The Official Stanford Investors Committee askedS the U.S. Justice Department to repatriate $330 million frozen in indicted financier R. Allen Stanford’s foreign bank accounts as suspected criminal proceeds, even though the funds are legally controlled by Stanford’s Antiguan receiver.
Ralph Janvey, the Dallas attorney appointed as Stanford’s U.S. receiver, has been fighting a separate receiver appointed by the Antiguan government for control of the financier’s estate for almost three years. The Antiguan receiver was awarded control by Swiss and British courts of the former billionaire’s bank accounts in those countries, while Janvey controls Stanford assets in the U.S.
Lawyers for Janvey and the Antiguan receiver told the Dallas judge in charge of the U.S. Securities and Exchange Commission’s civil fraud case against Stanford that the two receivers can’t agree how to share control of the estate or repay depositors.
About 28,000 investors were allegedly defrauded of more than $7 billion through certificates of deposit sold by Stanford International Bank in Antigua.
“Millions of dollars have been spent litigating these jurisdictional issues -- all at the expense of the victims,” attorney Peter Morgenstern, a member of the Stanford investors’ committee, said in a Nov. 18 letter to the Justice Department.
“The committee urges the DOJ to immediately begin the process to repatriate these funds to the U.S. for prompt distribution to all legitimate Stanford victims, regardless of citizenship or residency status,” Morgenstern said in the letter, a copy of which was provided today to Bloomberg News.
Stanford, 61, has been imprisoned as a flight risk since June 2009 on charges he defrauded investors about the security and oversight of their investments at his offshore bank. Stanford denies all wrongdoing and is in custody in a Houston federal prison awaiting trial, which hasn’t yet been scheduled.
Ed Davis, a lawyer for Stanford’s Antiguan liquidator, said the Dallas judge will ultimately decide who controls the foreign assets, not the Justice Department or the investors’ committee. He said Grant Thornton, as the Antiguan liquidator, is required by statute to establish procedures for administering the bank’s assets and claims.
“Those funds should be distributed to the victims through the Antiguan estate,” Davis said today in a phone interview. “Grant Thornton has said they’re willing to put safeguards in place to make sure all concerns are properly met and to give everyone comfort” that all investors will be properly paid.
Kevin Sadler, Janvey’s lead lawyer, declined in an e-mail today to immediately comment as he hasn’t seen the letter.
Laura Sweeney, a Justice Department spokeswoman, declined to comment on the letter.
The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission vs. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas).