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Open Letter from COViSAL to Antiguan Court & Joint Liquidators


March 7, 2014
An Open Letter from COViSAL to the Antiguan Court and the Joint Liquidators challenging the Court’s decision authorizing claw back claims against innocent depositors  
On February 17, 2014, COViSAL denounced the Joint Liquidators’ actions to claw back funds from innocent victims by sending a very damaging letter asking for the return of money withdrawn from their accounts during the six months prior to the collapse of the Stanford International Bank Limited (“SIBL”). They demanded a response within 120 days of receipt of the letter. This communication was sent in English and the majority of the victims, who are from Venezuela and other Spanish-speaking countries in Latin America, had difficulty understanding it. COViSAL’s response can be read at:
On February 25, 2014, the Joint Liquidators sent another letter titled, “Stanford International Bank Ltd. - In Liquidation – Notice of Declaration,” announcing that “the Joint Liquidators are now in a position to make a first interim distribution in the amount of $0.01 on the dollar. If you received a “preference payment," for which you will have been notified separately, your distribution will be held back until the Court makes a final determination.”  

At the end of the letter, the Joint Liquidators enclosed a summary of the receipts and payments covering the period of the liquidation to December 2013. The summary shows $108.8 million received as of December 31, 2013. Of this amount $95.1 million were part of the $100 million that UK authorities confiscated on April 7, 2009, following a request from the U.S. Department of Justice. Adjusting the total amount, the actual recovery earned by the Joint Liquidators is approximately $13.3 million. During the same period, the Joint Liquidators incurred professional fees and expenses totaling $43.3 million, plus a $15.3 million they reserved for future fees. The cost-to-recovery ratio between the actual recoveries and the liquidation expenditures is an incredible 441% (i.e. $4.41 were spent to recover $1.00).

According to the Joint Liquidators’ statement on the SIB Liquidation’s website, they were named on May 12, 2011, and their mission is “to recover $7 billion in losses stemming from the alleged R. Allen Stanford multi-billion Ponzi scheme and return the money to approximately 22,000 creditors in the shortest time possible.” However, it seems that the only beneficiaries are Mr. Wide, Mr. Dickson and their colleagues, who are receiving millions of dollars in fees and expenses, lining their own pockets at an alarming rate. The Joint Liquidators received $3 million a year; their lead counsel $4.3 million, other legal advisers $5.8 million, and $3 million was spent for other operational expenses. We have not seen any meaningful efforts towards a real recovery for the victims; the Joint Liquidators are just using the money confiscated in England and Switzerland to pay themselves and their colleagues, while forcing victims through a gauntlet for a pittance.

Why are the expenses so vague and lacking in supportive evidence? What honest and transparent legal entity is providing oversight of the liquidation’s affairs?  Where are the check and balances?

The real accomplishment of the Joint Liquidators seems to be in giving themselves “Preferential Payments.”

The facts about the alleged “Preferential Payments”
Innocent families, who had their life savings deposited at SIBL, were completely unaware of any problems the bank was having. There were no red flags or suspicious circumstances known to the depositors, who continued doing business with SIBL during its regular commercial operations until the bank closed its doors in 2009. It is a fact that the majority of depositors only became aware of trouble at SIBL when the SEC seized Stanford Financial Group on February 17, 2009.
In reference to the withdrawals made by the majority of depositors during the six months prior to the closing of SIBL’s operations, they were not “Preferential Payments,” but legitimate withdrawals of part of the principal invested by the rightful owners of the money, which they deposited and withdrew at the bank during the ordinary course of business. These withdrawals were made rightfully and in good faith. Families withdrew part of their invested principal regularly to pay for living expenses, medical treatments, relatives in need, down payments, business expenses, etc.
These families lost their livelihood in Stanford’s fraud; many sold their homes and what other assets they had left in order to survive for the past five years. The majority of depositors at SIBL are common people, families who worked very hard for 30-40 years to save money for their retirement, for a college fund for their children or grandchildren, and to have savings available for a medical emergency, among other things. Since the closing of SIBL in 2009, victims of the fraud have been living in dire straits; many died because they could not bear the news of losing their savings, or because they could not pay for a life-saving operation. The Stanford fiasco destroyed their lives.
Recently, the Joint Liquidators announced a 1% distribution (1 penny on the dollar) of the victims’ approved remaining net principal because interests and withdrawals were already deducted. Families saw a ray of hope with the announcement. However, Mr. Wide and Mr. Dickson decided to drop a bombshell at the last minute by sending these cold and calculated letters to innocent depositors, asking them to return their own money to the estate – money they do not have.
Why are they causing unnecessary harm to families already in emotional distress?
Where are the real foes that caused the run on the bank?
The Joint Liquidators are aware of the individuals who truly received preferential payments - namely the “net winners,” the insiders and the individuals who received tips to get their money out, as well as government entities that received millions of dollars in unpaid loans. They have all the records and reports. Allen Stanford, his close confidants, and their “people of influence” are the ones who received preferential treatment to withdraw their money when the bank was in trouble in February 2009. It is a shame that Stanford’s financial advisers continued selling CDs to unaware depositors even after the SEC and the US Courts had seized Stanford’s operations. See Karyl Van Tassel’s Affidavit.
The following paragraphs were obtained from court document titled: Class Action Complaint Wilkinson, Reed v. BDO USA, LLP and BDO International Ltd., Page 23:

“On February 4, 2009, in advance of a deposition before the SEC, Stanford Financial Group officials met with outside counsel in Miami. Two days later, on February 6, 2009, Allen Stanford’s old friend Frans Vingerhoedt sent Stanford an email, copying David Nanes, that illuminated Stanford Financial Group’s crumbling empire:
[T]hings are starting to unravel quickly on our side in the Caribbean and Latin America…[w]e need to come up with a strategy to give preference to certain wires to people of influence in certain countries, if not we will see a run on the bank next week …[w]e all know what that means. There are real bullets out there with my name on [sic], David’s name and many others and they are very real…[w]e are all in this together.”
One could deduce from the above email sent by Frans Vingerhoedt, President of Stanford Caribbean Investment, LLC, dated February 6, 2009, that  the bank’s run might have happened the week of February 9, 2009 at the earliest. If the management of SIBL permitted the redemption of Certificates of Deposits ("CDs") in the six months leading up to February 23, 2009, it was most likely their Preferred Customers, the “Net Winners,” who withdrew their money plus interest - unfairly prejudicial against all CD creditors and depositors of SIBL, including the innocent victims wrongly accused in their letter. In fact, the financial advisors were very well trained to keep depositors from redeeming CDs, and encouraged many to renew them. They used all kinds of dramatic and intimidating tactics to keep depositors from redeeming their CDs. They were very successful and well compensated.
The actions in pursuing claw backs against innocent investors are supported by neither logic nor law. The majority of families are in unfortunate situations, unable to pay for their living and medical expenses, and these actions are causing them untold harm.  The Estate stands to expend a substantial amount of resources with little prospect for a meaningful recovery - money that could be used to help victims in need. We consider the claims against innocent investors for the return of their principal without merit.
Why prolong the suffering of innocent victims who are already overwhelmed and  do not have the means to defend themselves against the Court of Antigua?
COViSAL’s requests to the Antiguan Court:
·    We ask the Antiguan Court to look at the facts and to not allow the claw backs of innocent families’ meager funds when they are already victims of this horrendous fraud. They are “Net Losers,” who withdrew part of their savings, their own property, in good faith without any knowledge of the bank's predicament
·       The Joint Liquidators’ actions are creating an undue hardship for innocent families that are emotionally distressed and in poor health after losing their savings. There must be consequences for these heartless actions.
·       The Joint Liquidators, who were named to prevent the waste and squandering of the creditors' patrimony, must be held accountable for their actions and for consuming what’s left of our stolen savings.
We greatly value justice and the rule of law, and ask the Court’s commitment to these values to ensure that justice is imparted to all innocent depositors who feel defrauded yet again.
COViSAL hopes that the Court in Antigua shows the world its commitment to fairness and justice.
/s/ Jaime R. Escalona
Jaime R. Escalona
On behalf of COViSAL
Twitter: @COVISAL

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