Wednesday, March 11, 2009

Who needs a lawyer?

(versión en español, en blog de venepirámides)
(Disclaimer: this is not legal advice…just my opinion)

I thought I was finished with this Stanford thing, but I have been getting emails with questions, so it’s better that I answer them here and everyone can read them. Let’s go case by case.

If you are the holder of an UNPAID Stanford International Bank LTD Antigua CD.

You do NOT need a lawyer. The bank in Antigua is in receivership and they are trying to collect as many assets as possible. The receiver in Antigua (Vantis) will be the one paying you eventually. You should keep track of the information that is coming out of Antigua and be patient. But please be realistic. There is not going to be much to distribute. My colleague at devilsexcrement had initially hoped maybe 10-20%, but now estimates 5% at most (more like 3%, if I read correctly). I’m afraid I must agree. The “investments” we know about aren’t worth much, and even if personal assets (jets, art, etc.) can be collected, much of it may go to fill in black holes elsewhere. For example, Stanford Financial may end up needing money, rather than supplying it. The bank franchises in Antigua, Venezuela and Panama have been taken over by the respective authorities. Even if they are re-sold, it is unlikely any money trickles back to the Antigua receiver.

Apparently the going rate for these lawyers is 40% of what is collected plus expenses.
Those expenses may turn out to be larger than any recovery. Some are going around claiming that they will be able to recover 40% of your investment. If they are so convinced, tell them to “buy” your claim for 20% and see the reaction. Not so enthusiastic anymore? I thought so.

In any case, ask what exactly do they plan to do. Sue SIBL? Sue your advisor? Sue the Antiguan Government? Maybe I’m missing something but I don’t see how a lawyer will put your claim ahead of the others.

The receiver in Antigua doesn’t think you need a lawyer either. Read the FAQ. Particularly the last one.

If you are the holder of a FROZEN Stanford Financial account and have never held an Antigua CD.

You do NOT need a lawyer. You need some patience. Your account will be thawed as soon as Mr. Janvey (the US receiver) verifies you have never had an Antigua CD. You do need to find a place to take your money because it can’t stay at Stanford, so start looking around.
If you want to sue Mr. Janvey for hardship, cost of opportunity, well go ahead. Remember that a judge has approved his actions.

If you are the holder of a FROZEN Stanford Financial account and have held an Antigua CD in the past.

You may think you were lucky to get out of Antigua, but unfortunately Mr. Janvey wants your money. If the interest you collected was part of Mr. Stanford’s fraud, you (according to this theory) are the beneficiary of “fraudulent conveyance” and need to return that “profit”. I’m not saying I agree with this, but apparently Mr. Janvey wants to do this.
If he does, you will be one of many affected. I would expect some sort of class action. You should probably join.

How far Mr. Janvey wants to take the “conveyance” principle is also a matter of speculation, because theoretically he could ask St. Jude Hospital to give back the Stanford donations or preferably for Mr. Stanford’s ‘acquaintances” or family to give back their Christmas presents. We’ll have to wait and see. For now he wants the Stanford accounts, because that is what is at his disposal. It may not be fair, but that is what it is.

If you are a past Antigua CD holder, lucky enough to not be anymore.

If you are outside of the US, you probably do NOT need a lawyer. I really don’t see how the Antiguan receiver can get at your assets for the “conveyance” thing, unless you have assets in Antigua. In the US, Mr. Janvey would have to find you first and unless the US firm has the records of all the Antigua CD holders, that won’t be easy to do.

Keep in mind, that people will be looking for money, and they may just want yours. So keep your options open, In any case, this will take some time, and no “conveyance” claims have been made yet in the Madoff case, as far as we know.

If you are a Stanford Advisor who didn’t sell Antigua CDs

You probably don’t need a lawyer, unless Mr. Janvey decides to collect those upfront “advances’ some of you received for bringing your business over to Stanford. I don’t see that case, but with these things you never know.
Keep your Rolodex, though. Good odds is that your clients may still like you and could even take their accounts to wherever you end up and keep you as an advisor.
If you find a new place, though…this time check it out better before signing on.

If you are a Stanford Advisor who sold Antigua CDs

You probably need a lawyer. Not to protect you from investor lawsuit, there is a 1994 Supreme Court decision that deals with that (or so I’m told). However, I could expect “fraudulent conveyance” to extend to the commissions and prizes that were paid for selling these CDs. If, on top of that, your assets are at Mr. Janvey’s disposal (frozen), I’d think he might want some of that. Besides a lawyer, maybe a career counselor would be good. There is a future for you in sales, but not so sure if in finance.
In any case, it always is a good policy to “know your client”, because they may be looking to know you better, after finding out that their Antigua CDs aren’t worth much anymore. Be careful.

If you are a Stanford Insider

You know you need a lawyer, but you already probably have the best other people’s money can buy.


  1. We succesfuly transferred the assets from a Stanford Financial account (no CD's,less than 250 K) today at Pershing.

  2. How is it "not fair" for Janvey to keep the accounts with CD interest or principal? The money in those accounts is the money the newer investors put in. Is it fair for some investors to keep the interest and full principle and the newer investors to be left high and dry? I believe that's called a Ponzi scheme and if Janvey doesn't use conveyance to build the receivership up to the biggest it can be and then split it up among all the investors, he is just continuing the scheme. I think he should go after every dime he can legally get his hands on. No one investor should end up with more than they put in at the sake of others only getting back pennies on the dollar.

  3. I'm sure that ex-CD holders at Stanford Financial will feel that it is "not fair" that they are singled out for "conveyance" claims, while other previous CD holders and beneficiaries from around the globe are not.
    That is what I meant, I really don't expect conveyance claims to go out to Venezuela, Mexico or even the US with any possibility of success.

    Those holding Antigua paper do get the rawest deal of all. Unfortunately.

  4. To other commenter.
    I was reading your comment and unfortunately I seem to have deleted it instead of publishing it. I'm sorry.

    You mention Mr. Stanford's personal wealth ($2.2 billion according to Forbes) and the possibility of claiming those assets.

    About Mr. Stanford's wealth. That is a Forbes "estimate" and like most of the things surrounding Mr. Stanford is an "exaggeration" in the best case and an outright lie in the most likely scenario. How does Forbes estimate these things? Well, they ask the "billionaire", look at some financial statements (if available) and guestimate.
    Sometimes they will consult analysts (I have been consulted in the past). It's not easy.

    But Mr. Stanford's wealth estimate is based on the value of his businesess (which are worthless...and financial statements which are false) and his personal assets.

    I think at this point we can reasonably suggest that Mr. Stanford was never independently wealthy and basically all of his "assets" were the result of "diversion" of money from the Antigua bank.
    He does not have $2,2 hidden away in a bank account (he may have something, though...).
    He was never a "real" billionaire and possibly never even a millionaire.

    So where is the money? Most of it was spent. On interest for CD holders (since the "investments" didn't provide the return), on buying up assets for Stanford (Stanford Financial, Venezuela, Panama, land etc). On bad businesses (eLandia, Transwitch, movies, Forefront, etc, etc,) on "lifestyle" (jets, trips, parties), on commissions for the advisors...etc...etc...

    $8 billion did not disappear was never all there and Mr. Stanford was never really a billionaire.

  5. Who do you call a Stanford Insider???? A broker who cashed in his CD's from say 9/08 - 12/09 and encouraged some of his clients to do the same? Would you consider this person an "insider?"

  6. More than an "insider", I'd say that broker at least had a grasp on what was going on around him and an acute sense of "smell". I'd say that that broker was looking out for himself and his clients as he should have. At least this person didn't have the blinders on, as many others did. Not what I was considering an "insider".

    To me an "insider" is someone who had "inside" knowledge and knew what the real business was. The top executives would be obvious candidates, but that could be extended to outside people who had knowledge of the scam.

    Who exactly? I have a hard time believing two or three people could pull this off on their own.
    I particularly have a hard time believing that the Chief Investment Officer wouldn't know where the investments were. And a person with a masters degree in mathematics is normally not a moron.

  7. To clarify, if I have a CD with stanford in Antigua I basically have to wait? What were the funds released by Janvey for 20,000 customers?

  8. The funds released by Janvey were brokerage accounts. They held stocks, bonds, mutual funds, etc....and the assets were actually there and segregated by client.

    Not Antigua CDs.