Bankruptcy Judge Blocks Testimony in Stanford Adviser's Trial

Whispers readers who subscribe to the Daily Report know that former Stanford Financial Group broker Chris Collier was fined $10,000 last week for steering a retiree into foreign CDs that turned out to be phony.

That client, whose name was not included in the order issued by Arkansas Securities Commissioner Heath Abshure, lost $300,000 of a total investment portfolio of less than $700,000.  

About 90 Arkansas households invested and lost a bit more than $54 million on certificates of deposit issued by Stanford International Bank of Antigua, according to information provided by the Arkansas Securities Department.

Collier was one of at least four Stanford advisers in Little Rock selling the CDs that were part of "Sir" Allen Stanford's $7 billion Ponzi scheme. And although Collier was not the most prolific - that title goes to Jim Alguire - he does seem to be the one who has suffered the most legal consequences.

Even as the fine was being issued, Collier was in U.S. Bankruptcy Court to defend against a claim by two other clients: Nancy McGraw of Little Rock and Pfeifer Sutter Family LLC of Benton, led by attorney Luther Sutter. McGraw and Sutter accused Collier of tricking them into investing almost $400,000 by telling them that the Antiguan CDs were insured by the Federal Deposit Insurance Corp., and they argued that he should not be allowed to discharge their claims in bankruptcy court.

U.S. Bankruptcy Judge John Mixon has not ruled in the case. But he would not allow Little Rock lawyers Brent Bumpers and Sam Baxter to testify for Collier.

Bumpers said he had talked to Collier about the CDs in 2008, shortly after he sold his Brent & Sam's bakery business, and Collier disclosed to him that the CDs were not insured.

Bumpers said he didn't buy any of the Stanford CDs. "Mary Jane Baxter c/o Sam Baxter, Esq." was listed among Collier's potential creditors when he filed for bankruptcy in July 2010.

How much the Baxters invested and lost is not a matter of public record, and Baxter didn't return our call seeking comment last week.

Next Step

Stanford victims who had hoped to collect from the federal Securities Investor Protection Corp. were dealt a blow on July 3. U.S. District Judge Robert Wilkins of Washington, D.C., ruled that the Securities Investor Protection Act did not apply to securities issued by Stanford's offshore bank, even though the Stanford Financial Group was an SIPC member.

The U.S. Securities & Exchange Commission had sued the SIPC in hopes of forcing it to pay up to $500,000 to each of some 7,000 investors.

But last week victims like McGraw and Sutter did begin receiving claim forms from the receiver appointed by the Securities & Exchange Commission to unwind Stanford assets. They have until Sept. 1 to file a proof of claim.