An Open Letter by COVISAL to the Joint Liquidators of Stanford International Bank Limited, the US Receiver, the US Department of Justice and the Official Stanford Investors Committee
March 27, 2012
Dear Joint Liquidators, US Receiver and Department of Justice,
The saga drags on for the victims of Stanford’s fraud as litigation continues to generate fees for attorneys, the only beneficiaries so far, charging millions of dollars in fees and reimbursed expenses.
On March 9th 2012, Mr. Janvey filed his 16th interim fee application before the U.S. District Court for the Northern District of Texas in Dallas. The motion is in Securities and Exchange Commission v. Stanford International Bank, Ltd. et al.
Mr. Janvey requested the approval from the Court to pay $1.6 million in fees to his attorneys, including his firm, from October 1st, 2011 to December 31, 2011. For only three months of work these firms will receive the following amounts: $43,166 for Janvey’s firm, Janvey, Krage & Janvey; $902,232 for Baker Boots, counsel for the receiver, and $44,000 for Thompson & Knight, also counsel for the receiver.
Mr. Janvey’s motion concludes, “The fees and expenses requested by the receiver are necessarily substantial, but… the receiver expects to continue reducing professional costs where it is possible to do so consistent with his duties.”
Kevin Sadler of San Antonio, a partner of Baker Boots who signed the motion, wrote in a message that Baker Boots had been paid $18.9 million for his work on the Stanford case from February 2009 through September 2011. During the same time period, Krage & Janvey received $1.16 million, and Thompson & Knight received $3.13 million. Sadler also writes that the court is “holding back" 20 percent of fees as a discount across the board, but the court might decide sometime in the future to pay these firms the additional percentage.
As of October 2011, the U.S. Receiver has recovered close to $217 million and has charged in the vicinity of $102 million in fees and expenses for his attorneys, accountants and consultants, leaving a mere $115 million for a possible distribution to the victims of the fraud. Supposedly, the U.S. Receiver has $80 million in unrestricted cash for a distribution to the victims. However, they are charging $1.6 million dollars now, and we still do not know how many more millions will be charged in legal fees and expenses before any money is distributed to the victims. One gets the impression that the cash available is simply petty cash for the attorneys.
On February 10, 2012, Mr. Marcus Wide, Joint Liquidator for the Stanford International Bank Limited (“SIBL”) in Antigua, presented his Second Report of the Joint Liquidators to the Eastern Caribbean Court – The High Court of Justice Antigua & Barbuda. This report shows that from May 12, 2011 to January 31, 2012, the law firms involved with the SIBL in Liquidation received the following payments in fees and expenses: $1,630,794.00 for Grant Thornton, Joint
Liquidators of SIBL in Antigua; $516,549.00 for Astigarraga Davis, counsel to the Joint Liquidators; and $1,367,486.00 for Martin Kenney & Co., also counsel to the Joint Liquidators. The following unidentified law firms were paid the following amounts: $1,373,671.00 for attorneys in Canada; $534,210.00 for attorneys in the U.K.; $666,331.00 for attorneys in the United States; $170,371.00 for attorneys in Switzerland; $172,418.00 for attorneys in Latin America, $75.129,00 for attorneys in Antigua; $99,454.00 for consultant's fees; $324,174.00 for Antiguan property related fees; and $1,186,750.00 for other operational expenses. We would like these unnamed law firms to be identified and to see the detailed bills of their work as well as detailed invoices for each of the payments made.
There is also a payment of $2,822,495 made from the cash available for costs awarded for the removal of the former Liquidators, paid to Alex Fundora and his attorney Edward Davis of Astigarraga Davis, now the actual counsel for the Joint Liquidators.
The income and expense statement of the Stanford International Bank Limited – in liquidation from the period of May 12, 2011 to January 31, 2012 – presented to the Eastern Caribbean Court, The High Court of Justice Antigua & Barbuda, could be misconstrued by persons not familiar with accounting terminology. The Joint Liquidators received a $15 million loan from the victims’ patrimony frozen in the United Kingdom with an interest of 5.4% per annum. The amount registered as income was $14,740,076.00; the Joint Liquidators recovered $8,110,527,00 (SIBL assets sold and money from a Stanford account at the HSBC in Panama), and the Joint Liquidators made payments of $10,939.829,00 for legal fees and expenses. The sum of these amounts shows a balance on hand of $11,910,774.00. Also, it is important to point out that there is a contingency liability (professional fees) for $18,000,000.00, claimed by the former Joint Liquidators FRP Advisory, LLC (Vantis). The new Joint Liquidators have been disputing this claim in Antigua’s court since October 2011, trying to reduce it. We do not yet know the exact amount; however, this amount will most likely be more than $12 million, and it would consume whatever balance there is at hand, leaving the SIBL, in Liquidation, operating at a loss.
The Joint Liquidators are spending $1 million US per month and currently have a contingency liability of $18 million. What legal independent entity is providing oversight of the Joint Liquidators' affairs? Where are the clarity and transparency of the process?
COVISAL sadly observes how the possibility of receiving an economic relief to mitigate the suffering of thousands of innocent retirees worldwide, desperate for the return of their savings, is vanishing in millions of dollars of legal fees, expenses and useless legal fights between the Joint Liquidators, Marcus Wide and Hugh Dickson, and the U.S. Receiver, Ralph Janvey. This is the perfect money-making business for the attorneys. As for the victims, they feel defrauded again.
We respectfully demand, without any further delay, that you sign a Cross-Border Insolvency Cooperation Protocol to allow for the recovery of assets without duplicating efforts or expenses. This Cooperation Protocol would oblige you to share records and documents indispensable to successfully achieving third party lawsuits; it would compel you to implement only one “Process of Certification of Claims,” and it would oblige you to formally elaborate joint reports to give the judicial process the transparency it lacks.
We beg you to abandon the legal turf war for the control of our assets in Europe and Canada, and instead focus your efforts on helping the real victims recover their stolen patrimony. We exhort the Official Stanford Investors Committee, which represents all Stanford investors worldwide, to demand from the parties mentioned above an immediate distribution to the victims without any more delays.
Please allow the $330 million of our savings, confiscated in the UK, Switzerland and Canada, to be distributed directly to the victims, holders of CDs from SIBL, in a direct, efficient and economical way, regardless of nationality or location and without appeals, retention of money for future real estate developments, further litigation, more legal fees and expenses, or payments to intermediaries - including the IRS from the United States. These funds are all that remains of our stolen savings. Please return them to their rightful owners!
Thank you.
/s/ Jaime R. Escalona
Jaime R. Escalona
On behalf of Covisal
Leader
Coalición Víctimas de Stanford América Latina (COVISAL)
Twitter: @COVISAL
Texas: (512) 377 6133 begin_of_the_skype_highlighting (512) 377 6133 end_of_the_skype_highlighting
