Examiner: Stanford receiver will use all the money

Nothing will be left for victims of the Stanford financial empire if a court-appointed receiver keeps spending reclaimed money, says an examiner for U.S. District Court of Northern Texas.
“Despite the scant likelihood of any significant recovery for the investors,” John J. Little said in brief to the court in Dallas, “the receiver has incurred fees and expenses in excess of $27 million during the first three and one-half months of his service.”
Little said that works out to an average weekly “burn rate” of more than $1.1 million in fees and expenses.
The case involves the financial collapse of Stanford Financial Group when a Securities amp& Exchange Commission investigation claimed it was insolvent in February. Thousands of investors lost more than $7 billion.
“At this rate of consumption, simple math suggests the substantial possibility that the whole of the Receiver Estate could end up, not in the hands of the victimized investors, but in the pockets of the receiver and the firms he has retained,” Little said.
Attorney Ralph S. Janvey, the receiver, has yet to respond to Little’s claims.
Janvey has billed the court for work done by 103 lawyers and 106 others, who reportedly are tracking down Stanford assets and performing other tasks.
The SEC shares Little’s concerns about the receiver’s lack of documentation about expenses.
Little also asked why Janvey hired a public relations firm to collect and archive news clippings about the case, as well as handle calls from the public about the receivership.
“The receiver’s failure to respond to investor communications has been, and remains, the single most common complaint that the examiner receives from Stanford investors.”
Little said he and the SEC want the court to withhold 20 percent of Janvey’s requested and approved fees until the financial condition of the estate “has come into far sharper focus.”
Davis plea agreement predicts other Stanford indictments
– The Baldwyn native admitted his role in the scandal last week in Houston.
By Patsy R. Brumfield
Daily Journal
More indictments in the Stanford financial scandal appear imminent, according to information contained in former Chief Financial Officer James M. Davis’ plea agreement.
Exactly who else will be indicted isn’t state in the allegations of a $7 billion investment scheme, but parts of Davis’ agreement, which was agreed to last week, refer to unnamed but specific people as Stanford International Bank Ltd. Executive A, Outside Attorney A and Stanford Financial Group Attorney A.
SFG is SIBL’s corporate parent.
The Wall Street Journal identified Outside Attorney A as Tom Sjoblom, SIBL’s outside counsel since 1995 and a former SEC investigator. His attorney declined to comment.
Also cited as active in the alleged conspiracy are people referred to as “other conspirators,” “subordinate employees” and “others.”
The financial house of cards came tumbling down in February, when the U.S. Securites amp& Exchange Commission declared the company insolvent and put its assets under a court-appointed receiver.
In June, federal charges came with arrests of Stanford’s CEO, R. Allen Stanford; its chief investment officer, Laura Pendergest-Holt of Baldwyn; and two other executives. Antiguan regulator Leroy King also was indicted with them, although he has not been extradited.
Davis of Baldwyn was charged and pleaded under a separate document, called an information.
Last week, he pleaded guilty to three counts of conspiracy to commit wire, mail and securities fraud; mail fraud; and conspiracy to obstruct and SEC investigation.
Facing 30 years in prison for his part in the scam, Davis admitted the financial money game began as early at 1988, when he was controller of Guardian International Bank Ltd., chartered in Montserrat and owned by Stanford, his Baylor University roommate.
When bank regulators there began asking questions, Guardian moved to Antigua as SIBL.
Its primary investment product was a certificate of deposit sold by SFG broker-dealers, sometimes referred to as “financial advisors.”
Davis’ attorney, David Finn of Dallas, termed his client “the whistleblower” who brought the scheme down. Davis has been cooperating with investigators for months and will receive some leniency, if that cooperation is considered substantial.
He won’t be sentenced until the others’ cases are resolved.
Davis and his wife, Lori, reportedly are living on a family farm in Michigan, where he is doing manual labor for $10 an hour. Their stately home west of Guntown appears abandoned as part of the receiver’s assets frozen to recovery money for some 20,000 investors who lost money when SFG collapsed.
The plea agreement also includes mention of a 2003 “blood oath” of brotherhood that Stanford performed on King and another employee, who had oversight of SIBL. The oath and bribes were to keep them quiet about SIBL’s practices.
Prosecutors allege that Stanford paid King some $200,000 in bribes and, in January 2004, gave him $8,000 tickets to the Super Bowl game in Houston for King and his girl friend.
Finn told reporters last week it’s possible King will cooperate with the government.
Contact Patsy R. Brumfield at (662) 678-1596 or patsy.brumfield@djournal.com. Read Patsy’s blog, From the Front Row, at

Patsy R. Brumfield/NEMS Daily Journal

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