Receiver releases Stanford investors’ funds
Stanford Group Co. investors like Troy Lillie of Maurice, who moved their money out of the controversial CDs and into another Stanford account before the SEC shut down the company in February, got some very good news from the U.S. Fifth Circuit Court of Appeals in New Orleans Nov. 13. The court-appointed receiver’s attempt to claw back principal and interest on innocent investors was shot down by a three-judge panel. The court ordered that assets of investors like Lillie, an ExxonMobil retiree who at age 59 had returned to oilfield work, be unfrozen. And four days later, receiver Ralph Janvey, who could have appealed the decision to the full Fifth Circuit or the U.S. Supreme Court, released the funds: “Investor accounts, previously subject to the Freeze Order, are now available for release,” Janvey wrote on his Web site. “The ruling does not affect the freeze which remains in effect as to accounts held by former Stanford employees and brokers.”
Janvey’s action also helps another group of investors, those who withdrew interest over the years but left their principal in the CDs — the latter funds they will not likely recover. A lot was on the line for local investors like Bruce McLeod. The Advocate reported in August that the 61-year-old said he invested $2.7 million with Stanford as he was winding down his career as a pharmacist in Lafayette. But, over that same period, McLeod also withdrew $780,000 in interest and other profits from his accounts at Stanford. “He [Janvey] wants all of that back,” McLeod told the paper in August. “I put $2.7 million in. We lost that. There is no justice in this.”
McLeod, who is back working long hours as a pharmacist, could not be reached for comment before press time.
Unfortunately, the ruling does nothing to help victims who still had all of their money sitting in the CDs when the SEC stepped in and accused Stanford International Bank and its related entities of running an $8 billion Ponzi scheme. R. Allen Stanford, who headed the companies, and several other defendants have been indicted on 21 counts in the alleged fraud.
Other swindled investors’ last hope may be an effort by Louisiana’s congressional delegation to have the Securities Investor Protection Corp. provide up to $500,000 for each of them, just as it did for some victims of Bernie Madoff. Stanford Group Co. was insured by the SIPC; its logo appeared on business cards and stationery, a source of comfort to investors. The SIPC’s position, however, is that it does not provide insurance for investment fraud.
The Fifth Circuit decision was bittersweet for investors like Lillie, who says his faith guided him through the ordeal. He’s now praying for others who have been financially devastated. “I feel good that we have our life back, but I feel sad about the many that don’t,” Lillie says. “These are U.S. citizens, mostly retirees. The SIPC needs to provide coverage.”
The receiver was attempting to recover almost $1 billion in funds from about 600 investors — “a very small percentage of the more than $20,000 investors who have thus far received little or nothing from their investment in SIB CDs,” Janvey wrote — in order to distribute them equally to all investors. Janvey argued that the money should be evenly distributed because the redemptions, interest and other payments were made with money stolen by the Stanford entities from other CD holders. But the appellate judges ruled that he could not sue the investors who moved funds out of the CDs or cashed out early because they received the funds legally.
Lafayette businessman Mike Moreno is among the 49 investors Janvey listed who moved a total of $494 million out of the CD accounts earlier this year. The receiver says these account holders “received the largest amounts of purported CD redemption or interest proceeds after January 1, 2008,” but that they were not frozen accounts at Stanford Group Co. or Stanford Trust Co. Janvey doesn’t say if those investors cashed out or where those frozen accounts rested (this group may have been in the process of transferring its money when the SEC shut Stanford down in mid-February). It’s also unclear what prompted Moreno to move his $27 million out of the Stanford CDs; in December Lillie’s financial adviser, Michael Word of Zachary, suggested transferring his money, about $920,000, into another account. Lillie redeemed his so-called CDs in January and put them in a money market account, taking an $18,000 penalty.
Word, however, did not issue that same advice to all of his clients.
LongHorn Steakhouse going up near Academy
Yet another sign the strength of Lafayette’s economy is on national retailers’ radar: the steakhouse chain that captures the flavor of the West in its restaurants is investing in Lafayette. Construction is under way at the corner of Settlers Trace and Ambassador Caffery Parkway in front of Academy to make way for a LongHorn Steakhouse.
Construction of the building is valued at $1.13 million, according to Lafayette Consolidated Government’s permit records. LongHorn and its upscale sister eatery, The Capital Grille, are subsidiaries of Orlando-based Darden Restaurants Inc., which has 1,700 locations, including Olive Garden, Red Lobster, Bahama Breeze and Seasons 52 brands. Darden Restaurants (NYSE: DRI) is the world’s largest company-owned and operated restaurant group with almost $6.7 billion in annual sales.
“When you come into LongHorn Steakhouse, you’re paying a visit to the West. The authentic West. The West of loyalty, hospitality, and of course, real good food,” reads the company’s Web site description. LongHorn offers hand-cut steaks, seafood, chicken dishes, burgers and salads. Its Web site also includes nutrition information for the entire menu.
Compiled and edited by Leslie Turk; e-mail her at [email protected] .