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Stanford's victims continue to die


November 8, 2012

An Open Letter to the Joint Liquidators, the U.S. Receiver, and other authorities responsible for the Stanford Case:  Stanford's victims continue to die as a result of your actions and inactions.

Dear Mr. Wide, Mr. Dickson, and Mr. Janvey:

We respectfully address you to express our indignation for the unscrupulous handling of the Stanford Case that has hidden guilt and evaded responsibilities, without regard to the suffering of the innocent victims who lost their life-savings. It is almost four years since our savings were stolen by Allen Stanford and his accomplices. So far, we have not received a penny of our stolen patrimony. We have been kept in the dark all these years about the progress of the recovery, and its distribution.

Since the Securities and Exchange Commission (“SEC”) filed the civil lawsuit against Allen Stanford, his companies and related parties in February of 2009, COViSAL asked the U.S. Receiver, Ralph Janvey, and the Joint Liquidators of the Stanford International Bank Limited, (“SIBL”), Marcus Wide and Hugh Dickson of Grant Thornton, through letters and press releases, to set aside their pettiness and economic interests, and end the shameful game of “cat and mouse” that has wasted the Stanford victims’ patrimony in a never-ending litigation carousel.

Earlier this year, David Kotz, the former Inspector General of the SEC published an article titled: “Comparing the Asset Recovery Efforts in the Madoff and Stanford Ponzi Schemes." He writes: “By all accounts Picard and Sheehan have been tremendously successful. According to published reports, since being named trustee, Picard has filed more than 1,000 lawsuits, and recovered about $11 billion of the approximately $17 billion of capital believed to have been lost in the Madoff fraud. On the other hand, Janvey hasn't fared as well for the Stanford victims; he has recovered $217 million, according to recent reports, but has incurred $102 million in fees, making the actual recovery approximately $115 million… Janvey has been criticized by Stanford's investors for his high fees, not giving them updates and the "glacial" speed of the process.”

On November 6, 2012, the Wall Street Journal published an article titled: “Madoff Recoveries Increase. Trustee Said He Has Collected More Than Half of $17.3 Billion in Principal Lost… More than half of investors' funds have been recovered nearly four years after Bernard Madoff's arrest for running the biggest Ponzi scheme ever.”  Why is Madoff’s recovery effort more productive than Stanford’s recovery effort?

In addition to the U.S. Receiver’s exorbitant fees and expenses, Mr. Wide and Mr. Dickson, received a $20 million loan from the UK Frozen Funds, which has now been drawn down in full. This loan was approved by the UK Court from the victims’ patrimony frozen in the United Kingdom. During the period of May 12, 2011 to June 30, 2012, you received $8 million dollars from cash available in a account in Panama and proceeds from the sale of the ECAB Bank building; you incurred $19.6 million in legal fees and expenses, leaving a balance on hand of $8 million as of June 30, 2012. You are spending more than $1 million dollars a month in fees and expenses – most likely the $8 million balance will be depleted before the end of the year, and to date you have not made any recoveries.  It is important to point out that the Joint Liquidators have a contingency liability (professional fees) for $18 million, claimed by the former Joint Liquidators, Nigel Hamilton-Smith and Peter Wastell of FRP Advisory, LLC (Vantis), and the outstanding loan for $20 million. What is the actual cost-to-recovery ratio of the Joint Liquidators, including all the variables?

Considering the data mentioned above, we estimate that the cost-to-recovery ratio between the Actual Recoveries and the U.S. Receivership Expenditures is an incredible 83.43% (i.e. $0.83 cents spent to recover $1.00). The cost-to-recovery ratio between the Actual Recoveries and the Joint Liquidators Expenditures, (excluding the $18 million professional liability, and the $20 million loan liability) is an astounding 245% (i.e. $2.45 spent to recover $1.00). Why are the Courts allowing this bonanza that only benefits the Receivers, the Joint Liquidators, and their comrades?

One gets the impression that money available from our stolen savings is simply petty cash for the attorneys and their professionals managing the receivership and the liquidation. You are getting rich quick, while the victims are unable to pay for their basic living expenses and medical bills; many are living in poverty, while you collect high fees, enjoy first-class travel, fine-dining, and luxury hotels at our expense. Why are you receiving compensation from our stolen money? Is this an ethical outcome? Shouldn’t you be compensated by contingency based on real results?

The saga drags on for the Stanford’s victims as litigation, and delays of an agreement between the Joint Liquidators, and the U.S. Receiver continue to generate fees for you, your attorneys and professionals - the only beneficiaries so far who have collected more than $150 million. COViSAL regularly receives calls and emails from desperate families asking for help. Recently, a woman said: “My mother is very ill, and we do not have any insurance or money to pay for a surgery that she urgently needs. We lost it all with Stanford. Help me please! She’s dying.” Another person said: “My father worked so hard for 45 years to save for his retirement and family’s patrimony. He couldn’t overcome the loss of all of his life-savings; he died of desperation and sickness.” Another victim said: “My grandson suffers from autism, and we had to discontinue his medical treatments because we cannot pay for them anymore. We lost all our savings with Stanford.” There are many more heart-breaking and tragic stories of families in Latin America and other countries that are suffering a great deal as a result of this horrendous fraud.

The authorities responsible for the Stanford Case seem indifferent and oblivious of this social calamity. The victims are kept clueless and unaware of what is going on; many are unable to endure more suffering and discrimination. They are in dire straits, and feel defrauded over again. Now, to add insult to injury, former Stanford financial advisers, and companies being promoted on the Joint Liquidators’ website are taking advantage of the chaos and uncertainty; they are lurking for desperate people to entice them to sell their claims against SIBL, for a few cents on the dollar. This senseless abuse must stop now!

We exhort the Official Stanford Investors Committee, which represents all Stanford investors’ interests worldwide, to step forward, voice our cry and concerns expressed in this open letter to the Court, and other authorities responsible for the Stanford Case. We demand to see the real picture of all the litigation claims brought to the Court, the status of all recovery efforts, the claims registration process, and the first distribution to the victims. What is the actual potential amount of recovery of all the domestic litigation listed in your last joint report? What are your recovery actions internationally? What law suits are moving forward, and which are not? When can we expect the first distribution? What is the actual potential amount of recovery from the actions taken by the Joint Liquidators? Where is our money? We ask the U.S. Department of Justice and the Courts to make sure that our stolen patrimony is returned directly to families, holders of SIBL’s CDs. Stanford’s victims are in extreme need; we have endured four challenging years, four Thanksgivings, and four Christmases without receiving an economic relief.

We find it deplorable that Courts in the United States and in Antigua, have allowed the U.S. Receiver, and the Joint Liquidators, who were named to prevent the waste and squandering of the creditors' patrimony, to continue fighting for the control of the assets - duplicating costs and efforts, and hindering the possibilities of a distribution of the victims’ patrimony.

What honest and transparent legal entity is providing oversight of the liquidation’s and receivership’s affairs? Where are the check and balances? Who is protecting our interests?  Are our fundamental rights being considered?

The authorities responsible for the Stanford Case should make their principles coincide with their actions and show the world their commitment to honesty, equality and justice.

        We pray to God that without any more obstacles, victims’ rights prevail, and the administration of justice is imparted with a good conscience.


Jaime R. Escalona
On behalf of COViSAL           

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