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.

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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.

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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

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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.”

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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.

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U.S. justices divided in Allen Stanford Ponzi scheme case: 10/7/2013

U.S. justices divided in Allen Stanford Ponzi scheme case


October 8, 2013, 8:08 am

WASHINGTON (Reuters) - On the first day of its new term on Monday, the U.S. Supreme Court appeared divided over whether lawyers, insurance brokers and others who worked with convicted swindler Allen Stanford could avoid lawsuits by investors seeking to recoup losses incurred in his $7 billion (4.3 billion pounds) Ponzi scheme.

New York-based law firms Chadbourne & Parke and Proskauer Rose and insurance brokerage Willis Group Holdings Plc were all sued by former Stanford investors.

They are part of a consolidated case along with two other defendants, financial services firm SEI Investments and insurance company Bowen, Miclette & Brittin, for which the Supreme Court heard a one-hour argument on Monday.

The defendants sought Supreme Court review after the New Orleans-based 5th U.S. Circuit Court of Appeals in March 2012 said the lawsuits brought under state laws by the former Stanford clients could go ahead.

The former Stanford clients are keen to pursue state law claims because the Supreme Court has previously held that similar so-called "aiding and abetting" claims cannot be made under federal law.

The defendants have argued that under the Securities Litigation Uniform Standards Act (SLUSA), the claims cannot be heard under state law either.

The class action lawsuits filed by the former investors accused Thomas Sjoblom, a lawyer who worked at both law firms, of obstructing a Securities and Exchange Commission probe into Stanford, and sought to hold the other defendants responsible as well.

Stanford's fraud involved the sale of certificates of deposit by his Antigua-based Stanford International Bank. Much of the litigation centres on whether these qualified as securities under applicable laws.

Stanford is serving a 110-year prison sentence.

ORAL ARGUMENT

During Monday's oral argument, the justices questioned to what extent a ruling in favour of the plaintiffs would affect the SEC. The Obama administration, representing the SEC, sided with the defendants.

The administration said in court papers it was against the lawsuits because they would conflict with Congress's intent to give the SEC the "ability to protect the securities markets against a variety of different forms of fraud."

Justice Department lawyer Elaine Goldenberg told the justices that lawsuits like those filed by the Stanford investors have "a very particular effect on investor confidence and the integrity of the markets, which is one of the purposes of the securities laws."

Several justices, including Justice Elena Kagan and Justice Stephen Breyer, indicated they would be uncomfortable with allowing such lawsuits to proceed in state court, although they also seemed keen for some kind of limit to federal authority.

Justice Anthony Kennedy, often the swing vote in close cases, questioned whether the claims made by the Stanford investors were any different from similar cases that courts already have determined to be excluded from state law claims.

But Justice Anthony Scalia signalled support for the plaintiffs on the language of the federal law in question, which says that state lawsuits are barred in relation to activity "in connection with the purchase or sale" of a covered security.

"There has been no purchase or sale here," he said.

A ruling in the case is expected before the term ends in late June.

The cases are Chadbourne & Parke LLP v. Troice et al, U.S. Supreme Court. No. 12-79; Willis of Colorado Inc et al v. Troice et al, U.S. Supreme Court, No. 12-86; and Proskauer Rose LLP v. Troice et al, U.S. Supreme Court, No. 12-88.

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Receiver files 3rd Schedule of Payments to be Made Pursuant to the Interim Distribution Plan

Receiver files 3rd Schedule of Payments to be Made Pursuant to the Interim Distribution Plan - On October 4, 2013, the Receiver filed his 3rd Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 3rd 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 3rd. 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.

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For those who missed the original Claims Deadline

I have had several victims - who for whatever reason missed the registration deadline last September and have asked me what they need to do to get their claim registered now. I have been speaking to Baker Botts and this is the reply he has sent to me: 

"Generally, if a claimant failed to file a claim with the US receivership prior to the September 1, 2012 bar date, such claims are forever barred as against the US receivership estate, per order of the Court. If there are extenuating circumstances that constitute good cause, the Receivership will consider the circumstances and make a determination whether to recommend acceptance of the late claims by the Court. Given the notice provided, however, we expect that good cause will be a difficult threshold to meet. If claimants wish to submit requests to accept late claims to the receivership, they can use the contact information below. 

Nonetheless, claimants who filed claims with the Joint Liquidators prior to September 1, 2012 but did not file with the U.S. receivership by that date may be allowed to participate in future receivership distributions if the Receiver determines the claimant has a valid claim and the claimant agrees to jurisdiction of the US Court. We will communicate directly with claimants who filed with the Joint Liquidators before the US receivership bar date with the appropriate form(s) to execute for the purpose of ensuring that such claimants agree to the jurisdiction of the U.S. District Court in Texas. Only after we have done so and received the appropriate forms back from the claimants will notices of determination issue to those claimants. Even if such claimants are allowed to participate in future distributions from the receivership, they will not be eligible to participate in the current distribution that has already been approved by the Court. 

Regards," 

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The final decision

Stanford Group sold the CDs while claiming that they were backed, at least in part, by SLUSA-covered securities.

 Therefore, the government's lawyers say, the bogus investments were in fact sold "in connection with" covered securities. And for SLUSA to work, it must be interpreted broadly, and the SEC's views (as the SLUSA watchdog) must be given deference.

 "Congress intended the phrase 'in connection with' to sweep widely enough to ensure achievement of 'a high standard of business ethics in the securities industry,'" while reining in excessive class actions, the government argues.

 But Preis says the SEC is backing what Goldstein calls a "newfound interpretation of the securities laws" to broaden its enforcement power "at the expense of backing the Stanford victims." Since the Stanford products that local investors bought were not sold on the New York Stock Exchange, state law should apply, he says.

 Regardless, it's an intriguing turn in the SEC's complicated role in the Stanford fiasco. Many victims blame the regulators for not catching on to Allen Stanford's scheme early. But the SEC backed investors' controversial bid for relief from the Securities Investor Protection Corp., even though the Stanford International Bank in Antigua, which issued the worthless CDs, was never a SIPC member.

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This just in from Baker Botts, hope it helps

The answer to your question concerning payments to trust beneficiaries is addressed on the Frequently Asked Questions page of the Stanford Financial Receivership Claims Website -- under FAQs relating to Trusts, Deceased Accountholders, and Related Beneficiaries -- which states specifically:

 1. How will the Receiver handle payments to beneficiaries of trusts, including trusts formerly administered by Stanford Trust Company, Ltd. in Antigua? Pursuant to the Notices of Determination issued by the Receiver, any payments regarding trusts' accounts will be made to the trusts themselves as payees. However, should the Receiver receive a request to change the payee from a trust to the trust beneficiaries, the Receiver will first need to verify the identities and ownership capacities of all beneficiaries of the trust, which may involve requests for additional information from those individuals, before making the requested change. Please note that any request to change the payee from a trust to its beneficiaries must include the express approval of all such beneficiaries.

The link to the FAQ section of the website is as follows:

 http://www.stanfordfinancialclaims.com/Home/FAQ#52

Requests to have checks reissued, along with supporting documentation, can be submitted to the Receivership within 180 days of the date the check was issued in writing by email at info@stanfordfinancialclaims.com and by mail at Stanford Financial Claims, c/o Gilardi & Co., LLC, P.O. Box 990, Corte Madera, CA 94976-0990.

 As we also state in the FAQs, people should not include requests for changes to payee names on the certification forms they return, and such requests will not be honored. Most claimants who had similar issues properly raised them as part of the notice of determination objection process, as the payee names are stated in the notices of determination. The only other way to make such a request after the check has issued is in writing per the instructions above. Claimants certainly can contact Gilardi by phone but the actual request for the payee name change and check reissuance must be in writing and signed by all beneficiaries of the trust.

 I have inquired with Gilardi regarding the answering of phone calls, and they have indicated they are continuing to receive and handle phone calls on a regular basis.

 As to claims that were listed for payment on the second distribution schedule, the checks were actually mailed on September 26, 2013. Thus, it is likely that many, have not yet arrived at their destinations. Regards,

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SEC lifts suspension for Dallas attorney accused of helping Stanford’s $7 billion fraud avoid detection

By Michael Lindenberger
mlindenberger@dallasnews.com

Shown here in 2002, former SEC enforcement official Spencer Barasch has been reinstated to practice law before the Security and Exchange Commission, about one year after he was suspended. Government officials say he helped steer investigators the other way when convicted schemer R. Allen Stanford was defrauding investors of $7 billion.

The Dallas lawyer accused by the U.S. Department of Justice’s inspector general of single-handedly using his position at the Securities and Exchange Commission to let R. Allen Stanford get away with defrauding investors of $7 billion is free to practice law again before the SEC.

Spencer Barasch worked 17 years for the SEC, including seven years as its chief of enforcement at the division office located in Fort Worth. After he resigned in 2005, he began representing Stanford before the SEC.

The inspector general’s report concluded that over the years as enforcement chief he had repeatedly denied federal investigators’ pleas to investigate suspicious aspects of Stanford’s offshore investment accounts, which later were determined to have been frauds.

Barasch denied wrongdoing at the time. He paid $50,000 to the Department of Justice to settle civil claims alleging impropriety.

Stanford was indicted in 2009 and convicted last year. He is serving a 110-year sentence in federal prison.

Last year, the SEC suspended Barasch from practicing before the commission, and said he could apply for readmission in one year. Barasch’s attorney released a statement at the time saying that Barasch had accepted the suspension to save on legal bills.

Barasch was head of enforcement for the SEC’s Fort Worth office from 1998 to April 2005. After leaving the government, he represented Stanford before the SEC in 2006.

A 2010 article in The Dallas Mornings News about the inspector general’s report included this anecdote:
In 2005, the report said, an SEC staff attorney presented the agency’s latest findings at a regional meeting of securities law enforcers attended by Barasch. The audit showed growing concern that the alleged Ponzi scheme was growing and putting billions of dollars at risk.
During the presentation, Barasch was said to look “annoyed.” Afterward, he reportedly told the attorney he had “no interest” in bringing action against Stanford.
“I thought I’d turned in a good piece of work and was talking about it to significant players in the regulatory community,” Victoria Prescott, the attorney, said in the report. “And I no sooner sit down, shut up and the meeting ended, but then I got pulled aside and was told this has already been looked at and we’re not going to do it.”
Some former colleagues defended him, however, with one telling The News that, at worst, he had used bad judgment.

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

BUSINESS REPORT.COM THE FINAL DECISION

The U.S. Supreme Court prepares to hear whether victims of the Stanford Group should be compensated.
By David Jacobs
Published Sep 30, 2013 at 6:00 pm

When the U.S. Supreme Court convenes Oct. 7, justices will hear a case that could decide whether victims of the Stanford Group scandal will finally be compensated, some five years after the Ponzi scheme fell apart.
The case could put the court's conservative justices in a quandary: Do I side with class action attorneys, or with a federal agency that wants to expand its power?

A bit of background: Baton Rouge attorney Phil Preis, arguing on behalf of Stanford Group victims, won at the Fifth Circuit Court of Appeals the right to pursue, in state court, a class action suit against law firms and financial services companies that he says enabled the scheme. That was a big win for the victims, because state law allows for a negligence claim, while federal law requires investors to prove actual knowledge of the fraud, a much higher bar.
Unfortunately for the victims, the high court agreed to review the Fifth Circuit's decision. Tom Goldstein, a prominent Washington, D.C., attorney and publisher of SCOTUSblog, will argue that the Fifth Circuit's decision should stand.
"This is going to establish the law on Ponzi schemes in the United States for years to come," Preis say
He argues that firms that worked with Stanford without probing what should have been obvious fraud should be held liable. Or as he puts it, "don't ask, don't tell" is not a defense. The big fish is SEI, an international firm that manages or administers some $400 billion in assets.

A U.S. Securities and Exchange Commission administrative law judge recently ruled that three former Stanford executives violated antifraud provisions of federal securities laws. The judge says the executives might not have known about R. Allen Stanford's scheme, but they ignored numerous red flags. While that line of reasoning seems to support Preis' argument, at the Supreme Court, the federal government will be supporting the other side.
It says the law, specifically the Securities Litigation Uniform Standards Act of 1998, precludes class actions based on state law that allege "misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security."

Basically, the government says securities fraud is the SEC's turf. And that's generally true. But in this case, the Supremes will have to decide how broadly the phrase "in connection with" should be interpreted.
The feds don't claim the fraudulent Stanford CDs were "covered securities" that might be traded on Wall Street. This was a classic Ponzi scheme; the purported investments underlying the CDs didn't exist. But the Stanford Group sold the CDs while claiming that they were backed, at least in part, by SLUSA-covered securities.----
Therefore, the government's lawyers say, the bogus investments were in fact sold "in connection with" covered securities. And for SLUSA to work, it must be interpreted broadly, and the SEC's views (as the SLUSA
Therefore, the government's lawyers say, the bogus investments were in fact sold "in connection with" covered securities. And for SLUSA to work, it must be interpreted broadly, and the SEC's views (as the SLUSA watchdog) must be given deference.
"Congress intended the phrase 'in connection with' to sweep widely enough to ensure achievement of 'a high standard of business ethics in the securities industry,'" while reining in excessive class actions, the government argues.

But Preis says the SEC is backing what Goldstein calls a "newfound interpretation of the securities laws" to broaden its enforcement power "at the expense of backing the Stanford victims." Since the Stanford products that local investors bought were not sold on the New York Stock Exchange, state law should apply, he says.Regardless, it's an intriguing turn in the SEC's complicated role in the Stanford fiasco.

Many victims blame the regulators for not catching on to Allen Stanford's scheme early. But the SEC backed investors' controversial bid for relief from the Securities Investor Protection Corp., even though the Stanford International Bank in Antigua, which issued the worthless CDs, was never a SIPC member.

The SEC failed to protect local victims from Allen Stanford. From Preis' perspective, the SEC is now failing to protect their interests once again.

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Stanford Financial Claims 2nd Distribution List September 16th 2013

On September 16 the U.S. Trustee Ralph Janvey filed with the Court of Dallas the second list of scheduled payments under the Plan of Distribution which includes about a thousand affected and a total of $ 3.86 million.

The Receiver will start the process of issuing checks within 10 days of its registration with the Court . Other payments will be scheduled and submitted to the court in the order in which received and processed Certification Forms. To view a copy of the 2nd. 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/

Receiver files 1st Schedule of Payments to be Made Pursuant to the Interim Distribution Plan

On August 20, 2013, the Receiver filed his 1st Schedule of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. The 1st 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 1st 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 lifts suspension for Dallas attorney accused of helping Stanford’s $7 billion fraud avoid detection

The Dallas lawyer accused by the inspector general of the Securities and Exchange Commission of letting R. Allen Stanford get away with defrauding investors of $7 billion is free to practice law again before the SEC.
Spencer Barasch worked 17 years for the SEC, including seven years as its chief of enforcement at the division office located in Fort Worth. After he resigned in 2005, he began representing Stanford before the SEC.

The inspector general’s report concluded that over the years as enforcement chief he had repeatedly denied federal investigators’ pleas to investigate suspicious aspects of Stanford’s offshore investment accounts, which later were determined to have been frauds.
Barasch denied wrongdoing at the time. He paid $50,000 to the Department of Justice to settle civil claims alleging impropriety stemming from his later decision to take Stanford on as a client, a decision he eventually reversed.

Stanford was indicted in 2009 and convicted last year. He is serving a 110-year sentence in federal prison.
Last year, the SEC suspended Barasch from practicing before the commission, and said he could apply for readmission in one year. Barasch’s attorney released a statement at the time saying that Barasch had accepted the suspension to save on legal bills. The settlement order specifically stated that Barasch neither admitted nor denied the wrongdoing described in the order.

Barasch was head of enforcement for the SEC’s Fort Worth office from 1998 to April 2005. After leaving the government, he represented Stanford before the SEC in 2006.

A 2010 article in The Dallas Mornings News about the inspector general’s report included this anecdote:
In 2005, the report said, an SEC staff attorney presented the agency’s latest findings at a regional meeting of securities law enforcers attended by Barasch. The audit showed growing concern that the alleged Ponzi scheme was growing and putting billions of dollars at risk.

During the presentation, Barasch was said to look “annoyed.” Afterward, he reportedly told the attorney he had “no interest” in bringing action against Stanford.

“I thought I’d turned in a good piece of work and was talking about it to significant players in the regulatory community,” Victoria Prescott, the attorney, said in the report. “And I no sooner sit down, shut up and the meeting ended, but then I got pulled aside and was told this has already been looked at and we’re not going to do it.”

Some former colleagues defended him, however, with one telling The News that, at worst, he had used bad judgment.

SEC wins dismissal of lawsuit over handling of $7 bln Stanford fraud

Published: Tuesday, 13 Aug 2013 | 12:40 PM ETBy: Jonathan Stempel



* SEC protected by exception to Federal Tort Claims Act

* Victims say SEC knew of Stanford Ponzi scheme in 1997

* Stanford serving 110-year prison term for $7.2 bln fraud

Aug 13 (Reuters) - A federal judge in Florida has thrown out a lawsuit accusing the U.S. Securities and Exchange Commission of negligence for failing to report that the now-imprisoned swindler Allen Stanford was running a $7.2 billion Ponzi scheme.

U.S. District Judge Robert Scola in Miami said the market regulator was shielded under an exception to the Federal Tort Claims Act that bars claims arising from misrepresentation or deceit.

The plaintiffs, Carlos Zelaya and George Glantz, said they lost a combined $1.65 million with Stanford, and sought class-action status on behalf of investors who were victims of his fraud. They plan to appeal Monday's decision, their lawyer Gaytri Kachroo said. SEC spokesman Kevin Callahan declined to comment.

Stanford, 63, is serving a 110-year prison sentence after he was convicted on criminal charges in March 2012 for a fraud that the government said was centered in certificates of deposit issued by his Antigua-based Stanford International Bank.

Zelaya and Glantz claimed that the SEC considered Stanford's business a fraud after each of four examinations between 1997 and 2004, but failed to advise the Securities Investor Protection Corp, which compensates victims of failed brokerages.

The SEC filed civil charges against Stanford in February 2009, two months after the multibillion-dollar Ponzi scheme of New York-based swindler Bernard Madoff was uncovered. In a typical Ponzi scheme, investors are promised high or consistent returns relative to the amount of risk taken, and older investors are paid with money from newer investors.

Last September, Scola let the lawsuit against the SEC go forward, saying the plaintiffs could argue that the regulator had breached a duty to report Stanford's misconduct.

But on Monday, he said the FTCA exception barring claims of misrepresentation deprived him of jurisdiction.

"The plaintiffs claim that they were induced into entering disadvantageous business transactions because of the SEC's misrepresentation," he wrote. "The plaintiffs' cause of action is a classic claim for misrepresentation."

Their lawyer Kachroo said: "We believe that the judge did not draw the appropriate distinction between a claim based on a misrepresentation and our claim based on a failure to warn in line with the SEC's mandatory duty to notify SIPC."

In 2010, the SEC's inspector general criticized the regulator, finding that it knew as early as 1997 that Stanford was likely running a Ponzi scheme.

Earlier this year, federal appeals courts in New York and California dismissed lawsuits against the SEC by victims of Madoff's fraud.

The case is Zelaya et al. v. U.S., U.S. District Court, Southern District of Florida, No. 11-62644.

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Stanford Victims’ Suit Over SEC Handling of Probe Tossed

Stanford Victims’ Suit Over SEC Handling of Probe Tossed
By Andrew Harris - Aug 13, 2013 3:30 PM CT

Two of R. Allen Stanford’s investors lost a bid to hold the federal government liable for the U.S. Securities and Exchange Commission’s alleged failure to tell another agency the financier’s business was in trouble.

The investors sued the U.S. two years ago claiming the SEC failed in its statutory duty to tell the Securities Investor Protection Corp. it suspected Stanford was running a fraud scheme before suing him in February 2009.

Stanford, 63, was later indicted. He was found guilty last year of running a $7 billion Ponzi scheme and is serving a 110-year prison sentence. Yesterday, a U.S. judge in Fort Lauderdale, Florida, ruled the federal government is immune from the investors’ suit.

“The plaintiffs claim is that they were induced into entering disadvantageous business transactions because of the SEC’s misrepresentation,” U.S. District Judge Robert N. Scola Jr. said in his ruling.

That type of claim isn’t allowed by the Federal Tort Claims Act, which sets forth under what circumstances the U.S. will let itself be sued, Scola said. Scola last year denied a defense bid for dismissal of the case, accepting as true at the time that the SEC had a duty to inform SIPC of its concerns.

SEC Probes
The SEC probed Houston-based Stanford Group Co. four times from 1997 and 2004, according to the investors’ revised complaint filed last year. While suspecting the business was a Ponzi scheme, with early investors paid from funds of those who followed, the agency took no action until 2009.

Plaintiff Carlos Zelaya invested $1 million with Antigua-based Stanford International Bank Ltd., losing almost all of it, while co-plaintiff George Glantz Revocable Trust lost almost all of a $650,000 investment, according to the complaint.

Their lawyer, Gaytri Kachroo of Cambridge, Massachusetts, didn’t immediately reply to a voice-mail requesting comment on the court’s decision. Kevin Callahan, a spokesman for the SEC, declined to comment.

Stanford investors lost about $5.1 billion in the scheme.

The case is Zelaya v. U.S., 11-cv-62644, U.S. District Court, Southern District of Florida (Miami).

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

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Golden Receivers – Trustees make a killing mopping up frauds

Golden Receivers – Trustees make a killing mopping up frauds
By JAMES DORAN
New York Post | August 12, 2009
Link to article

There’s a bull market on Wall Street.
Not for investors, but for a handful of elite lawyers and financial pros acting as court-appointed receivers or trustees of firms whose principals have been snagged by authorities and charged with running Ponzi schemes.
These lucky few, whose jobs most times are built around retrieving assets and winding down operations, can earn anywhere from $4,500 an hour to almost $2 million a week.
In the larger cases, professionals can earn $100 million over the life of the case.
And with the economy in recession and a surge in fraud cases being filed — from Bernie Madoff to R. Allen Stanford, Tom Petters and Ezra Merkin — there is no shortage of work.
“Many of the receivers I know are pretty busy,” said Robb Evans, whose firm has been appointed receiver in 28 cases this year through July, including the $1.5 billion fraud at WG Trading, which snared New Yorkers Paul Greenwood and Stephen Walsh.
Over the same period last year, Evans was appointed in 11 cases.
Ralph Janvey, the receiver winding down Stanford Financial Group, asked the court to approve more than $27 million of fees for just a few months’ work on the case. Janvey will pay accountants and lawyers at 14 different firms with the funds.
When the Securities and Exchange Commission and investors objected to Janvey’s massive fees, he told them he had already given them a 20 percent discount “out of concerns for the victims.”
While it is hard to pinpoint exactly what percentage of the total assets in any fraud will be eaten up by the professional fees of these “Golden Receivers,” in one recent $6.6 million fraud, the receiver distributed 43 percent of the assets to the victim — the rest went to professionals.
The percentage of assets eaten up by professional fees in the larger, $1 billion-plus cases, is expected to be lower.
“It’s a gravy train,” said Billy Procida, CEO of Procida Inc, who for a short time was appointed receiver to The Petters Group Worldwide after its founder, Tom Petters, was accused of running a $4 billion Ponzi scheme.
Procida, a Donald Trump protégé who was asked to become the receiver by a group of Petters creditors, was forced aside when a Minnesota court appointed Doug Kelley, a local lawyer and former Republican gubernatorial candidate, to wind down the business.
“I have dealt with a number of receiverships, and for these lawyers it’s like the full employment act,” Procida said.
In all, five $1 billion-plus frauds and alleged frauds have been unearthed in the last year.
Irving Picard, the court-appointed trustee in the Madoff fraud, is also raking in the dough. Picard last week asked for more than $15 million of fees for just 15 weeks of work — but got only $12.6 million.
Bart Schwartz, one of two receivers presiding over Merkin’s investment funds in New York, has had his fees capped by the court at just $150,000 a month but isn’t going to finish soon.
“There is a strong possibility that this receivership will last a fairly long time,” he said. “It is our job to make as much money for the investors as possible. Given current market conditions, it might be better to wait until things improve before we liquidate some of these assets.”
And while Schwartz is waiting, the meter is still running.
Procida believes the Golden Receivers should be paid on performance, not on time taken to complete their task. “They should get paid a percentage of their net proceeds, not gross. This would stop them from spending a million dollars to recoup hundreds.”
One of Madoff’s former investors filed court papers asking Picard to make public his time sheets, so the victims could see how the receiver spends his $1 million a week
Picard has said his work on the Madoff case could last at least five years, which means he could make upwards of $250 million if the court continues to allow his billing at the current rate.
“If he drags it out long enough,” said Helen Davis Chaitman, a lawyer representing hundreds of Madoff victims, “he will make more money than Madoff.”
Tags: Billy Procida, Doug Kelley, James Doran, New York Post, Ponzi Schemes, Receiver, Tom Petters
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One Response to “Golden Receivers – Trustees make a killing mopping up frauds”
Laser Haas says:
November 25, 2009 at 5:32 pm
You have published a story that has hit the nail on the proverbial head.
Receivers, Trustees and others that are elite. Need not compete for jobs. As is evident by the comments within the story Procida. He was not removed for excess billings or bad performance. He was removed so that a “good ole boy” could be placed within.
.
Doug Kelley was initially hired by PGW and even went public stating Creditors are a last consideration. Then he was made a Federal Receiver – violating Ethics, Model Rules and common sense.
.
Being that the law is being cast assunder – the Judge gave Doug Kelley and his counter Hansen Judicial Immunity.
.
Exactly where does one find the Federal authority to hand out Judicial Immunity?
.
Then Doug Kelley – with willful blindness of the US Trustee (the police of the system) – where the US Trustee even then overtly Helped Doug Kelley to illegally become the Trustee.
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Even the American Bar Association states that once a bankruptcy is filed the Receiver is moot.
.
This means the Bankruptcy Judge joined the fray in permitting skirts of the Law.
.
When ordinary citizens skirt (break) the Law – they go to jail!
.
We barked about Petters, Traub and others for years now. Even with all the arrests and pleads of guilt – felony violations and Collusions continue – including the Polaroid sale(s) etc.
.
This website fits the bill – for cronyism & corruption we must kill!
Sincerely
Laser@petters-fraud.com

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US SEC judge rules Stanford executives are liable for fraud

In a victory for federal regulators, an administrative judge has found three former executives who worked for Allen Stanford's now-defunct brokerage liable for fraud and said they should banned from the industry.

The ruling comes more than a year after Stanford was sentenced to 110 years in prison for bilking investors through a Ponzi scheme with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

In her ruling, Securities and Exchange Commission Judge Carol Fox Foelak described as "egregious" the conduct of former Stanford Group Co. chief compliance officer Bernerd Young, former president Daniel Bogar and Jason Green, a former head of the private client group.

Foelak also ordered the three executives to pay fines and forfeit ill-gotten profits.

The SEC's case against the three executives did not allege they actually knew about Stanford's Ponzi scheme.

Instead, it hinged on whether they sufficiently ensured that marketingmaterials and other disclosures were adequate for investors.

All three executives have vigorously denied any wrongdoing.

Young, who was previously a regulator with the group now known as the Financial Industry Regulatory Authority, told Reuters in the summer of 2012 that he took due diligence steps including reviewing quarterly financial statements and reading annual reports about the bank.

But he said in the exclusive interview that Antiguan privacy laws kept him from seeing more details about the investment portfolio, so he relied on the bank's compliance experts.

"If there is such a thing as a...perfect scam, this was the perfect scam," Young told Reuters last year.

Foelak ordered Young, Bogar and Green to each pay a $260,000 civil penalty.

In addition, Young was ordered to return roughly $592,000 plus interest. Bogar was ordered to forfeit about $1.5 million, and Green must pay $2.6 million.

Lawyers for both Young and Bogar said they were disappointed in the judge's ruling and are still considering their options.

If they decide to appeal, the case would first go before the full five-member SEC.

"Mr. Young...is deeply troubled by the initial decision's disturbing implications for the securities compliance industry and the newer and more Draconian standards that compliance officers may be facing," said Randle Henderson, Young's attorney.

"The decision demonstrates the real danger to compliance officers relying upon advice of independent outside counsel, fully licensed and qualified accounting firms and the audited financial opinions they issue, and the sovereign financial regulatory agencies of foreign countries."

Thomas Taylor, a lawyer for Bogar, said that while he felt his client got a "full and fair hearing," he disagreed with her outcome profoundly.

An attorney for Green could not be immediately reached.

Friday's ruling by the administrative judge marked the second big trial victory for the SEC in one week.

On Thursday, a jury in New York found former Goldman Sachs Group Inc. vice president Fabrice Tourre liable for federal securities law violations for his role in a complex mortgage deal that cost investors $1 billion when it failed.

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