Investors in a $7 billion Ponzi scheme orchestrated by convicted ex-Texas tycoon R. Allen Stanford have begun getting back some of what they lost after a recovery process that has dragged on for more than 4 1/2 years.
However, the amounts being returned to many who lost their life savings ultimately will be only a pittance of their investments -- about 1 percent of what they put in. The largest claim being paid out in the first distribution of funds to victims of Stanford's scheme is about $50,000, while the smallest is $2.81. Many of the claims seemed to be in the range of $1,000 to $4,000, according to court documents filed late last month.
British retiree Kate Freeman, who lost $820,000 in the scheme, said she and other investors continue to be frustrated by the slowness of the recovery process.
"After nearly five years, it's just the biggest disappointment -- isn't it? -- that this is all we're getting," Freeman, in her late 50s, said .
David Arlington, an attorney for Ralph Janvey, the U.S. court-appointed receiver who is making the initial distribution, said he expects that most of this first allotment of funds -- about $1 million -- will be disbursed within the next few months.
"Obviously it's a huge milestone in this receivership to be able to begin making payments to investors. We're pleased with the fact that we are doing that," he said.
Prosecutors said Stanford persuaded investors to buy certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua, then used the money to fund a string of failed businesses, bribe regulators and pay for his lavish lifestyle. In a Ponzi scheme, money from new investors is used to pay old ones.
Stanford, 63, was convicted last year on 13 fraud-related counts and sentenced to 110 years in prison.
Stanford's financial empire once spanned from the U.S. to Latin America and the Caribbean. After its collapse, a U.S. federal judge in Dallas and an Antiguan court both appointed people to try to recover assets. The U.S. Justice Department also undertook its own effort.
Janvey's initial distribution of funds is part of $55 million that he got approval in May to disburse.
"He's got $55 million to pay out. If he releases them in small batches like this, it's going to take forever," Freeman said. "It just seems so badly organized."