Ponzi Receiver Can Go After Tiger’s Charity

DALLAS (CN) – The court-appointed receiver for R. Allen Stanford’s $7 billion Ponzi scheme can go after the Tiger Woods Foundation charity for $500,000 in alleged fraudulent transfers, a federal judge ruled.

Ralph Janvey, a partner with Krage Janvey in Dallas, sued the Tiger Woods Foundation and Tiger Woods Charity Event Corp. in April. He claimed they received the money in two transfers from Stanford Capital Management LLC, Stanford Financial Group Co. and the Stanford Financial Group Building Inc. Janvey claimed the money was from ” innocent, unwitting ” Stanford investors.

U.S. District Judge David C. Godbey denied the defendants’ motion to dismiss on Wednesday, finding that the charity could not prove Janvey’s claims are time-barred.

Godbey said the foundation relies on “far too many factual ambiguities” for its motion to be granted.

Janvey’s fraudulent transfer claim under Texas law has a 4-year statute of limitations; his unjust enrichment claim has a 2-year limit.

The parties agree that the relevant date of reference here is December 13, 2013, the date on which the parties signed the tolling agreement,” the 9-page order states. “Thus, the Receiver’s [fraudulent transfer] claim is time barred if he could have discovered it before December 13, 2012, and the unjust enrichment claim is time barred if it accrued before December 13, 2011. The Receiver argues that because he pleads the discovery rule, an issue of fact exists as to when he discovered his causes of action and his complaint cannot be dismissed. The court agrees.”

The discovery rule under Janvey’s fraudulent transfer claim gives plaintiffs a year to sue after the claim “could reasonably have been discovered by the claimant.”

“Application of the discovery rule is generally a fact-intensive issue inappropriate for resolution in a motion to dismiss,” Godbey wrote. “Even once a plaintiff has been exposed to information that gives rise to a duty to inquire, whether the plaintiff has been diligent in making that inquiry is ultimately a question of fact” to be determined at trial.

Godbey was not persuaded by the foundation’s argument that Janvey failed to plead “diligence at all” in discovering the transfers.

“This argument fails because, as discussed, the Receiver does allege diligence in discovering these transfers by claiming his team spent hours pouring over obscure financial records in order to identify actionable transfers,” the order states. “Defendants take issue with the fact that the Receiver has not specifically contended that these particular transfers were concealed or difficult to discover. But, that would require too much of the complaint at the motion to dismiss stage.”

Godbey found that in a light most favorable for Janvey, it is “perfectly reasonable” to conclude that the “generally complex and obfuscated nature of the Stanford financial records made these particular transfers difficult to discover.”

The foundation did not immediately respond to a request for comment Thursday.

Janvey has aggressively tried to recover funds originating from the Ponzi scheme, filing approximately 50 lawsuits against recipients since his appointment, according to the Courthouse News database.

His targets have included the Miami Heat basketball team, Texas A&M University, the University of Miami, the PGA Tour and the ATP Tour, among others.

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




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Stanford Promises to Prove his Innocence and Repay Victims

To the Stanford International Bank depositors, and clients of the global Stanford Financial Group 

As this is the first statement from me since the February 17, 2009 destruction of the global Stanford companies, and my imprisonment for allegedly operating a fraud that has been referred to as a “Ponzi scheme”, I want to be direct, clear and emphatic. The actions taken by the U.S. government against me and my companies and that resulted in such harm to so many of you, was baseless, opportunistically contrived and, most importantly, unlawful. To many of you, and especially those of you who believe in and trust the accuracy and veracity of the American media machine, for now I will simply advise you of the series of legal actions taken by me in recent months and ask that you look at them on line, read them carefully and then follow their progress through the American legal system. In the coming days and weeks, as these legal initiatives make their way through the courts I will be posting a daily message on this site to keep informed those of you who have been harmed.

Meanwhile, I want all of you to know, the many of you around the world who entrusted me and my companies with your investment monies, that it is my intent, and in fact my mission in this life, to restore my good reputation as an honest man, and to personally repay each and every one of you… in full …each and every dollar that was so wrongfully taken from you by the Securities and Exchange Commission.
The manner in which I intend to achieve this will be made clear in the coming weeks.

Thank you,

R. Allen Stanford

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




Allen Stanford files 299-page appeal of his 110-year sentence

Allen Stanford was convicted in 2012 on 13 felony charges related to America’s second-largest Ponzi scheme ever.

Allen Stanford was convicted in 2012 on 13 felony charges related to America’s second-largest Ponzi scheme ever.

WASHINGTON — Even tucked away inside a high-security federal prison in Central Florida, former Houston billionaire banker Allen Stanford is still thinking big — and flouting the rules.

Stanford filed a 299-page brief last month with the 5th U.S. Circuit Court of Appeals in New Orleans, making no fewer than 15 lengthy arguments about why he should be set free. He was convicted in 2012 on 13 felony charges related to America’s second-largest Ponzi scheme ever and sentenced to 110 years in prison.

Before being halted by a federal judge in Dallas in 2009, Stanford’s fraud had drawn in more victims than any other investment scheme in American history. There are more than 18,000 outstanding claims from defrauded investors and thousands more under review.

Investors had deposited about $5.5 billion with Stanford, and so far just $72 million has been repaid to investors.

Kevin Sadler, the attorney for Ralph Janvey, the Dallas-based court-appointed receiver, said that nearly 1,400 verified claims totaling $455 million have been filed by investor groups with at least one victim living in Texas. There are 111 claims worth nearly $51 million with ties to Dallas residents.

Stanford’s verbose appeal is his best and probably only chance to die a free man. The court has given him until Monday to file the appeal again, at about half its current length.

Since he fired his court-appointed attorney, Stanford is writing his own appeal. In it, he divides his chief arguments into two broad attacks — that the U.S. didn’t have jurisdiction over his offshore business and that his trial in Houston was bungled.

The charges against him were improper, he writes, since his bank was in Antigua, not the United States, and offered clients certificates of deposit, not “securities” as defined by the U.S. statutes.

“Simply put, Stanford International Bank was regulated by — and only by — Financial Services Regulatory Commission of Antigua and Barbuda,” Stanford writes.

That part of his appeal is based in part on Morrison vs. Australian National Bank, a 2009 Supreme Court decision that ruled that Americans defrauded by the Australian bank couldn’t sue under U.S. law, even though incidental parts of the bank’s operations were in America.

Key question

Yet the high court in the Morrison case held that a key question that determines whether an offshore bank fraud triggers U.S. securities laws is whether it marketed its products to Americans.

“They are going to look at the Houston-based company and determine whether there was enough links between it and the CDs sold by Stanford’s bank in Antigua,” said securities law professor Stavros Gadinis of the University of California at Berkeley.

William J. Carney, professor emeritus of corporate law at Emory University in Atlanta, agreed.

“The difference between the Australian case and Stanford’s is that the Australian company didn’t do business in the U.S. and didn’t offer its securities here,” he said.

Carney said Stanford’s other argument, that the CDs he sold aren’t properly “securities,” has a long history in securities litigation.

“The question of whether CDs are securities is really a closer call,” he said.

Stanford also argues in his appeal that he never got a fair trial, thanks to a series of factors all stemming from a savage beating he took from another inmate just five months after he was placed in a federal detention center.

“This assault resulted in a traumatic brain injury … required extensive reconstructive surgery, and was followed by over-medication of psychotropic drugs,” Stanford writes, describing injuries that prosecutors say he later tried to milk to avoid trial. “All of which, combined, profoundly affected his ability to communicate with his attorneys and prepare his defense.”

Strongest grounds

The beating and all the problems it caused later are probably his strongest grounds for a new trial, said Ali Fazel, who along with his partner Richard Scardino defended Stanford during his seven-week trial.

Before Stanford was indicted in 2009, U.S. District Judge David Hittner ordered Stanford to prison rather than allowing him to post bond. In court records, Hittner said he considered Stanford — who had traveled to 30 nations and five continents in the previous four years — an exceptional flight risk.

In September of that year, Stanford was badly beaten in prison.

“While sitting in a chair, he was grabbed from behind and fell backwards, hitting the back of his head on the concrete floor resulting in a concussion and loss of consciousness,” his lawyers asserted in a court filing before the trial. Unconscious, he was beaten even more severely. His assailant then smashed Stanford’s face with a steel pole, the filing said.

In 2011, Hittner ruled that Stanford was unfit to stand trial and ordered him sent to a prison medical facility for a four-month treatment. And that delay in the trial grew.

When officials at the facility said Stanford needed another four months of care, Hittner reluctantly delayed the trial until January 2012.

The delays meant further suffering for the victims. Hundreds of millions of dollars remained frozen until the outcome of the trial, which kept getting pushed back.

After Stanford’s eight months of treatment were over, his lawyers asked for yet another postponement, citing testimony from a string of psychiatrists that Stanford was still not competent.

Federal prosecutors pounced. They alleged in court papers that despite his injuries, Stanford’s continued efforts to avoid trial were just one more fraud.

They said Stanford had conveniently claimed to have now forgotten “all his past life events … as well as details of his business and banking operations.”

A psychologist at the facility concluded he was malingering and reported that Stanford performed so poorly on a test he administered that “mentally retarded children do much better.”

Fazel said he and his partner recognized, even at the time, that the handling of the trial would be Stanford’s best grounds for an appeal.

“It’s really a shame that a trained and talented appellate attorney didn’t get their hands on the trial record,” Fazel said. “There were lots of issues preserved in the record that would give a trained appellate lawyer a lot of room to work.”

The victims

The delay cost virtually every single one of Stanford’s fraud victims. The only sizable trove of recovered assets — $300 million worth — had been frozen overseas. Under the law, even those funds could not be distributed to victims until Stanford was convicted and there was a finding of fraud by the court.

Most of that $300 million is still frozen, pending appeal.

“Unquestionably the delays at trial, and now with [Stanford] dragging out his appeal by shuffling through attorneys and filing these overlong briefs, have meant a delay of at least two years — and counting,” said Sadler, the attorney for the receiver.

Beyond the dollars, the human impact of the delay, and of the fraud itself, has been enormous.

Among the victims in Texas: a retired businesswoman who lost $1.3 million, money she was relying on to treat a rare genetic disease that would kill her without a kidney transplant; a retired cattle rancher who lost everything and found himself in and out of a hospital intensive-care unit repeatedly as doctors feared the stress was killing him; and a retired railway man and honored Vietnam veteran who feared that he had no money left to take care of a wife disabled with Parkinson’s.

Mary Oliver and her husband were living in Dallas in late 2007 when they began investing their retirement funds — about $1 million — with Stanford. Like most victims, they’ve recovered less than 1 percent of their losses.

“Allen Stanford ruined the lives of thousands of hard-working, tax-paying investors by stealing their life savings,” Oliver said. “He lied, cheated and stole from innocent victims. He deserves to be in jail for the rest of his life on earth.”

Stanford’s appeal is his best shot at avoiding that fate, but even as he prolongs his case, the thousands of people he defrauded have little prospect of ever being made whole.

Read More here:

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




Fifth Circuit affirms summary judgment against “net winners” of Stanford Ponzi scheme

In a recent opinion, the United States Court of Appeals for the Fifth Circuit held that the Texas Uniform Fraudulent Transfer Act allows a receiver to clawback interest payments made to investors under a Ponzi scheme. Beginning in the 1990s, a network of entities created by R. Allen Stanford sold certificates of deposit to investors through the Stanford International Bank, Ltd., promising extraordinarily high rates of return. In a classic Ponzi scheme, Stanford used later investors’ money to pay prior investors their promised returns. The scheme ultimately collapsed, Stanford and CFO James Davis were imprisoned, and the SEC brought suit against Stanford, his agents, and the Stanford entities, alleging federal securities law violations.

The court-appointed receiver over the Stanford entities brought multiple actions under the Texas Uniform Fraudulent Transfer Act (“TUFTA”) to recover funds paid to investors who purchased certificates of deposit as part of the Ponzi scheme and received back their principal, as well as purported interest on the principal. The Receiver moved for summary judgment on its TUFTA claims against the investor-defendants (described by the court as “net winners” of the scheme), arguing that the payments made to the net winners were fraudulent transfers not made in exchange for reasonably equivalent value. The United States District Court for the Northern District of Texas granted the Receiver’s motions for summary judgment and ordered the investor-defendants to return funds paid in excess of their original investments.

The investor-defendants filed an interlocutory appeal to the Fifth Circuit, which swiftly rejected each of their arguments and affirmed partial summary judgment in favor of the Receiver.

The investor-defendants first argued that the district court’s choice of law analysis was fundamentally flawed and that Antigua law rather than Texas law should apply. The Fifth Circuit concluded the district court correctly applied Texas law, as the scheme was centered in, and operated out of, Houston, Texas, and Texas has a substantial interest in the application of its fraudulent transfer laws because the Receiver, many of the Stanford entities, and some of the defrauded creditors and net winners are in Texas. The court also rejected the argument that the Receiver lacked standing to bring claims under TUFTA, concluding that the Stanford entities, through the Receiver, may recover assets or funds that the entities’ principals fraudulently diverted to third parties without receiving reasonably equivalent value. The court further rejected the investor-defendants’ statute of limitations argument because the suits were filed less than one year after the fraudulent transfer was, or reasonably could have been, discovered (measured from the date of the CFO’s guilty plea). In addition, the court determined that IRA accounts containing net winnings to which the investors had no legal right could not be sheltered as assets.

On the merits of the district court’s grant of summary judgment, the Fifth Circuit first addressed whether TUFTA’s element of fraudulent intent was satisfied. Fraudulent transfer requires that the debtor transferor make the transfer with actual intent to defraud the debtor’s creditors, and in the Fifth Circuit, such intent may be established by proving that a transferor operated as a Ponzi scheme. Here, it was well-established that the Stanford entities were operated as a Ponzi scheme, thereby establishing fraudulent intent.

Next, the court addressed the investor-defendants’ argument that they should be permitted to keep their contractually-guaranteed interest payments for which they asserted they paid reasonably equivalent value. Under TUFTA, a transfer is not voidable against a person who took in good faith and for reasonably equivalent value. Value is given if, in exchange for the transfer, an antecedent debt is secured or satisfied. Here, the CDs issued by Stanford were void and unenforceable, invalidating any contractual claim to interest; thus, the court concluded the investors failed to provide any value for the interest payments that they received. The court explained that, in the context of a Ponzi scheme such as Stanford, each payment of interest to an investor (made possible by a later investor’s deposit) decreases the net worth of the entity operating the scheme. Accordingly, the district court’s grant of partial summary judgment in favor of the Receiver on its TUFTA claims was affirmed. Notably, the Fifth Circuit agreed with the district court’s conclusion that the investors did give reasonably equivalent value to the extent that they received back their principal because they have actionable claims for fraud and restitution. Thus, in contrast to the interest payments, the principal payments were payments of an antecedent debt.

Join the Debate here:

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




Net Winners in Stanford Ponzi Scam Lose Appeal

Profits seen by some investors in R. Allen Stanford’s Ponzi scheme may face seizure by the court-appointed receiver trying to make victims whole, the 5th Circuit ruled.

Ralph Janvey, with Krage Janvey in Dallas, has filed more than 70 federal fraudulent-transfer suits in Dallas since his appointment. He has targeted former Stanford entities and employees, individual investors and third-party recipients of Ponzi scheme proceeds – included the Republican National Committee, the Democratic Congressional Campaign Committee, Miami Heat basketball team, the Tiger Woods Foundation, Texas A&M University, the University of Miami, the PGA Tour and the ATP Tour.

In a partial summary judgment for Janvey early last year, U.S. District Judge David Godbey said the hundreds of “net winners” who received interest on top of their principal would still be “in far better shape” after paying back the interest than most other Stanford victims “who lost everything.”

A three-judge panel with the 5th Circuit affirmed Godbey’s ruling on Thursday, concluding the net winners have no valid claim to the interest on their phony certificates of deposit (CDs).

“Here, we conclude that there is no valid claim for interest,” the 22-page opinion states. “The CDs issued by [the Stanford International Bank] are void and unenforceable. This is because ‘[t]o allow and [investor] to enforce his contract to recover promised returns in excess of his undertaking would be to further the debtors’ fraudulent scheme at the expense of other [investors].'”

Any recovery would be paid out of money “rightfully belonging” to the other victims of the Ponzi scheme, not from the Stanford entities’ own assets “because they had no assets they could legitimately call their own,” Judge Patrick Higginbotham wrote for a three-member panel in New Orleans.

The appeals court also affirmed that principal payments made to the net winners are off-limits to Janvey and not subject to fraudulent-transfer claims.

“Unlike interest payments, it is undisputed that the principal payments were payments of an antecedent debt, namely fraud claims at the investor-defendants have as victims of the Stanford Ponzi scheme,” Higginbotham wrote.

Net winners who tried to shelter their profit in individual retirement accounts that are exempted by the Texas Property Code are also not entitled to an exemption, the court found.

“As we recently explained, to claim this exemption, a defendant ‘must establish that she has a legal right to the funds in the IRA,'” the opinion states. “The investor-defendants have offered no evidence to the district court that they have a legal right to the funds despite those funds being the product of a fraudulent transfer. The district court did not err in denying this exemption.”

Janvey could not be reached for comment Thursday evening.

Read more here:

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