|Investors in $7 billion swindle could soon get payout||| Print ||
|Written by JUAN A. LOZANO, Associated Press|
|Saturday, 16 March 2013 07:29|
HOUSTON (AP) — Investors in a $7 billion Ponzi scheme orchestrated by former Texas tycoon R. Allen Stanford could finally begin getting back some of what they lost in the next few months, after a recovery process that has dragged on for more than four years.
Investors — some of whom lost their life savings — will see only a pittance of what they put into the scheme. But the process got a boost this week as parties that had been battling each other for control of about $300 million in frozen foreign bank accounts and other assets once owned by Stanford reached an agreement to work together.
"The freeing up of funds ... is a good thing," Angela Shaw, a Dallas-area woman who founded the Stanford Victims Coalition after three generations of her family lost $4.5 million in the fraud, said Friday.
In a Ponzi scheme, money from new investors is used to pay old ones. Prosecutors said Stanford persuaded investors to buy certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua then used the money to fund a string of failed businesses, bribe regulators and pay for his lavish lifestyle. Stanford, 62, was convicted last year on 13 fraud-related counts and sentenced to 110 years in prison.
Stanford's financial empire once spanned from the U.S. to Latin America and the Caribbean. In the wake of its collapse, a U.S. judge in Dallas and an Antiguan court both appointed people to try to recover assets. The U.S. Justice Department also undertook its own effort.
This week's agreement consolidates the efforts to take control of assets frozen in Canada, Switzerland and the United Kingdom.
"Without the ... agreement, the (parties) will be forced to expend substantial time, energy and money fighting over the Stanford assets," attorneys for Ralph Janvey, the receiver appointed by a judge in Dallas to oversee the recovery efforts, wrote in a court motion filed this week.
Edward Davis Jr., one of the attorneys for the Antiguan liquidators, said the agreement is the "beginning of relationship that allows for everyone to be rolling in the same direction."
British retiree Kate Freeman, who lost $820,000 in Stanford's scheme, said she believes the agreement is a positive step.
"This will help all of the victims," Freeman said in a telephone interview from her home in Antigua. "This will put a little bit of money in everyone's pocket."
Freeman said the agreement will provide the liquidators in Antigua needed funds to pursue lawsuits against individuals and organizations who aided Stanford's fraud.
The first distribution to investors will probably come from the U.S. receiver, who in January announced a plan to make an initial distribution of $55 million. That plan is still waiting for approval by a federal judge, but that could happen within the next month or two, officials say.
As of the end of January, Janvey had collected more than $230 million. But he had also racked up more than $119 million in fees and expenses, leaving about $111 million for investors.
Investors have criticized the amount of fees and expenses that have been tallied by the recovery process. Attorneys for Janvey have defended the expenses, saying the collapse of Stanford's business empire required an expensive clean up.
The Antiguan liquidators have retained control of about $227 million in assets, mostly in land once owned by Stanford, Davis said. That money won't be available for distribution until the land is sold.
The initial distribution from the liquidators will likely come by this summer from funds recovered from the United Kingdom, he said.
The amount investors will ultimately get back is expected to be small — probably about 1 percent of what they put in.
"If you've saved your whole life and invested $300,000, you are only getting back $3,000," Shaw said.
Andrew Stoltmann, a Chicago-based attorney who specializes in investment fraud, said such small recoveries are the norm.
"Unfortunately these sorts of recoveries are kind of the nature of the beast when it comes to Ponzi schemes," he said.
Follow Juan A. Lozano at http://www.twitter.com/juanlozano70
Copyright 2013 The Associated Press.
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