Stanford Assets Under Government Threat

Chidem Kurdas

Here’s another instance of how Allen Stanford left his victims in an even worse mess than Bernard Madoff left his.

If the agreement reached by the American receiver of the Stanford estate and the joint liquidators appointed by an Antiguan court is not approved by the respective courts, litigation between them will stretch into the foreseeable future—at the cost of the victims.

But even worse, the foreign authorities who control the remaining Stanford assets may take the goodies for themselves. A memo to the Texas court asking for the approval of the settlement says one goal is to ensure that “Stanford assets are not put at risk of expropriation by government authorities.”

The agreement turns over up to $36 million to the joint liquidators to pay for their litigation costs and gives the Texas receiver and affiliated lawyers control over assets that will no doubt enhance the fees they charge. So the deal is great for the estate functionaries appointed by different governments.

The US Securities and Exchange Commission, which names the receivers to estates it takes over in cases of fraud, is party to the settlement. The Department of Justice is also involved.

The fee issue is so sensitive that the liquidators will provide information about their compensation only in confidence, to the receiver and a representative of the Department of Justice. This confidential information is not to be disclosed to any other party unless the liquidators agree. Even so, they’ve put into the agreement a provision that they can redact – or delete parts of – the fee reports.

It is remarkable that victims of a Ponzi scheme can’t put the suffering behind them for years after governments take over. As they wait year after year, a good chunk of what remains of their assets goes to the lucky receivers and liquidators. And there is the risk of governments directly expropriating the money.

For the story of Stanford’s decades-long con game, see Political Sticky Wicket: The Untouchable Ponzi Scheme of Allen Stanford.

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