Judge Rules Stanford’s U.S. Receiver to Keep Control of Ponzi Scheme Case

By | August 1, 2012

Allen Stanford’s U.S. court-appointed receiver may keep control of the process to collect and distribute the convicted Ponzi schemer’s assets to victims, defeating a bid by Caribbean liquidators, a U.S. federal judge has ruled.

U.S. District Judge David Godbey in Dallas said it was “manifestly clear” that the United States was the “nerve center” of Stanford’s estimated $7 billion fraud, which centered on bogus certificates of deposit.

While recognizing that the Texas financier’s Stanford International Bank Ltd affiliate, which issued the CDs, was in Antigua, the judge said most of the day-to-day operations — and most of the victims — were elsewhere.

Prosecutors estimated that more than 20,000 investors were bilked in the two-decade fraud, which was uncovered in 2009.

“No other country approached the magnitude of the United States as a generator of CD sales,” Godbey wrote in a 60-page decision made public on Tuesday. “Stanford employees managed and directed the CD enterprise from the United States with no meaningful input from Antigua.”

Godbey’s ruling is a defeat for the Antigua liquidators Hugh Dickson and Marcus Wide of Grant Thornton International Ltd, who according to the judge had engaged in “repeated interference” in challenging the authority of U.S. receiver Ralph Janvey.

The judge did grant them “non-main” recognition, allowing them to gather evidence and conduct interviews provided they cooperated with Janvey, the U.S. Department of Justice, the U.S. Securities and Exchange Commission and others.

Elizabeth Ortega, a spokeswoman for the Antiguan liquidators, said in a statement that they are likely to appeal.

“We are disappointed that the American court has ruled in a manner inconsistent with the recognition already granted to the joint liquidators in the United Kingdom and Switzerland,” she said.

Kevin Sadler, a partner at Baker Botts representing Janvey, said the decision directs the Antiguan liquidators “in clear terms” to cooperate, and to stop blocking Janvey’s effort to recover money from accounts held outside the United States.

“The court has sent a clear message that such ‘extremely litigious and calculating’ conduct is not helpful to the victims of the Stanford fraud,” he said.

Janvey has said the estimated $330 million in the foreign accounts could be the single largest pool available to Stanford investors.

Stanford is serving a 110-year prison sentence following his conviction in March.

The case is In re: Stanford International Bank Ltd, U.S. District Court, Northern District of Texas, No. 09-00721.

Was this article valuable?

Here are more articles you may enjoy.