Stanford’s Political Donations Must Be Returned, Court Says

Five Republican and Democratic national political committees must repay $1.6 million in campaign donations Texas financier R. Allen Stanford contributed out of $7 billion he stole from investors, an appeals court ruled.

Two Democratic committees and three Republican committees had urged a New Orleans appellate panel to overturn a lower- court order that they return contributions Stanford donated from 2000 to 2008 to his court-appointed receiver, who is marshaling assets to repay investors.

At oral arguments in May, the political groups argued that they were legally entitled to keep the donations, which were spent long ago on a variety of campaigns.

“The committees’ argument would lead to absurd results,” U.S. Circuit Judge James Dennis said in a 14-page decision. “Under their interpretation, they would be allowed to keep funds that were, for example, stolen by force or fraud so long as the contributions did not run afoul” of U.S. campaign- finance restrictions.

$7 Billion

“Nor does the fact that the original funds have been spent preclude the receiver from asserting his claim,” Dennis said.

Stanford, 62, is serving a 110-year prison sentence after he was convicted in March of swindling investors of $7 billion through bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

Stanford and his companies donated $950,500 to the Democratic Senatorial Campaign Committee; $238,500 to the National Republican Congressional Committee; $200,000 to the Democratic Congressional Campaign Committee; $128,500 to the Republican National Committee; and $83,345 to the National Republican Senatorial Committee, according to the ruling. With court-ordered interest added, the five committees must repay more than $1.7 million, according to court records.

“Today’s court ruling affirms the long-standing principle that federal equity receivers are permitted to recover fraudulent transfers made by the individuals and entities over whom they are appointed,’’ Scott Powers, an attorney for the receiver, said in an e-mail. ‘‘The ruling also brings Stanford’s victims one step closer to recovering over $1.6 million in political donations that Allen Stanford and his co-conspirators made using other people’s money. With attorneys’ fees, costs, and interest, the total recovery under the Court’s judgment could exceed $2.2 million.’’

Mark Shank, an attorney representing the Republican committees, and attorneys Brian Svoboda and Marc Elias, who represent the Democratic committees, didn’t immediately respond to voice or e-mail messages asking if their clients will appeal the decision.

The case is Janvey v. Democratic Senatorial Campaign Committee Inc., 11-10704, U.S. Court of Appeals for the Fifth Circuit (New Orleans).

The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

To contact the editor responsible for this story: Michael Hytha in San Francisco at mhytha@bloomberg.net.

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