Stanford U.S. Receiver Has Deal With Antigua Counterpart
March 13, 2013
By Laurel Brubaker Calkins
R. Allen Stanford's Antiguan- appointed liquidators agreed to stop seeking control of the convicted financier's
assets in a deal that may allow defrauded investors to recover some of the $300 million Stanford stashed in
accounts outside the U.S.
Receivers appointed by the U.S. and the Antiguan courts have battled for four years to control assets recovered
from Stanford's financial-services empire. Stanford, 62, was convicted last March of leading a $7 billion
investment fraud based on bogus certificates of deposit at his Antigua-based bank. He was sentenced to 110 years
in prison.
"The funds that are the subject of this agreement represent the largest available source of investor money that
Allen Stanford had not already spent by the time his Ponzi scheme collapsed," Kevin Sadler, lead attorney for
U.S. receiver Ralph Janvey, said in an e-mail today. "In the absence of this agreement, these funds would remain
out of reach of the Stanford victims for years to come."
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 today.
Professional Fees
The Antiguan liquidators have already received $20 million from the U.K. accounts, so the additional payment will
boost their professional fees to $56 million -- almost as much as Janvey's receivership team has been paid since
U.S. securities regulators seized Stanford's operations in February 2009.
Janvey's professionals had been paid $63.3 million in fees and expenses as of Feb. 7, according to his latest
status report. That represents about a quarter of the $230.2 million Janvey has recovered for the estate. He has
paid out an additional $53.3 million in costs to wind up Stanford's business interests.
Janvey recently proposed a $50 million interim distribution be paid to investors, pending court approval.
Angie Shaw, a founder of the Stanford Victims Coalition, denounced the agreement as "ransom" that rewards the
Antiguan liquidators at the investors' expense.
"While the agreement does end a four-year international turf war that has cost the victims untold millions of
dollars, the only true beneficiary of the agreement is the Antiguan liquidators," Shaw said in an e-mail today.
"The Antiguan liquidators are essentially getting a ransom fee in exchange for dropping their litigation for
control over the frozen foreign accounts holding what is left of the victims' life savings."
Dallas Judge
While Janvey was awarded control over all Stanford assets by the Dallas judge in charge of the U.S. Securities
and Exchange Commission case against Stanford, courts in the U.K., Switzerland and Canada initially awarded control
of about $320 million in foreign accounts to Antiguan court-appointed liquidators Marcus Wide and Hugh Dickson of
Grant Thornton.
The Justice Department placed an administrative hold on the European funds, and it has been trying to repatriate
the money since Stanford and his co-conspirators were convicted last year.
The Antiguan liquidators have fought to retain control and have filed some asset-recovery lawsuits that duplicate
actions already initiated by Janvey, according to court filings. Wide and Dickson haven't publicly stated how much
they've been able to recover for Stanford's investors.
Stanford Victims
Edward H. Davis Jr., one of the Antiguan liquidators' attorneys, said in an e-mail today that Dickson and Wide have
already recovered and frozen more than $227 million in Stanford assets "independent of the amounts recovered by
Janvey and in addition to the approximately $300 million frozen" in overseas accounts.
"The joint liquidators have conducted intensive investigations and lodged claims and are in the process of launching
additional lawsuits that have the potential to yield billions of dollars in recoveries to pay the victim creditors,"
Davis said. "To suggest that the joint liquidators held the estate for ransom demonstrates a fundamental
misunderstanding about how a liquidation process maximizes recoveries for victim creditors."
Peter Morgenstern, a lawyer who sits on the Official Stanford Investors Committee, said the investors should be allowed
to decide whether the Antiguan liquidators receive more fees or whether the U.S. government should continue fighting
to recover Stanford's frozen European funds through international accords designed to recover criminal proceeds.
Significant Assets
"The issue is how significant assets recovered by the U.S. government for the benefit of Stanford victims should be
spent," Morgenstern said in an e-mail. Much as creditors have a say in how bankruptcy proceeds are distributed, he said,
the defrauded investors should also be consulted before such a large part of the estate is paid in professional fees.
Janvey has asked U.S. District Judge David Godbey in Dallas to hold a hearing at which investors can express their
opinions of the deal. No hearing has been set.
Under terms of the agreement announced today, the Antiguan liquidators will distribute the $44 million remaining in
the U.K. accounts to investors after the liquidators have received their $36 million in working capital. Wide and Dickson
will also distribute about $60.5 million of the funds currently frozen in Switzerland, according to the joint statement.
Fund Transfers
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.
The agreement "creates a plan for the distribution of almost 90 percent of the frozen assets from the U.K., Canada and
Switzerland pursuant to which distributions will be made as soon as the necessary approvals are obtained from the
pertinent authorities in those countries," the Antiguan liquidators said in the joint statement.
Courts in the U.S., Antigua and the U.K. must still sign off on the deal before any funds are transferred, according
to the statement.
Sadler, the U.S. receiver's attorney, said the deal was the result of months of negotiations involving officials
in five nations.
"This agreement is one of the most complex undertakings of its kind," he said in an e-mail. "This was no easy task."
Press release settlement (Spanish version).
Press release settlement (English version).
Agreement Janvey - JLs (English version).
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