Charlotte investors looking for a glimmer of hope regarding their chances of getting their money back from Stanford Financial Group's Southpark office heard more troubling news on Monday.
According to the lawyer appointed to oversee the assets of the downtrodden financial empire, the company’s financial health is far worse than originally thought.
In a statement issued delivered to a U.S. District Court judge in Dallas in a packed courtroom, attorney Ralph Janvey said the “liquidity situation and overall financial condition of the Stanford entities can only be described as dire.”
He said Stanford has amassed “tens of millions of dollars” in unpaid bills, with only a limited amount of available cash on hand, and that a “significant” percentage of Stanford customers invested in products or schemes that the U.S. Securities and Exchange Commission allege to be fraudulent.
“Evidence is also mounting that the assets of the company will be only a fraction of the amount needed to satisfy the anticipated claims against the firm,” said Janvey, in his first public statement.
The SEC has accused company chairman Robert Allen Stanford, as well as Jim Davis, the company’s chief financial officer, and Chief Investment Officer Laura Pendergest-Holt of running the Ponzi scheme and misappropriating as much as $1.6 billion of investors’ funds.
The number of brokerage accounts affected by these products could “number in the thousands,” Janvey said, while the company had spread its assets across 175 entities in multiple countries, making tracking the funds more difficult. He estimates the Stanford Group has a total of about 35,000 brokerage accounts.
On Monday, a U.S. District judge extended the order freezing Stanford assets placed under the receiver’s watch to March 12. Meanwhile, numerous investors who cannot access their funds have filed court motions seeking relief.
Despite the hardship being felt by investors, Janvey said Monday that the only way to ensure a fair distribution to defrauded investors is to temporarily prohibit withdrawals.
Said Janvey, “It is critical to my work on behalf of every defrauded investor to ensure that all available assets of the firm remain within the court’s control.”
Meanwhile Stanford employees are without pay, and have found their health insurance benefits frozen as well. Additionally many Stanford employees were also customers, maintaining, retirement, savings and checking account with the Stanford empire.
Brokers and administrative staff are still locked out of their Charlotte office unable to even retrieve personal items.
Administrative employees will certainly fair better, while brokers those with NASD licenses have watched from the sidelines as their careers vanish overnight.
Unable to buy or sell stocks on behalf of their clients, most have tired to assist their clients as best they can. But many clients are staying clear of their brokers and some are understandably angry.
One Charlotte client posted a comment at Cedar Posts (that the blog administrator removed late last night) at Cedar Posts "My broker is XXX XXXXXXXX and he is a guilty as the rest of them, if he was looking out for my best interest he would have known the whole place was a fraud."
With the market slumping to unimaginable levels the bad news just keeps coming for the Stanford Group's Charlotte Brokers.
Timothy L. Bambauer
David J. Morgan
J. Whitfield Wilks
Charles "Hunter" Widener
Charlotte's Business Journal expands on the above brokers plight in a February 25, 2009 article "Stanford's SouthPark Office Shut Down" was includes the following comment posted by Jim Koeniger:
"Anybody with only a modicum of financial advisory experience should have known the Stanford operation was suspicious. The supposed financial experts who joined Stanford should have known better. Stanford offered above average compensation and a shelter from the bad-news brokerages of big name banks and that apparently made brokers suspend rational thought".