Turk File

Turk File - July 2009

by Leslie Turk

AG seeking Lafayette Stanford victims

While speculation has been rampant that Lafayette is among the communities hard hit by the Stanford financial scandal, with Baton Rouge said to be the primary cluster in the state, local investors here have been relatively quiet in pursuing legal action to recover their losses. Many have been equally unwilling to come forward to tell their stories, though some have talked to Acadiana Business on the condition of anonymity.

Attorney Phil Preis of Baton Rouge believes south Louisiana was the national epicenter of Robert Allen Stanford’s alleged multibillion-dollar Ponzi scheme. Preis filed suit against numerous Baton Rouge area advisers, including Tiffany Angelle of Lafayette, alleging negligence in promoting and selling so-called CDs held in Stanford International Bank in Antigua. Preis told The Advocate about 70 percent of the U.S. dollars sent to the bank came from Baton Rouge, Lafayette, Covington and the surrounding areas. Calling the fallout “catastrophic,” he estimates the losses in Louisiana alone to be $1 billion.

Acadiana Business confirmed that about a dozen local investors are among Louisiana and Texas victims who have retained Baton Rouge attorney Ed Gonzales, a former federal prosecutor in the Middle District of Louisiana for more than a decade. “It should be obvious to all concerned that the investors as a whole were defrauded,” says Gonzales, declining to elaborate on the type of investigation he is conducting on his clients’ behalf. “I have been retained by a group of Louisiana and Texas investors to help them evaluate the accumulated evidence of fraud concerning Stanford International Bank, and to assist in the recovery of their losses,” he adds. “It is my clients’ intention that this effort benefit all of the people who have been affected by this scheme.”

Sources familiar with the group seeking legal advice from Gonzales say potential individual losses to local investors may be as high as $28 million. The former prosecutor would not confirm that figure and could not yet give a clear indication of when the suit would be filed.

As civil legal issues continue to unfold, it’s equally murky what criminal action might be taken in Louisiana as a result of the Stanford debacle here. But David Caldwell, head of the public corruption and special prosecutions unit with the Louisiana attorney general’s office, is vowing to leave no stone unturned. At the request of the Louisiana Stanford Victims Group, several months ago the AG’s office began looking into possible criminal activity and on June 16 announced a formal criminal investigation into the activities of Stanford Group Company. The office is aggressively seeking out victims and anyone else with information about how the company conducted its business in the state. “We know of hundreds of people who’ve lost their life savings due to the actions of the Stanford Group, [and] we know there are potentially hundreds more. In order to fully investigate this case and ultimately hold those responsible for what occurred, we need to develop a complete and accurate list of potential victims and their experiences with the Stanford Group,” he says.

“I can say there is certainly enough information warranting us going forward. If I didn’t think there was something here I would not have had an open call for victims,” Caldwell continues. “You can infer from the federal indictments there is a lot of smoke out there.”

Specifically, Caldwell wants to know how much the Stanford brokers knew about the scam. “Did these brokers know what was going on and help facilitate it?” he asks. “And it’s not defensible to intentionally stick your head in the sand,” he says. “Our inquiry will try to determine if that was the case.”

“Basically, what they are looking for is anything the financial advisers might have told us that we later found out was not true,” says Troy Lillie of Maurice, who met with AG officials the day after the formal criminal investigation was announced. “My adviser flat out told us it was low-risk,” Lillie adds. “Those were the exact words of Michael [Word].”

Another local investor, who asked not to be identified, also maintains that her financial adviser, Angelle, repeatedly told her the CDs were one of the safest, most conservative products Stanford offered. “And it was always sold to me that it was insured,” the investor says. “I just don’t think this is the kind of thing you can go ‘oops’ on and ruin a hundred people’s lives.”

Lillie, a retired ExxonMobil employee whose life savings of almost $1 million were frozen by the SEC when it shut Stanford’s operations down, is one of the most visible and outspoken local victims. “We’re not going to quit until we get recovery,” he says.