Blaine Smith says he and his wife sunk more than $1 million in fraudulent Stanford Group CDs. Dallas resident Angela Shaw says she and her husband lost $2 million.
As Business Report details in a feature in the current issue, both Shaw—the founder of Stanford Victims Coalition USA—and Smith, who leads the Louisiana chapter, have been trying to get their money back since Feb. 17, 2009, when federal investigators stormed the Stanford Group offices.
A high-powered, highly paid Dallas law firm has been working on their behalf, as have a bipartisan range of elected officials.
After eight years, what do investors like Shaw and Smith have to show for their efforts? About 2% of what they put in, if they’re lucky. But victims in Louisiana and across the country are still finding hope in courtrooms and in the halls of Congress.
Baton Rouge lawyer Phil Preis represents many of those victims. He cites three legal issues cheated Stanford investors are watching: Class actions, settlements and clawbacks.
Much of the money Robert Allen Stanford stole is long gone, possibly spent on his jet-set, politician-hobnobbing lifestyle, and will never be recovered by victims. But some investors are suing SEI, a multibillion-dollar international firm that handled the Stanford Trust’s back office functions, for enabling the fraud.
A federal judge certified Preis’ class action suit last year. Notices to about 1,500 people who bought certificates of deposit from the trust went out in October, and about 90% of them declined to opt out, Preis says. The class doesn’t include every Stanford victim; only people who bought CDs from the Baton Rouge-based trust are eligible.
“SEI has the ability to pay any judgment that is involved in the litigation,” Preis says, adding the total claim could be worth about $500 million.
The Stanford Financial Receivership, led by Dallas attorney Ralph Janvey, had collected $345.4 million as of Oct. 31, according to its most recent report filed Dec. 2. That sounds like a big number, until you compare it to a worldwide total loss said to be as much as $7 billion. Minus legal fees and expenses, the receiver only had $171.7 million, and had distributed just $91.9 million.
The receiver has sued a number of former investors—including many Exxon retirees—to get back some of the money they got from Stanford.
“They were among the lucky ones that got out,” Preis says of the clawback targets.
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