Open Letter to U.S. House Committee on the Judiciary on 10th anniversary of Stanford Financial Group's debacle; families get pennies and attorneys millions
COVISAL
For Restitution
February 16, 2019
Chairman
U.S. House Committee on the Judiciary
2132 Rayburn Building
Washington, DC 201515
The Honorable Doug Collins
Ranking Member
1504 Longworth HOB
Washington, DC 20515
Ref. 10 year anniversary of Stanford Financial Group’s debacle families have received pennies; Administrators and attorneys millions.
Dear Chairman Nadler and Ranking Member Collins:
When Stanford Financial Group (SFG) was seized by U.S. authorities on February 16, 2009, the world changed dramatically for thousands of families in the U.S., Latin American, and other countries around the world that had invested their life savings in a promise of safety under the protective umbrella of the United States. For non-U.S. depositors it had seemed a wise decision, considering the volatile nature of many of their own governments, and it was on this principle that they were sold their certificates of deposit. They entrusted their savings to a company belonging to an American conglomerate, regulated and supervised by U.S. regulatory agencies.
However, their trust was rewarded with a betrayal that resulted in a devastating loss. Families that had hope for a better future are now living off charity from neighbors. People are ill and unable to pay for their medical treatments. Lives have been lost because of an inability to pay for life-saving operations. Latin American victims were the largest defrauded group -- 15,270 families, representing 70.24% of depositors with more than $4 billion in losses. The majority of depositors are from Venezuela; the second largest group is from the United States.
In the U.S.
The U.S. Receiver for SFG, Ralph Janvey, shows $499.9 million recovered, and 224.6 million spent in professional fees and expenses as of October 31, 2018 in his 16th application for fees and expenses registered before the U.S. Federal Court in Dallas. That’s almost 50 percent of the total amount 'recovered' from Stanford’s bank accounts and fire sale of assets, leaving only meager sums for the victims. U.S. Receiver and his attorneys have received $121.5 million, Stanford’s Examiner $4.0 million, Official Investor’s Committee$37.1 million, and $61.6 million for other expenses other than professional. Presumably, $138.5 million were distributed to depositors.
The receivership’s attorneys and professionals have been very well compensated during the last ten years for the work they have performed. Unfortunately, they have not shown real accomplishments to deserve their $700 per hour fees. They have received more money than the depositors have; many of them getting millions of dollars, while some of the affected families have received less than 3 pennies on the dollar during the last 10 years. In contrast, Irving Picard, attorney overseeing liquidation of Madoff’s firms has recovered $13.9 billion of $19 billion of lost principal. He is on track to recover most of victim’s lost principal.
In Antigua
The Joint Liquidators (JLs) of Stanford International Bank, Ltd (SIBL), Marcus Wide and Hugh Dickson of Grant Thornton, presented their eighth report before the High Court of Antigua on April 5, 2017, that shows $64.2 million spent on professional fees and expenses as of December 31, 2016. This is the last report posted on their website.
According to the report total receipts were $181.7 million; however, from this total the JLs have already spent $89.3 million in fees for attorneys, consultants and other expenses. So far, they have spent over 50% of the total.
JLs, Marcus Wide and Hugh Dickson, have received more than $11.5 million, their co-lead legal advisor $18.3 million, and other unnamed legal advisors $27 million and over $26.3 million for other expenses. It does not include their fees and expenses for the last two years. Recently, Mr. Wide retired from Grant Thornton as of December 31, 2018.
Easy prey, once again in Antigua
On May 15, 2014, the High Court of Antigua issued an order appointing an Amicus Curiae, due to the joint liquidators’ application to claw back alleged net winners and preference creditors. More than a year later, on August 5, 2015, Mr. Justice Gerhard Wallbank sided with the joint liquidators by issuing an order that allows them to pursue claims against depositors considered preferential payment recipients. The majority of depositors accused of receiving alleged preference payments withdrew some of their savings deposited at SIBL for living expenses, rightfully and in good will. JLs withheld distribution of $17 million from innocent families.
Depositors’ Demands
We urge the U.S. Congress House Financial Services Committee to listen to our outcry and concerns expressed in this letter, and right a wrong that have been going on for the 10 years.
Randy Neugebauer, former U.S. Representative said in his article titled, ‘Allen Stanford’s Ponzi scheme victims have been shortchanged’, published in the Financial Times on February 12, 2019: “The US government should be doing more to right this wrong — and not let Stanford’s heartless scheme drift into the dustbin of history. We must secure real recoveries for victims, who have had their lives turned upside down…Congress must re-engage and find out why the effort to recover money is not working and what can be done. The US government should also pursue legal claims against the banks that helped the Stanford scheme operate.”
Lastly, the U.S. Department of Justice (DOJ) during the negotiations of the Settlement Agreement and Cross-Border Protocol on March 12, 2013, expressed its commitment to assist Stanford’s victims to ensure justice to all the families devastated by this horrendous crime.
Today, we ask DOJ to take action and help us stop this nonsense that continues to harm us. You must supervise the distribution of the money confiscated in Switzerland, as well as the claims process. You must have a voice in the determination of the reasonableness of total asset recovery and distribution expenses. The joint liquidators received $90 million from frozen assets in the United Kingdom, they spent it all in fees and expenses. They only distributed 1% to some depositors, and retained over $17 million from families accused of receiving preferential payments, during the sixth month prior to closing of the SIBL -- People who are net losers and withdrew as little as $1,200 during that period.
Now, the only money left is $208 million of our savings confiscated in Switzerland; the Joint Liquidators are supposed to received $65 million and the U.S. Receiver $143 million. This money must be distributed directly to the depositors.
The U.S. receiver and the joint liquidators were named to conserve, hold, manage, and prevent any waste of the creditors' patrimony, and to return the money to the innocent families. The protraction of the recovery of assets, and the very small settlements are generating high billable hours and expenses to the administrators and their attorneys, to the detriment of Stanford’s depositors.
What honest and transparent legal entity is providing oversight of the liquidation’s and receivership’s affairs? Where are the checks and balances? Are our fundamental rights being considered?
We insist that U.S. Government must show the world its commitment to honesty, equality and justice with concrete and immediate actions. Innocent families in the U.S., Latin America, and around the world, have the right to a full restitution of their savings.
In God, we trust that the rights of the survivors of this debacle will prevail over judicial manipulations, and that good conscience will be the instrument to impart justice, and to stop a never-ending fraud.
Sincerely,
/s/ Jaime Escalona
Jaime Escalona
On behalf of COViSAL
International coalition of depositors who lost their life savings
in Stanford Financial Group’s debacle in 2009
Austin, Texas
cc Members of the House Financial Services Committee
Sen. John Cornyn, Sen. Ted Cruz, Sen. Marco Rubio, Rep. Chip Roy
Kevin M. Sadler, attorney for receiver Ralph Janvey, David Reece, SEC.
Deborah Connor, Chief, Money Laundering & Asset Recovery DOJ,
Pamela Hicks, Chief Money Laundering & Forfeiture Unit
