In a development that could have positive ramifications for victims of the Stanford Group Ponzi scheme, the Swiss government has ordered Societe General Private Banking in Switzerland to return more than $100 million in stolen funds that have been squirreled away in the Swiss bank for more than a decade.
U.S. Sens. Bill Cassidy and John Kennedy jointly announced the development today in a written statement. Both have been working different angles in Washington, D.C., to help Stanford victims recover some of the $500 million they lost by investing in Stanford’s bogus certificates of deposit.
Kennedy spoke about the issue today at the Baton Rouge Press Club.
“Bill and I convinced Switzerland to return $100 million to the Stanford receivership. That’s the good news,” Kennedy said. “The bad news is, we don’t know what kind of cut the Stanford receiver is going to take.”
Kennedy and others have been critical of the Dallas-based receiver in the case, Ralph Janvey, who has recovered just $500 million or so of the $5 billion lost, nearly half of which has gone to attorney’s fees. In a related development, Kennedy and Cassidy sent a letter on June 26 to U.S. Securities and Exchange Commissioner Jay Clayton, asking what the SEC can do to better oversee the receiver and limit its administrative expenses, among other things.
“Jay Clayton is a capable guy and wants to help us,” Kennedy says. “The problem is, his hands are tied.”
For the thousands of Louisiana victims of the scam, which was orchestrated by Allen Stanford largely out of his downtown Baton Rouge offices, the recovery of the $105.7 million from Switzerland could mean each victim would recover about 2% of what they lost, according to local attorney Phil Preis, who represents a group of victims in a class action suit against an investment house that processed Stanford’s transactions.
But before Stanford Group victims celebrate the recent actions by the Swiss government, San Francisco-based attorney Kevin Sadler, who represents the receivership, says he doesn’t expect the money to be forthcoming any time soon—and he rejects Kennedy’s criticism of his client.
“This is an interim decision that is subject to appeal in the Swiss Courts,” Sadler says. “If past is prologue, Soc Gen will appeal and there is no reason to expect the funds will be returned anytime soon until the appeals are exhausted. … If and when any of the Swiss funds are returned, the receiver will distribute them in accordance with the court-approved agreement with DOJ, SEC, and the joint liquidators. Under that agreement, the distribution of Swiss funds is not reduced by attorneys’ fees from the receiver or his professionals. Any suggestion to the contrary is not accurate.”
Janvey has also responded to the senators’ letter to the SEC with a letter of his own, defending the terms of the receivership agreement.
“I am acutely aware that every dollar in fees and expenses is a dollar that does not go to the victims,” Janvey writes.