By Dan Levine
Jan 11 (Reuters) - Roughly 18,000 defrauded investors in
Allen Stanford's $7 billion Ponzi scheme would receive an
initial payment of $55 million for their claims, according to a
plan submitted by a court appointed receiver on Friday.
Stanford was sentenced last year to 110 years in prison for
bilking investors with fraudulent certificates of deposit issued
by Stanford International Bank, his bank in Antigua.
Following a lawsuit by the U.S. Securities and Exchange
Commission, a Texas-based federal judge appointed a receiver to
settle the Stanford estate and disburse any assets to claimants.
The plan filed in court on Friday proposes that $55 million
be disbursed to investors. "Many of these people entrusted their
entire life savings to the scheme and have received a pittance
or nothing at all from it," the receiver wrote.
A victim's advocate group immediately criticized the plan,
saying the fees involved in collecting the money far outweighed
"To say the recovery of one penny on the dollar is
disappointing is a dramatic overstatement," Angela Shaw, the
director the Stanford Victims Coalition, said in a statement.
Attorneys for the receiver, Ralph Janvey, could not
immediately be reached for comment.
Separately, the SEC had requested that an industry backed
fund, the Securities Investor Protection Corp, start a court
proceeding that could help further compensate victims.
But a U.S. judge turned down the SEC's request, saying the
agency had not met its legal burden to show why SIPC should be
compelled to act. SIPC, which has handled high-profile
liquidations such as Bernard Madoff's Ponzi scheme, contended
that Stanford's offshore bank fell outside the scope of its
The SEC has appealed.
The case in U.S. District Court, Northern District of Texas
is Securities and Exchange Commission vs. Stanford International
Bank Ltd et al, 09-cv-0298.
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