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Court Says Receiver Must Unravel Ponzi Assets

Thursday, August 02, 2012Last Update: 9:51 AM PT

Court Says Receiver Must Unravel Ponzi Assets


     DALLAS (CN) - A federal judge ruled against Antiguan court-appointed liquidators of convicted Ponzi schemer R. Allen Stanford's assets, finding that American court-appointed receiver Ralph Janvey is in charge.

     On Tuesday, U.S. District Judge David Godbey only granted conditional, limited relief to Nigel Hamilton-Smith and Peter Wastell, who were appointed as receiver-managers of the Stanford International Bank by the Eastern Caribbean Supreme Court in the High Court of Justice of Antigua and Barbuda in February of 2009.

     Two months later, the men filed for recognition in Dallas Federal Court under Chapter 15 of the U.S. Bankruptcy Code. The duo have been jockeying with Janvey, a Dallas-based attorney, over the collection and payment of Ponzi scheme assets since.

     Godbey only granted the joint liquidators "foreign nonmain" recognition because he concluded the Stanford entities' "center of main interest" was the United States, not Antigua.

     "Stanford employees managed and directed the [certificate of deposit] enterprise from the United States with no meaningful input from Antigua," Godbey wrote. "Although SIB, the issuing bank, was chartered and registered in Antigua, Stanford and [James] Davis controlled it - with assistance from [Laura] Pendergest-Holt - from various places within the United States ... Antiguan employees were excluded from decisions regarding SIB's self-professed primary business: CD-proceed investments."

     Specifically, Godbey limits Hamilton-Smith and Wastell to "the examination of witnesses [and] the taking of evidence or the delivery of information concerning [SIB's] assets, affairs, rights, obligations or liabilities."

     He was particularly concerned about the duo's history of repeated interference with Janvey.

     "For example, early on in the action, without notice to the Receiver or the Canadian court, the Former Joint Liquidators entered one of the Stanford Entities in Canada and wiped its computer systems clean of information," Godbey wrote. "Second, the current Joint Liquidators have attempted numerous times to unseat the Receiver from his role as the recognized foreign representative in Canada." Godbey continues: "Further, the Joint Liquidators have actively objected to criminal seizure proceedings by the U.S. Department of Justice in Canada, the United Kingdom, and Switzerland, and have taken affirmative steps to block the repatriation of Estate assets generally in the United Kingdom and Canada. Fourth, the Joint Liquidators have proven to be extremely litigious and calculating in this Court, filing multiple notices of objection to the Receiver's requests in this and other Stanford [multi-district litigation] suits, and filing motions to pursue claims the Receiver was already pursuing. The Joint Liquidators have admitted that they seek funds first and foremost to fund their current operations, which include challenging the Receiver's authority worldwide, not to distribute to investor-victims and creditors."

     Godbey said this repeated interference with Janvey has "been the norm" and is "particularly worrying."

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