STANFORD UPDATE: 5th Circuit says receiver can't take invested assets

NEW ORLEANS – Seven current and former major league baseball players, along with hundreds other investors, can keep the millions of dollars they put into R. Allen Stanford’s purported $7 billion Ponzi scheme, a federal appeals court has ruled.

The 5th U.S. Circuit Court of Appeals in New Orleans ruled Friday that while Stanford’s “certificate of deposits” may have been phony, the agreement between him and his investors was real, meaning they had legitimate ownership of the money in their accounts, both their initial principle and the interest earned, and it can’t be taken from them.

The court’s decision came in response to a move from the lawyer charged with taking control of Stanford’s assets to seek to recover all the money paid out as part of the purported scam so that it can be distributed among all of the victims.

The effort by Ralph Janvey, the court-appointed receiver in the case, made national headlines after being reported in June.

Janvey sought to sue the investors last summer for both the money they earned with Mr. Stanford, as well as their initial investments.

In the cases of the baseball players, that meant Janvey sought $9.5 million, of which $9.2 million was the money initially put up by the players on the assumption that Stanford’s businesses were legitimate investments.

The Securities and Exchange Commission had backed the players and the other investors, saying Janvey’s claims were “not supported by case law and contrary to commission practice.”

The baseball players involved are: former Atlanta Braves pitcher Greg Maddux, retired New York Yankees slugger Bernie Williams, Yankees outfielder Johnny Damon, Boston Red Sox outfielder J.D. Drew, Texas Rangers outfielder Andruw Jones, Tampa Bay Rays first baseman Carlos Pena and Jay Bell, a shortstop who played for several teams before retiring in 2003.

Stanford remains jailed awaiting federal charges that he sold self-styled “certificate of deposits” that promised impossibly high returns, but were in fact part of a $7.2 billion Ponzi scheme that afforded Stanford a jet-setting lifestyle.

NEMS Daily Journal