Stanford International Bank Limited in Liquidation (SIB)
We know that you are being asked to send letters and e-mails to the Joint Liquidators and we welcome all constructive input. But we also know that in some cases you are being asked to do so, directly or indirectly, by persons who have a personal economic stake in opposing the joint Liquidators in their efforts to obtain the best results for creditor/victims. Therefore we are inclined to view such correspondence with some skepticism.
We respectfully disagree with judge Godbey’s approach to his ruling and with the ruling itself, mainly because it potentially sets up a very poor outcome for the creditor/victims of Stanford International Bank (SIB). And to be clear, we have only the interests of creditor/victims of SIB to consider, not the creditors of the many other Stanford entities whose interests the Receiver and Judge Godbey are obligated to take into account.
If you are not a lawyer or international insolvency practitioner, we understand that you may not appreciate all of the potential implications of judge Godbey’s ruling and its limited application to this worldwide case if not appealed. We urge you to keep an open mind and read the following in which we set out our approach to obtaining the best results for the creditor/victims such as you. We appreciate the issues are very technical ones relating to international insolvency laws and the difference between a Receiver and a Trustee/Liquidator under US law, but this is what we do day to day. Let us try to explain some of the issues.
- A Trustee/Liquidator has more rights than an equity Receiver with respect to some of the parties that can be sued and the nature of damages that can be claimed. This is the principal reason why the Madoff case very quickly went into bankruptcy and is making big recoveries for his victims. In the SIB case a group of creditors, through lawyers, urged judge Godbey to authorise a bankruptcy filing, a right he had unusually reserved to himself. That request was withdrawn when Judge Godbey created the so called “Official Stanford Investors Committee” (OSIC), placed some of the same lawyers who had urged bankruptcy on the OSIC, and approved those same lawyers filing lawsuits on a contingency fee basis. It is our view that the decision not to take the bankruptcy avenue, limited the remedies available to recover assets by trying to make an international proceeding US centric, and allowed the US Receiver to spend a massive sum, over $115,000,000, on the administration of the receivership. Remember it is the US Receiver who is battling the joint Liquidators – not the other way around – as normally these Chapter 15 petitions are granted quite quickly and inexpensively. However, the US Receiver has always seen it as a threat to his continued running of his Estate (which you can judge for yourself) rather than as a cooperative tool that would have eased tensions and served to allow the two estates to work in concert and thus he forced the expenditure of hundreds of thousands of dollars to block what was and remains a reasonable request. Lamentably, Judge Godbey’s ruling has the feeling of a parochial, paternalistic and protective ruling which is out of step with the vast body of law developed for these types of proceedings around the world.
- Unfortunately, the ruling of judge Godbey makes findings with which we strongly disagree and which we fear will be used by third parties who assisted the fraud, to try and avoid financial responsibility for their misconduct when sued. For example, an issue raised by Judge Godbey, and Mr. Escalona, is why the joint Liquidators have yet to sue the Government of Antigua and Barbuda for the loans owed. However, despite clear evidence on this point that none of those loans are in the name of SIBL and are actually in the name of entities controlled by the US Receiver or others (like the Bank of Antigua) we feel that the facts are simply being ignored.The fact is that SIBL has no loan claim against the Government of Antigua and Barbuda but we have offered to assist the US Receiver as part of an overall protocol to collect those loans (if we can) but that has fallen on deaf ears. Why do your “advisors” continue to hide that fact from you?
- By finding that all of Stanford’s entities can be aggregated, and treated as one, judge Godbey has opened the door to SIB depositors having to share assets and recoveries properly attributable to SIB with creditors from other Stanford entities including claims that may rank in the hundreds of millions of dollars, such as the IRS. This cannot happen with recoveries that are distributed through the SIB Liquidation. Our obligation under this application is only to SIB creditor/victims. At the very least the fight between competing creditors from the different Stanford companies over who is entitled to recoveries in the US proceeding may delay distributions for months or years. We have no similar issues in our liquidation estate.
- Judge Godbey in approving the US Receiver’s claims process ignored our written suggestion that the claims process we had been running at that time for many months, at a much lower projected cost, be used in both proceedings; but in his ruling he is critical that we did not agree to a combined process. Had we been recognised as we requested, the US Receiver’s more expensive and duplicative process would not have been necessary and it was open to Judge Godbey to accept our process in any event. Had either happened you would not have needed to file two claims nor suffer the higher cost of the Receiver’s process. This has or will result in an expenditure of at least $4 million by the US Receiver which could have been significantly reduced. So please ask hard questions of those that advocate the US approach which so far has only enriched a small group of lawyers and forensic accountants and those surrounding them.
- Judge Godbey, in his conditions to relief, attempts to exert authority for his US Receiver/DoJ in parts of the world where the Liquidation has already been found by the local Courts or responsible authority, to be the “main” proceeding in the winding up of SIB. The Joint Liquidators in meeting their obligations in those jurisdictions cannot accept this – not because we don’t like it – but because:
i it will result in you being denied your proper recovery of assets;
of other Stanford entities,
it would be improper and offensive to them for us to
form of recognition given to the joint Liquidators
include some that are completely contrary
to our duties under Antiguan law and our obligations to
you, including disclosure of the bank’s confidential
financial and personal information on depositors; and
it, prohibits us from making payments “to any US person”,
which on the plain language of the Order would appear
By Patsy R. Brumfield/NEMS Daily Journal
HOUSTON, Texas – Two former executives of Stanford Financial Group face a new 11-count wire-fraud conspiracy indictment.
Gilbert T. Lopez Jr. and Mark J. Kuhrt of Houston were top financial executives for the worldwide company owned by R. Allen Stanford.
The Stanford empire, based in Houston, collapsed in early 2006 under the pressure of a federal investigation, leaving $7.2 billion mostly lost to investors in certificates of deposit through Stanford International Bank Ltd. in the Caribbean.
Stanford is serving a 110-year sentence after a Houston jury convicted him last March of masterminding the Ponzi scheme.
Lopez, SFG’s chief accounting officer, and Kuhrt, its global controller, face trial Sept. 10 before the same federal judge to preside over Stanford’s trial.
Co-defendant Laura Pendergest-Holt, Stanford’s chief investment officer, pleaded guilty June 21 to obstructing the federal investigation. The Baldwyn native faces sentencing Sept. 13 in Houston.
The two men are accused of conspiring with Stanford and former Stanford Chief Financial Officer James M. Davis, who lived in Union County. Davis pleaded guilty to his part of the scheme in September 2009 and faces sentencing after the Lopez-Kuhrt trial where he’s likely to testify.
Davis was the government’s main accuser during Stanford’s six-week trial earlier this year.
Lopez and Kuhrt face charges they conspired from 1990 through February 2009 to defraud investors with lies and using interstate and foreign commerce to do so.
They were indicted with everyone else in June 2009, but the new indictment focuses on the accusations against them.
The government claims they took part in the conspiracy “to enrich themselves through payment of wages, bonuses and other monies.”
They pleaded not guilty to the 2009 charges but have not been arraigned on the July 11 superseding indictment. Read more: djournal.com – New indictment for Stanford executives