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Golf Channel Denies Prior Knowledge of Alleged Ponzi Scheme

Stanford Hearing
Indicted financier R. Allen Stanford, accused of leading a $7 billion investment fraud scheme, arrives for a hearing at the Bob Casey Federal Courthouse in Houston on Jan. 6, 2011. Photographer: F. Carter Smith/Bloomberg

The Golf Channel said $5.9 million received from companies run by indicted financier R. Allen Stanford was for media services and not proceeds from an alleged Ponzi scheme as the receiver for Stanford’s businesses claims.

TGC LLC, known as the Golf Channel, said in response to the receiver’s lawsuit that it had no knowledge of what the government charges was a $7 billion fraud scheme. Golf Channel officials also threatened to counter-sue the receiver for $14.3 million for breach of contract if the judge presiding over Stanford’s civil fraud trial grants permission.

“The payments at the center of this case have nothing to do with a Ponzi scheme,’’ Theodore Daniel, the Golf Channel’s lawyer, said in papers filed yesterday in federal court in Dallas. Payments received from the Stanford Financial Group in 2007 and 2008 “were entirely legal’’ and the result of “arm’s-length, market-based, written contracts,’’ he said.

Stanford’s court-appointed receiver, Ralph Janvey, sued the the Orlando, Florida-based Golf Channel in February to recover what he claimed were fraudulent transfers from allegedly bogus certificates of deposit the financier’s Antiguan bank sold investors. The U.S. Securities and Exchange Commission seized Stanford’s businesses in February 2009 on suspicion of fraud.

The television channel primarily broadcasts golf tournaments, several of which were sponsored by Stanford’s company in the years before his financial empire collapsed.

Stanford, who denies any wrongdoing, is in jail awaiting trial on criminal fraud charges mirroring the allegations by securities regulators.

Unjustly Enriched

Others sued by Janvey and a committee of Stanford investors have also rebutted the receiver’s allegations that they were unjustly enriched by funds “taken from unwitting CD investors,’’ as Janvey claims. The individuals and companies say in court papers they earned the money in the course of normal business and are entitled to keep it.

Former Houston Mayor Lee Brown, who received $275,000 as a member of a Stanford advisory board from 2006 to 2008, accused the receiver and investors’ committee of “desperately casting their nets far and wide seeking to ensnare innocent victims’’ who did ordinary business with Stanford’s companies.

Brown said his case is “a simple but obvious attempt to impose strict liability upon all persons formerly associated with Stanford International Bank Ltd. without regard to the niceties of establishing guilty knowledge,’’ according to court papers he filed last month.

Children’s Hospital

St. Jude Children’s Research Hospital Inc., which received about $7.4 million in charitable donations from Stanford entities, filed court papers last week fighting a lawsuit by the investors’ committee that seeks return of the contributions.

“It is difficult to envision how plaintiffs can invoke equity to assert that funds the St. Jude defendants received to treat, prevent and cure catastrophic childhood diseases should instead be given to plaintiffs for their own personal gain,’’ the hospital’s lawyers said in a filing in Dallas federal court.

The cases are Janvey v. Golf Channel, 3:11-cv-0294; Janvey v. Brown, 3:11-cv-0301; and The Official Stanford Investors’ Committee v. American Lebanese Syrian Associated Charities Inc., 3:11-cv-0303; all U.S. District Court, Northern District of Texas (Dallas).

The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas).

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