Stanford Victim Penny-a-Dollar Payment Plan Goes to Judge
By Thomas Korosec & Andrew Harris - Apr 11, 2013 12:00 AM ET
R. Allen Stanford’s investors may now be able to 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 to marshal and liquidate Stanford’s personal and business assets in February 2009, is set today to ask permission to make a $55 million interim distribution, about one penny for each of the $5.1 billion dollars lost in the fraud scheme.
The proposed payout trails 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 filing with U.S. District Judge David Godbey in Dallas. “But the receiver’s interim plan, which drew only three objections from thousands of claimants, comes remarkably close.”
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 later 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 jury’s verdict.
In addition to being asked to approve the interim distribution plan, Godbey today will consider an accord between the Janvey receivership and Antiguan court-appointed liquidators with whom the receivership had been battling for control of $300 million of Stanford assets outside the U.S., potentially putting more money in reach of investors. Godbey’s approval of that agreement would be a step toward ending the dispute between Janvey and his Antiguan counterpart.
“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,” an attorney for Janvey, Kevin Sadler of Baker Botts LLP, told Godbey in a filing last month.
Liquidators Hugh Dickson and Marcus Wide, accountants with units of Grant Thornton International Ltd, 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.
Angie Shaw, a founder of the Stanford Victims Coalition, denounced the agreement as “ransom” that rewards the Antiguan liquidators at the investors’ expense.
Janvey’s professionals have 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.
An additional $4.1 million has 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).
To contact the reporter on this story: Andrew Harris in the Chicago federal courthouse at
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