Stanford’s daughter agrees to vacate $1.3M condo

The daughter of jailed Texas businessman R. Allen Stanford has dropped her fight to stay in a $1.3 million Houston condominium, her attorney said Thursday.

Randi Stanford’s decision came hours before she was to appear in federal district court to show why she should not be held in contempt for refusing to cooperate with government efforts to sell the 2,800-square-foot home. She will move out by March 31.

The condo was a gift from her father, who is accused of leading a $7 billion Ponzi scheme — allegations that he denies. Court-appointed receiver Ralph Janvey plans to sell the condo and direct the proceeds to allegedly defrauded investors.

On Wednesday, Janvey filed a declaration from a forensic accountant detailing that most of the $1.3 million purchase price came from the elder Stanford’s personal bank account in Antigua, which is tied to his alleged wrongdoing.

Joe Kendall, Randi Stanford’s attorney, said his client put up $20,000 for the condo and that her mother, Susan, put up $50,000. But the deed to the home is held by a limited liability company; its only member is R. Allen Stanford.

“That would make selling the property by Randi Stanford very problematic under the current circumstances,” Kendall said.

He added that Randi Stanford is working three jobs to support herself.

Janvey notified Randi Stanford in March 2009 that he intended to sell her condo. He offered to allow her to continue living there rent-free so long as she maintained it in good order. He also offered to provide three hours notice before showing the unit to prospective buyers and 30 days notice for her to remove her possessions when it was sold.

Instead, she declined to cooperate and argued that Janvey’s authority did not extend to the condo.

Randi Stanford said she spent more than $113,000 for upkeep since she moved in three years ago. She has not waived her claim to a share of the proceeds from the sale proportionate to her investment in the property, Kendall said.

Her father is the subject of a Securities and Exchange Commission lawsuit accusing him of promising inflated returns to about 28,000 investors on certificates of deposit at his Antiguan bank. The SEC also accuses him of skimming more than $1 billion to fund his lavish lifestyle.

Stanford is jailed in the Houston area on similar criminal charges.


Judge Puts 2 Insurers on the Hook for Defense Costs for Stanford, 3 Execs

Senior U.S. District Judge David Hittner of Houston on Tuesday issued a preliminary injunction that orders two insurance companies to advance defense costs to Stanford Financial Group executives facing criminal charges and civil litigation. In a 42-page order, Hittner ruled that Certain Underwriters at Lloyd’s of London and Arch Specialty Insurance Cos. are prohibited from withholding “all ‘costs, charges and expenses'” already incurred by the defendants and that will be incurred in the future in United States v. Robert Allen Stanford, et al., a criminal case pending in Hittner’s court, and in Securities and Exchange Commission v. Stanford International Bank Ltd., et al., a civil case which is pending before U.S. District Judge David Godbey of the Northern District of Texas. Hittner gave the insurance companies 10 days to pay all invoices already submitted by defense attorneys for the criminal case in his court and the SEC civil suit in Godbey’s court.

Allen Stanford and three other Stanford Financial Group defendants — Laura Pendergest-Holt, Gilberto Lopez Jr. and Mark Kuhrt — filed the coverage suit after the underwriters in November 2009 issued denial letters that retroactively denied them coverage under directors and officers’ policies.

In the order, Hittner found the Stanford plaintiffs “met their burden of persuasion with respect to all four prerequisites of a preliminary injunction.”

Lee Shidlofsky, a partner in Visser Shidlofsky who represents the Stanford plaintiffs in the coverage suit, Laura Pendergest-Holt, et al, v. Certain Underwriters at Lloyd’s of London, et al., says “this is what we wanted.” He notes, however, that defense attorneys for the insurers told him they will appeal the order to the 5th U.S. Circuit Court of Appeals.

Neal Lane, a partner in Akin Gump Strauss Hauer & Feld in San Antonio who represents the insurance company defendants, did not immediately return a telephone message seeking comment.

Stanford, who is in custody, and the other three defendants, who are out on bond, have each pleaded not guilty to the criminal charges against them and have denied the allegations in the civil suit. The executives were indicted in June on fraud and obstruction charges in connection with an alleged conspiracy to defraud investors who bought about $7 billion in certificates of deposit sold through the Stanford International Bank Ltd. They pleaded not guilty to the charges in June, and Hittner set the trial for January 2011.

Judge okays sales of Stanford property

LOS ANGELES (Reuters) – A U.S. judge on Tuesday approved the sale of real estate owned by corporations controlled by alleged swindler Allen Stanford.

Receiver Ralph Janvey, who is charged with recovering assets for Stanford investors, had asked the court to allow CB Richard Ellis to publicly auction the dozens of parcels of properties in the continental United States and U.S. Virgin Islands “in an efficient and cost-effective manner.”

“Marketing efforts will begin immediately,” Janvey said in a statement. “However, the timing of any sale will necessarily depend on … relevant market conditions and debt obligations associated with each property.”

U.S. District Judge David Godbey approved Janvey’s plan but ordered him to notify the Stanford Condominium Owner’s Association if he tries to sell property owned by the Stanford Development Corp, and give residents a chance to object.

Stanford, his former chief investment officer Laura Holt and former accounting executives Gilbert Lopez and Mark Kuhrt and an Antiguan regulator, face criminal and civil charges for defrauding investors in a $7 billion Ponzi scheme involving certificates of deposit.

Stanford, 59, is in jail awaiting a January 2011 trial. Stanford, Holt, Kuhrt and Lopez have denied any wrongdoing.

Although Stanford has yet to be tried, the court “has found good cause to believe that defendants violated federal securities laws,” according to court documents.

The procedures call for the receiver to select a “stalking horse bidder” to set the floor for the public auction price, and to pay a break-up fee of 3 percent should that bidder not prevail, court documents showed.

Competing offers are to be submitted to the receiver at least five days prior to the auction, the documents showed.

Janvey will post a notice of the proposed sales on its website, here, and in at least one local newspaper for at least four weeks prior to the sale, the order said.

The properties to be auctioned are located in various counties in Texas, Michigan, Tennessee, North Carolina, and Mississippi and in the U.S. Virgin Islands.

Janvey also was granted permission to dispose of certain parcels through private sales, the court order showed.

DPP makes submissions in King case

Written by Tahna Weston (Antigua Sun)

The former head of the Financial Services Regulatory Commission (FSRC), Leroy King, allegedly sought advice from Sir Allen Stanford’s legal counsel pertaining to questions being raised by the Eastern Caribbean Central Bank (ECCB).

Director of Public Prosecutions (DPP) Anthony Armstrong made mention of the matter while making submissions in the extradition matter before Chief Magistrate Ivan Walters on Monday (25 Jan).

King has been charged by the Securities and Exchange Commission (SEC) with taking hundreds of thousands of dollars in bribes to ignore wrongs in relation to the alleged Sir Allen Stanford $8 billion Ponzi scheme. He is facing ten counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to obstruct the SEC, and conspiracy to launder illegal proceeds.

The SEC’s complaint alleges that King facilitated the Ponzi scheme by ensuring that the FSRC conducted sham audits and examinations of Stanford International Bank Limited’s (SIBL’s) books and records. They also allege that in exchange for bribes paid to him over several years, King made sure that the FSRC did not examine SIBL’s investment portfolio.

Armstrong said that King faxed letters which were in his handwriting to Maurice Alvarado, Stanford’s Financial Company’s (SFC) general legal counsel. The letters were faxed to Alvarado at the SFC Houston office. The correspondences sent to the legal counsel were letters from the Eastern Caribbean Central Bank (ECCB) addressed to King regarding affiliate companies of the Bank of Antigua (BOA), which speaks to the supervision of SIBL and Stanford Trust Company Limited STCL).
Armstrong said that in one of the hand-written letters King writes, “My good friend” (referring to Alvarez.)

In another letter written to the attorney, he (King) again writes, “To America’s best and greatest attorney. Maurice, I am sending you two versions – one short and one long with a little more knockout punch. I prefer the shorter version, a little more subtle and diplomatic.” It was further quoted in that letter by King to Alvarez, “Any other idea? Must conclude tomorrow. Will send you a package to include the annual report for SIBL and STCL.

“I am sending a message to these guys that the institutions concerned are not run of the mill, they are great quality institutions and the numbers speak for themselves. Please do not bill me (laugh) Thanks a million, Lee (short for Leroy.)”

The DPP asked the court why King would be sending these letters from the ECCB concerning SIBL and STCL to his “good friend Maurice Alvarado” when he is refusing to disclose any information to the US regulatory body (the SEC).

On 23 Feb., 2007, King wrote to James Davis seeking further guidance as to how to respond to the ECCB’s request.

Armstrong also revealed that King wrote a letter to Davis under the header “Private and confidential” in which he asked “How can we fix this?”

The DPP told the court that Davis admitted to seeing certain monies being passed and when he (Davis) inquired about the sums, he was told that these were monies to be paid to King. Davis said the payments to King were done by cash.

Armstrong told the court that there are questions about cash deposits which were made to King’s account at Bank of America and JP Morgan Chase. The DPP pointed out that there is evidence to support the claim made by Davis that Stanford would provide regular bribe payments to King in exchange of him turning a blind eye to the alleged Ponzi operation. According to Armstrong, this is evident from the cash deposits which were made to King’s accounts in Atlanta, Georgia at the two banks.

He said that between 2 Feb. 2005, to 2 Feb., 2009, there were regular cash deposits made to the Bank of America account from as much as US$15,000 to as little as US$1,800, whilst at his account at JP Morgan Chase there were similar regular cash deposits made from 9 Jan., 2003, to 4 Feb., 2009, from as high as US$9,700 to US$2,000.

The DPP told the court that an independent auditor conducted investigations into SIBL’s financial statements among other documents and determined that the large investments being alleged did not exist.

However, Armstrong said that King reported to the SEC officials that SIBL was solvent and a good quality institution which was fully compliant with the requisite offshore banking regulations.

The DPP quoted from the report of the auditor, senior managing partner Karyl Vancassel of FTI Consulting Incorporated. In it Vancassel outlined, “In its monthly report issued in Dec., 2008, SIBL claimed to have had 8.6 billion in total assets and spent 8.4 billion in investment portfolios. FTI’s analysis to date reveals that the value of all virtual non-cash assets listed on 31 Dec., 2008, SIBL’s balance sheet was substantially overstated.”

The auditors concluded that any third-party analysis of SIBL’s actual internal records, similar to the type that FTI conducted, would have indicated the vast majority of investments (listed in SIBL’s report) did not exist or were grossly overstated as of 30 Sept., 2008.

Armstrong also referred to the evidence of James Davis in which he stated that in the third week of January last year (2009) he (Davis) met Leroy King in Antigua and that he (King) appeared very stressed. Davis said at that time SIBL was facing increasing scrutiny from the SEC, and added that he (Davis), Sir Allen and Laura Pendgast had received subpoenas from the SEC.

According to Armstrong, King told Davis that he (King) had been contacted by the SEC and asked him (Davis) if “We are going to make it”, to which Davis said he understood what King asked to mean whether the fraud that they had been engaged in was going to be exposed. Davis said he told King he thought they were going to be alright.

The DPP invited the court to consider that if King was not part of the conspiracy to defraud potential investors, then “who is he referring to as we and why would he be concerned if we are going to make it.” Davis said that King and Stanford were close friends.

Armstrong revealed that Stanford had handed to King an $8,000 Super Bowl ticket, which he said was part and parcel of the bribes. He added that was the comfort of being an active participant of the alleged Ponzi scheme.

King had a trading account with Charles Schwab and he later closed the account and withdrew the funds of $410,000 and $150,000.

Armstrong said that there was no written statement to support reasons why King took the money from trading account.
He admitted, though, the United States (US) government is not claiming that those proceeds are from any illegal activity.

Armstrong said that the monies, however, would have been subjected to forfeiture proceedings. He said King was given “notice of forfeiture” on the indictments that were filed in June, last year.

King’s attorney, Dane Hamilton QC, objected at this stage and told the court that there were no indictments (filed against King) at the time (when the monies were withdrawn).

Armstrong responded that King would have tried to minimise such consequence (forfeiture) in light of what was going on in Jan., 2009. He said an offence can be committed by an act of commission or omission.

According to Armstrong on 21 June, 2005, a correspondence was sent by King to Elizabeth Jacobs, deputy director of Securities and Exchange Commission (SEC), notifying her that any further investigations into SIBL was “totally unwarranted.”

“Why would he (King) say so if he was not investigating SIBL?” Armstrong inquired.

Judge tells Lloyd’s of London to pay for Stanford lawyers now

Jan. 26, 2010, 2:46PM

A federal judge today ordered Lloyd’s of London to pay for the criminal defense lawyers for R. Allen Stanford and other officers of his company indicted for allegedly operating a $7 billion Ponzi scheme.

Senior U.S. District Judge David Hittner issued a preliminary injunction and ordered the Lloyd’s insurers to pay the lawyers for Stanford and two codefendants within 10 days for work already billed and to keep paying them under a company policy to pay legal costs for directors and officers.

Lloyd’s has refused to pay for criminal defense past August, when the company’s former chief financial officer, James M. Davis, pleaded guilty to a role in the scheme. Lloyd’s insurers determined that the accused defendants participated in money laundering and thus it need not pay. But Davis did not plead guilty to money laundering, and no court has found that anyone involved in the case laundered money.

Lloyd’s lawyers argued that since Stanford and codefendants Laura Holt and Gilbert Lopez refused to testify in their own defense in a hearing about these payments, that it should be taken as proof they are guilty even though they have pleaded not guilty to criminal charges.

“(Lloyd’s) position is absurd because these circumstances are precisely why corporations procure D&O insurance on behalf of their directors and officers,” Hittner wrote in his 42-page opionion. “Indeed it would contravene the very purpose of the policies—as well as the language itself—to require (the accused) to prove their innocence before being entitled to fund for their defense.”

In granting the injunction the judge found Stanford and the others were likely to prevail in the future on this demand for insurance coverage and would be irreparably harmed if they did not receive money to pay their lawyers now. He also noted since all Stanford’s and Holt’s assets are frozen, the alternative is for the taxpayers to pay for lawyers, which is an undesirable outcome.

Stanford, a native Texan, has been in federal detention since he was indicted in July. He has been repeatedly denied bail as a flight risk. The others are free on bond.

The trial of the charges is set for January 2011. Kent Schaffer, Stanford’s criminal defense lawyer, has said Stanford is eager to get to trial, but the defense needs time to prepare because the case already includes 7 million pages of documents.

Founder and chairman of Stanford Financial Group, Stanford faces 21 charges of conspiracy, fraud and obstruction of justice. Holt, Lopez and and Mark Kuhrt, who was not covered by the officer and director insurance policy and already has a court-appointed lawyer, face fewer charges each.