Investors swindled by convicted financier R. Allen Stanford may receive an interim distribution payment worth a penny on the dollar of their losses, Stanford's U.S. receiver said in a court filing.
Ralph Janvey, the court-appointed receiver, asked a judge's permission to pay more than 17,000 investors an initial distribution of $55 million, according to a filing Friday in federal court in Dallas.
The sum represents about 1 percent of the $5.1 billion investors lost on bogus certificates of deposit at Antigua-based Stanford International Bank Ltd., according to Janvey's filing.
"The receiver anticipates that future distributions will be made using amounts from the estate's retained funds and additional amounts ultimately recovered through litigation, class action settlements and other asset recovery efforts," Kevin Sadler, Janvey's lead lawyer, said in the filing.
Stanford, 62, was convicted in March of stealing more than $2 billion from depositors at his Caribbean bank to finance a lavish personal lifestyle of private jets, yachts and mansions. Stanford is serving a 110-year federal prison sentence in Florida as he appeals his conviction and sentence.
Investors initially claimed more than $7 billion in losses from Stanford's Ponzi scheme, which paid early investors above- market returns with funds taken from later investors. Janvey said after reconciling 30,289 claims submitted to his Dallas- based receivership, he found many duplicates and discovered that most investors were trying to recover "fictitious interest" listed on their statements when the U.S. Securities and Exchange Commission seized Stanford's businesses on suspicion of fraud in February 2009.
'Fictitious interest'
"Such balances were inflated by fictitious interest that had not yet been paid to them," Sadler said in the filing.
Janvey calculated investors' true losses through what he called a "net loss approach, which is calculated on a 'money in, money out' basis –- i.e., money paid into the scheme minus any money returned to the investor," Sadler said. "Under the net loss approach, any fictitious, unpaid interest that has accrued on SIB CDs is not recognized."
Janvey didn't disclose in Friday's filing how much he has recovered for the estate or how much that recovery has cost.
In a June court filing, Janvey said total cash inflow for the estate was $220.1 million as of May 31. Of that recovery, $56.5 million was paid in fees and expenses to the receiver and his team of lawyers and forensic professionals, and another $51.9 million was paid in other expenses associated with winding down Stanford's extensive business holdings. Janvey had total unrestricted cash on hand of $94.5 million as of May 31.
