This week marks the six-year anniversary of the Stanford’s debacle that destroyed the lives of thousands of innocent families around the world when on February 17, 2009, the U.S. Securities and Exchange Commission (“SEC”), abruptly seized Stanford Financial Group worldwide. During these long years, families have watched with sadness while the possibility of receiving an economic relief that could mitigate their losses has all but vanished.
The reality is that injustice continues for them as the U.S. Receiver and the Joint Liquidator generate fees and expenses for themselves, their attorneys, and other professionals – the sole beneficiaries so far, charging millions of dollars. Latin American families are the largest defrauded group; 15,270 families representing 70% of the total depositors in the Stanford International Bank, Ltd. (“SIBL”) with more than $4 billion in losses, who entrusted their savings to a company belonging to an American conglomerate regulated and supervised by the U.S. Government.
The majority of Stanford’s depositors are modest people; families with children with special needs. Many are living off of charity from neighbors, others are ill and unable to pay for their medical treatments and medicine; lives are being lost because of an inability to pay for lifesaving operations – dreams shattered, and families destroyed.
The U.S. Receiver, Ralph Janvey has “recovered” approximately $240.9 million as of December 31, 2013, and spent more than $127.5 million in fees and expenses. Mr. Janvey’s accomplishments in the recollection of assets for the depositor’s distribution fund have been lacking. According to Examiner John Little, “The Receiver and his professionals have not identified any significant Stanford assets or accounts that were not identified in the earliest days of the Receivership.” In contrast, Irving Picard, the trustee unwinding Bernard Madoff’s fraud has recovered more than $10 billion for victims. That is 59 percent of the $17 billion in principal lost by thousands of investors in Madoff’s investment advisory business.
It is unacceptable that the Courts in the United States and Antigua, to the detriment of Stanford’s depositors, have allowed the U.S. receivership and the liquidation, named to prevent the waste and squandering of the creditors’ patrimony, to continue prolonging the recovery of assets for so long – generating endless billable hours and expenses for the professionals managing the receivership and liquidation. Furthermore, the Cross-Border Insolvency Cooperation Protocol signed by the U.S. Receiver and the Joint Liquidators, seems only to benefit their attorneys and professionals.
Why do the Courts and responsible government authorities allow the US Receiver and the Joint Liquidators to continue depleting the Stanford depositors’ patrimony with an agreement that allows the continual enrichment of attorneys without showing any significant recovery results and reasonable compensation to the victims of the moneys recovered?
In a response to the Receiver’s motion for approval to release of portion of the holdback, Examiner John Little states, “What has actually been distributed to Stanford’s investors – approximately $30 million – is less than half what has already been paid to the Receiver’s professionals.
Who are the real beneficiaries of the settlement agreement between the U.S. Receiver and the Joint Liquidators?
As far as the undeniable responsibility of the regulatory entities, COVISAL asks, “Why did the regulatory entities of the United States connive to deny protection to thousands of innocent depositors, clients of Stanford, violating the mandate from the U.S. Congress to “protect the investment public”? Why were the “red flags” that appeared in Stanford’s examinations conducted since 1997 disallowed? Why were the complaints from clients and former Stanford employees, which year after year warned of the vertiginous growth of a pyramidal fraud, not investigated?
What honest and transparent legal entity is providing oversight of the liquidation process? Where are the checks and balances?
Because of its implications, the Stanford Case is an example of how the United Stated handles issues of ethics and morality in the financial arena, set on a world stage that has already been witness to so much political and financial corruption. Therefore, we are convinced that if this monstrous fraud, which operated with impunity for more than a decade in and from the United States, is not resolved satisfactorily for all the victims, the worldwide discredit of the United States in regards to securities fraud will deepen, further increasing the distrust that currently exists in its financial sector.
In God we trust that the rights of innocent families prevail over the judicial maneuvering, and that the responsible authorities’ good conscience is the instrument to impart justice and compensation to all families affected.
Jaime R. Escalona
On behalf of COViSAL