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Tuesday, 29 June 2010

Allen Stanford's Girlfriend Stoelker Sued by Receiver for Wages, Payments

Stanford's girlfriend, Andrea M. Stoelker, was sued by the indicted financier’s court- appointed receiver for $560,000 that she received in wages and other payments from the Stanford Financial Group of companies.

Stoelker’s services, including her work on Stanford’s Caribbean cricket subsidiary, were of no value to creditors, said Kevin Sadler, lead attorney for Stanford receiver Ralph Janvey, in papers filed today in federal court in Dallas.

“Any services performed by Stoelker were designed to further the operations of the Ponzi scheme and may well have assisted Stanford in attracting new victim investors,’’ Sadler said in the filing.

Stoelker, who is identified by Sadler as Stanford’s “girlfriend and/or fiancée,’’ said in her own court filings that she often accompanied Stanford on international business trips and Las Vegas vacations. She also sought, and was denied, the return of her personal belongings taken from Stanford’s yacht when his assets were frozen by court order and turned over to Janvey in February 2009.

Stanford is in federal prison in Houston awaiting a January trial on charges that he swindled investors of more than $7 billion through allegedly bogus certificates of deposit issued by Antigua-based Stanford International Bank Ltd.

Mansions, Jets, Yachts

Stanford faces parallel civil fraud allegations from the U.S. Securities and Exchange Commission, which claims he skimmed more than $1 billion in investor funds to finance a lavish lifestyle that included multiple mansions, a fleet of jets, two yachts and a private island. Stanford has denied wrongdoing.

Stoelker was “unjustly enriched’’ while serving as president of both Stanford Financial Group Global Management LLC and Stanford 20/20, according to the lawsuit. The 20/20 organization promoted a faster version of cricket, which the financier hoped would attract a wider following to the sport. Stoelker received at least $140,000 from the cricket unit and another $180,000 from Stanford personally, Janvey claims.

Stoelker previously attended many of Stanford’s court appearances. She was refused court permission to visit Stanford in prison.

The case is Janvey v. Stoelker, 3:10-cv-01272, U.S. District Court, Northern District of Texas (Dallas).

Monday, 14 June 2010

What Does HSBC Have to HIDE?

I have been looking into the actions of HSBC who were instrumental in transferring money from UK and European bank accounts to Stanford International Bank in Antigua. From the information given by the forensic accountant Karyl Van Tassel of FTI Consulting and the wire instructions for transferring my money to Stanford International Bank in Antigua it became clear that something was seriously wrong.

I contacted HSBC and asked for proof that my money was indeed transferred to Stanford International Bank in Antigua, I new they would not be able to provide this because of the report by Karyl Van Tassel. I was immediately told since I did not have a bank account with HSBC they would not talk to me, I then spoke to the Banking Ombudsman who told me I would have to go through my bank where the money was originally transferred from.

After many months of discussions with Barclay's Bank and calling HSBC's bluff by paying the 50 GB pounds that HSBC demanded to provide proof the money was sent to Stanford International Bank in Antigua, I again met with a brick wall. Barclay's were told by HSBC that they refused to release the information without a Court Order. Barclay's were as astounded by the behaviour of HSBC as I was, these are not the actions of a bank that has nothing to hide!

I then consulted a lawyer, one who incidentally had won a case against HSBC recently involving wire transfers. He kindly took a preliminary look at my evidence and said he thought I had a good case against the bank. The bad news is the banking ombudsman will not help since I did not bank with HSBC, and the lawyer said unless I had limitless cash to throw at the case HSBC could draw out the case until I ran out of money. It could cost me tens of thousands of pounds just to get a court order to force them to release details of where the money was transferred to.

This is unbelievably and unjust, that a bank like HSBC can refuse to disclose what it did with a persons money and unless you are rich you will have no recourse for justice. How can I, an old age pensioner who has lost her life savings fight for justice against a Bank like HSBC?

I will outline below my case against HSBC perhaps a politician or an investigative reporter will help me find justice.

Stanford was first investigated 20 years ago when he became a subject of a joint Scotland Yard-FBI investigation into so-called “brass-plate” banks on the Caribbean island of Montserrat. The investigation was set up after the tiny island, with a population of fewer than 13,000 people, had been targeted by criminals who set up more than 300 banks and rapidly found itself at the centre of a worldwide money laundering operation. Among them was the Guardian International Bank, created by Allen Stanford. The bank was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers, according to former FBI agent Ross Gaffney, who headed the task force set up to investigate the suspicious explosion of offshore banks on the island. Before the investigation could develop further, Stanford was forced to surrender his Montserrat banking license by the British Government and left the island only to open Stanford International Bank in Antigua, who despite Stanford being a declared bankrupt in the United States and warnings from the FBI and Scotland Yard was granted a banking license.

American forensic accountant Karyl Van Tassel of FTI Consulting published a report for the SEC stating that none of the money investors pumped into Stanford International Bank (SIB) actually went to Antigua & Barbuda where the bank was based. Karyl Van Tassel, who was hired by the court-appointed receiver in the Securities Exchange Commission (SEC) civil case against Sir Allen Stanford, said the money went instead to Stanford company accounts at banks in the United States and Canada. Van Tassel found that between January 1, 2008 and February 17 this year, US $2.1 billion in deposits money went to Toronto Dominion Bank in Canada, another US $624 million went to Trustmark National Bank, which is based in Mississippi, and US $801 million went to the Bank of Houston.

Having looked at the money laundering regulations introduced throughout the European Economic Area (EEA) in 2007 which were passed into British law as Statutory Instrument 2007 number 2157, there are a couple of points to be noted:

The regulations state: A credit institution (“the correspondent”) which has or proposes to have a correspondent banking relationship with a respondent institution (“the respondent”) from a non-EEA state must—(a) gather sufficient information about the respondent to understand fully the nature of its business; (b) determine from publicly-available information the reputation of the respondent and the quality of its supervision. As I pointed out earlier Alan Stanford’s Guardian International Bank situated on Montserrat was being investigated by Scotland Yard and the FBI for money laundering which would usually undermine one’s ‘reputation’ in banking. Further SIB was audited by an unknown auditor.

The regulations also state: A credit institution must not enter into, or continue, a correspondent banking relationship with a shell bank….A “shell bank” means a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate. As I pointed out earlier a forensic audit proved money was never sent to Antigua but diverted to US and Canadian banks indicating that the mind and management of SIB was not in Antigua. Further SIB was not part of Stanford Financial Group. It was an affiliate.

While there is little doubt that the subtleties of the Stanford situation have only come to light after the US Securities and Exchange Commission’s freeze on all Stanford assets, the UK government were aware that this "bank" was being monitored and were in fact monitoring SIB themselves. Barclays and HSBC are enormous banks with many more resources to hand than individual investors. Further, agreeing to be a correspondent bank for all Euro transactions with a bank outside of the EEA should add an additional responsibility to undertake thorough due diligence given the ability to transfer funds freely within the EU and EEA.

How was it possible for HSBC to have become the correspondent bank for all Sterling and Euro deposits given the exercise of due diligence expected from correspondent banking with offshore entities and the history that Allen Stanford had with the British banking authorities.

The Foreign and Commonwealth Office comments to the recent BBC Panorama programme on Alan Stanford said that the ‘UK government does take financial malpractice very seriously and issues regular advice on countries and jurisdictions where there may be serious deficiencies in regulation. It is for companies and the financial professionals they employ to act on this advice with all due diligence’. Presumably, the last part of this comment would apply Barclays and HSBC.

My instructions for the transfer of money was from Barclays to HSBC Bank in London Swift code MIDLGB22XXX For further credit to Stanford International Bank in Antigua (Sort Code 40-05-15) Account Number 58180160 Swift Code (SIBP AG AG) For final transfer to Mrs XXXXX Account Number 161xxx.

The money never reached Antigua but was transferred by HSBC to their bank in the Cayman Islands. The sort code given of 40-05-15 with the Swift code for SIB in Antigua (SIBP AG AG)is actually nothing to do with Stanford but is HSBC in the Cayman Islands. The misrepresentation of the sort code being part of Stanford International Bank along side the swift code should have raised alarm bells with HSBC had they were practiced “due diligence”. Where the money went from HSBC in the Cayman islands remains a mystery, but from the behaviour of HSBC they clearly know it was not sent as per my instructions to Antigua.

I hope HSBC are proud of their actions, and I would like the world to know how this bank has behaved towards a retired victim and many others who have lost their life savings possibly as a result of the actions of HSBC.

Stanford’s Co-Defendants Try to Flee the ‘Circus’

Just like you don’t get to pick your family, defendants accused of being members of a conspiracy have to live with one another, even though that means a jury may lump them together in deciding their guilt. Executives from the Stanford Financial Group charged with participating in a multibillion-dollar Ponzi scheme are learning this lesson as they deal with what one described in a legal brief as the “circus” surrounding their co-defendant, R. Allen Stanford, the firm’s founder.

White-collar crime prosecutions usually involve multiple defendants, and a conspiracy charge is often at the heart of the case. That charge means a single trial involving all the defendants, even though they may have differing levels of culpability and one may be the lightning rod in the case.

Laura Pendergest-Holt, former chief investment officer at Stanford Financial, filed a motion last week asking to have her trial severed from her co-defendant because of what she called the “egregious and circus-like conduct” created by Mr. Stanford and his current lead counsel. Indeed, her brief uses the word “circus” no fewer than eight times in describing what has taken place in court.

Two other co-defendants, the firm’s former chief accounting officer and its controller, have joined her severance motion, trying to put as much distance as they can between their trials and Mr. Stanford’s.

Under Federal Rule of Criminal Procedure 8(b), prosecutors can charge defendants in a single indictment if they participated “in the same series of acts or transactions.” A conspiracy charge is the typical means for bringing different defendants together into a single case because it can be such a wide-ranging offense, sometimes covering years of conduct. So long as the government shows there is a reasonable basis to believe each defendant participated in the criminal agreement, they can be tried together.

There are many dangers to defendants in a joint trial, the most significant being the potential “spillover effect” from the evidence showing the culpability of other members of the conspiracy. Under conspiracy law, the acts of each accused conspirator can be used against all the other accused members.

Especially when one defendant is controversial, jurors may focus on that person and view the others as simply trailing the leader’s wake. Once convinced of the primary defendant’s guilt, it is easy for a jury to conclude that the others should be convicted.

A co-conspirator can seek to have the trial severed from other defendants under Rule 14(a) if a joint trial “appears to prejudice” the person. Of course, prejudice does not mean just that the jury is more likely to convict if they are tried together, so a defendant asking for a severance has the burden of showing significant problems that would call into doubt whether the person could receive a fair trial.

Mr. Stanford’s defense has been rather disorganized to this point, and his conduct in court has not gone over well with Judge David Hittner in Federal District Court in Houston, who is presiding over the criminal case. The Wall Street Journal recently noted that 10 different law firms had represented Mr. Stanford since the Securities and Exchange Commission first filed civil fraud charges in February 2009 accusing Stanford Financial of operating a Ponzi scheme.

Unfortunately for Ms. Pendergest-Holt and her co-defendants, the actions of Mr. Stanford may not be enough to have their case separated from his. Judges have a strong preference for conducting a single trial when the bulk of the evidence will be the same for each defendant.

There is a much stronger case for granting the severance motions in the insider trading prosecution of Raj Rajaratnam, the billionaire founder of the Galleon Group hedge fund, and Danielle Chiesi, his indicted co-conspirator. In that case, the government contends there were seven different conspiracies to trade on information in different companies from a variety of sources, but only one conspiracy charge accuses both defendants of agreeing to trade on inside information. There is significantly less overlap in the Galleon case, so they have a better chance of winning their motions.

In the Stanford prosecution, all of the defendants are named in the primary conspiracy, mail fraud and wire fraud counts, and there appears to be a significant overlap in the evidence against them. Ms. Pendergest-Holt is also named along with Mr. Stanford in additional counts alleging obstruction of justice, an even greater confluence of the evidence that will be used against them at trial.

The government is likely to strongly oppose the severance motion because it does not want to expose its witnesses, particularly the former chief financial officer of Stanford Financial, who is cooperating in the case, to multiple court appearances to testify.

Even when there is overlapping evidence, judges are more sympathetic to a severance motion when it appears that a joint trial puts the defendants in the position of offering antagonistic defenses, such as when each blames the other for pulling the trigger.

The conflict described in Ms. Pendergest-Holt’s brief between Mr. Stanford and his co-defendants appears to focus more on how his conduct makes it difficult to trust how he will act at trial and less on what their actual defenses to the charges will be.

While Ms. Pendergest-Holt and her co-defendants may try to shift as much blame as possible on to Mr. Stanford, that could require them to testify in order to point the finger at him. That is always dangerous because the jury could perceive them as taking the easy way out once they were caught and conclude that they all acted together.

Even when there is blame-shifting among the defendants, courts usually reject a request for separate trials and instead rely on jury instructions that the evidence against each must be weighed separately. Whether that keeps a jury from lumping the whole group together is an open question.

It is often the case that defendants in white-collar crime prosecutions cooperate on their defense and even enter into a joint defense agreement in order to present a united front. That is certainly not the case here, as Mr. Pendergest-Holt and her co-defendants want to avoid having Mr. Stanford dominate the trial and, if he chooses to testify, come across poorly to a jury.

While a joint trial would certainly make it more difficult for the other defendants to avoid the taint of being linked to Mr. Stanford, this is not the type of prejudice under Rule 14(a) likely to lead separate trials involving the same core of evidence. Judges do not want to listen to the same evidence all over again when the case can be tried once, even if that comes at the cost of putting antagonists together at the defense table.

Vantis warns it may have to stop trading

Accountancy group Vantis may itself face corporate restructuring or insolvency after its board flagged up uncertainty that the firm can continue trading, leading its shares to be suspended from the junior market.

Trouble at the firm, which specialises in corporate restructuring and insolvency, hinges on a massive unpaid fees bill from its work on Stanford International Bank, as well as the impact of the recession on its business advisory and tax arm.

Chief executive Paul Jackson and head of corporate restructuring Nigel Hamilton-Smith, who worked on Vantis's most high-profile case, the liquidation of alleged Ponzi schemer Allen Stanford's Antiguan bank, resigned from the firm's board on Saturday. They are still working for the firm on day-to-day business, Vantis said.

Vantis has yet to receive a penny of the multi-million-pound fees it is owed for its liquidation work on Stanford International Bank.

It was hit with further bad news last week when a high court judge in Antigua ordered the firm to be removed from its position as liquidator on the Stanford case after complaints from a creditor.

Vantis's finance director, Steve Smith, is taking over “all executive responsibilities” at the firm until a new chief executive is identified, the firm said.

It added that it was still in discussions about selling “certain of the company's assets” and talking to potential investors as well as its lenders, who include Lloyds TSB, Barclays and Royal Bank of Scotland, about a rescue package

Friday, 11 June 2010

Update relating to recent decision by the Court of Antigua re: Stanford International Bank Ltd - in Liquidation (SIB)

The Joint Liquidators of SIB, Mr Nigel Hamilton-Smith and Mr Peter Wastell, were appointed by the Financial Services Regulatory Commission of Antigua and Barbuda as Joint Receivers, and subsequently Joint Liquidators, of SIB on 19 February 2009.

Following a decision by the High Court of Antigua on Tuesday 8 June 2010, the Joint Liquidators wish to confirm that the Court has decided that they should be removed from office and alternative liquidators appointed. As at the date of this release, a written judgment has not been handed down by the Antiguan Court.

The Joint Liquidators have been advised by their legal counsel that the basis of the decision, which has as yet only been given orally by the Judge, was incorrect and that it should be urgently appealed to the Eastern Caribbean Court of Appeal.

Since their appointment, the Joint Liquidators have continued to make significant progress in their efforts to recover monies on behalf of the creditors and investors of SIB and, as recently as 7 June 2010, were recognised by the Swiss Financial Regulator as the officers to whom control of the SIB assets in Switzerland, totalling in excess of US$100 million, should pass.

Following extensive negotiations, the Government of Antigua & Barbuda had also recently confirmed that the properties owned by SIB, which the Government had made moves to compulsorily purchase, would be released to the Joint Liquidators, as part of their ongoing efforts to obtain the maximum return for creditors.

In addition, a settlement agreement between the Joint Liquidators and the United States Receiver was reached in late May 2010, which sought to bring to a conclusion the legal challenges that have taken place between them in relation to the assets of SIB that are located in Antigua, the United States, the United Kingdom and Canada.

The Joint Liquidators wish to confirm that they will request a stay in the High Court decision pending their appeal to the Eastern Caribbean Court of Appeal to enable them to remain in office. The Joint Liquidators remain focused on recovering the assets of SIB for creditors. All SIB investors who have not yet registered their claim on the Online Claims Management System should do so via the website at https://stanford.vantisplc.com/, where their claims will continue to be processed.

Just in from Morgenstern and Blue

Dear Clients:

We are providing this update concerning a significant development in the case relating to the roles of the U.S. Receiver (Ralph Janvey) and the Antiguan Liquidators (Nigel Hamilton-Smith and Peter Wastell of Vantis). As you know, the U.S. Receiver and the Antiguan Liquidators have been fighting on a number of fronts over control of Stanford’s assets. In the U.S. Courts, the Antiguan Liquidators started what is called a Chapter 15 Proceeding (named after the section of the Bankruptcy Code that applies to actions related to foreign bankruptcies). In the Chapter 15 Proceeding, the Antiguan Liquidators asked Judge David Godbey, the Federal Judge presiding over the Stanford case in Dallas, to find that Stanford International Bank, Ltd. was primarily based in Antigua, and that the Antiguan Liquidators (not the U.S. Receiver) should control Stanford International Bank’s assets, and the distribution of those assets to Stanford’s victims and other creditors. The U.S. Receiver opposed that request, arguing that all Stanford matters should be handled through the federal court in Dallas. That dispute was scheduled for a hearing in January, but was abruptly cancelled shortly before it was scheduled to begin.

On May 18, 2010, the U.S. Receiver and the Antiguan Liquidators announced that they had reached a settlement agreement that would resolve the Chapter 15 Proceeding and allocate assets and responsibility between them. In essence, the agreement provided that the Antiguan Liquidators would be responsible for all assets and actions in Antigua, and that the U.S. Receiver and the Antiguan Liquidators would not interfere with each other and would attempt to work out further arrangements for cooperation. The U.S. Receiver and the Antiguan Liquidators jointly requested that Judge Godbey approve the stipulation between them.

Yesterday, however, news reports from the Caribbean indicated that Vantis has been fired by the Antiguan authorities, and that no successor liquidators have yet been named. The apparent removal of Vantis casts considerable doubt on the continued validity of the agreement that the U.S. Receiver and the Antiguan Liquidators reached.

In all events, we felt compelled to object to Court approval of the agreement because we do not believe that the agreement, at least in its current form, is in the best interests of our clients or other Stanford investors. We are particularly concerned that the agreement would leave in place, and formalize, a dual-receivership that would require investors to submit two sets of claims, to two sets of liquidators, with differing requirements. We are also troubled by the agreement’s perpetuation of a system that essentially requires the investors to pay the bill for two sets of administrators, two sets of attorneys, two sets of accountants, and so on. In our view, a real resolution of the disputes between the U.S. Receiver and the Antiguan Liquidators would unify control of Stanford’s assets, establish a single system for the submission of claims and distribution of assets, and eliminate duplication of effort and expense. Because the proposed agreement does not accomplish those goals, we filed an objection yesterday in which we argued that the Court should not approve the settlement. (A copy of the Objection is available on our website.)

We do not know when Judge Godbey will act on the Receivers’ motion to approve the settlement. When he does, we will provide you with a further update.

This information can also be found on our website:

http://mbstanford.typepad.com/clientinformation

Thursday, 10 June 2010

Stop the Madness: Stanford Co-Defendant Asks to be Tried Separately

If past behavior is indeed a reliable predictor of future behavior, we’re in for a wacky few months with Allen Stanford, the financier accused of masterminding a $7 billion Ponzi scheme.

Now, even his co-defendants are looking to get away from the financier, who seems to be having a fairly miserable go of it while he awaits his trial — and whose antics are appearing increasingly erratic. (Click here for a recent story from the WSJ’s Amir Efrati on Stanford’s merry-go-round of lawyers.)

Laura Holt, one of Stanford’s co-defendants asked U.S. Judge David Hittner on Wednesday to separate her trial from that of Stanford, her former boss. In her filing, she cited a “circus-like” behavior by Stanford and his current lead criminal defense lawyer. Click here for the story from the Houston Chronicle; here for Holt’s filing.

The lawyers for Holt, the former chief investment officer of Stanford Financial group, told Judge Hittner that that Holt’s rights to a fair trial could be prejudiced by the Stanford’s antics, which include a whole bunch of lawyer switching.

In their motion, Holt’s lawyers also allege that Stanford and his lawyers, a group called the Bennett-Nguyen Joint Venture, have flouted court orders.

The motion is nicely summarized by the Chron’s Mary Flood:

The motion complains that Stanford faked spitting up blood in court by biting his tongue months ago, has burned through 11 different law firms in a “circus like manner” and mocked the court at a hearing, after which he was ordered to sit and stay quiet.

Bennett has sent a “ridiculous stream of people” into prison to visit Stanford, the motion alleges, says he is bankrupt, has been accused of insurance fraud by his former co-counsel, has submitted a bloated $80 million budget for Stanford’s defense and has misled the court by ghostwriting court correspondence that was supposed to be coming from Stanford.

Bennett refused comment to Flood when she asked about the motion today, before referring the the question to another attorney who was not available.

Prosecutors oppose Holt’s request but refused further comment.

Stanford, Holt and six others face criminal charges involving conspiracy, fraud, bribery and obstruction of justice in what prosecutors say is a $7 billion Ponzi scheme that defrauded some 30,000 investors globally.

SEC's regional offices present managerial problems, become an obstacle to reform

For nearly a decade, Julie Preuitt told her colleagues at the Securities and Exchange Commission's Fort Worth office that she had found problems at a fabulously successful investment firm in Houston, saying its unmatched returns were probably the result of fraud.

But officials in the agency's enforcement division weren't interested in complex cases, just quick-hit lawsuits that would make the regional office look active, according to a review by the SEC inspector general. They brushed off her warnings about the Houston enterprise run by R. Allen Stanford -- only much later exposing it as one of the largest scams ever: an $8 billion Ponzi scheme.

So Preuitt was dismayed in 2007 when the Fort Worth office decided to extend what she feared was the same quick-hit approach to other work. Her complaints centered on a new method of inspecting financial firms that she protested was motivated only by a desire to boost the office's exam statistics. Preuitt was also essentially demoted after vocalizing her complaints, according to a second report by the inspector general.

The introduction of the new inspections, dubbed raves, followed by Preuitt's reassignment, opened a rift between Fort Worth managers and staff that continues today, undercutting the effort by SEC leaders in Washington to rebuild the agency and promote coordination after years of setbacks, according to current and former SEC officials and internal agency documents, including three separate reports by the SEC's inspector general.

Managing the SEC's 11 regional offices has long posed a difficult challenge. Breakdowns in coordination among the New York, Boston and Washington offices, for example, helped Bernard Madoff get away with his Ponzi scheme for years.

These failures are among various agency shortcomings documented over recent years in internal reviews and media reports. The accounts have in part blamed an agency culture that favored easy cases over difficult ones, as well as a deadening bureaucracy and a workload that has overwhelmed the staff.

The Fort Worth office investigates alleged wrongdoing by public companies and financial firms in Texas, Oklahoma and Arkansas and conducts periodic reviews, or "exams," of financial companies. The region is home to some of the country's largest public companies, and most financial firms have major offices there.

Fort Worth's fumbling of the Stanford fraud investigation was discussed in an inspector general's report published two months ago. But its findings that the office failed to act on credible concerns about Stanford -- potentially costing investors more than a billion dollars -- only hinted at broader problems within the office.

Tensions in Fort Worth escalated in 2006 after Preuitt, an assistant regional director for exams, was beaten out by her colleague, Kimberly Garber, for the job of overseeing the office's exams of financial companies. Soon after, Garber told the staff she was interested in boosting the number of exams the office conducted, and later decided to introduce a new half-day exam for brokerage companies that sold investments to customers or traded on their behalf. In these exams, SEC officials would interview management and review company policies for complying with securities rules, but did not examine company records. The end result was a page-long summary.

Several lower-ranking officials, including Preuitt and her deputy, Joel Sauer, protested the new type of review, according to agency documents and current and former officials. Preuitt and Sauer said that the rapid-fire exams were an artificial way of boosting the number of exams the Fort Worth office conducted, were cursory at best and duplicated work being done by other regulators.

Garber decided to proceed with the exams. Preuitt protested vocally and repeatedly, contacting agency officials in Washington to complain about the raves. But agency officials in Washington let them proceed in the hope of spotting more cases of financial fraud, according to SEC spokesman John Nester.

Her superiors -- Rose Romero, head of the Fort Worth office, and Garber -- considered Preuitt antagonistic in the way she voiced her objections. They took action against her, removing Preuitt, a 16-year veteran, from the exam program and placing her in a job with far fewer responsibilities, according to the inspector general's report.

The inspector general said the way Preuitt raised her concerns could be proper grounds for disciplinary action, but not the substance. He concluded that "the connection between [Preuitt's] complaints about program functions and the personnel actions against her" was "inappropriate."

"It's bad whenever you take someone who's got experience and knows what they're doing and kind of put them on the sidelines," said Hugh Wright, a 28-year SEC veteran who formerly ran the examination and enforcement programs in Fort Worth.

Garber and Romero declined to be interviewed for this story. They said Nester spoke on their behalf.

After Preuitt was reassigned, Sauer wrote to Christopher Cox, the SEC's chairman at the time, to raise concerns about the situation and, more broadly, about Garber's management.

In the letter, Sauer also complained about a trip Garber had arranged for her staff to visit state regulators in Kansas. She'd had the team stay in Baldwin City, well outside Topeka, at a turn-of-the-century bed and breakfast called Three Sisters Inn. The inn was owned by Garber's brother and sister-in-law.

In a later review, the SEC's top ethics lawyer concluded that Garber violated the agency's rules by using her public office for private gain of her relatives, the inspector general reported. Nester said "appropriate action was taken" in connection with the Kansas trip but provided no details.

Sauer's letter of concern was forwarded to Romero; Sauer was told by Washington officials that Romero would work on the issues he raised.

But Sauer's supervisors, Romero and Garber, took disciplinary action against him and issued a letter of reprimand for insubordinate behavior, the inspector general found. Sauer quit in 2008. "I am proud of my work at the SEC and the work of the [Fort Worth] examination staff. I will let my record of 13 years of service to the SEC and Texas State Securities Board speak for itself," Sauer said in a statement.

Nester said senior officials in the office had "acted appropriately" by taking the guidance of the SEC's human resources department before taking action against Preuitt and Sauer. Preuitt did not respond to phone calls seeking comment.


Current and former Fort Worth SEC officials said the clash between Preuitt and Garber kicked off a period of ill will between managers and their staff. One official said there was "a lack of trust," saying many front-line examiners disagreed with how Garber treated staff and how she has run the exam program

In Washington, SEC chairman Mary Schapiro and her team have espoused a different approach. They suspended rave inspections across the whole agency, in favor of programs to verify assets claimed by investment companies in the wake of the large number of Ponzi schemes disclosed in the past two years.

Vantis to Appeal Antigua High Court Decision

The Joint Liquidators of SIB, Mr Nigel Hamilton-Smith and Mr Peter Wastell, were appointed by the Financial Services Regulatory Commission of Antigua and Barbuda as Joint Receivers, and subsequently Joint Liquidators, of SIB on 19 February 2009.

Following a decision by the High Court of Antigua on Tuesday 8 June 2010, the Joint Liquidators wish to confirm that the Court has decided that they should be removed from office and alternative liquidators appointed. As at the date of this release, a written judgment has not been handed down by the Antiguan Court.

The Joint Liquidators have been advised by their legal counsel that the basis of the decision, which has as yet only been given orally by the Judge, was incorrect and that it should be urgently appealed to the Eastern Caribbean Court of Appeal.

Since their appointment, the Joint Liquidators have continued to make significant progress in their efforts to recover monies on behalf of the creditors and investors of SIB and, as recently as 7 June 2010, were recognised by the Swiss Financial Regulator as the officers to whom control of the SIB assets in Switzerland, totalling in excess of US$100 million, should pass.

Following extensive negotiations, the Government of Antigua & Barbuda had also recently confirmed that the properties owned by SIB, which the Government had made moves to compulsorily purchase, would be released to the Joint Liquidators, as part of their ongoing efforts to obtain the maximum return for creditors.

In addition, a settlement agreement between the Joint Liquidators and the United States Receiver was reached in late May 2010, which sought to bring to a conclusion the legal challenges that have taken place between them in relation to the assets of SIB that are located in Antigua, the United States, the United Kingdom and Canada.

The Joint Liquidators wish to confirm that they will request a stay in the High Court decision pending their appeal to the Eastern Caribbean Court of Appeal to enable them to remain in office. The Joint Liquidators remain focused on recovering the assets of SIB for creditors. All SIB investors who have not yet registered their claim on the Online Claims Management System should do so via the website at https://stanford.vantisplc.com/, where their claims will continue to be processed.

Wednesday, 9 June 2010

Stanford Receivers Fired

Vantis Business Recovery Services, which was appointed to liquidate R Allen Stanford-owned lands released by the government, was relieved of its duties by a court ruling on Tuesday.

Caribarena.com received reliable information that the company, along with joint liquidators Nigel Hamilton-Smith and Peter Wastell, are no longer to preside over the sale of Stanford lands.

Attorney General Justin Simon confirmed this on Tuesday night, when Caribarena.com received the information.

Simon said he had not seen the judgment, but it is his understanding that the claimant is to provide three names to the court for a determination on who is the best replacement.

Cabinet Backs New Guiana Island Project

The Cabinet of Antigua & Barbuda has endorsed a development proposal for Guiana Island and Crump Peninsular, in spite of its earlier position to declare the lands part of a protective management plan for a marine sanctuary.

The land, situated in St Peter’s parish and owned by R Allen Stanford’s Stanford International Bank (SIB) – have been a contentious topic stretching between past and present administrations and stirring environmental activists.

It is now in the hands of joint liquidators as Stanford awaits his trial in the United States following an investigation for fraud by the US Securities Exchange Commission.

These lands were, however, never among those parcels compulsory acquired by the government and now handed over. Attorney General Justin Simon announced in Parliament on May 27 that some of the lands were released to Vantis Business Recovery Services to generate money to repay investors who were allegedly defrauded.

According to information on www.iprantigua.com, Gilbert Boustany, acting on behalf of liquidator Nigel Hamilton-Smith, is seeking interested investors for acquisition of the land and the Island Paradise Resort Development project.

So far, the joint liquidators Hamilton-Smith and Peter Wastell of Vantis Business Recovery Services have “engaged OBMI and Ernst & Young to create a master plan vision and a high level feasibility study for the future development of the site.”

In a letter dated February 20, 2010 to Boustany, the government gave its seal of approval to the Island Paradise Resort (IPR) proposal.

“This is to advise that the Government of Antigua and Barbuda is in strong support of the Island Paradise Resort Development Project and the Crump Peninsular and Guiana Island,” the letter said. “At a meeting of the Cabinet on Thursday 18th, February the project was presented by Antigua and Barbuda Investment Authority and received favourable consideration from the Cabinet. I look forward to continuing working closely with your group to see the full completion of this project." It was signed by Minister of Tourism, Civil Aviation and Culture John Maginley.

The AG confirmed to Caribarena.com that Cabinet met to discuss the proposal and later submitted an agreement in principle.

“The creators were seeking to attract investors and basically indicating to investors the kind of development, and they wanted the government’s OK in principle to that kind of development on Guiana Island… there is an agreement in principle with the development proposals,” he said. “There has been no firm proposal in respect of the development. What they wanted was to advertise the place and to see what kind of development would be supported when they present it to would-be investors."

The IPR website said the company intends to create a project that will rank first among destinations in Antigua, and significantly boost tourism. It also promises to preserve the existing natural resources on the site.

Caribarena.com has been informed that the proposal has reached the Development Control Authority (DCA) for consideration. We were further told that DCA had forwarded the document to the Environmental Division for review, and to submit recommendations. However, this has not been confirmed by those bodies.

Simon, however, told Caribarena.com that for a plan to reach DCA, it must be presented by the person or persons who would be leading the actual development.

The overall project, as stated on the IPR website, includes five hotels with 1,060 rooms, in addition to 1,300 residential units, a golf course, a casino and sports marine, and commercial facilities on the 982 acres of Crump Peninsula, 478 acres of Guiana Island, and 52 acres on Crump Island.

In 2007, the United Progressive Party (UPP) administration refused to sell Guiana Island Farms land to Stanford for the construction of a multi-million dollar development.

Nonetheless, Stanford managed to bypass the government, and acquired the land from Asian Village Antigua Limited, owned by Dato Tan Kay Hock.

Dato Tan had failed to deliver on an agreement with the Antigua Labour Party (ALP) government to construct a resort on the property.

Update: Since writing this article, caribarena.com has confirmed that the joint liquidators Nigel Hamilton-Smith and Peter Wastell of Vantis Business Recovery Services are no longer the liquidators. It is also unknown who will assume the liquidation duties.

Monday, 7 June 2010

What the UN Thinks of Antigua

Overview

In 2009, the sudden implosion of the Stanford Financial Group due to an alleged $8 billion investment fraud exposed strong ties between billionaire financier R. Allen Stanford and the government of Antigua and Barbuda. Several defrauded investors filed lawsuits claiming that the government had benefited from the schemes and aided in the cover-up, heightening political tensions in the country.


http://www.unhcr.org/refworld/docid/4c0ceb0bc.html

Law Firms that have Represented Stanford Since Last Year

Thursday, 3 June 2010

Stanford Retirement Payout Due Soon

The over 430 former employees of R Allen Stanford could be receiving payment of their retirement fund in a matter of weeks. The intense legal action against R Allen Stanford for alleged financial fraud had further compounded the matter.

The Stanford Severed Employees Committee was formed last year to pursue severance and pension payments of former workers of the Sticky Wicket, Pavilion, Antigua Athletic Club, Stanford 20/20, and Stanford Development Company.

Their money deposited in the Stanford Retirement Savings at the Bank of Antigua (BOA).

Legal Representative of the Committee Cosbert Cumberbatch told Caribarena.com he has been working assiduously on the matter, especially within the last month.

He said within the next three weeks, the former workers could be paid between $7-8 million from the fund.

Cumberbatch said initially, they were unable to access the account because the bank did not have the necessary signatures to disburse any money.

However, there has been a new development with the signatures, hence the green light for access.

Cumberbatch noted, however, that the issue of severance will take longer to address. He was unable to speculate on a date.