Stanford receiver calls out Libya and rich ballplayers

July 29, 2009

The court-appointed receiver, defying the wishes of securities regulators, is going ahead with a lawsuit seeking to recoup $925 million from investors and former employees of indicted Ponzi schemer R. Allen Stanford.

The Securities and Exchange Commission went to court last week seeking to block the receiver from “clawing back” early redemptions paid to “innocent investors.” The SEC said it had no problem with the receiver targeting brokers who benefited from selling some $7 billion of Stanford’s bogus certificates of deposit.

Regulators claim it makes no sense to go after investors who had no knowledge of the alleged fraud and were simply lucky enough to cash-in some of the CDs before the long-running scam was exposed in February. I agree with the SEC’s desire not to victimize Stanford investors twice.

But Ralph Janvey, the Dallas attorney serving as the recevier for what little is left of Stanford’s fallen financial empire, didn’t wait for the federal judge to issue a ruling on the SEC’s request.

Today, he filed a lengthy motion explaining his rationale for pursuing the claw backs and the list of people he’s seeking to recoup money from. Most of the investors on the list are average folks who never would appear on the cover a celebrity magazine.

But just as with the infamous list of Bernie Madoff investors, there a few notable names on the Stanford receiver’s hit list. (A hat tip to Alex Dalmady, the financial analyst who was early on the Stanford situation, for helping me sort through the list of names).

The investor Janvey is seeking to reclaim the most money from is Gary Magness,  a cable television magnate, who Forbes describes as one of the 400 richest men in the America. Of course, you’ll recall that Stanford himself regularly made the Forbes list before his downfall. Janvey seeks to recoup some $88 million in CD procees from Magness’ irrevocable trust.

Janvey also is targeting a Libyan soveriegn wealth fund, trying to get back some $55 million in early redemptions paid out to the Libyan Foreign Investment Co. This confirms a story I broke at BusinessWeek about Stanford bragging to his brokers last winter about getting investment money from the Libyan government.

Also named on the receiver’s list are a number of current and former professional baseball players, including Johnny Damon, Greg Maddux, JD Drew, Bernie Williams, Paul Byrd, Andruw Jones and Jay Bell. We all know Stanford’s history of paling around with athletes, including cricket players in Antigua–the island nation where his bank was based.

Now, I admit it’s hard to feel sorry for some rich ballplayers. But if they got their money back without any knowledge of the alleged fraud or something was amiss at Stanford, I think they should be able to keep their money.

But I’m willing to amend my earlier blanket rejection of the receiver’s claw back action when it comes to Libya. Hard to feel too sorry for the government of Muammar el-Qaddafi.

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