Investors in a $7 billion Ponzi scheme may finally get some money back after a four-year investigation and recovery process, as reported by KPIC in Roseburg, OR, on March 16. The scam, perpetrated by Texas banking tycoon R. Allen Stanford, was discovered in 2008, the U.S. government seized the company in early 2009, and Stanford was convicted in 2011 on 13 counts of fraud and sentenced to 110 years in prison.
The scam, which operated under the umbrella of the Stanford Financial Group, sold Certificates of Deposit and other instruments to thousands of unsuspecting victims, who thought they were investing with a legitimate company.
Instead, Stanford paid off older investors with money from newer investors, invested in a number of unsuccessful business ventures, and lived an incredibly ultra-wealthy lifestyle using other people’s money.
Many people lost their life savings, and have been waiting for years to find out how much, if anything, they will be able to recover. Only $300 million in Stanford’s assets has been recovered, and it has been frozen for years as significant parties battle in court for control.
The first disbursement of recovered funds could happen within the next month or two, and will amount to $55 million. To date the receiver in charge of the recovery process has reportedly gathered approximately $230 million, but has also incurred over $119 million in fees and expense, leaving only $110 million for the victims.
The liquidators also have control of approximately $227 in land that must be sold before the money can be returned.
At this point, it appears that they victims can expect to recover only about 1% of what they had invested with Stanford. The rest of the money is simply gone.
"Unfortunately these sorts of recoveries are kind of the nature of the beast when it comes to Ponzi schemes," said Andrew Stoltmann, a lawyer who specializes in investment fraud.
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