Antigua finally admits to the Class Action Lawsuit

For twelve months the Antiguan Govt has been telling the population of Antigua that the class-action is just propaganda. Now the papers have been served, they have finally had to admit the truth, and we may just have a fight on our hands! Congratulations PDM, it has taken a while but now the clock is ticking:

ST JOHN’S, Antigua, Monday October 18, 2010 – The Antigua and Barbuda government says it’s building a defence against a lawsuit brought by the Stanford Victims Coalition (SVC) which is seeking to recover financial losses as a result of the fall of Allen Stanford’s empire.

Attorney General Justin Simon says the administration has instructed its lawyers from Texas who recently visited the island.

The SVC alleges that government has benefited from Stanford’s investments and, on that basis, should compensate the members for their losses.

“Government is looking at whether that action is sustainable against a sovereign state and the whole issue as to whether or not there was a commercial enterprise in which the government participated with Stanford would first of all have to be established,” a statement from the government said.

The Attorney General noted, though, that there were very few actual engagements between Stanford and the United Progressive Party (UPP) administration and it is hoped that, with the information given to the lawyers, the lawsuit would be dismissed.

The Stanford investors want US$24 billion in compensation – three times the amount the businessman is alleged to have defrauded customers out of.

They have also filed another lawsuit, in which the Eastern Caribbean Central Bank (ECCB) is also named, accusing the regional institution of unlawfully seizing Stanford’s Bank of Antigua (BOA) after news of his charges caused a run on the bank and threatened its stability.

The Attorney General says no papers have been served in relation to that matter.

BOA officially becomes the Eastern Caribbean Amalgamated Bank (ECAB) from today, owned by the government of Antigua and Barbuda and five of the largest Eastern Caribbean banks – Antigua Commercial Bank (ACB), St Kitts-Nevis-Anguilla National Bank Ltd, Eastern Caribbean Financial Holdings Company Ltd, National Commercial Bank (SVG) Ltd and National Bank of Dominica Ltd.

Antigua and Barbuda has 40 percent interest in ECAB – 25 per cent belonging to government and the remaining 15 percent allocated to ACB; while each of the other four banks have 15 percent share.

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SIPC Cover for the Americans will be paid to the detriment of International Victims

We have just learned that should the Americans be successful in their application for SIPC cover it will be to the detriment of the 20,000 remaining International Victims.

The SECURITIES INVESTOR PROTECTION ACT OF 1970 Document clearly states that the SIPC cover is considered a “LOAN” and the money will be recovered from remaining assets of the Debtor, ie any recoveries the receiver may have made from selling Allen Stanford’s assets.

So to be clear, when we were told that if the Americans received SIPC cover it would leave more money for the receiver to distribute among the remaining International Victims this was incorrect. Not only will the money to pay for SIPC be recovered from the receiver he will also have to pay administration charges for the above work.
In essence the Americans will be paid SIPC cover to the detriment of every International Victim!

This is clearly unfair, all Stanford Victims should be treated equally,and certainly the few should not benefit at the expense of the many.

Sip a 70

Angela Shaw Resigns as Leader of the SVC

Angela Shaw has resigned as leader of the Stanford Victims Coalition stating that she no longer feels that she can represent the International Victims. I have asked her to make a statement on the forum informing everyone and I was told it would take her a few days to put things in order before she made an announcement. I have informed Angela that I cannot in all conscience withhold this information from other members and so I have decided to inform you all. I have no doubt that Angela will give her thoughts and reasons over the next few days, but for now the victims have to decide how they want to proceed.

I have taken this paragraph from my email from Angela as I feel it is important that victims have a say in what happens next and not be given a fait accompli

Here is the extract from the email:

I feel the committee should appoint a primary communicator to serve as a liaison with non-US victims – possibly the Peruvian lawyer who is quite politically savvy and very eager to get involved on a day to day level. I think he would be the most responsive if not the examiner, which victims would still have access to otherwise. Valdespino, Snyder and Morgenstern are all way too busy to pull back to do even more they aren’t getting paid for while the Willis suit is in discovery and they are taking depositions in London next week I believe. They took one in Barbados last week. Peter should be getting some documents for the bank suits very soon so he is going to be buried with the response to their motion to dismiss, and Antigua should be responding soon as well. It would be a smoother transition for Jaime Pinto to introduce himself and state his position with regard to how he foresees the committee working together with victims to get recovery.

Lloyd’s off the hook for Stanford’s fees

Lloyd’s of London no longer has to pay legal fees for accused swindler R. Allen Stanford and two of his former executives because they likely engaged in activities excluded from coverage under a company insurance policy, a judge ruled Wednesday.

U.S. District Judge Nancy Atlas ruled that Stanford, founder of Houston-based Stanford Financial Group, was personally aware that an offshore bank he owned was selling certificates of deposit using “important misrepresentations” about its investment portfolio and performance.

Atlas also ruled that former Stanford Financial accounting chief Gil Lopez and global controller knew or should have known as trained accountants that the extraordinarily high returns on the bank’s investments were not possible.

They also should have known or at least suspected that the funds were not put in low-risk, liquid assets as advertised to investors, Atlas ruled.

Stanford, Lopez and Kuhrt are accused of luring investors into a $7 billion fraud by promising higher-than-average interest rates on certificates of deposit issued by Stanford International Bank on the Caribbean island of Antigua.

The indictment alleges that investors and regulators were told the CDs were invested in liquid assets and easily could be converted to cash, when some of the investors’ money actually went to Stanford and his ventures.

Atlas based her ruling on testimony during a four-day hearing in August, after Lloyd’s of London sought to end the payment of legal fees to the senior executives it said were involved in money laundering activities.

As broadly defined in the policy, money laundering includes knowing or suspecting that benefits stemmed from criminal conduct.

Lloyd’s, which argued that Stanford was at the “epicenter of a massive Ponzi scheme,” according to Atlas, pointed to its insurance policies for directors and officers that excluded coverage in the case of money laundering. The insurance company took the unusual step of asking a federal judge to rule that its clients — the clients it was required to defend -had participated in illegal activities and therefore voided the policy.

Lloyd’s of London’s policy is not to comment, said Barry Chasnoff, a lawyer with Akin Gump Strauss Hauer & Feld in San Antonio who is representing the giant insurer in the Stanford matter.

Lloyd’s out $11.2 million
Lloyd’s already has spent more than $11.2 million on legal fees for Stanford, Lopez and Kuhrt, according to Atlas.

The $100 million available under the policy is dwindling, Atlas wrote, and at least 30 other Stanford Financial Group officers and directors not excluded under the money laundering provision are eligible to use the insurance funds for their legal fees.

“It is unfair to continue defense costs for plaintiffs at the potential expense of others who are in need and have not yet benefited,” according to Atlas’s ruling.

Atlas noted that her findings and conclusions are not intended for use in criminal or civil cases against Stanford and others.

Stanford ‘very stoic’
The Securities and Exchange Commission filed a civil fraud suit against Stanford Financial Group and its top executives in 2009, and a Dallas judge froze their assets and placed the firm in receivership. Investors also have filed civil suits.

Stanford, who is in federal custody without bail as a flight risk, was disappointed but “very stoic” about the ruling, said his attorney, Robert S. Bennett.

Stanford, who is in federal custody without bail as a flight risk, was disappointed but “very stoic” about the ruling, said his attorney, Robert S. Bennett.

Bennett said his next step is to apply for federal funding to represent indigent clients.

Stanford’s criminal trial is scheduled to start Jan. 24. The others will be tried later.

Houston lawyer Jack Zimmermann, who is representing Lopez, said he is still examining the opinion and has not yet decided whether to appeal.

He said it was unusual to have a civil proceeding, like the one involving the insurance, ahead of criminal trial. “It doesn’t seem fair because we couldn’t put on a case,” he said.

The lawyer representing Kuhrt could not be reached.

Lopez and Kuhrt are free on bail.

Stanford financial’s chief investment officer, Laura Holt, who also is named in the criminal indictments, was originally a party to the lawsuit but settled with Lloyd’s prior to the start of the hearing in August.

Fighting extradition
A fifth defendant, former Antiguan bank regulator Leroy King, is fighting extradition.

Stanford Financial Group’s chief financial officer, James M. Davis, was charged separately, pleaded guilty and is cooperating with prosecutors. Statements in his guilty plea were central to the insurer’s money laundering allegation.