Diario Judío México - Ralph Janvey, the court-appointed receiver overseeing the businesses of R. Allen Stanford, said the financier’s companies were organized to blur how they operate and that as much as $1 billion in cash can’t be found.
“It appears that very few people were privy to sufficient information to understand the totality of the operations,” Janvey said in a 58-page report filed today in federal court in Dallas. “The structure was seemingly designed to obfuscate holdings and transfers of cash and assets.”
A “very substantial” amount of cash — as much as $1 billion — received by Antigua-based Stanford International Bank Ltd., can’t be accounted for, Janvey said.
U.S. regulators sued Stanford and two of his employees, accusing them of running an $8 billion Ponzi scheme through his Stanford Group Co. and two related businesses. The 59-year-old Texan has denied the allegations and hasn’t been charged with a crime.
Stanford and the others used his Antiguan bank to sell $8 billion in self-styled certificates of deposit, according to the U.S. Securities and Exchange Commission’s complaint. Stanford and the others told clients that their funds would be placed primarily in easily sold financial instruments monitored by more than 20 analysts and audited by Antiguan regulators, according to SEC attorneys.
The “vast majority” of the portfolio was managed by Stanford and co-defendant James M. Davis, who invested much of the portfolio in private equity and real estate, according to the SEC.
“He was taking investors’ money under the premise the CDs were backed up by liquid assets, and they weren’t,” Janvey said today in an interview in his temporary office at Stanford’s former Houston headquarters.
“He also doesn’t have the money available there should be to pay for the CD redemptions,” Janvey said. “There’s simply not billions of dollars. He can argue that’s because there’s been a market decline, but the records don’t show that.”
The receiver, appointed Feb. 16 by U.S. District Judge David Godbey in Dallas, in the report said some of the cash that hasn’t been accounted for might be recovered.
“Some of this cash may have been transferred to Mr. Stanford and then used by him to purchase personal assets or invested in personal bank accounts that are not reflected in available financial records,” Janvey said in his report. “This value may be recoverable once identified.”
In an e-mail, Stanford attorney Jacks C. Nickens, of Houston’s Nickens Keeton Lawless Farrell & Flack, declined to comment on the Janvey report.
Stanford, in an interview earlier this week, said all depositor funds were invested in “real assets,” such as financial instruments, private equity and real estate.
“I never got a dollar of that money,” he told Bloomberg News. “The SEC came in and gestapoed my business, and I watched $5 billion of my net worth disappear.”
Davis, 60, who shared an apartment with Stanford while the men attended Baylor University, later served as chief financial officer of the Stanford Group Co. Also named as a defendant in the SEC suit is Laura Pendergest-Holt, age 35.
Pendergest-Holt was Stanford Group’s chief investment officer. The lone person facing criminal charges in the probe thus far, she was charged on Feb. 26 with obstructing the commission’s investigation.
Attorneys for her and for Davis have said their clients are innocent.
Neither Stanford nor Davis have owned any of the Stanford International Bank CDs since at least 2003, Janvey’s report said, citing available records.
The receiver also said the Stanford bank acquired 1,587 acres of undeveloped and partly developed Antiguan land in April 2008 for $63.5 million and, in a series of transactions solely between Stanford and companies he controlled, parlayed the asset’s book value to $3.2 billion.
“The write-up would suggest that the value of the property increased 50-fold in just a few months during a period that was generally characterized by falling real estate values,” the report said.
The case is SEC v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas).