UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT ____________________________________ Securities and Exchange Commission, ) ) Petitioner
-Appellant, ) ) v. ) ) Securities Investor Protection ) Corporation, ) ) Respondent-Appellee. ) ___________________________________ )
REPLY IN SUPPORT OF MOTION FOR LEAVE TO APPEAR AS AMICUS CURIAE OF THE COURT-APPOINTED EXAMINER, THE OFFICIAL STANFORD INVESTORS COMMITTEE, AND THE STANFORD VICTIMS COALITION IN SUPPORT OF APPELLANTS John J. Little, the Examiner (the “Examiner”) appointed by the Court in Securities and Exchange Commission v. Stanford International Bank, Ltd., et al., Civil Action No. 09-298-N (the “Receivership Proceeding”) in the U.S. District Court for the Northern District of Texas, Dallas Division (Godbey, J.)(the “Receivership Court”); the Official Stanford Investors Committee (the “Investors Committee”), created by order of the Receivership Court in the Receivership Proceeding; and the Stanford Victims Coalition (“SVC”), a not-for-profit corporation organized under the laws of the State of Texas; respectfully file this Reply in support of their motion, pursuant to FED. R. APP. P. 29(b), for leave to 1
participate in this appeal as amicus curiae in support of Petitioner-Appellant Securities and Exchange Commission (“SEC”) to seek reversal of the district court order from which this appeal is taken. I. Summary of the Argument
The Securities Investor Protection Corporation (“SIPC”) opposes the amici’s Motion for Leave and dramatically accuses the amici of attempting to insert into this appeal “a mishmash derived from different actions involving different legal issues and different parties.” SIPC Response at 9-10. That simply is not the case. The amici demonstrate in this short reply that the judicial decisions cited by the amici in their proposed Amicus Brief rely largely upon evidence that is in the record on appeal here. Moreover, those decisions do not come from some alien courts, but from courts that are intimately familiar with the Stanford Ponzi scheme. This Court can and should consider how those courts analyzed that evidence in connection with its review of the district court’s analysis of that same evidence. II. The Receivership Decisions Cited in the Amicus Brief Rely Upon Evidence Found in the Record Here
The proposed Amicus Brief relies primarily upon three decisions of the Receivership Court, as follows: • Janvey v. Alquire, Civil Action No. 3:09-CV-724-N, (N.D. Tex. June 10, 2010), aff’d 628 F.3d 164 (5th Cir. 2010), op’n withdrawn and replaced, 647 F.3d 585 (5th Cir. 2011)(the “Broker Injunction Case”).
Janvey v. Democratic Senatorial Campaign Comm., Inc., 793 F.Supp.2d 825 (N.D. Tex. 2011), aff’d 699 F.3d 848 (5th Cir. 2011)(the “Political Committees Case”).1 In re Stanford International Bank, Ltd., Civil Action No. 3:09-CV0721-N (N.D. Tex. July 30, 2012), appeal dism’d subj. to reinstatement, No. 12-10836 (5th Cir. Nov. 26, 2012)(the “Chapter 15 Case”).
The proposed Amicus Brief urges that these Receivership decisions support the conclusion that at least some purchasers of SIBL CDs should be deemed customers of SGC under the reasoning of the Old Naples and Primeline decisions.2 SIPC opposes the amici’s Motion for Leave to Appear and argues that the proposed Amicus Brief seeks to introduce evidence that is not found in the record on appeal before this Court. That argument simply is not accurate. The amici demonstrate below that the Receivership decisions to which they refer this Court considered some of the same critical evidence that appears in the record on this appeal. The amici have listed below the more significant materials that appear in the record before this Court and in the records of the Receivership Court; the Court will note that some of these materials appear in the records of more than one of the Receivership decisions cited by the amici.
In the Receivership Court, the Political Committees Case was pending as Civil Action No. 3:10-CV-346-N In re Old Naples Sec. Inc., 223 F.3d 1296 (11th Cir. 2000); In re Primeline Sec. Corp., 295 F.3d 1100 (10th Cir. 2002). 3
A. Expert Testimony Declaration of Karyl Van Tassel3 executed May 24, 2010, Doc. 25-3. Broker Injunction Case, No. 3:09-cv-724-N, Doc. 444-2. Political Committees Case, No. 3:10-cv-0346-N, Doc. 94-4 at 26-55. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 115-3 at 72-101. Declaration of Karyl Van Tassel executed July 27, 2009, Doc. 1-3 at 151-173. Political Committees Case, No. 3:10-cv-0346-N, Doc. 94-4 at 57-79 Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 115-3 at 5-27 Direct Testimony of Karyl Van Tassel, executed December 5, 2011, Doc. 25-2. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 115-1. B. SEC Materials
Office of the SEC’s Inspector General’s March 31, 2010 Report, Doc. 23-2. Broker Injunction Case, No. 3:09-cv-724-N, Doc. 393 at 38-196. Political Committees Case, No. 3:10-cv-0346-N, Doc. 94-1 at 29-187 Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 115-6 at 40-198
Karyl Van Tassel is the Receiver’s expert and leads his forensic accounting effort. She has supplied numerous declarations in the Receivership Proceeding and related cases, including the testimony identified here. Her work has been lauded by several different courts. E.g, Janvey v. Alguire, 647 F.3d 585, 597 (5th Cir. 2011)(“The Van Tassel Declarations also provide clear, numerical support for the creative reverse engineering undertaken by Stanford executives to accomplish the Ponzi scheme”); Pendergest-Holt v. Certain Underwriters at Lloyd’s London, 751 F.Supp.2d 876, 880-81 n.10 (S.D.Tex. 2010)(“Van Tassel and FTI performed extraordinarily detailed analysis, as described in the Declarations and summarized above.”).
SEC’s Analysis of SIPA Coverage for Stanford Group Company, Doc. 1-3 at 3-16. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 117-9. December 19, 2002 memorandum from Hugh Wright of the SEC’s Fort Worth, Texas office, Doc. 23-16.4 Political Committees Case, No. 3:10-cv-0346-N, Doc. 94-4 at 128-130; Doc. 94-5 at 1-15. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 115-15 at 24-25; Doc. 115-16 at 1-16. July 16, 1998 Letter from the SEC’s Fort Worth, Texas office to Robert B. Glen, Stanford Group Company, Doc. 23-15. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 115-11 at 19-25. C. SIBL Materials SIBL Marketing Brochure, Doc. 30-4.5 Broker Injunction Case, No. 3:09-cv-724-N, Doc. 444-2 at 49-64. Political Committees Case, No. 3:10-cv-0346-N, Doc. 37 at 72-88. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 115-3 at 119-134.
The record here contains only a 3 page excerpt of this memorandum. The record in the Political Committees Case and the Chapter 15 Case contains the full document, which consists of 18 pages. The marketing brochure was attached to the parties’ Stipulated Facts below. Doc. 30-1. 5
SIBL Disclosure Statement for U.S. Investors, Doc. 23-6; Doc. 30-36. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 110-16. SIBL Subscription Agreement and Investor Questionnaire, Doc. 23-8. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 110-14.7 D. Other Materials Report of the Receiver dated April 23, 2009, Doc. 1-3 at 51-108. Receivership Proceeding, No. 3:09-cv-0298-N, Doc. 336. Receiver’s Response to the Antiguan Liquidators’ December 3 Supplemental Brief, Doc. 1-3 at 110-149. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 61. April 17, 2009 Judgment of the High Court of Antigua and Barbuda, Doc. 23-21. Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 117 at 2-20. Amended Order Appointing Receiver dated May 12, 2009, Doc. 23-22. Receivership Proceeding, No. 3:09-cv-0298-N, Doc. 157. E. Evidence in the Record Here was Central to the Decisions Cited
Each of the Receivership decisions referenced in the proposed Amicus Brief relies heavily upon the testimony of the Receiver’s forensic accounting expert,
The disclosure statement was also attached to the parties’ Stipulated Facts below. Doc. 30-1. The record here contains a sample of this Subscription Agreement that appears to have been completed by a Stanford investor in May 2007. The record in the Chapter 15 Case contains a blank form of the Subscription Agreement. 6
Karyl Van Tassel. For example, many of the findings and conclusions made by the Receivership Court in the Chapter 15 Proceeding (the “Chapter 15 Order”), Chapter 15 Case, No. 3:09-cv-0721-N, Doc. 176,8 are drawn verbatim from the Direct Testimony of Ms. Van Tassel that is found in the record here at Doc. 25-2: Chapter 15 Order [T]he SIBL CD proceeds did more than just keep the bank afloat. Stanford Entities and Stanford himself received large disbursements of the proceeds. Chapter 15 Order at 29. Proposed Amicus Brief at 14. CD sales largely bypassed Antigua Chapter 15 Order at 42. Proposed Amicus Brief at 16. Stanford overwhelmingly marketed his CDs through Stanford broker-dealers in non-Antiguan territories. Chapter 15 Order at 43. Proposed Amicus Brief at 16. [B]roker-dealers in the United States generated substantially more CD sales, by dollar amount, than broker-dealers in any other country, and no other country approached the magnitude of the United States as a generator of CD sales. Chapter 15 Order at 43. Proposed Amicus Brief at 16. Van Tassel Testimony Doc. 25-2 at 7 of 47
Doc. 25-2 at 8 of 47
Doc. 25-2 at 33 of 47
Doc. 25-2 at 34 of 47
The Chapter 15 Order is attached to the proposed Amicus Brief as Exhibit 2. 7
Investors instead dealt only with their financial advisors, few of whom were based in Antigua. These financial advisors were essentially the face of the Stanford enterprise to investors, providing CD applications, CD investment managing, and Stanford brokerage accounts. Id. at 49 Chapter 15 Order at 49. Proposed Amicus Brief at 16.
Doc. 25-2 at 33 of 47
The other decisions referenced by the proposed Amicus Brief similarly rely heavily upon declarations provided by Ms. Van Tassel. See Broker9 Injunction at 12 (“The Receiver presents an extensive report from a forensic accountant [Ms. Van Tassel] confirming Davis’s admissions.”);10 Janvey v. Democratic Senatorial Campaign Committee, Inc., 793 F.Supp. 2d 825, 834 n. 9 (N.D.Tex. 2011)(quoting from Van Tassel Declaration), aff’d 699 F.3d 848 (5th Cir. 2012). III. Conclusion
The proposed Amicus Brief does not seek to introduce evidence that is beyond this Court’s record, as SIPC’s opposition suggests. Response at 2. Rather, the proposed Amicus Brief seeks to refer this Court to decisions of both the Receivership Court and the Fifth Circuit, both of which have been presiding over the Receivership for several years, addressing the same entities, transactions and
The Broker Injunction is attached as Exhibit 1 to the proposed Amicus Brief. The Broker Injunction also notes that it relies upon the report of the SEC’s Inspector General, Broker Injunction at 12, which appears in the record below at Doc. 23-2. 8
Ponzi scheme at issue here. The foregoing analysis demonstrates that the decisions of the Receivership Court and the Fifth Circuit were based upon, and relied heavily upon, some of the same evidence that was before the court below. For that reason, this Court can and should consider how the Receivership Court and the Fifth Circuit viewed that evidence, particularly as it informs the extent to which Old Naples and Primeline should control the result here. This Court should grant the Examiner, the Official Stanford Investors Committee and the Stanford Victims Coalition leave to appear in this appeal as amicus curiae aligned with the Petitioner-Appellant in support of a reversal of the district court’s order.
Respectfully submitted, STRASBURGER & PRICE, LLP
By:___/s/John Heffner_________ John Heffner District of Columbia Bar No. 114074 firstname.lastname@example.org Mark J. Andrews District of Columbia Bar No. 000232 email@example.com 1700 K Street N.W., Suite 640 Washington, D.C. 20006-3715 Telephone: (202) 742-8600 Facsimile: (202) 742-8699 Attorneys for the Court-Appointed Examiner and the Official Stanford Investors Committee
MURPHY & McGONIGLE, P.C.
By:__/s/ Robertson Park____________ Robertson Park District of Columbia Bar No. 372068 555 13th Street, N.W., Suite 410 Washington, D.C. 20004 Telephone: (202) 661-7022 Facsimile: (202) 661-7057 Attorneys for the Stanford Victims Coalition February 1, 2013
CERTIFICATE OF SERVICE I hereby certify that, on February 1, 2013, I caused the foregoing brief to be served by ECF on all parties to this appeal as follows: Josephine Wang General Counsel Security Investor Protection Corporation 805 15th Street, NW Washington, DC 20005 firstname.lastname@example.org Eugene F. Assaf KIRKLAND & ELLIS LLP 655 15th Street, NW, Suite 1200 Washington, DC 20005 email@example.com Michael L. Post Senior Litigation Counsel Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 STRASBURGER & PRICE, LLP By:___/s/John Heffner_________ John Heffner Attorneys for the Court-Appointed Examiner and the Official Stanford Investors Committee MURPHY & McGONIGLE, P.C. By:__/s/ Robertson Park____________ Attorneys for the Stanford Victims Coalition