'Stanford Refugees' Finally Get Money Back

by Gwen Moritz  on Monday, Mar. 30, 2009 12:00 am  

Andrew and Susan Meadors of Little Rock waited more than a month for the return of assets frozen in the collapse of Stanford Financial Group.

Late last Monday afternoon, Andrew and Susan Meadors of Little Rock finally got back all the money they had entrusted to the Stanford Financial Group. But Andrew Meadors would argue that they haven't been made whole.

The Meadorses are what Andrew calls "Stanford refugees," clients whose financial lives were displaced by the civil case that the Securities & Exchange Commission filed against Stanford on Feb. 17. The day before the complaint was filed, a receiver appointed by a federal judge in Texas froze assets associated with Stanford – including those that were clearly the assets of clients rather than the company. The Meadorses first had to fight for what was rightfully theirs and then find another home for their retirement accounts and trading account.

To streamline the process, they liquidated their trading account when the Dow Jones Industrial Average was near its lowest point in almost a decade. And, in another stroke of luck – bad luck – the wire transfer of their assets was completed just about the time the Dow, the S&P 500 and the Nasdaq Composite Index all gained roughly 7 percent in a single day.

"So we just missed out on that by one day, and now we have to buy back our securities at higher prices," Meadors, a partner in the Meadors Adams & Lee insurance agency, said in a tone that was equal parts frustration and resignation.

It could have been much worse, of course, so Meadors doesn't plan to sue. The Meadorses could have, but didn't, invest in the Stanford Allocation Strategy mutual fund or buy any of the impossibly high-yield certificates of deposit issued by Stanford-owned banks in Antigua. Clients who had those assets have a lot more to worry about than missing a one-day rally on Wall Street.

Stanford in Arkansas
Exactly how many Stanford refugees are in Arkansas and how much Arkansas money was frozen – or lost – is not known. The only other Arkansas clients publicly identified are Hannah Kay Peck (who is officially listed as a resident of Hawaii) and the Peck Family Trust, who sued three advisers in Stanford's Little Rock office – Mike Arthur, Matthew McDaniel and Heath Stevens – on Feb. 24.

(Peck also sued the Stanford Group and Pershing LLC, the third-party custodian for most securities owned by Stanford customers like Peck and the Meadorses, but she later dropped them as defendants. The entire case was stayed on March 10.)

The office at 500 President Clinton Ave. in the River Market district was big enough to support five experienced financial professionals – Arthur, McDaniel, Stevens, Christopher J. Collier and Jim Alguire. Other financial professionals consulted by Arkansas Business gave estimates of the assets under management out of the Little Rock Stanford office of $300 million to $1 billion, although some portion of that amount probably came from out-of-state clients.

Stanford entered Arkansas in late 2006 by buying the local wealth management team of StillPoint Advisors of Atlanta. In turn, StillPoint had hired Collier, Arthur, Alguire and McDaniel away from Merrill Lynch in Little Rock in late 2004.

Meadors said Alguire, who was a friend and still is, began courting him and Susan. Alguire invited the Meadorses to Memphis for the Stanford St. Jude Championship, a PGA golf tournament sponsored by Stanford Financial Group and benefiting St. Jude Children's Research Hospital. (On March 19, the tournament announced a new name, St. Jude Classic, despite the fact that Stanford had reportedly paid most of its $7 million sponsorship before the receiver was named. The tournament will be played June 8-14.)

Stanford made the most of the tournament, Meadors said, taking over the renowned Peabody Hotel and treating clients and prospects to top-flight performers – Al Green in 2007 and Aretha Franklin in 2008.

"The thought certainly crossed my mind: 'Who's paying for this?'" Meadors said.

The company's flamboyant founder, R. Allen Stanford – by then being called "Sir Allen," thanks to a knighthood bestowed by Antigua in 2006 – was conspicuous. The "aura of wealth" surrounding Sir Allen struck Meadors as "kind of cultish."

 

 

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