Allen Stanford Told to Disgorge $6.7 Billion in SEC Case

R. Allen Stanford, the Texas financier convicted last year of leading an investment fraud scheme, was ordered to disgorge more than $6.7 billion by the judge in a U.S. Securities and Exchange Commission lawsuit.

U.S. District Judge David Godbey in Dallas issued the order yesterday against Stanford, his Stanford Group Co. and the Antigua-based Stanford International Bank Ltd.

The order may clear the way for Godbey to grant a court- appointed receiver’s request to make an interim $55 million payout to investors who lost money after buying certificates of deposit issued by the Stanford Bank.

“The fraud perpetrated was obviously egregious, was done with a high degree of scienter, caused billions in losses and occurred over the course of a decade,” Godbey said, using the legal term to describe the mental state of intent to deceive.

A federal jury in Houston convicted Stanford of lying to investors about how their money was being handled.

“The truth is that he flushed it away,” Justice Department lawyer William Stellmach told jurors in his closing arguments at the March 2012 trial. “He told depositors he was using their money in one way and the truth was completely different.”

Stanford, 63, was sentenced to 110 years in prison. Maintaining his innocence, he has appealed the verdict.


Parallel Judgment


Godbey referred to the jury’s guilty finding in granting the SEC’s request he render a parallel judgment in their case filed in February 2009, four months before the financier was indicted. The judge also cited the August 2009 guilty plea by Stanford Group Chief Financial Officer James Davis.


“The court finds that $5.9 billion is a reasonable approximation of the gains connected to Stanford’s fraud,” Godbey said of the sum he would order disgorged. He then added more than $861 million in interest for a total of $6.76 billion. Davis too is jointly liable.

Finally the judge imposed a $5.9 billion penalty on Stanford and a $5 million assessment against Davis, who received a five-year prison sentence.

The court-appointed receiver, Ralph Janvey, asked Godbey this month for permission to begin repaying some of the losses incurred by the more than 17,000 claimants. At an April 11 hearing, the judge told Janvey’s lawyer, Kevin Sadler, he was concerned about doing so before a final order had been entered against Stanford.


Societe Generale


In a separate filing today, a group of Stanford investors asked Godbey to grant them a judgment of at least $95 million in a lawsuit against a unit of Paris-based Societe Generale SA. (GLE)

The lender’s Societe Generale Private Banking (Suisse) unit took the money from a Stanford bank account with his permission in December 2008 to repay a loan made to him four years earlier, according to court papers.

The financier had caused a business funded by Stanford investor-depositor money to guarantee the loan in 2007, the investors alleged, while those depositors received no benefit. The transfer of that money to Societe Generale just two months before the SEC sued Stanford and shut down his businesses was a fraudulent transfer, the investors claimed in today’s filing.

Ken Hagan and Jim Galvin, New York-based spokesman for the French bank, did not immediately reply to voicemail messages seeking comment on the allegations.


Slush Fund


Davis, the CFO, testified at Stanford’s trial that the financier maintained a Societe Generale Swiss bank account, funded by investor deposits.

“It was a slush fund, just used for whatever the holder wanted to use it for,” Davis said during the Houston federal court trial in February 2012.

The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston).

The investors’ case is Rotstain v. Trustmark National Bank, 09-cv-02384, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporter on this story: Andrew Harris in the Chicago federal courthouse at aharris16@bloomberg.net

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


Source: http://sivg.org/article/2013_Stanford_Disgorge_6Billion.html

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SEC Order Against Stanford

April 25, 2013
By U.S. District Judge David C. Godbey

Securities and Exchange Commission, Plaintiff, vs. Stanford International Bank LTD., et al. Defendants. Civil Action No. 3:09-CV-0298-N

This Order addresses Plaintiff Security and Exchange Commission's ("SEC") motion for partial summary judgment [1779]. The Court grants the motion. The Court also denies Defendant R. Allen Stanford's motion for extension of time [1807].

The Court grants the SEC's motion for summary judgment. The Court enjoins Stanford from violating the Exchange Act § 10(b), Rule 10b-5, the Securities Act § 17(a), and the Advisers Act § 206(1) and (2), enjoins Davis violating the Exchange Act § 10(b), Rule 10b-5, the Securities Act § 17(a), and enjoins SGC and SIB from violating the Exchange Act § 10(b), Rule 10b-5, the Securities Act § 17(a), the Advisers Act § 206(1) and (2), and the Investment Company Act § 7(d). The Court finds Stanford, Davis, SGC, and SIB jointly and severally liable to disgorge the $5.9 billion fraudulently acquired by Stanford's scheme. The Court adds $861,189,969.06 of prejudgment interest to this total, for a total disgorgement liability of $6,761,189,969.06. Finally, the Court imposes a civil penalty of $5.9 billion on Stanford and $5 million on Davis.

Read the complete Order of U.S. District Judge David C. Godbey.


Source: http://sivg.org/article/2013_SEC_Order_Against_Stanford.html

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Louisiana officials want release of SEC report in Stanford case

A Louisiana senator told officials of the Securities and Exchange Commission Friday that he wants immediate release of a year-old report by the commission’s inspector general on efforts to recover money for victims of a multibillion-dollar fraud.
U.S. Sen. David Vitter, R-La., described as incompetent efforts by a court-appointed receiver to find and distribute assets of convicted con man Robert Allen Stanford.
Stanford, 63, of Houston, is serving a 110-year prison sentence for a fraud conviction that followed estimated worldwide losses of approximately $7 billion. About $1 billion of those losses were from about 1,000 investors in the Baton Rouge, Lafayette and Covington areas, according to estimates by state Sen. Bodi White, R-Central, and Baton Rouge attorney Phillip W. Preis.
“The fraud caused an absolute tragedy for many Louisiana families who invested their hard-earned retirement savings in good faith that it would be there for them when they retired,” Vitter said Friday in a letter to Mary Jo White, who chairs the SEC.
Vitter said the receiver in the case, Dallas attorney Ralph Janvey, spent $100 million to collect $55 million for Stanford’s victims.
“In the best light, Janvey’s actions can only be seen as incompetent,” Vitter told White in that letter. He urged White to release the SEC inspector general’s report on Janvey, noting that it was completed in March 2012.
There are more than 20,000 Stanford victims across more than 100 countries.
A retired Zachary couple, Louis and Kathy Mier, saw $240,000 of their savings stolen by Stanford’s fraudulent scheme.
“Whatever any of our congressmen do to shed light on the truth of what happened, and whatever they can do to help us get our money back and be whole again, would make Louis and me very, very happy,” Kathy Mier said Friday.
John J. Nester, a spokesman for the SEC, said in an email Friday that neither he nor other SEC officials would comment on Vitter’s request before White issues a response to the senator’s letter.
U.S. Sen. Mary Landrieu, D-La., released a statement through her staff: “The Stanford victims deserve answers, and the immediate release of the IG’s report is the very least the SEC can do.”
U.S. Rep. Bill Cassidy, R.-Baton Rouge, said through his staff: “I strongly urge the SEC … to release the full results of the inspector general’s report. The victims of this crime were hard working Louisiana families, and they are entitled to see the details of the report.”
Vitter noted that Janvey, against the SEC’s wishes, unsuccessfully sued some Stanford victims in an effort to seize money those victims retrieved before Stanford’s operations were shut down in February 2009.
“Given the demonstrated incompetence of the court-appointed receiver, it makes you wonder how bad this (inspector general’s) report gets,” Vitter added. “The Stanford victims deserve to see.”
“Given the demonstrated incompetence of the court-appointed receiver, it makes you wonder how bad this (inspector general’s) report gets. The Stanford victims deserve to see.” U.S. Sen. David Vitter, R-La.

Source: http://sivg.org/article/2013_Louisiana_want_release_SEC_report_Stanford_case.html

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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 ofLehman 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.

Source: http://www.sivg.org/article/2013_SEC_Cant_Force_Help_For_Stanford_Victims.html

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Stanford's Civil Tactic Makes SEC Indignant: April 11, 2013

Stanford's Civil Tactic Makes SEC Indignant
By DAVID LEE
ShareThis

DALLAS (CN) - R. Allen Stanford must be held civilly liable for his massive Ponzi scheme, the Securities and Exchange Commission argued, scoffing at the implication his criminal trial was unfair.
In a 2009 federal complaint, the agency accused Stanford of running an $8 billion Ponzi scheme through the sale of certificates of deposit. U.S. District Judge Reed O'Connor then entered a temporary restraining order, froze his assets, and appointed a receiver.
Stanford later faced a criminal trial for the scheme, and a jury convicted him in 2012 on 13 of 14 counts of conspiracy, wire fraud and mail fraud. He was sentenced in June to 110 years in federal prison.
With the SEC now seeking partial summary judgment on its civil claims, Stanford moved on March 25 for a time extension to secure sealed exhibits from his criminal trial.
The SEC replied Monday that this extension should be denied.
"First, for all the reasons noted above, these pleadings cannot add any substantive information relevant to the commission's motion for summary judgment because they relate to arguments that have already been rejected in Stanford's criminal case," it said in a six-page response. "In fact, the materials were attachments to a motion for new trial that was denied. The only reason for the Court to examine these pleadings would be to re-examine the fully litigated decisions made in the criminal case. The pleadings cannot give any basis to ignore the well-established precepts of collateral estoppel that demonstrate Stanford's civil liability in this parallel proceeding."
The SEC said Stanford has offered no basis to avoid the "estoppel effect" of his criminal conviction.
"In his response, Stanford admits, as he must, that he has been criminally convicted based on the very conduct that is at issue in this case," the filing states. "And he, in essence, concedes that the elements of collateral estoppel have been met here, including the fact that the same issues were at stake. His only argument is that the criminal trial did not provide him with a full and fair opportunity to litigate the common issues and that, as a result, collateral estoppel does not apply."
It is "beyond dispute" that Stanford had full and fair opportunity to try the criminal case against him, the agency added.
"As he admits, he was represented by competent counsel," the reply states. "His trial lasted over thirty days and over thirty witnesses testified. As even a cursory review of the docket sheet from that proceeding demonstrates, Stanford's criminal trial was fully and fairly litigated, even if Stanford does not like the results."
Stanford had even moved in October 2010 for change of venue based on the same pretrial publicity of which he complains now, the SEC said.
"He had a fair and full opportunity to litigate his motion for continuance," it wrote. "Stanford has pointed to no case suggesting that in circumstances like this collateral estoppel does not apply. Nor could he."
The SEC also sued several Stanford-controlled entities, including Antigua-based Stanford International Bank, Houston-based broker-dealer/investment adviser Stanford Group Co., and investment adviser Stanford Capital Management. The SEC also sued Stanford International Bank CFO James Davis and Laura Pendergest-Holt, chief investment officer of Stanford Financial Group.
At the time of the suit, former SEC enforcement chief Linda Chatman Thomsen had called the conspiracy "a massive fraud based on false promises and fabricated historical return data to prey on investors."
Rose Romero, former regional director of the SEC's Fort Worth division, called it "a fraud of shocking magnitude that has spread its tentacles throughout the world." Romero is currently a partner with Thompson Knight in Dallas.
The SEC says Stanford International Bank sold roughly $8 billion of CDs by promising improbable and unsubstantiated high interest rates. These rates were supposedly earned through bank's unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for 15 years.


Source: http://sivg.org/forum/view_topic.php?t=eng&id=59

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Stanford Victim Penny-a-Dollar Payment Plan Goes to Judge

R. Allen Stanford’s investors may recoup some of their losses more than four years after the Stanford Group Co. founder was sued by the U.S. Securities and Exchange Commission and put out of business.
Ralph Janvey, the receiver appointed by a federal judge in 2009 to marshal and liquidate Stanford’s personal and business assets, today asked permission to make a $55 million interim distribution to about 17,000 claimants, or about 1 cent for each of the $5.1 billion lost in the fraud scheme.
“We will follow it up in a subsequent distribution as the money comes in,” Janvey’s attorney, Kevin Sadler of Baker Botts LLP, told U.S. District Judge David Godbey today in Dallas.
The proposed payout would trail the more than $5.4 billion paid to victims of Bernard L. Madoff, who was arrested in December 2008; about $4.9 billion paid clients of the MF Global Inc. brokerage after its parent MF Global Holdings Ltd. failed in October 2011; and the $123 million interim distribution for victims of Peregrine Financial Group Inc. founder Russell Wasendorf, who prosecutors last year said stole $215 million.
“No distribution plan can satisfy every claimant,” Janvey’s lawyers said in a Feb. 12 court filing. “But the receiver’s interim plan, which drew only three objections from thousands of claimants, comes remarkably close.”
Cross-Border Protocol
Godbey didn’t rule today on Janvey’s bid for payment plan approval. The judge granted a request to approve the Cross- Border Protocol, a cooperation agreement between the Dallas court-appointed receivership and U.S. authorities on one side, and Antiguan court-appointed liquidators of Stanford assets outside the U.S. on the other. That approval could boost investors’ final recovery.
“The court finds the motion to be well-taken,” Godbey said in a two-page order. He heard more than two hours of argument this morning.
A federal jury in Houston last year found Stanford, 63, guilty of lying to investors about the nature and oversight of certificates of deposit issued by his Antigua-based bank. The jurors decided he must forfeit $330 million in accounts seized by the U.S. government.
Sentenced to 110 years in federal prison, Stanford has appealed the verdict.
Godbey today asked Sadler whether it was proper to distribute Stanford’s money before entering a final order in the SEC case against the financier and his businesses.
No Precedent
No legal precedent requires Godbey to first issue such a ruling, Janvey’s lawyer replied. He also told the judge that in a prior decision he said “not a nickel” of the money recovered by the receiver from Stanford entities was not taken by fraud.
One objection to the payout plan came from the law firm Curtis, Mallet-Prevost, Colt & Mosle LLP. A lawyer for the firm, Myles Bartley, told the judge today that it’s owed $1.4 million for work done for Stanford entities and isn’t included in the first group of distributions.
Sadler said there would be enough funds to resolve those claims even if the judge approved the proposed payment plan.
In an e-mailed statement, Sadler called the judge’s ruling today “a significant milestone” in the receivership’s effort to get money to Stanford fraud victims.
Godbey’s order requires the Janvey receivership and the Antiguan liquidators to “perform in accordance with their rights and obligations as outlined in the settlement agreement.”
Long Dispute
Lawyers for both factions battled for months for control of $300 million of Stanford assets outside the U.S.
“So long as it continues, millions of dollars in assets that could otherwise be distributed to victims of the Stanford Ponzi scheme will remain tied up in the courts,” Sadler told Godbey in a filing last month.
The liquidators, Grant Thornton International Ltd. accountants Hugh Dickson and Marcus Wide, joined in the approval request through a separate filing.
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 on March 12. The Antiguan liquidators already have received $20 million from the U.K. accounts.
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.
‘Ransom’ Payment
Angie Shaw, a founder of the Stanford Victims Coalition, has denounced the agreement as “ransom” that rewards the Antiguan liquidators at the investors’ expense.
“There is no Plan B,” Sadler told the judge.
Edward H. Davis Jr., an attorney for the liquidators, told Godbey today that an Antiguan court approved the agreement this week.
He said the agreement funds a “war chest” for the liquidators to further pursue lawsuits.
“The Joint Liquidators are pleased to have obtained the approval of the settlement from the High Court in Antigua this past Monday,” Davis said today in an e-mailed statement.
Attorneys representing law firms already defending suits filed by Janvey in the U.S. objected to the accord, arguing that it would result in more litigation offshore.
“There is obviously a jurisdictional issue,” Godbey said. “There is no getting around it.”
Fees Paid
Janvey’s professionals had been paid $63.3 million in fees and expenses as of Feb. 7, according to his most recent status report. That represents about a quarter of the $230.2 million Janvey has recovered for the estate. He has paid out $53.3 million more in costs to wind up Stanford’s business interests.
Shaw couldn’t immediately be reached for comment on Godbey’s ruling this afternoon. Peter Morgenstern, an attorney who serves on the official Stanford Investors Committee, also didn’t immediately reply to voice-mail and e-mail requests for comment.
An additional $4.1 million in Stanford-related assets have been identified in an account held by Pershing LLC, according to a court filing by Sadler yesterday seeking an order for the turnover of those funds.
The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston).

Source: http://sivg.org/forum/view_topic.php?t=eng&id=58

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SEC Not Liable for Missing Bernie Madoff Scheme: Court

Investors who lost billions in Bernie Madoff’s infamous Ponzi scheme may be angry with securities regulators for failing to catch him during his decades-long crime, but a federal appeals court ruled Wednesday the investors cannot sue them.

The Second U.S. Circuit Court of Appeals upheld a lower court’s rejection of claims by a number of defrauded Madoff clients who argued “the SEC [Securities and Exchange Commission] negligently failed to adequately investigate Bernard Madoff despite numerous warnings.”

INVESTIGATION: The Madoff Scandal: Behind the Headlines

The three-judge panel said SEC employees are shielded by what’s known as the Discretionary Function Exception, which protects the government from certain lawsuits even if a private employer could be held liable under similar circumstances.

“We recognized that challenging the SEC would be difficult but this was a case that needed to be fought,” said plaintiff’s attorney, Howard Elisofon.  “We believe that our clients were wronged (both by Madoff and the SEC) and their rights needed to be vindicated.”

PHOTOS: The Secret World of Bernie Madoff

The judges said they have “sympathy” for the plaintiffs, and they called the SEC’s failure to uncover Madoff’s scheme “regrettable.”  However, the judge said, “Congress’s intent to shield regulatory agencies’ discretionary use of specific investigative powers… is fatal to the plaintiffs’ claims.”

“We were disappointed,” said another of the plaintiff’s attorneys, Howard Kleinhendler, who told ABC News he plans to appeal to the United States Supreme Court.  “The SEC completely failed.  They failed to collect the facts.  They failed to properly investigate.  They broke down and should be held accountable.”

The SEC declined to comment on the decision.

Madoff pleaded guilty in 2009 to orchestrating a colossal fraud that cost his clients at least $17 billion.  He is serving what amounts to a life sentence at a federal prison in North Carolina.

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

SDC workers picket over non-payment of wages

ST JOHN’S, Antigua – There’s very little end in sight for unpaid striking workers of Stanford Development Company (SDC) as neither SDC’s former directors nor the liquidators of Allen Stanford’s empire in Antigua are able to say when they will receive their monies.

      The 65 workers reported they have not received wages and salaries since January 15. They said their former bosses, Barbara Streete and Andrea Stoelker, can no longer pay staff since a court ruled the two were not properly appointed as directors of the company.

      The duo had appealed the ruling and applied for a stay of execution (a hold on enforcement of the judgment). The appeal is set for a date two months from now, but the application for a stay was recently rejected, workers confirmed.

      Staff had hoped the liquidators of most of Stanford’s assets here could help, but liquidator of Stanford International Bank (SIB) Marcus Wide told OBSERVER media last night he can offer no relief.

      “As of now we have no authority over SDC and while we are very sympathetic to their situation, regretfully, we cannot assist the employees,” Wide said.

      Wide said SIB was not responsible for the removal of the directors or freezing of their bank accounts.

      Up to yesterday, Wide said he was unaware the workers had not been paid since January and further that they had begun protesting.

      Affected workers are car park attendants, landscapers, maintenance crew and security at SDC properties.

      Efforts to reach the former directors were unsuccessful.

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

Report Exposes Secrets of Off-Shore Tax Havens

The off-shore tax havens of least 30 Americans accused of fraud, money laundering or other financial crimes have been unearthed in a groundbreaking report by The International Consortium of Investigative Journalists and a global consortium of news outlets.

The first articles based on a cache of 2.5 million files were published Thursday, exposing secrets of more than 120,000 offshore entities -- including shell corporations and legal structures known as trusts -- used to hide the finances of politicians, crooks and others from more than 170 nations.

These havens are harboring an enormous amount of money. One study estimated the total could be as high as $32 trillion. That's roughly the size of the U.S. and Japanese economies combined.

The documents give a first-ever look at how agents for giant private banks would incorporate companies in Caribbean and South Pacific micro-states. These companies would then have front people called "nominees" to serve, on paper, as directors and shareholders -- creating another layer of secrecy and protection for the companies' real owners.

The ICIJ's review of documents from just one company which sets up off-short companies and trusts, Singapore-based Portcullis TrustNet, identified 30 American clients who are in legal trouble for their financial dealings. According to the ICIJ, these include Paul Bilzerian, a corporate raider who was convicted of tax fraud and securities violations in 1989, and Raj Rajaratnam, a billionaire hedge fund manager who began serving an 11-year prison sentence in January for his role in one of the biggest insider trading scandals in U.S. history.

The documents also reveal detailed information about the financial dealings of array of notorious people and companies including international arms dealers, smugglers and a company the European Union says is a front for Iran's nuclear-development program. Records have also been found on:

-- Maria Imelda Marcos Manotoc, daughter of the late Philippine dictator Ferdinand Marcos. Following the release of the data, Philippine officials said they hope to learn if any of the money now held by Manotoc is part of the estimated $5 billion her father amassed through corruption.
-- Individuals and companies who stole $230 million from Russia's treasury in a case which strained U.S.-Russia relations and led to a ban on Americans adopting Russian orphans.
-- A Venezuelan man accused of using offshore companies to fund a U.S.-based Ponzi scheme and spending millions of dollars to bribe a Venezuelan government official.
-- A corporate mogul who got billions of dollars in contracts from the government of Azerbaijan while serving as a director of offshore companies owned by the Azerbaijani president's daughters.

The ICIJ and 86 investigative journalists worked for more than a year to make sense of the cache of 2.5 million files. The reporters came from new outlets in 46 countries, including The Guardian and the BBC in the U.K., Le Monde in France, Süddeutsche Zeitungand Norddeutscher Rundfunk in Germany, The Washington Post, the Canadian Broadcasting Corporation and 31 other media partners around the world.

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Accountant appointed to investigate Stanford companies

Accountant appointed to investigate Stanford companies
By Tahna Weston - Tuesday, April 2nd, 2013.


ST JOHN’S, Antigua – An accountant has been appointed to look into the business affairs of companies of former financier R Allen Stanford.

Hordley Forbes of Forbes & Associates, Chartered Accountants, will conduct investigations into Stanford Development Company (SDC) Ltd and three other affiliated companies who are registered owners of property in Antigua.

Attorney General Justin Simon QC on March 5 obtained a court order for the investigation.

Forbes has been empowered to enter into SDC’s owned or operated properties to demand and examine books, documents, correspondence, contracts, corporate and accounting records.

He will also be seeking the co-operation of directors, managers, former directors, accountants, and legal counsel, all of whom are under an injunction not to interfere with or prevent the inspector from conducting his investigation.

“The application was filed in October 2012 on a number of grounds including that SDC and the other companies may have been formed and managed for a fraudulent and unlawful purpose and in particular to defraud customers of Stanford International Bank. That its obligation to pay severance to ex-employees remains outstanding despite disposition of real property, and the management of the company is questionable with the sole shareholder and director having been sentenced to 108 years imprisonment for massive fraud.

“The investigator is to report back to the court within 30 days of his appointment. The order was served on the registered office of the companies and personally on Barbara Streete and Andrea Stoelker with a Penal Notice attached,” Simon told OBSERVER media.

In January this year, SDC applied to the High Court for leave to file a claim against the Registrar of Companies for her refusal to accept and file documents, which seek to appoint Barbara Streete, a director and to amend the company’s Articles of Association to allow persons who do not hold shares in the company to be appointed directors.

The registrar was reportedly not satisfied with the authenticity of the documents presented. The application was heard on February 28 and decision has been reserved.

Following the filing of that case in June 2010, Andrea Stoelker resigned as director in August 2010, and obtained a power of attorney from R Allen Stanford, which he subsequently revoked.

SDC in September 2012 filed an application against Stanford International Bank Ltd. (SIBL), which is in liquidation.

The High Court ruled on January 21, 2013, that Barbara Streete and Hugh Marshall Jr lacked the authority to conduct affairs on behalf of SDC.

It was also found during the ruling that the company “has no properly constituted Board of Directors and as such it has no legal capacity to conduct the business of SDC”, and that “Ms Barbara Streete is not a director of SDC and should cease holding herself out as such.”

That decision is being appealed by SDC.

(More in today’s Daily OBSERVER)

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

SIPC: $5.44 BILLION NOW DISTRIBUTED TO MADOFF VICTIMS

Madoff Trustee’s Third Distribution Sends Approximately $506.2 Million to Customers With Allowed Claims

WASHINGTON, DC – April 1, 2013 - With the distribution of approximately $506.2 million to victims in the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS), a total of $5.44 billion will now have been distributed to BLMIS customers with allowed claims.   The Securities Investor Protection Corporation (SIPC) today applauded the hard work of Trustee Irving H. Picard and his attorneys in their continued efforts to recover and return funds to BLMIS customers.

When combined with the funds already returned to BLMIS customers from the Customer Fund and advances from SIPC, more than 50 percent of the total Madoff accounts with allowed claims will be fully satisfied following the third interim pro rata distribution. A total of 1,106 accounts will be fully satisfied following the third interim distribution out of a total of 2,178 accounts with allowed claims. 

Since December 2008, $9.32 billion has either been recovered or agreements reached to recover funds to return to BLMIS customers.  This amount is more than 53 percent of the approximately $17.5 billion in principal estimated to have been lost by BLMIS customers who filed allowed claims. The Trustee’s recovery of more than $9.32 billion has been made possible through advances provided by SIPC, which is funded by the securities industry.  To date, SIPC has committed approximately $807 million to pay customer claims and over $718 million to fund the liquidation proceeding.  No monies recovered by the Trustee have been used to pay any administrative expenses.  All recoveries made by the Trustee benefit customers. 

SIPC President Stephen Harbeck said: “Thanks to the significant Tremont Funds settlement, which allocated more than $1 billion to the BLMIS Customer Fund, and additional funds recovered by Trustee Picard and his team since last fall, additional distributions continue to be made in an effort to fully satisfy as many BLMIS allowed claims as possible. We applaud the hard work Trustee Picard has undertaken to recover monies and distribute them to customers at the failed BLMIS brokerage.  His successful efforts have resulted in the ability to fully satisfy more than half of the BLMIS accounts with allowed claims, a significant achievement.  SIPC is pleased to continue to facilitate the work of the Trustee to make possible the maximum recovery and return of funds to customers. ”

ABOUT SIPC

The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event of the failure of a brokerage firm owing customers cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.

The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims for customer cash and/or securities held in custody with the broker for up to a maximum of $500,000 per customer. This figure includes a maximum of $250,000 on claims for cash. From the time Congress created it in 1970 through December 2011, SIPC has advanced $ 1.8 billion in order to make possible the recovery of $ 117.5 billion in assets for an estimated 767,000 investors.

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