Appeals Court Upholds Freeze on Stanford Employee Funds
A federal appeals panel has upheld a freeze on the assets of more than 300 employees of Texas financier Allen Stanford, who is charged with running a $7 billion Ponzi scheme involving fraudulent certificates of deposit.
The court-appointed receiver who is gathering assets for Stanford's investors — Dallas attorney Ralph Janvey — had obtained the freeze in February, 2009, after a federal judge shut Stanford's business down.
The employees, including 76 Stanford financial advisors who sold the CD's to investors, argued that the case should go to arbitration; and some argued the court that imposed the freeze abused its discretion since they say Stanford did not operate a Ponzi scheme.
But the three-judge panel from the Fifth Circuit Court of Appeals disagreed, finding Stanford's business did operate as a Ponzi scheme.
The ruling potentially preserves millions of dollars that Janvey wants to distribute among all Stanford investors.