Hopes dimming for Stanford victims
With long-awaited restitution a fraction of what was taken, many see grim future
Mike and Roxane Short imagined spending retirement in their new dream house, with more space for their large family to visit. They planned to travel, spoil their grandchildren, take care of their elderly parents. Years of working and saving had left them with a healthy nest egg.
Nearly a decade later, those dreams are long forgotten. The Pearland couple scrapes by on Social Security and military-retirement checks. They are $200 short for a looming $550 homeowner’s association bill. Roxane quit smoking, not for health reasons, but because she can’t afford it. She sold her diamond ring to pay her property taxes. She’s gotten one haircut in several years.
“I don’t know how much longer we can live in this house or pay the bills,” she
said. “I don’t know what to do. I see no end to this.”
This new reality for the Shorts began just as Mike Short was retiring from his job as a mechanical engineer, when they invested their life savings of $250,000 in certificates of deposit hawked by R. Allen Stanford’s investment firm. The money disappeared in the $7 billion Ponzi scheme orchestrated by Stanford over two decades before it was uncovered in 2009.
The U.S. Supreme Court 2½ weeks ago closed the book on the criminal case, affirming the conviction and 110-year federal prison sentence Stanford received in 2012. But for his estimated 30,000 fraud victims, resolution seems unattainable. The Shorts, for example, have so far recovered only $2,300 and do not expect to see more.
“I see no money coming,” Roxane Short said. 10 cents on the dollar
For years, Stanford promised low risk and high rates of return through Stanford International Bank, an offshore bank he controlled on the island of Antigua. Instead, as outlined in court documents and during his Houston trial, the cash was skimmed into the pockets of the scheme’s operators.
Losses for the victims were estimated at $5.5 billion, but officials say only a fraction has been recovered through a complex system of restitution involving multiple estates liquidators, a court-appointed U.S. receiver and a separate joint liquidator.
Assets squeezed from bank accounts around the world and the sale of Stanford’s extravagant purchases — a mansion in Houston, yachts, planes and expensive furniture — were not nearly enough to cover the fraud.
Plus, tens of millions of dollars also have been spent on litigation and professional fees, and the tab is rising. Other funds are frozen in foreign accounts or tied up in the court system across multiple jurisdictions.
Only about $125 million has been returned to victims in the last eight years.
“The victims already were looking at, at the very beginning, way less than 10 cents on the dollar max,” said Ed Davis, co-counsel for Marcus Wide and Hugh Dickson, joint liquidators of Stanford International Bank, or SIB Liquidators.
“Stanford didn’t have $5 billion sitting around. That’s not the way it works. They spent it like drunken sailors.”
Stanford, now 66 and incarcerated in Florida, was convicted on charges of conspiracy, wire and mail fraud, obstruction and money laundering following a complex and emotional six-week trial.
The Nov. 28 Supreme Court ruling in his case will kick-start a process to uncover roughly $200 million in assets currently frozen in a bank in Switzerland and possibly provide some cold comfort for the victims.
Yet the liquidators agree there is a long road ahead for victims in more than a dozen countries. Many have died. The Shorts are not the only ones struggling to make ends meet.
“It’s the end of the road for Allen Stanford. It’s symbolic on some level. The victims at least get that,” Davis said. “It’s awful and heartbreaking, and the reality is that we can’t make the legal system move faster than it’s willing to go.”
Davis said about $600 million in assets, including cash in bank accounts in various countries and assets from Stanford’s lavish estate in Houston and other holdings was available. Many early expenses went to professional services for forensic analysis in the U.S.-related litigation.
In an effort to secure more funds, Davis said, liquidators have been suing law firms, accounting firms and banks that allegedly aided the Ponzi scheme. This lawsuits have resulted in several settlements, but the process is still ongoing.
The U.S. receiver had collected a total of $345 million, including operating income streams, asset liquidation and funds from third parties, as of the end of October. The receiver has distributed $91 million to victims.
SIB Liquidators has been allocated $50 million for victims and distributed $34.3 million so far. Other funds are tied up in a court review. A huge gap
The U.S. receiver and other entities involved in the case finally entered into a settlement agreement to manage the Swiss funds along with the U.S. Department of Justice, Security and Exchange Commission and SIB liquidators. Once the process with the Swiss government is completed, these entities have agreed how the roughly $200 million frozen in a Swiss bank will be dispersed.
That country requires a final conclusion in the criminal case before the process can begin for a forfeiture of funds. The Justice Department now will start the process, which Kevin Sadler, counsel for the U.S. receiver, said is likely to be a lengthy one.
“The conclusion of Stanford’s criminal case is an important milestone,” Sadler said. “… It will move us toward a process to get the money released for payment to victims.”
He acknowledged the huge gap between what the victims are owed and what is available.
Roxane and Mike Short have given up hope they will ever see the money they invested in Stanford’s company on the recommendation of friends, both of whom have died.
Roxane, 62, has arthritis that keeps her from working as a massage therapist. Mike, 79, worked for several years as a substitute teacher, but his health no longer allows it. A financial adviser suggested he apply for a job as a Wal-Mart greeter.
The couple stretches every dollar. For a time, they lived off green beans and okra from their garden. Roxane currently has 42 cans of Campbell soup in her pantry because she found a 10-cans-for-$10 special.
Roxane wrote Stanford in prison, explaining how he ru- ined the lives of hardworking people. She’s sent letters to judges, President Barack Obama and other political leaders. She said she’ll write President-elect Donald Trump, but she doesn’t expect a response. She and her husband stopped voting several years ago. ‘Nobody cares’
“The problem is that nobody cares,” she said. “When I talk about it, I get so angry. I feel so let down. Nobody tries to help or fix it. Nobody cares. The more people die, the more the story goes away. It’s been eight years. Will it change? Probably not.”
Now they hope not to lose their house.
“My grandkids don’t understand why Grandma and Grandpa don’t have a Christmas tree or presents,” Roxane Short said. “We used to tell them when they were little, ‘The bad man took Mimi and Papa’s money.’ Nowwe just don’t talk about it.”