IRS Hikes Offshore Account Penalty To 50% For Stanford Companies

The IRS updated (12/23/14) its list of so-called bad foreign banks where offshore accounts trigger a 50% (rather than 27.5%) penalty in the Offshore Voluntary Disclosure Program (OVDP). The IRS added Sovereign Management and Legal, Ltd., plus certain branches of Bank Leumi. Neither addition should come as a surprise. Both banks have been targets of the Department of Justice.

Israel’s Bank Leumi is fresh off its $400 million settlement with the U.S. and New York, so its addition to the 50% list is the other shoe dropping. Sovereign’s addition should also raise no eyebrows, coming on the heels of numerous that John Doe Summonses issued to FedEx, DHL, UPS, HSBC relating to Sovereign. Presently, taxpayers in the 2014 OVDP face a 50% penalty if they had accounts at any of the following:

  1. UBS AG
  2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
  3. Wegelin & Co.
  4. Liechtensteinische Landesbank AG
  5. Zurcher Kantonalbank
  6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
  7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
  8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.

  9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
  10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
  11. Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates
  12. Bank Leumi le-Israel B.M., the Bank Leumi le-Israel Trust Compay Ltd., Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA

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


Allen Stanford’s Lawyers Shed Some Charges

Investors harmed in R. Allen Stanford’s $7 billion Ponzi scheme cannot sue the Greenberg Traurig and Hunton & Williams law firms for breach of fiduciary duty, a federal judge ruled.

The Official Stanford Investors Committee and court-appointed receiver Ralph Janvey, with Krage Janvey in Dallas, sued both law firms and Miami attorney Yolanda Suarez in Dallas Federal Court in 2012, alleging legal malpractice, breach of fiduciary duty and fraudulent transfer, among other things.

They claimed the defendants aided the scheme’s success and eventual downfall by providing deficient legal services.

They said Suarez was Stanford’s chief of staff and the “protegé” of attorney Carlos Loumiet, a partner first at Greenberg and later at Hunton.

U.S. District Judge David C. Godbey granted in part the defendants’ motion to dismiss on Dec. 17, finding that the investors failed to plead an independent claim for breach of fiduciary duty.2011

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

Receiver files 11th Schedule of Payments to be Made Pursuant to the 1st Interim Distribution Plan

Receiver files 11th Schedule of Payments to be Made Pursuant to the 1st Interim Distribution Plan – On December 12, 2014, the Receiver filed his 11th Schedule of distribution payments under the 1st Interim Distribution Plan with the United States District Court for the Northern District of Texas, Dallas Division. The 11th Schedule will be followed by others, each of which will be submitted by the Receiver on a rolling basis as additional responses to Certification Notices are received and processed.

To view a copy of the 11th Schedule, please click here.

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

Federal judge in Dallas clears way for some Stanford victims to have day in court

WASHINGTON–On the topic of justice, few have said it better than the novelist William Gaddis in his 1994 novel, A Frolic of One’s Own. “Justice? – you get justice in the next world, in this world, you have the law.”

For victims of the Allen Stanford Ponzi scheme, justice is still a very long way off, even if Stanford himself has been serving his 110-year sentence in a federal prison since 2012.

But this week, the law took a tiny turn in favor of victims and it happened in a Dallas court room. U.S. District Judge David Godbey of the Northern District of Texas issued two opinions this month, the second one on Monday, that keep alive the Stanford victims’ still-slender hopes of recovering money from the Wall Street firms and other financial power-brokers who were paid millions by Stanford over the years for help in keeping in motion what has turned out to be perhaps the most far-reaching financial scandal in U.S. history.

The facts of the case by now are familiar: Some 20,000 Stanford investors around the world lost more than $5.5 billion in principal and nearly $2 billion more in interest when the federal government finally acted in 2009 to shut down the sprawling, global investment empire he ran from offices in Houston and from the tiny Caribbean nation of Antigua. Godbey ordered Stanford’s assets frozen and turned over to Dallas lawyer Ralph Janvey, who was appointed receiver.

In the years since, plaintiffs have recovered precious little of their money — about a penny on the dollar. One remaining hope they have is to sue the professional services firms that profited so mightily over the years from their work for Stanford. So far, it’s been a tough legal hill to climb, despite a surprisingly favorable ruling by the Supreme Court. The justices ruled 7-2 in February that federal securities laws don’t require that all cases be heard in federal court Some state-court actions will be permitted, opening up the possibility that plaintiffs can sue on negligence and other grounds.

That ruling hasn’t resulted in any victories yet for the plaintiffs, but they did get a burst of good news out of Dallas this month.

In Monday’s opinion, Godbey ruled that the clearing agent (useful definition here) for the Houston-based broker-dealer that persuaded thousands of Stanford’s victims to put their money in phony certificates of deposits can be sued. That agent is Pershing, LLC, a subsidiary of the venerable Bank of New York Mellon. It will have to go to trial on allegations that it breached its fiduciary responsibility in being such a pliant participant in the scheme. The Houston-based broker-dealer, known as Stanford Financial Group, was a separate entity owned by Allen Stanford and licensed by the U.S. financial regulators. So far, courts have sided with defense attorneys who argue the actual fraud that took place was accomplished by Stanford’s stand-alone bank in Antigua. Investors actually sent their check to this bank, not to the Houston brokers, and as a result victims have had little luck holding the U.S. financial system responsible for any of their losses.

Monday’s opinion doesn’t mean they’re about to hit pay dirt. Godbey simply declined Pershing’s motion to dismiss a suit brought by investors from Texas and Louisiana. It had argued, among other things, that as clearing agents for the Houston firm, it was as a matter of law too far removed from the actual fraud to be liable for the losses.

Godbey disagreed. It’s true, he wrote, that federal courts have held just that, shielding clearing agents from liability in an underlying fraud. But he also ruled that when plaintiffs can show — as they do here — that the aid provided by the agents went beyond mere clerk-like duties, the issue becomes one ripe for trial. In addition, the Texas Securities Act provides that when an otherwise shielded party like Pershing can be shown to have had adequate knowledge that its services were being used to carry out an improper end, it can be held liable.

Monday’s ruling doesn’t mean that the plaintiffs’ will prevail at trial, or that they can prove the allegations they’ve made. It just means that they’ll get a chance to make their case.

The earlier ruling by Godbey was similar, and potentially good news for the victims. He ruled Dec. 5 that a suit brought by the receiver, Ralph Javney, against insurance brokers can proceed. Those insurance brokers issued letters of good standing, essentially, which were in turn used by Stanford’s employees to make investors feel safer in sending their money to the bank in Antigua. Those policies didn’t cover deposits in the bank, only investments held by the Houston brokers. The plaintiffs allege the insurance brokers knew or should have known that. Now, they’ll get a chance to prove it.

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

Stanford appeal delayed 60 days as court grants DOJ more time to respond


WASHINGTON—Allen Stanford’s many victims have grown used to waiting. They waited for years for the former Houston billionaire to be tried, and they’re still waiting to see some of their billions that the disgraced banker fleeced from their investment accounts.

They’ve also been waiting for Stanford’s 2012 conviction to finally be settled, and of that to happen the Fifth Circuit Court of Appeals in New Orleans is going to have to hear his appeal, something that has been delayed again and again as Stanford has worked through a series of fired lawyers and finally filed his 299-page brief this fall.

Word came this week, however, that the victims will have a wait a little longer still — and this time it’s the U.S. Government that has sought the delay. The Fifth Circuit granted the DOJ’s request for more time to file its answer to Stanford’s appeal on Tuesday.

The U.S. response to Stanford’s brief, which he has since rewritten and scaled down to comply with court rules on length, is due Feb. 3.

The court granted the government’s request without seeking Stanford’s approval, a point he apparently didn’t like. He filed a letter yesterday saying that he is “vehemently opposed” to the 60-day extension, and will be filing a motion in opposition soon, though such a motion doesn’t seem likely to have any legal significance at all.

Stanford is serving a 110-year sentence in a federal prison in Florida. He was convicted of fraud after an SEC complaint triggered an investigation into what a jury later concluded had been a massive, transcontinental Ponzi scheme centered in Houston and in Antigua.

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