April 26 (Bloomberg) -- A group of Stanford International Bank Ltd. depositors asked a U.S. judge to order the receiver he appointed and rival bank liquidators selected by a Caribbean court to collaborate on a process to pay victims of R. Allen Stanford’s $7 billion fraud scheme.
The depositors and other creditors of the Houston-based Stanford Group Co. securities firm filed their request today with U.S. District Judge David Godbey.
The judge yesterday described as “mind boggling” the continuing dispute between Dallas lawyer Ralph Janvey, whom Godbey appointed in February 2009 to collect and liquidate Stanford assets to pay off creditors, and the two Grant Thornton accountants asked to do comparable work by the Eastern Caribbean Supreme Court for Antigua and Barbuda.
“Something is terribly wrong here,” the Stanford depositors and creditors told Godbey in today’s filing. “This simply should not have been that hard.”
A federal jury in Houston in March convicted Stanford, 62, of leading a international banking fraud scheme centered on the sale of certificates of deposit by his Antigua-based bank. He is scheduled to be sentenced on June 14.
Godbey yesterday declined to immediately grant Janvey’s request that he set a deadline for the filing of claims by Stanford’s fraud victims. The receiver was appointed after the U.S. Securities and Exchange Commission filed suit against Stanford and his bank.
“I’m not saying that I want it to be a fixed price contract,” the judge said, adding that he sought assurance “we are not going to spend another $50 million.”
Janvey’s outside counsel, Kevin Sadler of Houston-based Baker Botts LLP, told the court he would file a cost estimate within two days.
The Janvey and Grant Thornton receivers have spent about $150 million in their global efforts to recover Stanford assets, according to the creditors’ filing today. They haven’t agreed on a unified plan for processing victim claims and payments.
‘Round and Round’
“We’ve gone round and round and have not come up with anything that’s acceptable,” Joseph Wielebinski, a lawyer for the Antiguan liquidators, said in court yesterday, relaying his clients’ objections to the setting of a claims bar date.
“Nobody is more sensitive to that issue than the receiver,” Sadler told Godbey. “We are very anxious to start the process.”
“Unfortunately,” the Stanford creditors said in their filing, “it appears that it will take firm and unambiguous action by the court to right this ship.”
The creditors said they seek a court-ordered day-long session involving representatives of the Janvey receivership, the Antiguan liquidators and victims’ advocates.
“In the event an agreement is not reached, movants respectfully move the court to fashion a single claims process,” they said.
Miami attorney Edward H. Davis, who represents the Grant Thornton liquidators, didn’t reply to an e-mailed request for comment.
Sadler, in a telephone interview, called the filing by creditors’ lawyer Stephen Malouf “very unfortunate and very ill-timed.”
“He just doesn’t know how much time the receiver, the SEC, the creditors committee and the examiner have spent negotiating with the Antiguans,” Sadler said. The parties have had “innumerable meetings,” in the past year, making what he described as a “considerable effort to reach some kind of an agreement.”
Sadler said the Antiguans maintain they are the only legally authorized liquidators of the Stanford bank and as such, “they want to be in control of everything.” It has been impossible to dislodge them from that position, he said.
Almost $3.5 billion in claims have already been submitted to the Janvey receivership without a formal claims process in place, Sadler said.
“You have to have a claims process in place before you can distribute one dime,” he said.
The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston).
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