Judge to Stanford Receiver: Stop Looking for Pot of Gold and Start Repaying Investors

“When the U.S. Justice Department has already checked and there’s no pot of gold, then the receiver can stand down,”

- United States District Judge Godbey

The federal judge overseeing the court-appointed receiver tasked with recovering assets of R. Allen Stanford's alleged $7 billion Ponzi scheme recently expressed his desire to see a claims process initiated for the repayment of assets recovered thus far to victims.  Additionally, U.S. District Judge David Godbey expressed concern that receiver Ralph Janvey may be depleting funds that could potentially be distributed to victims by duplicating efforts of the United States Department of Justice, which is also investigating Stanford as it continues to work towards putting Stanford on trial in early 2012. 

As covered by Ponzitracker here, calls have been growing from Stanford victims that Janvey's ongoing crusade to recover assets for victims have accomplished little and instead continue to build the amount of fees paid to Janvey for his efforts.  This concern was echoed by Judge Godbey at a hearing Thursday, who stated he was "concerned the receiver is expending resources that could otherwise be distributed to investors trying to track down missing resources.”  The frustration comes from the search thus far for assets related to Stanford's alleged $7 billion fraud; to date, Janvey and his legal team have recovered approximately $100 million in unrestricted cash.  The Receiver has liquidated nearly all of the saleable assets under its control, and is currently in negotiations with liquidators in Antigua and Barbados to determine the best course to take with Stanford's island properties there.  Additionally, Janvey and his team have filed more than 100 "clawback" lawsuits, which, if successful, could add up to $500 million to that total.  According to Kevin Sadler, the lead attorney representing Mr. Janvey, "we've sued everyone we can find."

Judge Godbey cited the ongoing efforts by U.S. prosecutors, who have won asset freezes on more than $300 million in Stanford-related bank accounts abroad.  Those funds are outside the reach of Janvey's duties, and could possibly be returned to victims through the process of remission, as recently seen in the AdSurfDaily Ponzi scheme and detailed on Ponzitracker here.  Judge Godbey has asked for a plan entailing what it would take to wrap up the search for Stanford's assets and what the initiation of a claims process for investors would cost.   

Previous Ponzitracker coverage of the Stanford Ponzi scheme is here.

AdSurfDaily Ponzi Scheme Victims Set to Receive $55 Million in Forfeited Funds

The Department of Justice announced that it has begun to return approximately $55 million in forfeited funds to victims of the AdSurfDaily Ponzi scheme that generated more than $110 million from thousands of victims worldwide.  AdSurfDaily was a massive Ponzi cheme that presented itself as an online advertising company, promising investors exorbitant returns in exchange for spending time on certain websites.  The funds are being returned to investors through a process known as "remission," and is the result of civil forfeiture judgments being pursued against nearly $80 million contained in bank accounts seized after the fraud was uncovered.

The DOj indicted Thomas A. Bowdoin Jr., 76, in December 2010, charging him with five counts of wire fraud, one count of securities fraud, and one count of unlawful sale of unregistered securities in connection with the scheme.  Bowdoin allegedly operated the scheme from September 2006 to August 2008, soliciting investments exceeding $100 million by promising extensive returns in exchange for spending small amounts of time daily on certain websites.  Annual returns were advertised that exceeded 100%, in addition to commissions for new member referrals.  In total, more than $31 million of investor funds were used to pay interest and principal redemptions to investors.  Bowdoin has pled not guilty to all of the charges, and is currently awaiting trial.

The DOJ and Secret Service established the website www.adsurfdailyremission.com for victims of the scheme, and there provided forms for victims to submit documented proof of their losses.  Investors had faced a claims deadline of January 19, 2011 to submit claims.  According to the website, the U.S. Government seized approximately $79 million from several bank accounts associated with the scheme, and legal efforts to obtain civil forfeiture judgments against the money remain ongoing.  Approximately 8,400 victims stand to receive some form of payout as a result of the remission process.

A copy of the indictment against Bowdoin is here.