Some Stanford Properties Handed Over

The government of Antigua & Barbuda has released parcels of lands and properties owned by R Allen Stanford into the hands of joint liquidators.
Attorney General Justin Simon, as a result, vows that eventually, those who have filed financial claims against the investor will receive their just due.

“… the government has released from its acquisition process the three parcels of land, two of them vacant at the Bank of Antigua headquarters at the airport, which are owned by Stanford international Bank and also the Pelican Island property in St Phillip’s North in which Stanford International Bank has a 100 per cent beneficial interest,” Simon told the Lower House on Thursday.

He also further listed the Bank of Antigua building in St John’s among more properties released, and noted that certain assets and liabilities of that bank will be sold to the Eastern Caribbean Amalgamate Bank (ECAB).

“Government has also released from its acquisition process the three parcels of land in St John’s – the two vacant on High Street and the third housing the bank branch of the Bank of Antigua on the corner of High and Thames Streets to the owner, The Bank of Antigua Limited, at the request of the Bank of Antigua, which continues to be managed by the Eastern Caribbean Central Bank,” Simon announced.

He added, “The plan which is envisaged Madame Speaker, is that certain of the assets and liabilities of the Bank of Antigua will be sold to a new corporate entity (ECAB), the Eastern Caribbean Amalgamate Bank, which is made up of the various indigenous banks within the OECS, who then be taking over the Bank of Antigua, so that the depositors, creditors, persons who save would all be protected in the long run.”

According to a new company registration list, the directors of ECAB are Edmund Lawrence, Robert Norstorm, Gladston Joseph, Derry Williams, Gregory Degannes, Craig Walter, and Whitfied Harris.

The AG added that in respect of the legal challenge filed by other Stanford entities against the compulsory acquisition of the parcels of land, the consent order was approved and filed by May 19. Simon said although the government will move to release more land, a hold remain in place for others.

“…the government is to release or revest all of the other lands titled to the various Stanford entities save and except for eight parcels within the airport compound to include the parcels on the airside of the VC Bird Airport, adjoining the disused runway-10, along with the former and current car park,” Simon said.

He explained that the hold on certain property in the vicinity of the airport is for security reasons and future development of the area.

“Government has released a number of those various parcels of land and held on to those at the airport which are necessary in respect to the security of the VC Bird International Airport, and also essential in terms of the future expansion of the airport,” Simon said, “and the car park which we think from a public point of view in an international airport has to be controlled and owned by the government of Antigua and Barbuda.”

Simon, who is responsible for legal affairs, said the issue of compensation for these parcels in accordance with the Land Acquisition Act has to be settled. He indicated that the parties will have to complete an agreement within six months of the date of the order.

The AG said earlier this week, he received communication from the joint liquidators of Stanford International Bank Limited (SIBL), Nigel Hamilton Smith and Peter Wistel of Vantis Business Recovery Services, who were appointed by the High Court of Antigua & Barbuda in April 2009.

He said they have advised that following negotiations, a co-operation agreement between themselves and US receiver Ralph Janvey has been filed with both the High Court of Antigua and Barbuda and the US District Court for the Northern District of Texas.

The agreement, which is subject to approval by both courts, seeks to bring an end to the legal challenges that have been taking place between the joint liquidators and the US receivers in relation to SIBL assets throughout the world.

He pointed out that the agreement proposes that the US receiver will deal with the “realization of assets” in the United States and in Canada, while the joint liquidators will deal with the realization of assets located in Antigua & Barbuda and the United Kingdom. Simon said this should end the legal battle between the two.

Furthermore, he said the agreement will provide a platform for both parties to co-operate and share information to assist in their efforts to claim assets covered by the agreement and also in countries not covered by the agreement.

Simon said he is conscious of the longstanding claims made by trade creditors, ex-employees, and APUA, as well as the allegations made by the Stanford Victims Coalition (SVC) in the United States that their SIBL deposits were used to purchase and develop many Stanford properties.

Moreover, the AG said he was informed by the joint liquidators that based on their investigation, it appears that up to US$1.5 billion was loaned to R Allen Stanford by SIBL through Stanford-owned US companies.

As a result, Simon said that the new co-operation agreement signed by the liquidators and the US receiver will allow them to trace those monies to the real and personal assets in corporate entities both locally, in the US, and elsewhere.


Lands Returned to Stanford

While taken on face value the following statement appears to be good news for Stanford victims, however it required international action to force the government to acquiesce and hand back these properties.

It should also be remembered that properties within the airport complex have been retained by the government and that similar promises were made to Half Moon Bay holdings which still have not been honoured.
Attorney General Justin Simon announced in Parliament yesterday that all “Stanford” lands with the exception of those inside the airport compound have been released from government hands.

Simon said the release comes in conjunction with a co-operation agreement signed between US receivers, Ralph Janvey and the joint liquidators.

“Earlier this week, I received communication from the joint liquidators of the Stanford Bank Limited … (That) a co-operation agreement between themselves and the US receiver has been filed.

“This co-operation agreement … seeks to bring an end to the various legal challenges that have been taking place between the joint liquidators and the US receivers,” Simon said.

The AG said a consent form was signed releasing the lands in response to legal challenges from parties seeking to claim funds they invested in Stanford International Bank Limited (SIBL). He listed the lands that have been released effective May 20 this year.

“The government has released from its acquisition process the three parcels of land, two of them vacant and the Bank of Antigua headquarters at the airport … and also the Pelican Island property … Government has also released from its acquisition process the three parcels of land in St John’s, the two vacant on High Street and the third housing the bank branch of the Bank of Antigua,” Simon added.

The attorney general explained that the plan, as it regards Bank of Antigua, is for an amalgamation of various indigenous banks within the OECS to take charge of the bank.

“Certain of the assets and liabilities of the Bank of Antigua will be sold to a new corporate entity, ECA the Eastern Caribbean Amalgamated Bank, which is made up of the various indigenous banks within the OECS who will then be taking over the Bank of Antigua,” Simon said.

The refusal of the government to release the lands within the airport compound means that the compulsory acquisition process will continue and Simon assured that compensation will be settled for those eight parcels of land.

“The issue for the compensation for these parcels in accordance with the principles laid down in the Land Acquisition Act has to be settled and the parties are to exercise best endeavours to complete agreement within six months of the order,” he said.

In February last year, the government acquired 254 acres of land previously owned by Allen Stanford, after he was accused of US $8 billion fraud.

Then Minister of Finance and the Economy Dr Errol Cort said that they were forced to take action because the Texan appointed receiver for Stanford International Bank, Stanford Group Company, Stanford Capital Management, as well as the investor and other individuals had sought to impose himself in as the receiver-manager of SIB.

How Stanford is worse than Madoff

If I ask you who the worst hedge fund fraudster is in the world, there’s only one name that will spring to mind. The guy who allegedly looted billions of dollars from unwitting victims. The guy who had been accused of fraud for years, though the government failed to properly investigate for years. The guy who is now seemingly showing no remorse while protesting the conditions in prison. The guy who left many of his victims broke and has been beaten while incarcerated.

Madoff, right? Wrong. I’m thinking of Allen Stanford, accused of running an $8 billion Ponzi scheme. So why should the general public care a lot more about the former Sir Allen Stanford (he is no longer a Knight) than Bernard Madoff’s $60 billion crime?

The sheer size of Stanford’s fraud would be the easy answer. $8 billion is nothing to sneeze at. But the money is actually somewhat beside the point.

What about caring about the failures of the SEC, which is under withering scrutiny following the release of its internal investigation regarding its handling of the Stanford matter? The report, released the Friday the commission also charged Goldman Sachs with fraud, shows that SEC examiners identified Stanford as a serious risk back in 1997, only two years after Stanford Group Co. had registered as an investment advisor. The SEC also was twice warned that Mr. Stanford was running a Ponzi scheme, yet failed to act for more than a decade. But the SEC’s (in)actions aren’t the cause, either.

How to (almost) get away with fraud: hide it in plain sight

The Stanford case matters to everyone, not just rich people, not just the government, and not just people who bought Stanford CDs, because the core of the issue lies is the exploitation of that near universal financial instrument, the CD. That’s correct – Certificates of Deposit, available from your local bank, (not CDOs or CDSs, from Wall Street investment banks).

Stanford and his firm are accused of running a scheme that pitched CDs with rates higher than those being offered by anyone else. Bernie Madoff, when describing his investment strategy, called it a “split strike conversion method.” To the ordinary person, those words make most sense when heard in a bowling alley.

It has been argued that sophisticated and even unsophisticated investors probably should have been more skeptical about Madoff’s product, which they clearly didn’t really understand. What’s more, Madoff described his fund as an “alternative” investment, something which should have been a sign that it’s not a place to put your entire fortune.

The same cannot be said about investing in CDs. In fact, the CD is just about the simplest financial product to grasp: Investors pay money for a document they can later cash in for the same amount, plus interest, guaranteed by the U.S. Government. This simplicity is what makes Stanford’s alleged scheme so insidious, and so scary for society.

A short history of the crimes of Allen Stanford

In February 2009, Stanford’s company, Stanford Financial Group, was reported to be under investigation by the SEC, FINRA and the FBI because one entity under its umbrella, the Stanford International Bank (SIB), was consistently providing higher-than-market returns on CDs to its depositors.

The promised rate of return caught the eye of regulators, who deemed it too high for the low-risk investments that SIB advertised (a portfolio of equities, metals, currencies and derivatives, per SIB’s Web site and its CD disclosures); Fortune reported that “according to the SEC complaint . . . The returns on the so-called CDs ranged from 16.5% in 1993 to 11.5% in 2005.”

At one point, CD rates offered by SIB were in the double-digits; more recently, the firm was offering 4.5% (while most other bank rates hovered around 1.5% (for a one-year, $100,000 CD). That June, Stanford was indicted for “massive ongoing fraud.”

Having investigated Stanford Financial and Mr. Stanford in early 2007 for a client considering a potential business transaction with the firm, the government’s allegations were hardly surprising to me. Among other things, our firm’s investigation revealed his complex and somewhat sordid history with Antiguan government:

A June 1999 news item reported that U.S. officials were “most alarmed” that Mr. Stanford was selected to sit on a “six-member board created to oversee [Antigua’s banking] industry,” leading to reforms with “…loopholes … that made it harder than ever to get at bank records.”
In early 2002, Mr. Stanford failed to appear before an Antiguan commission investigating fraud; he was to testify about a $31 million bank loan the government was repaying at rates it believed were exorbitant.
An allegedly “improper” land swap deal where Mr. Stanford reportedly made $37,000 payments to two Antiguan government officials negotiating with him.
Stateside, Stanford also made headlines for something he was not. In 2001, Stanford University stated that despite Mr. Stanford’s claims, they did not think that he was related to Leland Stanford Jr.

Stanford was sued for his Ponzi scheme in 2006

The most devastating information, though, was public three years before Stanford was busted. In a 2006 Florida whistleblower suit, a former employee charged that he was fired after he “began asking probing questions about Stanford Financial’s business model and, more specifically, how Stanford Financial earned its revenue.” The employee claimed in court documents that Stanford Financial was “operating a ‘Ponzi’ or pyramid scheme” in which money was “laundered” in its offshore bank and then used to “finance its growing brokerage business, which did not have any profits of its own.” A subsequent suit was filed in Texas by other Stanford executives making similar allegations.

Many will argue that the lawsuit and Stanford’s Antiguan government issues should have been known by federal regulators tasked with protecting individual investors. That said, it would be very difficult for individual investors to easily and inexpensively find this type of information, and even if they did, to know what to do with it.

That fact, combined with the straightforward appeal of the Stanford scheme, is a terrifying thought to individual investors. While there will always be criminals preying on the unsuspecting, it has been a little hard for most people to muster tons of sympathy for super rich individuals who put their savings — and some folks who even borrowed money to invest — in Madoff’s opaque alternative investment. Let alone for the investment firms that placed money from thousands of their customers into Madoff’s funds without making sure his methods were sound.

But having sympathy for the people who bought Stanford CDs — 28,000 of them — is a different story. Their loss is a warning that no investment – even ones that sound completely humdrum, like a CD – can ever be 100% safe

"Savagely beaten" Stanford asks to be freed

Allen Stanford, the Texas financier charged with running a $7 billion Ponzi scheme, asked the federal judge overseeing his case to release him pending the start of his criminal trial, saying that his detention violated his constitutional rights.


Stanford has also fired one of his lawyers, setting up a potential showdown with U.S. District Judge David Hittner, who said last month he would not allow a fifth change to the defense team.

In a filing on Tuesday with the federal court in Houston, lawyers for Stanford said their client had been “subjected to substantial and undeniable punishment,” including nearly a year of incarceration and both physical and psychological damage.

This and the prospect of more than a year of further custody until and during his trial, which is scheduled to start in January 2011, violates his constitutional rights to due process, effective assistance of counsel, a speedy trial, and an absence of excessive bail, the lawyers said.

“When Mr. Stanford surrendered to authorities, he was a healthy 59-year-old man,” Stanford’s Houston-based lawyer, Robert Bennett, wrote in a brief on which Harvard Law Professor Alan Dershowitz consulted.

“Mr. Stanford’s pretrial incarceration has reduced him to a wreck of a man: he has suffered potentially life-impairing illnesses; he has been so savagely beaten that he has lost all feeling in the right side of his face and has lost near-field vision in his right eye,” Bennett said.

Saying their client had neither the motive to flee nor the means, having been declared “indigent” by court, Stanford’s lawyers urged that he be placed under house arrest at the home of his fiancee’s sister, with an ankle bracelet and other travel restrictions.

The office of U.S. Attorney Jose Angel Moreno in Houston did not immediately return a call seeking comment.

A federal appeals court has twice rejected Stanford’s attempts to be freed from jail pending trial, and Hittner has called Stanford a flight risk.

Stanford has been held in a Texas jail since his June 2009 arrest. In a 21-count indictment, prosecutors accused him of selling fraudulent certificates of deposit issued by his bank in Antigua.


Separately, one of Stanford’s lawyers, Michael Essmyer, has asked the court for permission to withdraw from the case.

Essmyer, the managing partner at Essmyer, Tritico & Rainey LLP, cited Stanford’s decision to fire him on May 14, and “irreconcilable differences” with Bennett over litigation strategy and other matters.

“The nature of the irreconcilable differences is also the fact that Mr. Bennett acts independently without lead counsel’s knowledge or consent, and often in a manner that, in lead counsel’s opinion, is detrimental to the best interests of the client,” Essmyer wrote. He said he and his law firm “do not want to be held responsible for the actions of Mr. Bennett.”

Essmyer declined to make additional comments. Bennett did not immediately return a call seeking comment.

At a hearing on April 6, Hittner raised his voice several times as Stanford refused to directly answer questions about his legal representation. The judge nonetheless agreed to let Stanford to replace his latest two lead lawyers.

“You’ve had 10 attorneys attempt to enter this case on your behalf,” Hittner said. “I will not entertain any further substitutions.”

A case manager for Hittner said the judge would consider Essmyer’s request at a hearing to be scheduled.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No 09-cr-00342.

(Reporting by Jonathan Stempel; Additional reporting by Anna Driver in Houston; Editing by Ted Kerr)