Janvey Stops Stanford ‘End Run’ to Tap Lloyd’s Coverage in U.K.

R. Allen Stanford’s court-appointed receiver persuaded a U.S. judge to block the accused Ponzi scheme mastermind’s bid to access insurance funds to pay his lawyers at a hearing today in London Chancery court.

Ralph Janvey, who was placed in charge of Stanford’s financial empire, told a Dallas judge the Texas financier is trying “a blatant attempt to end run this court” by asking the U.K. court to order the insurer to pay over Janvey’s objections. U.S. District Judge David Godbey yesterday ordered Stanford to withdraw his petition from the London court.

“It appears that Stanford is purporting to seek relief before another tribunal relating to the policies,” Godbey wrote in an order posted on his court’s Web site. “Such actions by Stanford both violate the terms of this court’s prior orders, as well as threaten to interfere with this court’s jurisdiction over the policies.”

Janvey has been fighting Stanford’s efforts to unlock frozen assets or access his Lloyd’s of London liability insurance to hire lawyers to defend against civil and criminal allegations he swindled investors of more than $7 billion through bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

‘Very Unfortunate’

“The court’s order is entirely appropriate,” Janvey said yesterday in a statement issued by his spokeswoman, Kristie Blumenschein. “It is very unfortunate that Mr. Stanford and his attorneys continue to engage in conduct which needlessly increases the costs of litigation to the receivership.”

Stanford, 59, who denies any wrongdoing, is in jail in Texas awaiting trial on 21 felony charges that mirror civil fraud claims filed by the U.S. Securities and Exchange Commission. He is recovering from a Sept. 24 fight with another inmate that left him with a concussion, two black eyes and a broken nose, said Kent Schaffer, Stanford’s criminal-defense lawyer.

“He was beaten up,” Schaffer said. “I don’t know what the circumstances are that led to the fight or why they kept him in the hospital until Sunday morning.”

Yesterday, U.S. District Judge David Hittner, who is presiding over Stanford’s criminal case in Houston, granted the defendant’s request for a transfer from a private Texas jail to a federal facility closer to his lawyers in downtown Houston.

Sworn Statements

Janvey filed copies of sworn statements that Stanford’s lawyers submitted last week to the British court, seeking an emergency hearing in London to force the receiver to stop interfering with payment by Lloyd’s of some fees to Stanford’s lawyers under the liability policy. Janvey claims the bulk of the policy coverage should be reserved for his use to defend Stanford’s companies against claims.

British lawyer Simon Peter Kamstra, in a statement dated Sept. 23, told the British court that the SEC and the U.K.’s Serious Fraud Office have no objection to Stanford obtaining legal defense funds through the Lloyd’s policy. The SEC, which has opposed letting Stanford access frozen funds to hire attorneys, hasn’t taken a position on Stanford’s access to insurance proceeds in papers filed with the Dallas judge.

Stanford faces “at least 49 separate United States proceedings,” as well as lawsuits in Switzerland, Israel, Panama, Venezuela, Mexico, Canada, Malaysia and Singapore, Kamstra said in his statement to the British court. Because Stanford hasn’t been represented by lawyers at most of these proceedings, judgments are being entered against him in several cases, Kamstra said.

Stanford was assigned to the federal public defender’s office in Houston two weeks ago by the judge overseeing his criminal case when the financier couldn’t say he had access to any funds for his defense. Kamstra mentioned that to the U.K. court, too.

Frozen Funds

Godbey has rejected Stanford’s requests for at least $10 million in frozen funds unless he can prove the money isn’t tainted by fraud. Godbey hasn’t ruled on requests over who can access Lloyds’ coverage that could be worth $90 million. More than 60 former employees of Stanford Financial Group, including its founder, have asked to draw on the policy.

Stanford’s British lawyers asked the U.K. court to order Janvey to drop his objections to Lloyd’s paying Stanford’s attorneys and to stop interfering with the payments.

Some Lloyd’s of London underwriters joined Janvey’s request to block Stanford’s attempt to obtain insurance coverage through the U.K. court proceeding today, according to documents filed yesterday in federal court in Dallas.

‘Threatening’ Letter

The underwriters said Stanford’s civil lawyers had sent them a Sept. 22 letter “threatening” legal action if they didn’t begin to pay Stanford’s legal bills immediately. Their lawyer, Daniel Lane of Akin, Gump, Strauss, Hauer & Feld LLP asked Godbey to rule on the issue “so the underwriters will not risk entry of competing and inconsistent orders” from the British court.

Hittner signed an unrelated order yesterday regarding Stanford’s legal team. He blocked Schaffer and the federal public defender’s Houston office from representing the financier on any appellate issue that arose before they were appointed as Stanford’s taxpayer-funded defense counsel on Sept. 16.

Schaffer said in a phone interview that the order will keep him from asking a full panel of judges at the U.S. Court of Appeals in New Orleans to review Hittner’s June 30 order denying Stanford bail on the grounds he might flee. A three-judge appellate panel already denied Stanford’s request to have the bail denial overturned, and his request for en-banc review must be filed at the New Orleans court by Oct. 8, Schaffer said.

Robert Luskin and Christina Sarchio, attorneys with Washington-based Patton Boggs LLP who filed an earlier appeal for Stanford on the bail issue, didn’t immediately return calls or e-mails seeking comment on whether they will continue working for the jailed financier.


Sir Allen Stanford moved to another prison after a brawl

The renegade financier Sir Allen Stanford, awaiting trial in Texas on $7bn (£4.4bn) fraud charges, is being moved to a different jail by US authorities after he suffered two black eyes, a broken nose and concussion in a fracas with a fellow inmate. Stanford, who bankrolled Twenty20 cricket tournaments, had complained repeatedly about conditions at the Joe Corley Detention Centre, a private facility in the town of Conroe where he shared a cell with ten others. After representations by lawyers, a judge ordered authorities to move him to a federal detention centre in central Houston, saying this will make it easier for the former billionaire to meet with counsel in preparation for his trial Stanford’s lawyer, Kent Schaffer, said the only way to communicate with Stanford had been to hold up documents to a window and shout through two-inch thick glass. Schaffer gave few details of the fight in which Stanford was injured, other than to say: “The reality is violence happens in any jail.”

Stanford in hospital after jail altercation

Allen Stanford, who is in jail awaiting trial on charges related to an alleged $7 billion fraud, was taken to a Texas hospital after a fight with another inmate, a deputy U.S. Marshal confirmed on Friday.

Stanford, 59, was injured in a fight on Thursday morning and needed medical attention, the deputy said.

He will be kept in the hospital overnight returned to the jail on Saturday, Houston television station KPRC-TV reported.

The deputy declined to provide details of the extent of Stanford’s injuries.

A phone call to Stanford’s lawyer was not immediately returned.

Stanford has been in a federal detention facility 40 miles north of Houston since his arrest in June. He is accused of running a Ponzi scheme targeting clients of his offshore bank in Antigua.

Stanford Seeks Reversal of Two Court Orders to Sell Assets

R. Allen Stanford, accused by the U.S. of leading a $7 billion fraud scheme, is seeking reversal of two court rulings allowing a receiver to sell assets from the Texas financier’s private equity portfolio.
Stanford’s attorneys yesterday filed papers with the federal court in Dallas signaling their intent to appeal trial court Judge David Godbey’s Aug. 25 rulings enabling the receiver to sell Stanford’s stakes in a Houston luxury hotel development and two Israeli development funds.
The U.S. Securities and Exchange Commission sued Stanford in February, claiming he and two business associates led a “massive” fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd.
The Dallas court then appointed attorney Ralph Janvey as receiver for Stanford’s businesses, authorizing him to marshal the financier’s assets to repay investors. Janvey in July asked the court to approve his sale of the private equity holdings.
The receiver asked for, and received, permission to liquidate Stanford’s shares in Midway CC Hotel Partners LP for $2.7 million plus the assumption of obligations of Stanford Venture Capital Holdings Inc., which the receiver said included a pending $4.5 million capital call.
Janvey also obtained Godbey’s permission to sell for $4.1 million of Stanford’s $14.3 million stake in the Israeli development funds to avoid $2.5 million in past-due capital calls and another $61 million in future commitments.
‘Not Prudent’
Attorneys for the financier opposed the sale plans, arguing they weren’t in the best interests of the receivership estate.
“Liquidating the investments now, while they remain immature and/or are showing negative returns, is not financially prudent,” Ruth Brewer Schuster, Stanford’s civil lawyer, said in a July 24 court filing opposing the sale of the Israeli funds.
“We believe the appeal is without merit,” Kristie Blumenschein, a spokeswoman for Janvey, said in an e-mailed response to questions.
Stanford, who has also been indicted on criminal fraud charges, has denied all allegations of wrongdoing. He is being held without bail pending a trial which could be more than one year away.
The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas

Receiver wants to sell Allen Stanford’s yacht

The receiver in charge of Allen Stanford’s assets has asked a federal judge for permission to sell the alleged swindler’s luxurious 112-foot motor yacht, the Sea Eagle.

Ralph Janvey, the receiver in the case, filed a motion late on Tuesday asking U.S. District Judge David Godbey in Dallas to approve the sale of the vessel, which is currently listed for $6.5 million at a marina in Fort Lauderdale, Florida. here

Stanford bought the boat for $3.9 million in 1998 and invested “substantial sums” to renovate it. Costs included reducing the number of state rooms, replacing the teak interior with mahogany and putting in a new galley kitchen, according to the yacht broker and court papers.

The receiver has one bid for $2.5 million from an investor in Dubai who has agreed to take the vessel “as is,” but higher bids would be accepted if the sale process were approved by the judge, court papers said.

Stanford, 59, whose fortune was estimated at $2.2 billion by Forbes magazine in 2008, is accused of masterminding a $7 billion scheme involving fraudulent certificates of deposit issued by his offshore bank in Antigua.

Janvey wants to sell the vessel because it is very expensive to maintain.

“The yacht requires a 24/7 crew aboard for insurance qualification, continuous air conditioning and water service and costs the receiver over $25,000 per month just to keep it in dock,” the motion said.

In August, Janvey filed a motion seeking approval to sell Stanford’s smaller 50-foot yacht, the Little Eagle, to a buyer from Oklahoma for $150,000.

Godbey has not ruled on either motion.

Before the U.S. government seized his assets in February, Stanford lived an opulent lifestyle. He frequently flew all over the world in his private jets and owned luxury homes in Texas, Florida and the Caribbean.