Local Stanford Group Victims Hold Out Little Hope

by Gwen Moritz  on Monday, Sep. 27, 2010 12:00 am  

Last week's hearing by the Senate Banking Committee into the Securities & Exchange Commission's failure to detect "Sir" Allen Stanford's alleged fraud was a reminder that the damage to Arkansans has not been measured.

An investigation by the SEC's inspector general, David Kotz, found that regulators in the Stanford Group's home state of Texas suspected a Ponzi scheme as early as 1997. And the SEC in Washington, D.C., had evidence by 2007 - by which time Stanford had been operating in Little Rock for several months.

But it wasn't until February 2009 that the SEC lowered the hammer, charging Allen Stanford and a handful of lieutenants with selling $8 billion worth of phony-baloney "certificates of deposit" through a bank Stanford owned in Antigua, the Caribbean island nation that had knighted Stanford in 2006.

In the Senate hearing on Wednesday, according to various national news reports, Kotz complained that the SEC's culture of rewarding the number of successful enforcement actions, rather than the number of investors protected, encouraged regulators to concentrate on easy cases with few victims.

And the Stanford case, as scores of victims could attest if they were willing to speak on the record, is anything but easy.

Stanford clients fell into two categories, those who maintained only brokerage accounts and those who bought Antiguan CDs, reportedly in minimum denominations of $50,000. Brokerage account clients - like Andrew and Susan Meadors of Little Rock, who told their story to Arkansas Business last year - were made whole within a few weeks after the Stanford Group was taken into receivership.

But clients who bought CDs are still waiting, 19 months later, to see whether the receiver appointed by the U.S. District Court in Dallas will find enough Stanford assets to make a dent in their losses - or whether Congress might offer some retroactive relief.

"I've just given it off," a former Stanford client told Arkansas Business last week. "It's gone."

"We would have hoped that these people in Dallas would have gone to trial by now," another victim said.

For more than a year, only a handful of Stanford's Arkansas clients had come forward, including the Meadorses; part-time Little Rock resident Hannah Peck, who briefly filed a federal lawsuit against three brokers in Stanford's Little Rock office; and former Pine Bluff businessman Rick Riley, who told the Arkansas Democrat-Gazette last year that he had borrowed money to buy Antiguan CDs.

Then in July, Christopher J. Collier filed for Chapter 7 bankruptcy, claiming $700,000 in assets and $1.94 million in liabilities. Collier, 51, was one of the four former Merrill Lynch financial advisers who were working for Atlanta-based StillPoint Advisors' Little Rock office when it was sold to Stanford Group in 2006.

Among his creditors, Collier includes 29 former clients, some of them married couples. One of them, the Pfeifer Sutter Family LLC, represented by Benton attorney Luther Sutter, has a lawsuit pending against the Stanford Group and Collier personally in Saline County. The Pfeifer Sutter Family claim is listed as $112,000. Sutter didn't return calls for comment last week.

For the other 28 clients, however, the amount of their claims is listed as "unknown," and each has the following notation: "possible lawsuit connected with Stanford Investments."

 

 

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