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Open Letter from COViSAL to JLs & Antigua Court Objecting to Letter of "Preference" Payments & "Proposal


May 12, 2014

Open Letter from COViSAL to the Joint Liquidators and the High Court of Justice of Antigua and Barbuda objecting to letter of “Preference” Payments and “Proposal”

The Joint Liquidators Proposal to Stanford’s victims: Pittance, intimidation, or both?

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actions to claw back funds from innocent victims by sending a very damaging letter asking for the return of money withdrawn from their accounts during the six months prior to the collapse of the Stanford International Bank Limited (“SIBL”).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. COViSAL’s response can be read at

The Joint Liquidators of SIBL, Marcus Wide and Hugh Dickson of Grant Thornton, then sent another letter dated April 9, 2014 to a select group of innocent Stanford victims with a proposal titled: Stanford International Bank Limited in Liquidation – Proposal re Preference Claims and Distribution Process.

The letter states that innocent victims received “preference” payments under the Joint Liquidators interpretation of the International Business Corporation Act (“IBCA”) of Antigua.  We have reason to believe that their attempts to recover the alleged “preferential” payments are flawed under Section 204 of the IBCA. This act seems to apply to the corporation itself, its affiliates, directors, officers,  and share holders, and not to depositors. Additionally, the Joint Liquidators are selecting affected creditors whose alleged “preference” payments were small in relation to their admitted claim and offering them a “hardship” arrangement in order to participate in the ongoing 1% distribution process.

The “hardship” arrangement stipulates that those who agree will receive two thirds of each distribution while the Joint Liquidators keep one third until the “preference” amount is recovered in full. This deal is essentially a payment plan that distributes the payments of the alleged “preference” amount over a longer period of time while allowing victims to receive a portion of the distribution. Those who agree to this arrangement will be signing away their rights if a court deems the efforts to recover the alleged “preference” payments unlawful, and more damaging yet, they are admitting to having received the alleged “preference” payments – a blatant falsehood in regards to the majority of innocent family members and followers of COViSAL.

It is important to emphasize that the withdrawals made by the majority of these depositors during the six months prior to the closing of SIBL’s operations were not “preference” payments as alleged, 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, and were in no way informed by prior “preferred” knowledge of the bank’s imminent demise. Families withdrew part of their invested principal on a regular basis to pay for living expenses, medical treatments, relatives in need, down payments, business expenses, etc.

Furthermore, depositors of CDs filled out and signed a Depositor’s Account Application subject to the Bank’s General Terms and Conditions and Terms of Deposit. The latter permitted depositors to make withdrawals from their CD accounts at any time (See enclose copies of bank’s documents).

The “preference” payment claim in its entirety rests on the assumption that these depositors somehow had prior knowledge of SIBL’s impending downfall. The elephant in the room, so to speak, is the fact that the burden of proof lies with the liquidators. Where is the evidence that would prove that these depositors received information that would put them in a better position in the event of the bank’s failure? Where is the documentation that implicates specific depositors of this alleged “preferential treatment”?

Instead of doing the work required to determine who actually received “preferential” payments, the liquidators have chosen to send out a blanket notice that in essence accuses everyone outside of U.S. legal jurisdiction of being complicit in this atrocity, regardless of the lack of proof. It does not escape our notice that they are targeting Latin American investors with claims written in English, in the hopes that innocent investors will capitulate to their desires out of fear and confusion. This proposal puts victims between a rock and hard place and seems to leave them no choice but to comply and admit guilt of receiving “preferential” payments with their own money or fail to receive any future distributions.

The Joint Liquidators know how to manipulate the laws and processes of the liquidation to keep clocking billable hours for Grant Thornton and a secure paycheck with the spoils of the victims’ savings until they are all gone. The U.S. receiver attempted to pursue a similar avenue but was shot down by the United States Court of Appeals  for the Fifth Circuit on November 13, 2009. The SEC also commented that there were no good policy reasons for allowing a receiver to recover principal investments from wholly innocent investors. “Forcing innocent investors to return funds they contributed to the defunct entity does nothing more than create new victims of the fraud because it deprives those investors of their actual out-of-pocket contributions.” This is at the heart of our objection to the “preferential” payment allegation. After failing to fleece U.S. investors with this fraudulent clawback claim, they have gone after the international investors who do not have an SEC to protect them.  They are counting on the fact that these investors have no voice. We at COViSAL are here to inform them that they are mistaken – our sole purpose is to give voice to the voiceless, to create a platform where the Latin American victims can receive the tools to stand up for themselves and not be bamboozled by greedy lawyers.

As to the allegation that these investors had knowledge of the collapse of Stanford's enterprise in the six months prior, how is it possible that ordinary investors half a world away obtained this knowledge before those at the very top? 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. How could the innocent victims wrongly accused in their letter have discovered and exploited this information before Stanford himself? 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 very well compensated.

The Joint Liquidators' insistence on pursuing claw backs against innocent investors is supported by neither logic nor law. 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?

/s/Jaime R. Escalona
Jaime R. Escalona
On behalf of COViSAL
Coalición Víctimas de Stanford América Latina (COViSAL) ; Twitter: @COVISAL

Enclosures (3)

cc. Joint Liquidators of SIBL, High Court of Justice Antigua & Barbuda

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