Investors unable to access US$1.7 billion connected to companies owned by Texas billionaire Allen Stanford asked a federal appeals court on Monday for access to their money.
The holders of about 4,000 accounts had their constitutional rights violated when a district judge in Dallas froze their Stanford-related assets, documents filed with the Fifth US Circuit Court of Appeals in New Orleans claim. The pleading also argues that the judge and a court-appointed receiver don’t have jurisdiction over an Antigua-based bank connected to the alleged fraud.
The Securities and Exchange Commission (SEC) filed a lawsuit in February accusing Stanford and his top financial officer of running a “massive” pyramid scheme that defrauded investors of about US$8 billion. Stanford has denied the allegations, and did so again on Monday night during a tearful interview aired on ABC’s World News with Charles Gibson.
Attorney Michael Quilling, who represents about 35 account holders, said a favorable ruling on his pleading would result in the court unlocking the 4,000 accounts that the receiver has so far declined to release. He also questioned whether Dallas attorney Ralph Janvey, the court-appointed receiver, has jurisdiction in the case, calling Janvey “a king without a country.”
“The big issue here is that right now thousands of Americans are having their due process rights trampled under the guise of an order that is based on no jurisdiction,” Quilling said. “This is a second victimization. [Account holders] were victimized by the bank and its fraudulent practices and are now being victimized by the court and the receiver.”
Janvey, who was appointed receiver by Judge David Godbey, did not immediately return a message left by the Associated Press.
Janvey had earlier approved the release of about 28,000 accounts.
About 4,000 accounts worth roughly US$1.7 billion remain locked because they included money related to certificates of deposit at the Stanford International Bank in Antigua that are central to the SEC’s fraud case against Stanford and his companies. Other frozen accounts included those owned by Stanford shareholders, board members, senior managers and financial advisers.
“It’s extremely frustrating to investors because many of them have chronic cash needs,” Quilling said. “Two of my clients are 75 and older, and literally every nickel they have is frozen. They don’t know how they are going to pay for groceries.”
In the ABC interview that aired on Monday evening, Stanford denied running a Ponzi scheme and said he expected to be indicted by a federal grand jury in the next few weeks.
“I think the government failed in their oversight and I’m the maverick rich Texan where they can put the moose head on the wall,” he said. “I care for everybody in this company ... and I’m going to fight this with everything in me.”
Stanford called accusations of laundering money for Mexican drug cartels “ludicrous.”