Open Letter from COViSAL to JLs & Antigua Court Objecting to Letter of "Preference" Payments & "Proposal
COALICION VICTIMAS DE STANFORD AMERICA
LATINA (COViSAL)
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damaging letter asking for the return of money withdrawn from their accounts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 http://covisal.blogspot.com/2014/02/stanfords-victims-defrauded-again-by.html
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
Director
Coalición Víctimas de Stanford América Latina
(COViSAL)
Enclosures (3)
cc. Joint Liquidators of SIBL, High Court of
Justice Antigua & Barbuda