R. Allen Stanford’s U.S. court-appointed receiver defeated a bid by Caribbean court-appointed liquidators to wrest control of the collection of his assets for liquidation and distribution to his creditors.
U.S. District Judge David Godbey of Dallas ruled the legal epicenter of Stanford’s $7 billion international fraud scheme was in the U.S., even though the Texas financier’s Stanford International Bank Ltd. was in Antigua.
“Stanford employees managed and directed the CD enterprise from the United States with no meaningful input from Antigua,” Godbey said yesterday in a 60-page ruling posted on the court’s electronic docket today.
Stanford in March was found guilty of running a $7 billion fraud involving certificates of deposit issued by his Antiguan bank and sold in the U.S. by the Houston-based securities firm, Stanford Group Co. He is serving a 110-year prison sentence.
The 20-year scheme involved more than 20,000 investors worldwide.
Ralph Janvey, the Dallas lawyer appointed in February 2009 to wind down Stanford’s affairs when he was sued by the U.S. Securities and Exchange Commission, has primacy over rival liquidators Hugh Dickson and Marcus Wide of Grant Thornton International Ltd., Godbey said.
Dispute Over Assets
Janvey has been battling Dickson and Wide over the right to marshal assets and pay creditors. The Grant Thornton accountants claimed Antiguan law requires any liquidation to be based in Antigua, which doesn’t recognize Janvey’s authority. “The joint liquidators’ repeated interference with the Receivership has been the norm,” Godbey said.
The judge granted Dickson and Wide “nonmain” recognition and conditioned their ability to collect evidence and testimony in the U.S. on their cooperation with the Justice Department, Janvey and the SEC outside the country.
The Antiguan liquidators have been fighting U.S. efforts to repatriate more than $300 million from Stanford’s foreign accounts, which Janvey has said could be the single largest recovery for investors.
Order to Consult
The court directed the liquidators to consult with Janvey and a court-appointed investor advocate, John Little, and to use their “best efforts” to adopt a common claims process.
“The receiver welcomes the ruling and the conditions imposed upon the Antiguan liquidators that will prevent interference with the receiver’s work,” Janvey’s lead lawyer, Kevin Sadler, said in an e-mailed statement. “It remains to be seen, however, whether the Antiguan liquidators choose to accept this ruling or persist in conduct that the court accurately described as “extremely litigious and calculating.”
Dickson and Wide, in an e-mailed statement, said that while they’re not now seeking any relief or disclosure in the U.S., they will probably appeal.
“We are disappointed that the American court has ruled in a manner inconsistent with the recognition already granted to the joint liquidators in the United Kingdom and Switzerland,” Wide and Dickson said. “At first blush” it does not appear to affect their efforts outside the U.S., they said.
The case is In re Stanford International Bank Ltd. Debtor in a Foreign Proceeding, 09-cv-721, U.S. District Court, Northern District of Texas (Dallas), and 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).