Webinar Q & A

There are approximately 22,000 accounts with current positive balances, although there may be situations where more than one account is controlled by a single individual or entity.

In a fraudulent scheme, claims are admitted on the basis of an account holder’s or depositor’s net cash investment. The net cash investment is the money deposited less any cash returned, whether by supposed interest payments or return of deposit, that represents the actual loss. This recognises that to pay one depositor either interest or a principal redemption, another depositor’s money will have been used, requiring us to level the position as between depositors.

Unravelling what actual loss to depositors is, that is without the fictitious interest allocated to them, requires restating every depositor’s account and is a substantial exercise that we have underway. Currently our best estimate is that the real claims of depositors will be in the range of $4.5 to $5 billion which is in the same range as estimated by the SEC Receiver. We are verifying this by a detailed review of individual accounts.

Much of the property of SIBL is either in bank accounts that are frozen or real estate that needs to be managed in order to optimise the value. There are very few assets which can be converted to cash in a short time frame.

There is real property in Antigua controlled by the Liquidators.

There also is property acquired by other companies with SIBL money that requires legal action to bring back into the estate. Legal action has been taken to protect those lands, and we have obtained an interim freeze so that it cannot be sold without consent of the Court. It will take time to complete this fiercely opposed litigation.

Almost all of this land is in Antigua. Some of this land would increase substantially in value if modest improvements are made to it and we are taking expert advice on how best to bring this to market. Unfortunately, the market for development lands in the Caribbean is very limited at present.

However, we have been able to negotiate a sale of the former Bank of Antigua building for $4.5 million.

Additionally, there are funds frozen in Canada, Switzerland and the United Kingdom at the request of the US Department of Justice (DoJ) that the DoJ has not yet been prepared to release to SIBL. The Joint Liquidators are contesting these actions by DoJ but hope to ultimately arrive at a compromise that allows the funds to be distributed to the depositors by the Joint Liquidators.

Lastly, the most valuable assets owned by the SIBL Estate, and the ones that are mostly likely to generate a substantial return to depositors, are claims against those that have aided the fraud who should be obligated to pay damages to the Estate. These require legal action.

It is not possible to predict if we can negotiate settlements or how strongly any of the actions referenced above will be defended. Therefore it is impossible to say exactly how long the recovery process might take. However, without taking these actions, the total returns to depositors from both the US and Antiguan proceeding are likely to be minimal.

If the DoJ were to release funds to the estate promptly, it is possible that a distribution could take place at some point during the latter part of the first quarter of 2012. Certainly, as funds are gathered in, to the extent available for distribution, we expect to make interim distributions. We do not expect that it will be necessary to wait to the end of the litigation process to return funds to depositors.

This will depend on a number of factors. The first is the amounts that can be recovered from those that assisted the fraud. Secondly it will depend on the advice as to how to and over what time frame the lands should be marketed to maximise value. Thirdly it also depends to some extent on how the Chapter 15 recognition process in the US plays out, as we are strongly of the view that, without our assistance, some of the US claims and actions may fail, or yield less than they might. Regardless of the money recovered, the value of the claims filed has an impact. While we believe that the total claims are in the range of $4.5 to $5 billion, it is our experience that rarely do all possible claimants file claims. To the extent that claims filed fall short of our estimate, more will be paid on a percentage basis to those that do file.

At the moment, by combining the current quick sale value of the land, the cash held by the SEC Receivership, the frozen cash funds, and the cash held by the Antiguan Estate, the total assets of the bank (many of which are still not liquid) approximate $500 million. Based on an estimate of claims coming in the total range estimated (), that would result in creditors getting somewhere in the range of 10 cents on the dollar (or 10% of losses) or less. The Joint Liquidators believe that, to increase that significantly to get a significant amount of money back to the victim/depositors it is necessary to

i) Position the Antiguan land for sale over time following expert advice
ii) Pursue claw-back claims, primarily inside and outside of the US
iii) Aggressively pursue third party liability claims.

Based on our estimates of costs to do this, depositors will in essence be putting 2 cents on the dollar that they might otherwise receive at risk as an investment to potentially receive more later. However, by doing this, we are optimistic that total recoveries can increase to somewhere closer to 50 cents on the dollar or potentially more.

What is clear is that unless this investment is made, returns to depositors will not exceed 10 cents on the dollar and may well be less.

As we reported during the two webinars and elsewhere, the Antiguan Government has no role in the Liquidation nor in the direction of the Joint Liquidators.

We are appointed by the High Court of Antigua, which, like the court system in the US, is independent of the government. It is worth restating that the ultimate court of appeal for the Antiguan High Court is the Privy Counsel in England, which used to be called the House of Lords. It also is worth noting that we were nominated by a creditor, not the Antiguan Government, to replace the former liquidators, whose conduct was censured by the very Court that appointed us.

The Government does not have any of the lands or other property of SIBL seized and, as we have stated repeatedly, we are prepared to pursue any and all funds or assets that belong to or are traceable to SIBL funds held by the Government if it is economic to do so, as we would any other asset of the liquidation.

This is dealt with in the webinar, which is available as an audio file on our website at sibliquidation.com. We invite you to visit our site and get information on this and other topics which we will update regularly.

At the time of our appointment, we had no direct link to the creditors, and therefore, no understanding of their view of the liquidation process and how they wanted it to unfold. Wanting input from real creditors, we let it be known that we wanted volunteers to interact with us as Joint Liquidators and give us input as to our actions. A significant number of volunteers came forward, and from them, we selected persons who seemed business oriented, who were representative of the many countries from which the victims came, who represented different sizes of claim from large to small, and who were themselves victims.

On this basis, we have representatives from the US, Mexico, Venezuela, Columbia, Canada/Bahamas, Antigua, and Switzerland.

The only representative who is not a direct victim is the Mexican delegate who is a US lawyer who represents Mexican victims. The reasons for this are that, when seeking volunteers, we were approached by a group of Mexican victims who were not confident they could effectively participate and requested we accept their nominee.

None of the committee members, including the lawyer for the Mexican interests, are paid for their participation. All have signed undertakings of confidentiality and agreed that they will not undertake any action from which they will obtain any financial benefit from the estate except the same right as all creditors to share in the distributions.

This is an interim committee, and if it proves not to provide appropriate representation to the victims, we can adjust its makeup. So far, both the size of the Committee, its geographic representation and the participation of the members has proven to be helpful to us.

There is no requirement for us to have a Creditor Committee. It was simply something we felt was needed to get input from a broad spectrum of the creditor body. The Committee has met seven times by conference call. Some members of the committee have asked for anonymity due to concerns that they would be overwhelmed by calls from other victims.

To increase our communication with the creditors as a whole, we have had two general meetings of the creditor/victims by webinar. These have been well attended and again a source of useful input and we now have substantial input from an even broader base. We expect to have further Creditor Meetings by webinar and will continue to welcome comments and input via our website.

This was dealt with in the webinar, but it remains a matter of such concern that we will repeat it here.

Unfortunately, the balance you confirmed under the electronic process initiated by the former JL’s does not properly represent the claim that you have in the estate.

Forms which comply with the legislation and rules for claims will soon be available on our website for download, or can be obtained by calling our representative at the bank’s premises in Antigua. This number will be posted on our website along with the forms, the instructions for completing them and the process for submitting them.

Even if you registered under the online process and confirmed your account balance, you will have to submit your claim in this format.

We will notify all creditors for whom we have email addresses, by email. We will also post directions on our website. We will likely also publish an announcement in key newspapers. At present, there is no absolute final date for filing claims, but at some point one will be set. Again, you will be advised by email or through our website. It would be better to make your claim as soon as you can rather than try and file when a deadline has been set.

The priority for payment is set out in the laws of Antigua. In simple terms, after the costs of recovery, employees get a priority for unpaid wages and there are some limited priorities with respect to the claims of the Government. Based on what we know to date, these claims are very minor and, in the case of the government, we are aware of no claim. Next in line, there is a provision with respect to the payment of small depositor claims (up to EC$20,000 or roughly US$7,000). After those are paid, all other creditors share in proportion to their claim, no matter if they are a customer, a supplier of goods or services, where they are located, or their nationality.

The mechanics of the payment process have not been finalised as yet. It is anticipated that the payments will be made in US dollars as that is the currency in which we expect that the bulk of recoveries will be made. It is usual for payments to be made by cheque, sent to the location submitted on your proof of debt form. However, we will look at the possibility of making payments by wire transferor in other currencies provided the associated costs are assumed by the account holder. We do not anticipate that your physical presence in Antigua or anywhere else will be required.

We are trying to negotiate a cooperative claims and distribution process with the US Receiver to mitigate costs and ensure uniformity and fairness. This may result in some changes to this process.

The laws of Antigua make no exceptions for hardship cases. All creditors have their priority set out by statute in the interests of fairness to everyone and to avoid having to make subjective judgments on relative degrees of hardship.

The claim form is not complicated and you should not ordinarily require the assistance of a lawyer or claims manager in completing it. However, that decision is up to each individual to make.

Any problems you have with completing the forms may be sent by email to the address on our website.

We do not know if individual creditors have special circumstance under which they may have rights or remedies outside of the Antiguan Liquidation, be it by participating in a class action or other suit. What we can say is that the actions we bring or participate in will be in respect of damages done to the bank and brought on behalf of the interests of the whole creditor/victim body. To that extent, there is no need for you to participate individually nor will you have to individually fund any litigation.

During the webinar, we indicated that we were engaged in negotiations as to a co-operation protocol under which we would share information, try to run a single claims process, and would examine the rights of both the US Receiver and the Joint Liquidators to recover assets. Our objective would be to determine which of us had the best case or ability to bring the claim, where was the best place to do that (e.g., where are the laws most favourable), and what is the most appropriate fee structure. Based on this, it would be agreed which approach generated the biggest return to creditors and that approach would then be followed. This should avoid competing claims and maximise recoveries. Presently, those negotiations have not borne fruit, but the US Court has agreed to hear our application for recognition under the US Bankruptcy Code in late December.

It remains our objective to avoid competing claims and duplication of effort. This is NOT an attempt to take over the US receivership, but to ensure that claims and litigation opportunities are not wasted or lost by, for example, limitations on time for filings expiring, so that those that have been stalled, such as the class actions, can benefit from the rights the Joint Liquidators have that the Receiver does not, and to ensure that the place which gives the best chance of success (which may not be Dallas, Texas) is where the claim is brought.

If successful the recognition process will provide part of the frame work for a cooperation protocol. Failure to accomplish this may well put significant value at risk, which would be a tragedy for the victims/depositors.

It must also be understood that our sole interest is in maximising the value of the assets of SIBL and returns to its creditors.

The Receiver has many entities in his control, each with their own assets and creditors and therefore issues as to how costs and recoveries are to be shared between them. For example, should the landlords or employees of non-SIBL entities be entitled to share in SIBL assets? The Receiver has started a claims process which should address these issues.

We are working with expert property advisors as to how to best maximise recoveries from the lands under the control of SIBL.

We are continuing to assert our claim to lands in Antigua which are presently being administered by Andrea Stoelker under a power of attorney from Mr. Stanford. We are being strongly resisted.

We have also identified possible recoveries in Venezuela that are being investigated. A small pool of cash is being administered by a trustee in Columbia, which it appears may be turned over to a few local claimants. We have taken steps to have these funds returned to Antigua.

We are investigating possible assets in Switzerland over and above the frozen funds.

While we have no direct debt on the books of SIBL from the Government of Antigua, should such debts be uncovered, we are prepared to pursue repayment of such loans.

We have preserved rights to sue in a variety of jurisdictions, but, for strategic and privilege reasons, we cannot give precise details what actions we might take and where at this point.

We have finally been adequately funded to upload the electronic records of the bank for forensic examination to both support claims and to see if we can account for all the depositors’ money or determine if there are funds unaccounted for which we should be searching.

No we are not. We are in the process of accounting for how much real cash came in, and see if we can account for where it went. For example, we know that fictitious earnings were paid out to account holders out of new deposits, a large sum was expended on land acquisitions, and further funds were lost on bad business ventures, like Caribbean Star, or sponsorships, such as the Twenty20 cricket tournament.

The object is to determine, after adding up these costs and the operating expenses, if there is money that we cannot account for that might represent assets still not identified or deliberately hidden by SIBL’s principals. Depending on the outcome of this review, we can make an economic decision, in consultation with the Creditor Committee and through feedback on our website, of the extent to which we are prepared to expend the limited funds available on searching for these monies.

Your claim will be paid into your estate, for your beneficiaries.

On the basis of our reading of the authorising statutes, it is difficult to see what role SIPC can have. However, the decision to provide some form of restitution to those that invested through the US brokerage company is for them to make. Should they do so, they would become effectively the Trustee in Bankruptcy of the brokerage company Stanford Group Company or “SGC” and it is likely they will try to recoup their payouts by making claims against other Stanford entities, potentially including the funds in the hands of the Receiver and the funds which the DoJ has sought to freeze. In our view, they would have no direct access to funds in the hands of the Antiguan Liquidation, although they would become a creditor in the proceeding as equitable assignee of the claims they paid. In the Antiguan Liquidation, this will make no difference to the share of moneys available to victims who are not compensated by SIPC.

It is not possible for Directors to insure the company against their own acts of fraud or misconduct.

While unlikely, this would have no impact on the Antiguan Liquidation, which is an insolvency proceeding. It may have an impact on the US Receivership, which is predicated on the improper acts of Stanford, and it would likely cause the DoJ “freezes” to be vacated.

Employees not associated with the fraud are entitled to claim for unpaid wages and severance. There were no employees of SIBL in the US, only in Antigua and Canada.

Yes, the Joint Liquidators do have control of the records of SIB. However, local legislation requires that each creditor/victim must prove their claim in writing. If you do not have the necessary records to complete your claim you may submit a request signed by all account holders to stanford.claims.support@uk.gt.com requesting copies of your account statements and these will be provided to you.

No. Provided you submit your claim in good faith we will not reject your claim in full if it does not agree with the Bank’s records. We will calculate the net deposit and will provide you with a revised calculation based on the Bank’s records.

You will then have 21 days to apply to the Antiguan Court for the decision to be reversed or amended as provided for in the 1986 UK Insolvency Rules. If you agree with the revised amount, you do not have to do anything.

All distributions will be made by cheque to the address provided on your claims form The address provided for distribution purposes does not have to be your residential address. Prior to any distribution being made, we will consider all options available to us in the event that there are problems with a distribution being made in US dollars.

No. If you had multiple accounts with the Bank, then your claims from each account will be added together to arrive at your total claim.

Unfortunately, we are not able to provide specific tax advice to individuals. If you have questions about how you should treat any distribution for tax purposes, you will need to take local tax advice.

The Joint Liquidators and their advisors believe there are a number of parties that contributed to the ultimate losses incurred by creditors/victims and that they should provide restitution to the estate for their part. This litigation will be expensive to pursue but presents a significant amount of recovery that may be achieved if successful. We are currently looking at a number of options for this, including using part of the funds that would otherwise be available for distribution.

While we are optimistic that litigation will be successful, it is important to note that, as with all litigation, there are no guarantees.