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Friday, 26 April 2013

Michigan-based Butzel Long law firm seeks assistance with underfunded pension obligations


LANSING, MI — Butzel Long PC has requested that a federal agency salvage its pension plan that’s underfunded by more than $9 million.

The Detroit-based firm says it can no longer afford to pay its pension obligations, which were underfunded by $9.1 million as of October, if it wants to continue paying attorneys competitively.

It asked the Pension Benefit Guaranty Corp. to take over the retirement plan. The PBGC is a federal government agency but does not use general tax revenues. Sponsors of defined-benefit plans pay insurance premiums to be covered by the agency.

Butzel Long has offices in Detroit, Ann Arbor, Bloomfield Hills and Lansing. It also has offices in New York and Washington, D.C., along with alliance offices in China and Mexico. It employs about 250 people, including some 135 lawyers.

The firm covers several areas of law and regularly represent clients before the PBGC. It also represents the Michigan Press Association, of which MLive Media Group is a member.

The pension plan has about 460 members. Its market value was nearly $33.4 million in 2011, according to an Internal Revenue Service filing.

Firm President and managing shareholder Justin Klimko said low interest rates, market conditions and longer life expectancies contributed to the plan’s problems.

The firm froze the benefits for all attorneys in 2004 and for other employees in 2007. Since then, there have been no more benefits accrued or new members added to the plan, he said. Employees are now offered a defined-contribution 401(k) plan.

“The size of the future contributions would affect our ability to pay competitive compensation for our people,” Klimko said. “That’s the name of the game in our business.”

Though some companies that apply for relief through the PBGC are facing bankruptcy, Klimko said that’s not the case for Butzel Long.

The PBGC insures about 990 pension plans sponsored by Michigan companies. In 2011 it paid about $384 million to more than 45,000 Michigan retirees in failed plans, according to its website.

Law practice consultant Edward Poll has chided law firms for not meeting their pension obligations.
“You have to know that at some point, you’re obligated to pay that, and if you don’t have the cash set aside to pay that, you’re going to have a problem. To me that’s just mismanagement,” said Poll, owner of Venice, Calif.-based LawBiz Management Co.

Poll said he knows of only a few law firms that have funded pension plans for their attorneys. He said he understands that external factors contribute to underfunding, but said it’s still "irresponsible" to let a plan get to that point.

Most law firms have 401(k) retirement plans. Pensions are more common in government and collective bargaining shops than they are among private employers.

The state of Michigan has been making changes to public employee pensions. Laws impacting long-term state employees and teachers have ended up in court on constitutionality questions.

Automakers also have struggled with pension obligations. Ford Motor Co.’s plan is underfunded by $18.7 billion, The Detroit News reported on Tuesday.

Email Melissa Anders at manders@mlive.com. Follow her on Twitter: 



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Allen Stanford Ordered to Disgorge $6.7 Billion in SEC Case


R. Allen Stanford, the Texas financier convicted last year of leading an investment fraud scheme, was ordered to disgorge more than $6.7 billion by the judge in a U.S. Securities and Exchange Commission lawsuit.

U.S. District Judge David Godbey in Dallas issued the order yesterday against Stanford, his Stanford Group Co. and the Antigua-based Stanford International Bank Ltd.

The order may clear the way for Godbey to grant a court-appointed receiver’s request to make an interim $55 million payout to investors who lost money after buying certificates of deposit issued by the Stanford Bank.

“The fraud perpetrated was obviously egregious, was done with a high degree of scienter, caused billions in losses and occurred over the course of a decade,” Godbey said, using the legal term to describe the mental state of intent to deceive.

A federal jury in Houston convicted Stanford of lying to investors about how their money was being handled.
“The truth is that he flushed it away,” Justice Department lawyer William Stellmach told jurors in his closing arguments at the March 2012 trial. “He told depositors he was using their money in one way and the truth was completely different.”

Stanford, 63, was sentenced to 110 years in prison. Maintaining his innocence, he has appealed the verdict.

Parallel Judgment

Godbey referred to the jury’s guilty finding in granting the SEC’s request he render a parallel judgment in their case filed in February 2009, four months before the financier was indicted. The judge also cited the August 2009 guilty plea by Stanford Group Chief Financial Officer James Davis.

“The court finds that $5.9 billion is a reasonable approximation of the gains connected to Stanford’s fraud,”Godbey said of the sum he would order disgorged. He then added more than $861 million in interest for a total of $6.76 billion Davis too is jointly liable.

Finally the judge imposed a $5.9 billion penalty on Stanford and a $5 million assessment against Davis, who received a five-year prison sentence.

The court-appointed receiver, Ralph Janvey, asked Godbey this month for permission to begin repaying some of the losses incurred by the more than 17,000 claimants. At an April 11 hearing, the judge told Janvey’s lawyer, Kevin Sadler, he was concerned about doing so before a final order had been entered against Stanford.

The SEC case is Securities and Exchange Commission v. Stanford International Bank, 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).

To contact the reporter on this story: Andrew Harris in the Chicago federal courthouse at aharris16@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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FOURTH JOINT REPORT OF THE RECEIVER, THE EXAMINER AND THE OSIC CONCERNING PENDING LITIGATION (FOR THE PERIOD ENDING MARCH 31, 2013)





For a full and open debate on the Stanford Receivership visit:

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Tuesday, 23 April 2013

Stanford Victims Aren't Owed SIPC Aid, Ex-SEC Chiefs Say

Two former commissioners of the U.S. Securities and Exchange Commission urged the D.C. Circuit on Monday to affirm a landmark ruling declaring that Securities Investor Protection Corp. doesn't owe compensation to victims of Robert Allen Stanford's $7 billion Ponzi scheme.

Ex-SEC Commissioners Joseph A. Grundfest and Paul S. Atkins said the D.C. Circuit will “dramatically expand the scope of persons covered through SIPC” if it chooses to reverse a lower court's ruling and compel SIPC to pay the fraud victims' claims through a liquidation proceeding.

Grundfest and Atkins said the July decision by U.S. District Judge Robert L. Wilkins should stand because SIPC lacks the authority to provide relief to investors of Stanford's foreign bank Stanford International Bank Ltd.

Grundfest and Atkins said the SEC's argument that an offshore bank should be covered under the Securities Investor Protection Act “contravenes the plain language of the statute, conflicts with the relevant statutory history, and is at odds with more than 40 years of judicial precedent.”

The brief comes nine months after Judge Wilkins ruled that Antigua-based Stanford International was an offshore bank, not a registered broker-dealer, which is what SIPC oversees.

Judge Wilkins' decision was a major blow to victims of the Ponzi scheme, who together lost upwards of $7 billion in certificates of deposit administered by Stanford International. It also carried broader legal significance, marking the first time since the enactment of the SIPA 42 years ago that a federal court had ruled on how much power the SEC has to command a SIPC liquidation.

Because of its precedential nature, a key issue in the Stanford dispute was the standard of proof required of the SEC. The agency argued for a more lenient standard than SIPC did, describing its burden as merely probable cause supported by hearsay.

Judge Wilkins ultimately chose the higher standard requested by SIPC: a preponderance of the evidence. In an SIPC liquidation, an investor must meet a preponderance standard to prove the validity of his or her claim.

In its appellate brief filed in January, the SEC said Judge Wilkins had taken a narrow view of the term “customer.” The agency argued that transactions with Stanford entities should be treated the same way under the SIPA because the company operated “as a single fraudulent enterprise that ignored corporate boundaries.”

“This interpretation of the statute to allow for flexibility in certain circumstances is the correct one, and it is at least a reasonable one that was entitled to deference by the district court,” the SEC said.

But Grundfest and Atkins said in their brief Monday that expanding the “customer” definition was unnecessary and could pose an economic burden to SIPC.

“The SEC's unwarranted expansion of the definition of the term 'customer' would substantially increase the financial exposure of the SIPC fund,” the brief said. “Yet the SEC has presented no economic analysis considering the financial implications of this expanded coverage.”

“The SEC's proposed expansion of SIPC protection, absent even the most rudimentary consideration of any financial consequences, would radically transform SIPA and threaten SIPC's ability to function as Congress intended,” the brief added.

SIPC said earlier this month that the terms of its mission were clear: to protect investors when a member brokerage fails, adding that Judge Wilkins' purportedly narrow view of the term 'customer' was appropriate.

“By its terms, the statute does not insure against fraud or investment losses, instead protecting only the 'customer' property that an SIPC-'member' brokerage firm holds in custody when the brokerage fails,” it said.

The corporation also said the SEC's case was unprecedented because it has not made similar requests in proceedings related to the downfall of a major financial institution.

“In 40 years and over 300 liquidation proceedings — including the recent liquidations of Lehman Brothers Inc., Madoff Investment Securities LLC and MF Global Inc. — this is the first the SEC had ever tried to compel a liquidation,” it said.

Stanford was sentenced in June to 110 years in prison for his role in the fraud.

Grundfest and Atkins were joined on the brief by Simon M. Lorne, the former general counsel of the SEC and securities law professors William J. Carney of Emory University School of Law and Kenneth E. Scott of Stanford Law School.

Grundfest and Atkins are represented by Noah Levine, Steven P. Lehotsky, Joshua S. Press and Albinas J. Prizgintas of WilmerHale.

SIPC is represented by Edwin John U, Eugene F. Assaf Jr., John C. O'Quinn, Michael W. McConnell and Elizabeth M. Locke of Kirkland & Ellis LLP.

The case is U.S. Securities and Exchange Commission v. Securities Investor Protection Corp., case number 12-5286, in the U.S. Court of Appeals for the District of Columbia Circuit.




For a full and open debate on the Stanford Receivership visit:

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Monday, 22 April 2013

Louisiana officials want release of SEC report in Stanford case

A Louisiana senator told officials of the Securities and Exchange Commission Friday that he wants immediate release of a year-old report by the commission's inspector general on efforts to recover money for victims of a multibillion-dollar fraud. 

U.S. Sen. David Vitter, R-La., described as incompetent efforts by a court-appointed receiver to find and distribute assets of convicted con man Robert Allen Stanford. 

Stanford, 63, of Houston, is serving a 110-year prison sentence for a fraud conviction that followed estimated worldwide losses of approximately $7 billion. About $1 billion of those losses were from about 1,000 investors in the Baton Rouge, Lafayette and Covington areas, according to estimates by state Sen. Bodi White, R-Central, and Baton Rouge attorney Phillip W. Preis.

 "The fraud caused an absolute tragedy for many Louisiana families who invested their hard-earned retirement savings in good faith that it would be there for them when they retired,"

Vitter said Friday in a letter to Mary Jo White, who chairs the SEC. Vitter said the receiver in the case, Dallas attorney Ralph Janvey, spent $100 million to collect $55 million for Stanford's victims.

 "In the best light, Janvey's actions can only be seen as incompetent," Vitter told White in that letter. He urged White to release the SEC inspector general's report on Janvey, noting that it was completed in March 2012.

 There are more than 20,000 Stanford victims across more than 100 countries.

 A retired Zachary couple, Louis and Kathy Mier, saw $240,000 of their savings stolen by Stanford's fraudulent scheme.

 "Whatever any of our congressmen do to shed light on the truth of what happened, and whatever they can do to help us get our money back and be whole again, would make Louis and me very, very happy," Kathy Mier said Friday.

 John J. Nester, a spokesman for the SEC, said in an email Friday that neither he nor other SEC officials would comment on Vitter's request before White issues a response to the senator's letter.

 U.S. Sen. Mary Landrieu, D-La., released a statement through her staff: "The Stanford victims deserve answers, and the immediate release of the IG's report is the very least the SEC can do."

 U.S. Rep. Bill Cassidy, R.-Baton Rouge, said through his staff: "I strongly urge the SEC … to release the full results of the inspector general's report. The victims of this crime were hard working Louisiana families, and they are entitled to see the details of the report."

 Vitter noted that Janvey, against the SEC's wishes, unsuccessfully sued some Stanford victims in an effort to seize money those victims retrieved before Stanford's operations were shut down in February 2009.

 "Given the demonstrated incompetence of the court-appointed receiver, it makes you wonder how bad this (inspector general's) report gets," Vitter added. "The Stanford victims deserve to see."




For a full and open debate on the Stanford Receivership visit:

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Wednesday, 17 April 2013

New Provisional Liquidators Appointed to Stanford Development Company (“SDC”)


Marcus Wide of Grant Thornton (British Virgin Islands) Limited and Hordley Forbes of Forbes and Associates (Antigua) were appointed as the new Joint Provisional Liquidators of SDC by The Eastern Caribbean Supreme Court, High Court of Justice, Antigua and Barbuda as of April 17, 2013.

With extensive years of combined experience, Wide and Forbes provisional joint appointment represents an important step in the management of SDC in and efficient and effective manner and in the recovery of money for the creditor-victims and the employees and other stakeholders. An urgent component of this liquidation are the past due wages that may be due and ordering the books. Accordingly, the newly appointed Joint Provisional Liquidators’ first call to action is to organize and clarify the past due wages and arrange for prompt payment. We ask the SDC employees and the creditor-victims for patience through the transition as the proper amounts owed are determined and the terms of the appointment order is implemented. The Joint Provisional Liquidators are committed to bringing a prompt resolution to this matter in the most efficient and beneficial manner for the interests of the pertinent stakeholders, including the SDC employees.



For a full and open debate on the Stanford Receivership visit:

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Tuesday, 16 April 2013

SEC Can't Force Help For Stanford Victims, DC Circ. Told

The Securities Investor Protection Corp. asked the D.C. Circuit on Monday to affirm a landmark district court ruling declaring it doesn’t owe compensation to victims of Robert Allen Stanford’s $7 billion Ponzi scheme, suggesting the U.S. Securities and Exchange Commission succumbed to political pressure in bringing the suit.

The SIPC asked the appeals court to affirm U.S. District Judge Robert L. Wilkins’ decision dismissing the agency’s application to compel the SIPC to pay the fraud victims’ claims through a liquidation proceeding.

A top agency official had originally agreed that the SIPC did not owe funds under the Securities Investor Protection Act, SIPC claims, but that changed after U.S. Senator David Vitter, R-La., threatened to block the nominations of two SEC officials in June 2011, the SIPC said.

“The record shows that the SEC's general counsel agreed that SIPA did not apply to the Stanford case,” the SIPC said. “It was only two years later that the SEC sought to force SIPC's hand, apparently bowing to pressure from a U.S. senator,” referencing a June 14, 2011, press release from Vitter.

The corporation, funded by the brokerage industry to cover investors who lose money in failing firms, also claims the SEC didn’t seek a liquidation until two years after its 2009 case against Stanford.

“If the SEC had thought the Stanford fraud was within the scope of what SIPA protects, it was under a legal obligation to notify SIPC immediately,” the SIPC said. “The SEC did not do so, even though it filed an enforcement action against Stanford and secured the appointment of a receiver over U.S. Stanford assets in February 2009.”

On July 3, Judge Wilkins ruled that Stanford's U.S.-based Stanford Group Co. was a member of the SIPC, but that the Antigua-based Stanford International Bank was not. Stanford International Bank Ltd. was an offshore bank, not a registered broker-dealer, which is what the SIPC oversees, Judge Wilkins said.

Judge Wilkins’ decision was a major blow to victims of the Ponzi scheme, who together lost upwards of $7 billion in certificates of deposit administered by Stanford International Bank. It also carried broader legal significance, marking the first time since the enactment of SIPA 42 years ago that a federal court had ruled on how much power the SEC has to command a SIPC liquidation.

The U.S. Supreme Court has ruled that brokerage customers cannot force such proceedings, but that the SEC has the authority to do so.

Because of its precedential nature, a key issue in the Stanford dispute was the standard of proof required of the SEC. The agency argued for a more lenient standard than the SIPC did, describing its burden as merely probable cause supported by hearsay. Judge Wilkins ultimately chose the higher standard requested by the SIPC: a preponderance of the evidence. In an SIPC liquidation, an investor must meet a preponderance standard to prove the validity of his or her claim.

In its appellate brief filed in January, the SEC said Judge Wilkins had taken a too-narrow view of the term "customer." The agency argued that transactions with both Stanford entities should be treated the same way under SIPA because the company operated “as a single fraudulent enterprise that ignored corporate boundaries.”

“This interpretation of the statute to allow for flexibility in certain circumstances is the correct one, and it is at least a reasonable one that was entitled to deference by the district court,” the SEC said.

The SEC added that it was not seeking customer status for all Stanford investors, but only for those who held accounts with Stanford Group Co., purchased fraudulent certificates of deposit through SGC and deposited funds with Stanford International Bank Ltd.

But SIPC said Monday that the terms of its mission were clear: to protect investors when a member brokerage fails, adding that Judge Wilkins' purportedly narrow view of the term 'customer' was appropriate.

"By its terms, the statute does not insure against fraud or investment losses, instead protecting only the 'customer' property that an SIPC-'member' brokerage firm holds in custody when the brokerage fails,” the corporation added.

The corporation also said the SEC’s case was unprecedented because it has not made similar requests in proceedings related to the downfall of a major financial institution.

“In 40 years and over 300 liquidation proceedings — including the recent liquidations of Lehman Brothers Inc., Madoff Investment Securities LLC, and MF Global Inc. — this is the first the the SEC had ever tried to compel a liquidation. '

Stanford was sentenced in June to 110 years in prison for his role in the fraud.

SIPC is represented by Edwin John U, Eugene F. Assaf Jr., John C. O'Quinn, Michael W. McConnell and Elizabeth M. Locke of Kirkland & Ellis LLP.

The case is U.S. Securities and Exchange Commission v. Securities Investor Protection Corp., case number 12-5286, in the U.S. Court of Appeals for the District of Columbia Circuit.


For a full and open debate on the Stanford Receivership visit:

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Friday, 12 April 2013

Stanford Victim Penny-a-Dollar Payment Plan Goes to Judge



Cross-Border Protocol

Godbey didn’t rule today on Janvey’s bid for payment plan approval. The judge granted a request to approve the Cross-Border Protocol, a cooperation agreement between the Dallas court-appointed receivership and U.S. authorities on one side, and Antiguan court-appointed liquidators of Stanford assets outside the U.S. on the other. That approval could boost investors’ final recovery.

“The court finds the motion to be well-taken,” Godbey said in a two-page order. He heard more than two hours of argument this morning.

A federal jury in Houston last year found Stanford, 63, guilty of lying to investors about the nature and oversight of certificates of deposit issued by his Antigua-based bank. The jurors decided he must forfeit $330 million in accounts seized by the U.S. government.

Sentenced to 110 years in federal prison, Stanford has appealed the verdict.

Godbey today asked Sadler whether it was proper to distribute Stanford’s money before entering a final order in the SEC case against the financier and his businesses.

No Precedent

No legal precedent requires Godbey to first issue such a ruling, Janvey’s lawyer replied. He also told the judge that in a prior decision he said “not a nickel” of the money recovered by the receiver from Stanford entities was not taken by fraud.

One objection to the payout plan came from the law firm Curtis, Mallet-Prevost, Colt & Mosle LLP. A lawyer for the firm, Myles Bartley, told the judge today that it’s owed $1.4 million for work done for Stanford entities and isn’t included in the first group of distributions.

Sadler said there would be enough funds to resolve those claims even if the judge approved the proposed payment plan.

In an e-mailed statement, Sadler called the judge’s ruling today “a significant milestone” in the receivership’s effort to get money to Stanford fraud victims.

Godbey’s order requires the Janvey receivership and the Antiguan liquidators to “perform in accordance with their rights and obligations as outlined in the settlement agreement.”

Long Dispute

Lawyers for both factions battled for months for control of $300 million of Stanford assets outside the U.S.

“So long as it continues, millions of dollars in assets that could otherwise be distributed to victims of the Stanford Ponzi scheme will remain tied up in the courts,” Sadler told Godbey in a filing last month.

The liquidators, Grant Thornton International Ltd. accountants Hugh Dickson and Marcus Wide, joined in the approval request through a separate filing.

For dropping their dispute with Janvey and the U.S. Justice Department, the Antiguan liquidators will receive fees of $36 million from Stanford’s frozen funds in the U.K., according to a statement jointly released by both receivers on March 12. The Antiguan liquidators already have received $20 million from the U.K. accounts.

About $23 million in Canadian funds and $132.5 million in Swiss funds will be transferred to the Justice Department and Janvey for distribution to investors through a system the U.S. receiver is establishing, according to the joint statement.

‘Ransom’ Payment

Angie Shaw, a founder of the Stanford Victims Coalition, has denounced the agreement as “ransom” that rewards the Antiguan liquidators at the investors’ expense.
(Comment from Kate...I see Shaw is still opposing anything and everything that does not support her SIPC claim. She has always opposed this agreement because she told me it could interfere with her SIPC claim. So thanks Shaw for putting your own wants and needs before those of the victims. Clearly when the Joint Liquidators are successful in getting money from the banks, I take it Shaw will not want any!!)

“There is no Plan B,” Sadler told the judge.

Edward H. Davis Jr., an attorney for the liquidators, told Godbey today that an Antiguan court approved the agreement this week.

He said the agreement funds a “war chest” for the liquidators to further pursue lawsuits.

“The Joint Liquidators are pleased to have obtained the approval of the settlement from the High Court in Antigua this past Monday,” Davis said today in an e-mailed statement.

Attorneys representing law firms already defending suits filed by Janvey in the U.S. objected to the accord, arguing that it would result in more litigation offshore.

“There is obviously a jurisdictional issue,” Godbey said.“There is no getting around it.”

Fees Paid

Janvey’s professionals had been paid $63.3 million in fees and expenses as of Feb. 7, according to his most recent status report. That represents about a quarter of the $230.2 million Janvey has recovered for the estate. He has paid out $53.3 million more in costs to wind up Stanford’s business interests.

Shaw couldn’t immediately be reached for comment on Godbey’s ruling this afternoon. Peter Morgenstern, an attorney who serves on the official Stanford Investors Committee, also didn’t immediately reply to voice-mail and e-mail requests for comment.

An additional $4.1 million in Stanford-related assets have been identified in an account held by Pershing LLC, according to a court filing by Sadler yesterday seeking an order for the turnover of those funds.

The SEC case is Securities and Exchange Commission v. Stanford International Bank, 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).

To contact the reporters on this story: Tom Korosec in the Dallas federal courthouse at tkorosec@texaswordworks.com; Andrew Harris in the Chicago federal courthouse at aharris16@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


For a full and open debate on the Stanford Receivership visit:

http://sivg.org.ag/

The Stanford International Victims Group Forum


Thursday, 11 April 2013

US District Court approves Settlement Agreement and Cross-Border Protocol

Before the Court is the Amended Joint Motion of the SEC, the Receiver, the Examiner, and the Official Stanford Investors Committee to Approve the Settlement Agreement and Cross-Border Protocol [Doc. 1793 in SEC v. Stanford, 09-CV-298, Doc. 189 in In re: Stanford International Bank, 09-CV-721]. The Court has reviewed the Motion, any responses and replies, and the applicable authorities. The Court finds the Motion to be well taken. Therefore, the Motion shall be and is hereby GRANTED. It is therefore ORDERED that the Settlement Agreement and Cross-Border Protocol, entered into by and among the SEC, the Department of Justice, the Receiver, the Examiner, the Official Stanford Investors Committee, and the Joint Liquidators shall be and is hereby APPROVED. The parties to the Case are hereby authorized to perform in accordance with their rights and obligations as outlined in the Settlement Agreement and Cross-Border Protocol.



For a full and open debate on the Stanford Receivership visit:

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Monday, 8 April 2013

Antiguan Courts Ratify Agreement Between Janvey & GT

Good news for ALL victims!! 

Today I attended the Antiguan courts with Marcus Wide, Edd Davis and four other lawyers.

I am pleased to inform you that the agreement between the parties has been ratified by the Antigua courts. Let us all hope that when the agreement goes before judge Godbey later this week no individuals attempt to block this agreement which has the support of the vast majority of victims.



For a full and open debate on the Stanford Receivership visit:

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The Stanford International Victims Group Forum


Wednesday, 3 April 2013



Eighty-nine investors defrauded by imprisoned financier Robert Allen Stanford are seeking $115 million from seven insurance companies in addition to claims that could total as much as $1 billion against the Louisiana Office of Financial Institutions and SEI Investments Co. 

Stanford, who was indicted by a federal grand jury for frauds exceeding $7 billion, is currently serving 115 years behind bars.


According to reports emanating out of the United States, six of the insurers responded earlier in March by transferring the investors’ four-year-old state court suit to Baton Rouge federal court, action the investors have fought hard in the past.


“We feel confident that this case should not be removed to federal court, because the state court has already ruled on it and granted the investors class-action status,” said Phillip W Preis, Baton Rouge attorney for the investors.


The investors sued OFI and Pennsylvania-based SEI in 19th Judicial District Court in Baton Rouge in 2009. That was soon after the Securities and Exchange Commission shut down Stanford’s worldwide operations and alleged his investment programme was nothing more than a fraudulent scheme.


However, a federal judge in Dallas, where the SEC had filed its complaint, yanked the Louisiana investors’ suit into his Texas court and then dismissed the case, a US online news site, The Advocate, reported.


It added that the Dallas judge ruled in 2011 that the Baton Rouge investors’ suit violated a Securities Litigation Uniform Standards Act prohibition against state court litigation that could negatively affect the nation’s financial markets.


Last year, however, a three-judge panel of the US 5th Circuit Court of Appeals overruled the Dallas judge and concluded that investors could pursue recovery of their losses in Baton Rouge state court.


“That returned the investor claims to state District Judge Michael Caldwell, who held hearings on disputed allegations that OFI knew of Stanford’s misdeeds and should have warned investors, as well as a complaint that SEI ignored a duty to tell investors that Stanford’s assets were grossly overvalued,” The Advocate reported.


“Caldwell issued a judgment last year that certified the investors’ suit as a class action, meaning that all people who lost investments at Stanford Trust Co’s Baton Rouge office could join the suit as plaintiffs against SEI, OFI, and now SEI’s seven insurers.”


Caldwell has not yet scheduled a trial for the case, The Advocate said.

The US Supreme Court has agreed to hear arguments on appeals of related Stanford investor cases in October.


The six insurers that transferred the dispute last month to US District Judge James J Brady are: Allied World Assurance Co (US) Inc, Continental Casualty Co, Arch Insurance Co, Indian Harbor Insurance Co, Nutmeg Insurance Co, and certain underwriters at Lloyd’s of London.


Those insurers told Brady a seventh firm - Endurance Specialty Insurance Ltd of Bermuda - did not join their motion because Endurance officials had not yet been served with a copy of the investors’ suit.






For a full and open debate on the Stanford Receivership visit:

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