Kachroo Legal Services Update July 30th

Dear KLS Stanford SEC Clients,

We write to update you on the current status of this case.

  1. Order of Limited Discovery: As you are aware from our previous updates, in February 2013, the Court through the Magistrate Judge had ordered the US Government to provide discovery to Plaintiffs including disclosure of documents and information on a limited basis while a second Motion to Dismiss was outstanding. Since that time, the Government has repeatedly argued about the quantity and nature of the information they are prepared to give us, which has required us to go back to the court several times, for both hearings upon filing a number of motions and responses.
  2. Discovery Orders and Multiple Hearings on Discovery: As you can see from the attached documents, KLS has participated in and requested several hearings in order to obtain the discovery initially ordered by the magistrate judge. Each of the times we have gone back to Court, we have been successful in persuading the Judge to allow discovery to proceed – despite the Government’s repeated objections.
  3. Stay of Proceedings: Only a few days ago, and amidst our progress to date, the District Court Judge in the case has just handed down an order staying all proceedings as he prepares to provide a ruling on the second motion to dismiss.

We will advise all clients as soon as this happens, but in the meantime, please do not hesitate to contact us if you have any questions.

The KLS Stanford Team. .

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/


Angela Shaw Replaced by Ms Reed on OSIC

For those victims who were not aware Ms Shaw has resigned from the OSIC and been replaced by Ms Reed. The “REPORT OF THE OFFICIAL STANFORD INVESTORS COMMITTEE” can be viewed here:

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/

Investors Sue Insurance Company That Vouched for Stanford Ponzi Scam

The letters circulated by Stanford International Bank among would-be investors claimed deposits were insured by Lloyds of London and that the bank’s employees were “first class business people.”

The letters proclaimed the bank had undergone “stringent risk management review by an outside audit firm.”

Stanford International Bank is now known as one of the world’s largest Ponzi schemes, a $7 billion scam that is second only to the con pulled off by the former New York investment adviser and financier Bernard Madoff. The Stanford bank, which was based in Antigua and maintained a sizable footprint in Miami, went under in 2009.

So while the bank’s founder and one-time billionaire, R. Allen Stanford, is serving a 110-year prison sentence for fraud, investors are looking for deep pockets to make them whole.

They hope they found it in Willis Group Holdings, the U.K.-based insurance company that provided Stanford with written endorsements. The investors are also suing Willis Group’s American subsidiary based in Colorado.

Getting the litigation to stick in one jurisdiction, though, hasn’t been easy. Filed in Miami-Dade Circuit Court in February, the plaintiffs’ suit was transferred to U.S. District Court in Miami on June 3.

U.S. District Judge Jose E. Martinez stayed the case on June 14 after the Willis Group argued the U.S. Supreme Court is looking at the liability of insurance letters to investors in a related case against Willis Group.

Other lawsuits against Willis Group by similarly situated plaintiffs have ended up in multidistrict litigation in Dallas. One has also been stayed by a Miami federal judge.

A telephone call placed to attorney Edward Soto, a partner at Weil Gotshal & Manges in Miami who represents Willis Group, was not returned by deadline.

But in his motion to Martinez for a stay, Soto said the defendant expects the case and four others filed against Willis Group to be transferred to the U.S. Bankruptcy Court in Texas that oversees the estate of Stanford International Bank.

The plaintiffs attorney, Ervin Gonzalez, said businesses that vouch for criminal enterprises like Stanford need to be held accountable.

“If someone is going to give an endorsement … they’d better be careful because people rely on those endorsements,” said Gonzalez, a partner at Colson Hicks Eidson in Coral Gables, Fla. “They have an obligation and a duty to be accurate.”

Also representing the plaintiffs is attorney Luis Delgado, a partner at Miami’s Homer & Bonner.

“From in or around August 2004 through 2008, Willis provided ‘safety and soundness’ letters to Stanford Financial’s agents on Willis letterhead and signed by a Willis executive,” the lawsuit claims.

The letters misled clients into believing their deposits were safe and insured, the lawsuit states.

The 29 plaintiffs are from Uruguay, Bolivia, Colombia and Venezuela and had a combined loss of $30 million when SIB collapsed. The lawsuit states they received identical Willis Group letters with the only difference being the date and address.

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum


The Stanford International Victims Group Forum

Investors plan appeal of Stanford lawsuit dismissal

A federal appeals court will be asked to reverse a Baton Rouge federal judge’s dismissal of a lawsuit that claims the Securities and Exchange Commission and a former official knew of Robert Allen Stanford’s $7 billion fraud scheme but failed to investigate and stop it, an attorney for some victims said Friday.

The suit, filed in July by seven Baton Rouge residents and firms, was thrown out June 21 by U.S. District Judge Shelly Dick at the request of the federal government, which argued the SEC enjoys complete discretion in deciding what matters to investigate.

The suit alleges that Spencer Barasch, a former SEC regional enforcement director in Fort Worth, Texas, was negligent and engaged in deliberate misconduct in failing to investigate the scheme before investors suffered losses. The suit contends Barasch knew of the Stanford scheme but refused to probe it, allowing the continued defrauding of investors.

In his written ruling, Dick called Barasch’s alleged conduct “disturbing” but said the law supports the government’s position that there was no statute, regulation or policy that required Barasch to make an enforcement referral to either the National Association of Securities Dealers or the Texas State Securities Board.

“While the court sympathizes with the losses suffered by the plaintiffs in this matter, plaintiffs have failed to identify any mandatory obligations violated by SEC employees in the performance of their discretionary duties,” the judge wrote.

Ed Gonzales, an attorney for the seven Baton Rouge residents and firms who filed suit in federal district court in Baton Rouge, said an appeal will be filed at the 5th U.S. Circuit Court of Appeals in New Orleans. Those plaintiffs say they lost roughly $3.5 million to the scheme.

Dick’s ruling described the suit’s plaintiffs as victims of a Ponzi scheme who lost their investments in Stanford International Bank Ltd.

The suit alleges the SEC knew in 1997 that Stanford was operating a fraudulent scheme and failed to stop him until February 2009.

Robert Stanford, 63, of Houston, is serving a 110-year prison sentence for a fraud conviction that followed estimated worldwide losses of approximately $7 billion. About $1 billion of those losses were from about 1,000 investors in the Baton Rouge, Lafayette and Covington areas, according to estimates by state Sen. Bodi White, R-Central, and Baton Rouge attorney Phil Preis, who represents numerous Stanford victims in another lawsuit.

A Ponzi scheme is a fake investment program. Illegal operators skim most of the money provided by people who believe they are investors.

Early investors receive dividends that actually are small portions of their personal funds and those of later investors. Stanford’s Ponzi scheme attracted investment money for his Stanford International Bank on the Caribbean island of Antigua.

There are more than 20,000 Stanford victims across more than 100 countries.

For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum


The Stanford International Victims Group Forum