A private Swiss bank has been ordered to turn over $105.7 million in frozen assets from the Stanford Group Ponzi scheme by the Swiss Federal Office of Justice.
Societe Generale, or SocGen, has the Stanford funds in two accounts that were frozen in 2009. But Kevin Sadler, an attorney with the Houston firm of Baker Botts, which represents Ralph Janvey, the receiver in the Stanford case, cautioned investors they won’t see money from the bank any time soon.
An attorney representing victims has estimated more than 1,000 south Louisiana residents, primarily from the Baton Rouge, Lafayette and Covington areas, deposited more than $1 billion with Stanford.
The Swiss bank has opposed turning over its frozen funds to U.S. authorities, citing that Swiss law governing handover of assets had not been met and that the bank’s dealing with Stanford were done in good faith. The bank wanted to hold onto the money in case it had to pay any claims related to its dealings with Stanford.
“This is an interim decision in a criminal proceeding,” Sadler said. SocGen can also appeal the order from the Federal Office of Justice. The bank has appealed every decision against it over the past decade and there’s no reason to expect it will stop now, he said.
While there had been talk that SocGen had more than $200 million in Stanford funds, Sadler said the amount is actually closer to about $170 million, as best as he can tell.
While U.S. attorneys don’t have direct access to the Swiss legal proceedings, it looks like that money was spread across accounts tied to various Stanford companies, he said. The $105.7 million in frozen assets was only in accounts tied to the Stanford International Bank.
Still, U.S. Sens. Bill Cassidy, R-Baton Rouge., and John Kennedy, R-Madisonville, applauded the Swiss agency's decision. They sent a joint letter in February to SocGen, demanding that the bank return the frozen money to Stanford victims. Cassidy followed that up in April, meeting with SocGen attorneys.
“This is a welcome decision that brings some justice to thousands of Louisiana families victimized by the Stanford Ponzi scheme,” Cassidy said. “No doubt SocGen will challenge this ruling, but I urge the Swiss courts to carry out this decision. I will continue to fight for the Stanford victims and the return of as much of stolen funds as possible.”
Kennedy told the Baton Rouge Press Club Monday he frankly didn't think the Swiss government would agree to release the money. But he said the issue now is how much of a cut of the money the U.S. receiver will take to cover expenses. In 2014, it was disclosed that out of the $240.9 million in Stanford funds that had been recovered, nearly $120 million was spent on investigations and on attorneys, accountants and investigators seeking to recover the money.
According to a statement from Stanford International Bank, two-thirds of the Swiss bank money would go to the U.S. receiver to distribute among victims of the scheme. The remaining third will go to the Stanford estate in Antigua, which has been liquidated, for distribution among its creditors.
Allen Stanford was convicted of fraud in 2012 and is serving a 110-year prison sentence.
Stanford bilked $7 billion from some 25,000 investors in more than 100 countries, and lived a lifestyle of island-hopping luxury.
Investors were told by Stanford's financial advisers that their money was safely held in certificates of deposit at Stanford International Bank in the Caribbean island of Antigua. The money for the CDs, however, funded his lavish habits.