Stanford Moves to Have Receiver Disqualified

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Allen Stanford, the Texas financier accused of operating a massive Ponzi scheme, claims the court-appointed receiver managing his company’s assets has a conflict of interest.

Ralph Janvey, who was appointed receiver over the company’s American assets, hired Baker Botts LLP, to assist him as counsel with the proceedings.

Stanford says Baker Botts assisted him with the creation of Guardian Bank on the island of Monserrat from 1985 to 1987. Guardian Bank later evolved into Stanford International Bank, which was headquartered in Antigua and sold the controversial certificates of deposit. Stanford has moved that Baker Botts be disqualified, maintaining that the firm could serve as a potential witness for Stanford and should not be allowed to advise the government on an institution it helped to establish.


Stanford contends that Baker Botts assisted him in setting up the bank’s business model, which was structured around the sale of certificates of deposit.

In a motion filed by Stanford’s attorney, Stanford alleges:

“Baker Botts organized the bank, prepared its bylaws, and qualified the Bank to do business under the banking regulations of the United States Federal Government, and under the regulations of the State of Texas. Furthermore, Baker Botts was involved in setting up the basic business model of the Bank from the beginning.”

The motion also states that the firm helped to create the income structure of the bank, which is now in question.

“It was planned that the Bank would sell Certificates of Deposit and reinvest the money in real estate, bonds, CDs issued by U.S. banks, and other investments. In short, Baker Botts was, ‘intimately involved in all aspects of the organization of the [B]ank and its sale of CDs, the utilization of funds from the sale of such CDs, and the relationships between the Bank, Stanford Financial Group, and other related, but independent, companies.'”

Baker Botts maintains that it has “no record” of ever representing Stanford in any capacity and took no part in the formation of Stanford International Bank. In a statement sent to FOXBusiness.com, Baker Botts said:

“We did represent a related party briefly from October 1985 to February 1986 regarding the subject of doing business in the Caribbean generally. That work involved two meetings and a total of 5.5 hours of time and our fee was $850. The associate who did the work left our firm many years ago, and the partner who would have supervised him also left the firm many years ago.”

Baker Botts intends to continue to be of counsel to the receiver in the case.

“This prior work bears no relationship to the work we are doing for the Recevier and that we do not have a conflict of interest,” the firm said in a statement.

The court has yet to rule on the issue.

Source: http://www.foxbusiness.com/story/markets/industries/government/stanford-moves-receiver-disqualified/

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