Stanford case,” the SIPC said. “It was only two years later that the SEC sought to force SIPC’s hand, apparently bowing to pressure from a U.S. senator,” referencing a June 14, 2011, press release from Vitter.

The corporation, funded by the brokerage industry to cover investors who lose money in failing firms, also claims the SEC didn’t seek a liquidation until two years after its 2009 case against Stanford.

“If the SEC had thought the Stanford fraud was within the scope of what SIPA protects, it was under a legal obligation to notify SIPC immediately,” the SIPC said. “The SEC did not do so, even though it filed an enforcement action against Stanford and secured the appointment of a receiver over U.S. Stanford assets in February 2009.”

On July 3, Judge Wilkins ruled that Stanford’s U.S.-based Stanford Group Co. was a member of the SIPC, but that the Antigua-based Stanford International Bank was not. Stanford International Bank Ltd. was an offshore bank, not a registered broker-dealer, which is what the SIPC oversees, Judge Wilkins said.

Judge Wilkins’ decision was a major blow to victims of the Ponzi scheme, who together lost upwards of $7 billion in certificates of deposit administered by Stanford International Bank. It also carried broader legal significance, marking the first time since the enactment of SIPA 42 years ago that a federal court had ruled on how much power the SEC has to command a SIPC liquidation.

The U.S. Supreme Court has ruled that brokerage customers cannot force such proceedings, but that the SEC has the authority to do so.

Because of its precedential nature, a key issue in the Stanford dispute was the standard of proof required of the SEC. The agency argued for a more lenient standard than the SIPC did, describing its burden as merely probable cause supported by hearsay. Judge Wilkins ultimately chose the higher standard requested by the SIPC: a preponderance of the evidence. In an SIPC liquidation, an investor must meet a preponderance standard to prove the validity of his or her claim.

In its appellate brief filed in January, the SEC said Judge Wilkins had taken a too-narrow view of the term “customer.” The agency argued that transactions with both Stanford entities should be treated the same way under SIPA because the company operated “as a single fraudulent enterprise that ignored corporate boundaries.”

“This interpretation of the statute to allow for flexibility in certain circumstances is the correct one, and it is at least a reasonable one that was entitled to deference by the district court,” the SEC said.

The SEC added that it was not seeking customer status for all Stanford investors, but only for those who held accounts with Stanford Group Co., purchased fraudulent certificates of deposit through SGC and deposited funds with Stanford International Bank Ltd.

But SIPC said Monday that the terms of its mission were clear: to protect investors when a member brokerage fails, adding that Judge Wilkins’ purportedly narrow view of the term ‘customer’ was appropriate.

“By its terms, the statute does not insure against fraud or investment losses, instead protecting only the ‘customer’ property that an SIPC-‘member’ brokerage firm holds in custody when the brokerage fails,” the corporation added.

The corporation also said the SEC’s case was unprecedented because it has not made similar requests in proceedings related to the downfall of a major financial institution.

“In 40 years and over 300 liquidation proceedings — including the recent liquidations of Lehman Brothers Inc., Madoff Investment Securities LLC, and MF Global Inc. — this is the first the the SEC had ever tried to compel a liquidation. ‘

Stanford was sentenced in June to 110 years in prison for his role in the fraud.

SIPC is represented by Edwin John U, Eugene F. Assaf Jr., John C. O’Quinn, Michael W. McConnell and Elizabeth M. Locke of Kirkland & Ellis LLP.

The case is U.S. Securities and Exchange Commission v. Securities Investor Protection Corp., case number 12-5286, in the U.S. Court of Appeals for the District of Columbia Circuit.

For a full and open debate on the Stanford Receivership visit:

The Stanford International Victims Group Forum

Stanford Victims Will Benefit From $300M Settlement

In a huge step forward for R. Allen Stanford’s cheated investors and creditors, a settlement aims to break the logjam over who is entitled to $300 million worth of frozen assets around the world.

When Stanford’s Ponzi scheme was exposed in 2009 and his business went under, it spawned a global hunt for his many assets to repay his investors and creditors. But those involved in the search—U.S. government agencies, a U.S.-court appointed receiver and the liquidators of Stanford’s Antiguan bank—fought in courts across the world over who controlled the various assets.

The settlement, announced last week and subject to the approval of several courts in the coming weeks, will resolve the years-long battle. It will also speed efforts to return money to those who invested in certificates of deposit issued by Stanford International Bank, a scheme through which Stanford ultimately cheated investors out of $7 billion. Stanford used investors’ cash to further the fraud and fund a lavish lifestyle in which he accumulated real estate, yachts and other assets around the world.

The U.S. receiver warned in court papers that if the settlement isn’t approved, “millions of dollars in assets that could otherwise be distributed to the victims of the Stanford Ponzi scheme will remain tied up in the courts.”

Some of the specific deal terms include handing over $44 million of assets frozen in the U.K. to the Antiguan liquidators, which they’ll distribute to victims in that court proceeding. The liquidators will get another $36 million from the U.K. to fund their continued search for more assets.

More than $132.5 million that was found in Switzerland and $23 million in Canada will be forfeited to the U.S. Department of Justice, which will allow that to be distributed through the U.S. receivership. Antiguan victims will get another $60.5 million from Switzerland.

The settlement doesn’t allow the distribution of any of the $300 million in frozen assets to be paid to two government creditors, the Internal Revenue Service and Antiguan government.

The settlement is subject to the approval of the U.S. District Court in Dallas, the Antiguan court and London’s Central Criminal Court.

Convicted last year of fraud, conspiracy and other criminal charges, Stanford is now serving a 110-year prison sentence. He has insisted he did nothing wrong and has appealed his conviction and sentence.

For a full and open debate on the Stanford Receivership visit:

The Stanford International Victims Group Forum

Stanford Investors Sue Antigua, Caribbean Central Bank

By Laurel Brubaker Calkins (Bloomberg)

R. Allen Stanford’s receiver and investors’ committee sued Antigua, the Eastern Caribbean Central Bank and 23 former Stanford Financial Group Co. executives over allegations they aided the financier’s $7 billion fraud.

The Official Stanford Investors Committee seeks repayment of at least $90 million in documented loans Stanford made to the dual-island nation of Antigua and Barbuda and accuses its elected officials of having been “Stanford’s partners in crime.” The nation’s leaders shielded Stanford’s scheme and traded choice real estate for as much as $230 million in loans that haven’t been repaid, according to the lawsuit.

“Antigua knowingly provided necessary assistance to Stanford’s $7 billion Ponzi scheme and, in exchange, received millions of dollars in loans whose repayment terms Stanford did not enforce,’’ the committee said in a complaint filed in Dallas federal court on Feb. 15. “For well over a decade, Antigua was a prime participant in, and beneficiary of, the Stanford Ponzi scheme, and actively protected and shielded Stanford’s criminal enterprise from real regulatory scrutiny.’’

Stanford, 62, was convicted in March of masterminding a Ponzi scheme that defrauded investors through the sale of bogus certificates of deposit at his Antigua-based Stanford International Bank Ltd. He is serving a 110-year sentence in a Florida federal prison as he appeals his verdict and sentence.

Falsified Audits

Evidence at Stanford’s trial showed he bribed Antiguan banking regulator Leroy King to falsify audits certifying the bank’s investment returns and mislead U.S. securities regulators investigating the former Texas billionaire’s operations. Stanford was also allowed to underwrite and participate in banking reform legislation that Antigua claimed had cleaned up its corrupt offshore banking industry, according to trial evidence. Antigua has so far failed to extradite King to face criminal charges in the U.S.

The investors on Feb. 15 separately sued the Eastern Caribbean Central Bank, which nationalized Stanford’s other island financial institution, the Bank of Antigua, after the U.S. Securities and Exchange Commission seized Stanford’s enterprise on suspicion of fraud in February 2009.

The ECCB in turn parceled out ownership in the bank to the government of Antigua and to other Caribbean banks in what the investors called “a second act of brazen thievery.” The head of ECCB’s monetary council at the time was Antiguan Minister of Finance Errol Cort, who was both King’s supervisor and one of Stanford’s personal attorneys, according to court papers.

‘Rightful Owners’

“The considerable value of the Bank of Antigua, believed to be in the tens or hundreds of millions of dollars, should be distributed as compensation to its rightful owners, Stanford’s victims and creditors,’’ the committee said in court papers.

Recent comments by Antiguan elected officials indicate the country intends to repay the bank instead of the defrauded investors, Peter D. Morgenstern, a lawyer for the investors’ committee, wrote, meaning that “in essence, Antigua intends to use CD investors’ money to pay itself.’’

Tom Bayko, Antigua’s attorney, didn’t immediately respond to voice or e-mail messages seeking comment on the lawsuit. In an earlier suit, Bayko said Antigua was protected from such litigation by foreign sovereign immunity.

Officials at the ECCB didn’t immediately return telephone or e-mail messages seeking comment on the lawsuit.

Ralph Janvey, Stanford’s court-appointed receiver, filed another lawsuit on Feb. 15 claiming breach of fiduciary duty lawsuit by 23 former directors and officers of Stanford’s operations, including three executives convicted of furthering the fraud scheme. The suit seeks return of all compensation from these individuals, some of whom have been previously sued by the receiver on similar claims.

“Many directors and officers simply looked the other way, while others actively assisted Stanford in defrauding thousands of people out of billions of dollars,’’ Kevin Sadler, Janvey’s lead lawyer, said in the filing in Dallas federal court. They “put their continued employment and substantial compensation ahead of the best interests of the entities they were hired to serve,” he said.

The cases are The Official Stanford Investors Committee v. Antigua and Barbuda, 3:13-cv-0760; The Official Stanford Investors Committee v. Bank of Antigua, 3:13-cv-0762; Janvey v. Alvarado, 3:13-cv-0775. All are in 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 Forum