Stanford Beneficiaries Lose in Courts

Chidem Kurdas

The political and investment beneficiaries of Allen Stanford’s Ponzi scheme have little recourse left in their efforts to keep the money they received from him. Yesterday a District Court in Texas decided that the receiver of the Stanford estate can get back from Stanford investors any interest they were paid.

And about three months ago a US Appeals Court decided that various political committees have no legal ground to keep campaign contributions from Stanford and his company. Democrats and Republicans showed a rare spirit if bi-partisanship in refusing to give back Stanford’s dirty dough, appealing an earlier District Court ruling to the effect that they should hand it over. But the Appeals Court affirmed the District Court ruling.

While Stanford spread his goodies around so as to get the most political bang for his buck,  the entity that received the largest share of the funds in question in this legal action is the Democratic Senatorial Campaign Committee, which stands to give back almost $1 million.

Separately, yesterday’s court decision follows well-known precedent – for instance in the Bernard Madoff case – that “net winner” investors who took out more than they put into a fraudulent scheme cannot keep the gains.  Judge Godbey  of the District Court points out, as others have in previous cases, that those fake gains were paid from the victims’ money.

The Stanford receiver says more than $220 million in fictitious returns was paid to over 800 investors. Once recovered, this can be distributed to the victims. So far the receiver has proposed to distribute only $55 million, so this is a major addition. But the net winners are expected to appeal Judge Godbey’s ruling.

Stanford used much of the $7 billion he swindled to make disastrous real estate investments, finance his extraordinarily lavish lifestyle and buy political influence in the United States and the Caribbean—see  my book Political Sticky Wicket: The Untouchable Ponzi Scheme of Allen Stanford 

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Tags: Allen Stanford, Bernard Madoff, fraud, Ponzi scheme