Stanford suits hitting closer to home

by Leslie Turk

Receiver seeks $700,000 in ‘ill-gotten proceeds’ paid to Lafayette financial advisor Tiffany Angelle.

(Editor's Note: Through her attorney Alan Breaud, former Stanford Group Co. financial advisor Tiffany Angelle says the story below includes untrue information. “She is quite upset about the article and the damage to her reputation,” Breaud writes in an e-mail. “She has never given a Rolex or any other gift to get someone to invest.” In a phone interview, Breaud also said Angelle didn’t take any investors on trips to keep them from withdrawing money. The Independent Weekly has attempted several times to reach Angelle by phone [at the address listed in the lawsuit], but no one answers and there is no machine set to accept messages.)

When a Lafayette investor was threatening to pull his money out of Stanford Group Co., his financial advisor, Tiffany Angelle, set about to change his mind, flying him to the West Indies island of Antigua, where parent company Stanford International Bank is headquartered. He was lavishly entertained, and the attractive blond advisor also presented him with an expensive gift: a Rolex watch.

Such extravagancies (anyone ever go to a Stanford-sponsored LSU tailgating party?) appear to have been a common tactic for a company the SEC in mid-February alleged was operating a Ponzi scheme that cost victims more than $8 billion, most of which was sent to Antigua. Now more of those alleged victims are seeking to recover $6.5 million from 10 investment advisors in Louisiana, according to the Stanford receiver’s suit filed in U.S. district court in Dallas last week. Seven of those advisors are in Baton Rouge, and three others are in Denham Springs, Zachary and Lafayette. Tiffany Angelle and Hank Mills of Baton Rouge, who also worked in the Lafayette office in River Ranch, are among them.

Last week’s suit — which names Stanford Group Co. advisors as relief defendants in the Feb. 17 complaint the SEC filed against Stanford International Bank, two its subsidiaries and their top officials — appears to be the first to name Angelle. It is just the latest in a number of lawsuits that have been piling up; another was filed in Baton Rouge last month by 10 investors (Mills is a defendant in that suit).

Individuals named as defendants in the original SEC Feb. 17 complaint are R. Allen Stanford, SIB’s chairman of the board and sole shareholder; James M. Davis, SIB’s chief financial officer; and Laura Pendergest-Holt, SIB’s chief investment officer. In last week’s complaint, 66 financial advisors in Louisiana and seven other states were sued for more than $40 million by Ralph S. Janvey, the court-appointed attorney who since February has been overseeing the financial empire of R. Allen Stanford.

“Over a two-year period, these financial advisors received commissions ranging in amounts from $2.6 million to $200,000, along with incentive compensation, to promote the sales of CDs,” from SGC’s affiliate, SIB, according to the suit. “In selling the CDs to investors, Defendants [R. Allen Stanford, Davis and Pendergest-Holt] repeatedly touted the CDs’ safety and security and SIB’s consistent, double-digit returns on its investment portfolio.” Janvey’s April 15 complaint was filed on the heels of his request that the court release accounts held by Stanford Trust Co., which was based in Louisiana.

According to the complaint, the company used an elaborate and sophisticated incentive program to keep its advisors highly motivated to sell the so-called CDs to bring in new money and to minimize redemptions of CDs previously sold (a claim the incident with Angelle and the Rolex seems to support.) The program included high commission rates, bonuses, and forgivable loans. For example, in return for placing investors’ money with the offshore bank, Janvey claims that advisors often received a 1 percent commission upon the sale of a CD and as much as an additional 1 percent trailing commission during the term of the CD. In 2007, SIB paid SGC and its affiliates more than $291 million in management fees and commissions on CD sales, up from $211 million in 2006.

Listed among what Janvey calls “ill-gotten proceeds from a fraudulent scheme” are $1.4 million earned by Mills, and $675,664 by Angelle. But it was the almost $1.3 million earned by Baton Rouge financial advisor Michael Word from January 2007 to January 2009 that stoked the anger of 59-year-old Maurice resident Troy Lillie, a Stanford investor. Word was Lillie’s financial advisor for the past four years.

When Lillie didn’t see any commissions coming out of three CDs he purchased, he asked Word how he was making money. “He told me Stanford paid him a salary,” Lillie recalls. Lillie’s not happy about the revelation that his advisor was earning a commission on the front end and renewal of his CDs. “I didn’t even know about it. The CDs were all in an IRA account; all I would see is each quarter was a statement showing the interest they had accrued and the total value. I assumed the only thing he was making was the salary and or the commission on any stock sales,” Lillie says. “The only time I ever saw anything come out of my account was when I sold stock once a year; a commission would come out.”

And while the retired ExxonMobil employee redeemed his so-called CDs in January and put them in a money market account, taking an $18,000 penalty on $920,000, he cannot touch the funds because they have been frozen. They also may be subject to the “clawback” provision, which allows the courts to retrieve money already paid out to Stanford investors.

Investors have also been infuriated by Janvey’s claims that significant portions of SIB’s portfolio were misappropriated by R. Allen Stanford and used by him to personally acquire private equity investments and real estate.

In order to conceal their fraud and ensure that investors continued to purchase CDs, R. Allen Stanford and other officials fabricated the performance of SIB’s investment portfolio, Janvey alleges, noting that for a time the company was able to keep the fraud going by using a portion of the funds from current sales of the SIB CDs to make interest and redemption payments on pre-existing CDs. However, in late 2008 and early 2009, CD redemptions increased to the point that new CD sales were inadequate to cover redemptions and normal operating expenses. “As the depletion of liquid assets accelerated, the fraudulent scheme collapsed,” Janvey writes.

After reading Janvey’s complaint, Lillie — who is still struggling to cope with the financial loss he faces — hopes he never has to talk to his former financial advisor again. “I don’t harbor hatred or anything like that,” Lillie says. “But now I feel like I was used.”