Stanford Victims Will Benefit From $300M Settlement

In a huge step forward for R. Allen Stanford’s cheated investors and creditors, a settlement aims to break the logjam over who is entitled to $300 million worth of frozen assets around the world.

When Stanford’s Ponzi scheme was exposed in 2009 and his business went under, it spawned a global hunt for his many assets to repay his investors and creditors. But those involved in the search—U.S. government agencies, a U.S.-court appointed receiver and the liquidators of Stanford’s Antiguan bank—fought in courts across the world over who controlled the various assets.

The settlement, announced last week and subject to the approval of several courts in the coming weeks, will resolve the years-long battle. It will also speed efforts to return money to those who invested in certificates of deposit issued by Stanford International Bank, a scheme through which Stanford ultimately cheated investors out of $7 billion. Stanford used investors’ cash to further the fraud and fund a lavish lifestyle in which he accumulated real estate, yachts and other assets around the world.

The U.S. receiver warned in court papers that if the settlement isn’t approved, “millions of dollars in assets that could otherwise be distributed to the victims of the Stanford Ponzi scheme will remain tied up in the courts.”

Some of the specific deal terms include handing over $44 million of assets frozen in the U.K. to the Antiguan liquidators, which they’ll distribute to victims in that court proceeding. The liquidators will get another $36 million from the U.K. to fund their continued search for more assets.

More than $132.5 million that was found in Switzerland and $23 million in Canada will be forfeited to the U.S. Department of Justice, which will allow that to be distributed through the U.S. receivership. Antiguan victims will get another $60.5 million from Switzerland.

The settlement doesn’t allow the distribution of any of the $300 million in frozen assets to be paid to two government creditors, the Internal Revenue Service and Antiguan government.

The settlement is subject to the approval of the U.S. District Court in Dallas, the Antiguan court and London’s Central Criminal Court.

Convicted last year of fraud, conspiracy and other criminal charges, Stanford is now serving a 110-year prison sentence. He has insisted he did nothing wrong and has appealed his conviction and sentence.

For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum

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Proskauer, Hunton, Chadbourne Attack Antiguan Stanford Deal

By Maria Chutchian

Proskauer Rose LLP, Hunton & Williams LLP and Chadbourne & Parke LLP on Thursday challenged a settlement between the U.S. and Antiguan receivers in charge of compensating victims of Robert Allen Stanford’s $7 billion Ponzi scheme, saying the deal exposes them to duplicative litigation.

The three firms join Greenberg Traurig LLP in urging a Texas court to reject the settlement, which will resolve disputes about jurisdiction over $300 million that Stanford had in the U.K., Switzerland and Canada.

Proceedings are already underway in the U.S. that are looking to hold the law firms liable with respect to their legal work for Houston-based Stanford Financial Group, alleging that they did not do enough to stop Stanford’s fraud.

Furthermore, the deal ignores earlier court-ordered prohibitions to the U.S. and Antiguan receivers pursuing independent lawsuits against lawyers and duplicating their efforts in the two nations’ court systems, as well as terms that would allow the Antiguan receivers to conduct U.S. discovery without being subject to the personal jurisdiction of U.S. courts, the firms argue.

The settlement agreement includes a provision that allows the receivers and government agencies to pursue the same claims in different jurisdictions, the firms contend. This could force them to defend themselves against the same allegations both in the U.S. District Court for the Northern District of Texas and again in Antigua.

“This result creates the possibility of inconsistent judgments, and in any event would entail a waste of judicial resources and the resources of the parties,” Proskauer said in its objection to the deal.

The firms are asking the court to either deny the settlement should or remove the provision that allows for the duplicate claims.

Stanford rose to prominence as the head of the multinational financial services group that bore his name, whose banking arm was the Stanford International Bank in Antigua. The four firms that have objected served as outside law firms to some of Stanford’s companies for a time, but all have denied any knowledge or culpability in his massive scheme.

After investigators in February 2009 alleged that the consistently above-average returns Stanford promised were possible only because of fraud, regulators in both Antigua and the U.S. appointed receivers to handle the claims. They had been at odds until the settlement was reached.

The settlement, announced March 12, would allow distributions to victims to go forward without litigation between the U.S. receiver and his counterparts in Antigua — joint liquidators Marcus Wide and Hugh Dickson of the accounting firm Grant Thornton — threatening to disrupt the process as it had in the past.

A hearing in Antigua on the proposed settlement, which requires U.S., U.K. and Antiguan approval, is scheduled for April 8.

Stanford was convicted of securities fraud in March 2012 and sentenced to 110 years in prison.

Proskauer is represented by Bruce W. Collins and Neil R. Burger of Carrington Coleman Sloman & Blumenthal LLP and by James P. Rouhandeh, Daniel J. Schwartz and Richard A. Cooper of Davis Polk & Wardwell LLP.

Chadbourne is represented by Harry M. Reasoner and William D. Sims Jr. of Vinson & Elkins LLP and by Daniel J. Beller, Daniel J. Leffell and William B. Michael of Paul Weiss Rifkind Wharton & Garrison LLP.

Hunton is represented by Richard A. Sayles and Shawn Long of Sayles Werbner and by Jeffrey D. Colman, David Jiménez-Ekman, April A. Otterberg Kaija K. Hupila of Jenner & Block LLP.

U.S. receiver Ralph Janvey is represented by Kevin M. Sadler, Scott D. Powers and David T. Arlington of Baker Botts LLP.

The case is Securities and Exchange Commission v. Stanford International Bank Ltd. et al., case number 3:09-cv-00298, in the U.S. District Court for the Northern District of Texas.

For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum

Stanford fighting SEC fines

Convicted Ponzi-scheme operator R. Allen Stanford, who continues to protest what he says was an unfair criminal trial, is now fighting the government’s quest to squeeze billions of dollars in penalties out of him in a related civil lawsuit.

Stanford, currently serving a 110-year prison sentence, this week filed an objection to the Securities and Exchange Commission’s bid to impose billions of dollars in monetary penalties against him and several other defendants in a civil securities fraud lawsuit. He was convicted last year of criminal charges that he defrauded investors out of about $7 billion.

In court papers, the SEC argues that Stanford’s criminal conviction validates the similar claims it makes in its civil suit. The agency says Stanford, two of his businesses and one of his former associates should, at a minimum, face a penalty of $5.9 billion — the amount that federal prosecutors have ordered Stanford to forfeit in the criminal proceeding.
For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum

Antiguan Court Hearing Scheduled for April 8th on the Approval of the Joint Settlement Agreement and Cross-Border Protocol for Stanford International Bank

A Potential Distribution of Assets in Close Proximity

Antigua, March 22, 2013 – Earlier this week, the Antiguan Court scheduled the hearing of an Application of the Joint Liquidators to Approve the Settlement Agreement with the Receiver, the US Department of Justice, and others. The hearing will be held before Madam Justice Henry of the Antiguan Court at 11:30am, local time on April 8, 2013. Creditor-victims may file responses to the application with the Antiguan court and may attend the hearing to voice their opinions on the Agreement. The Joint Liquidators advise creditor-victims to file their responses by 4:00 p.m., Wednesday April 3, 2013 Eastern Standard Time to ensure that their opinions are considered, effectively, and to also e-mail their response to stanford.claims@uk.gt.com.

The appropriate method to lodge responses with the Court is by filing an affidavit setting out the issues which form the basis of the relevant response.

This hearing, along with that scheduled by the United States District Court for the Northern District of Texas for April 11, 2013, on the same matter, brings creditor-victims of the Stanford fraud closer to an expeditious distribution of assets as a result of the unified plan among the Joint Liquidators, the Receiver, and the DOJ. Among the benefits, the Settlement Agreement, which will only become effective after it has been approved by courts in the US, Antigua and the United Kingdom, resolves litigation over approximately $300 million in assets frozen in Canada, Switzerland and the United Kingdom, provides for coordinated claims processes, and cooperation and an exchange of information with respect to litigation recoveries.

Further information on the procedure for filing responses, and a copy of the Agreement, are posted on the Joint Liquidators’ official website at www.sibliquidation.com. Persons who believe they were victims of this fraud scheme should visit this sites for additional information.

For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum

Important Announcement Concerning Stanford Receivership

The Joint Liquidators (JLs) Marcus Wide and Hugh Dickson of the Stanford International Bank, Ltd. (SIB) and the U.S. Receiver for Stanford Financial Group and all related entities (Receiver), have entered into a Settlement Agreement and Cross-Border Protocol (Settlement Agreement) with one another, the U.S. Examiner, John Little, the Official Stanford Investors Committee (OSIC), the U.S. Department of Justice (DOJ), and the Securities and Exchange Commission (SEC).  The Advisory Creditors Committee of the Liquidation of SIB has also voted to give its approval to the Settlement Agreement. 
Among many other benefits, the Settlement Agreement resolves litigation over approximately $300 million in assets frozen in Canada, Switzerland and the United Kingdom, and creates a unified plan among the JLs, the Receiver, and the DOJ to expedite the handling and distribution of those assets to creditor-victims. 
The Settlement Agreement will only become effective after it has been approved by courts in the US, Antigua, and the U.K.  On March 12, 2013, the Receiver, SEC, Examiner, and Official Stanford Investors Committee filed a Joint Motion to Approve the Settlement Agreement in the U.S. District Court for the Northern District of Texas. Responses to the Joint Motion must be filed no later than  March 28, 2013 at 5:00 p.m. central and the Court will hold a hearing on the Joint Motion on Thursday, April 11, 2013 at 9:00 a.m. central    The text of the Court’s Order setting the response deadline and hearing is set forth  below.   Anyone considering filing a response to the Joint Motion or appearing in the U.S. District Court in relation to the motion should consult with their own legal counsel.
After all three courts have approved the Settlement Agreement, it will become effective and pursuant to the terms of the Settlement Agreement the parties will pursue the release of funds via appropriate legal processes in the respective countries, including Canada and Switzerland.  The Settlement Agreement has several benefits, including that it:
    • creates a plan for the distribution of almost 90% of the frozen assets from the U.K., Canada, and Switzerland pursuant to which distributions will be made as soon as the necessary approvals are obtained from the pertinent authorities in those countries;
    • allocates $36 million of the funds in the U.K. to the JLs’ estate in order to pursue additional funds for the estate, to be released over time under the supervision of the Central Criminal Court in London, which the JLs expect to significantly enhance amounts available for distribution because those funds will be used to further additional asset recovery efforts.  The remaining $44 million of the funds in the U.K. will be distributed to creditor-victims by the JLs;
    • allocates in Canada all $23 million to the DOJ to be transferred to the Receiver to be distributed to creditor-victims;
    • allocates in Switzerland $132.5 million to be forfeited to the DOJ and transferred to the Receiver to be distributed to creditor-victims and $60.5 million to be transferred to the JLs for distribution to victims;
    •   provides that distribution of the frozen funds shall be made to creditor-victims of SIB and not to other claimants such as the Internal Revenue Service or the Antiguan government;
    • provides a framework for the sharing of information among the JLs, the Receiver, and OSIC to achieve efficiencies, minimize burdens, and maximize recoveries in Stanford-related litigation;
    • facilitates cooperation and coordination of efforts with respect to litigation and recovery and monetization of Stanford assets;
    • provides for coordination of claims and distribution processes between the JLs and the Receiver; and
    • terminates the substantial expense of competing legal claims to, and proceedings relating to, the frozen assets in Canada, the U.K., Switzerland, and the US.
The Settlement Agreement is a product of the parties’ common goal of optimizing and enlarging the overall recovery for creditor-victims as quickly and cost-effectively as possible.  The parties to the Agreement all believe that the Agreement is in the best interests of the victims of the Stanford fraud.   
Further information, including a copy of the Agreement, the Joint Motion to Approve the Agreement, and a Q&A about the Agreement, are available on the U.S. Receiver’s website at http://stanfordfinancialreceivership.com.  Further information is also available on the JLs’ official website at http://www.sibliquidation.com, and on the Examiner’s website http://www.lpf-law.com/.   
Text of March 18, 2013 Order of the U.S. District Court for the Northern District of Texas:
The Court will hold a hearing on the Receiver’s motion for approval of interim distribution plan [1766] and the SEC, Receiver, Examiner, and Official Stanford Investors Committee’s joint motion to approve settlement agreement and cross-border protocol (the “Joint Motion”) [Doc. 1793 in  SEC v. Stanford, 09-CV-298, Doc. 189 in In re Stanford International Bank, 09-CV-721] on Thursday, April 11, 2013 at 9:00 a.m. in Courtroom 1505. The time for parties to these actions to respond to the Receiver’s motion for approval of interim distribution plan has lapsed, see N.D. TEX. R. CIV. P. 7.1(e), and the Court will not entertain any further responses or objections from those parties. Parties who wish to file a response to the Joint Motion must do so no later than March 28, 2013 at 5:00.  Nonparties, including but not limited to investors or other potential claimants, may file written comments or objections to either motion, also no later than March 28, 2013 at 5:00 p.m.  The Receiver may file a reply to those responses, comments, or objections no later than April 5, 2013 at 5:00 PM. During the hearing, the Court will not entertain comments, objections, or argument from parties or nonparties that failed to file written responses, comments, or objections. 

For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum