A federal judge today approved a request that could release more than $4 billion in previously frozen funds to investors in the troubled companies owned by Texas billionaire R. Allen Stanford. During a 10-minute hearing in Dallas, U.S. District Judge David C. Godbey granted a motion from the court-appointed receiver to release accounts greater than $250,000 held by two brokerage firms and not containing proceeds from the certificates of deposit that are at the heart of a civil suit filed against Stanford by the Securities and Exchange Commission.
The motion, submitted by an attorney for the receiver, stated that 16,000 accounts containing assets of $4.1 billion would be released, leaving another 4,000 with assets of $1.8 billion frozen. Previously, Godbey had granted a motion releasing accounts with assets of less than $250,000. The SEC complaint, filed Feb. 17, alleges a massive fraud surrounding CDs issued by Stanford National Bank, part of Stanford’s Houston-based financial empire. Earlier this week, Stanford asserted his Fifth Amendment right against self-incrimination when asked to testify before the SEC.
Kevin M. Sadler, the lead attorney for the receiver, stated in the motion that releasing the additional accounts will make it more difficult to recover claims, but the move was considered necessary to ease the financial difficulties faced by a large number of Stanford customers. “The hardship of a continued hold on these accounts must be balanced against the benefits of the hold,” he wrote.