Judge orders return of billions by Stanford, Davis

By Patsy R. Brumfield/NEMS Daily Journal

DALLAS, Texas – Defrauded investors in Stanford certificates of deposit may be a step closer to seeing some return of their massive losses.
Last week, U.S. District Judge David Godbey in Dallas ordered more than $6.7 billion surrendered by R. Allen Stanford, his Stanford Group Co., and the Antigua-based Stanford International Bank Ltd.
Some 20,000 investors worldwide – hundreds in Mississippi – lost some $6 billion in 2009 when Stanford’s empire collapsed under the weight of a federal investigation.
Godbey’s order may clear the way to grant a court-appointed receiver’s request to make an interim $55 million payout to investors who lost money after buying the Stanford bank CDs.
“The fraud perpetrated was obviously egregious, was done with a high degree of scienter, caused billions in losses and occurred over the course of a decade,” Godbey said, using the legal term to describe the mental state of intent to deceive.
In early 2011, a federal jury convicted Stanford of lying about how investors’ money was handled. He is serving a 110-year sentence and has appealed the verdict.
Stanford CFO James Davis’ 2009 guilty plea also was cited by the judge.
Davis lived in Union County and often worked out of the Tupelo and Memphis offices.
“The court finds that $5.9 billion is a reasonable approximation of the gains connected to Stanford’s fraud,” Godbey said. He added another $861 million in interest for a total of $6.76 billion. Davis is jointly liable.
Davis is serving a five-year sentence in a federal prison in Memphis.
Finally, the judge imposed a $5.9 billion penalty on Stanford and a $5 million assessment against Davis.
In a separate filing, a group of Stanford investors asked Godbey to grant them a judgment of at least $95 million in a lawsuit against a unit of Paris-based Societe Generale SA.
Davis testified during Stanford’s Houston trial that the money in the Swiss bank account, funded by investor deposits, was a slush fund.