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But the court-appointed receiver, Ralph S. Janvey, has their $800 million-plus on ice until the 5th Circuit Court of Appeals decides who can keep the money, which he describes as innocently derived ill-gotten gains.
"Stanford investors received money that they may have believed was a return on an investment placed with what they thought was a legitimate bank," Janvey said in a July 28 document filed in federal court in Dallas.
"The funds used to pay purported CD interest and redemptions was simply money that came from the more than 20,000 CD holders who were deceived into purchasing CDs and who by chance, or as the result of sales tactics by brokers, had not withdrawn funds from SIB as of the date the receivership was put in place."
SFG's 66 former financial advisers and the investors who cashed in their Stanford International Bank certificates of deposit are called "relief defendants" in the case aimed at recovering their money into a victims fund.
The money in question is called "claw backs."
Among other assets on hold by the receiver are money, homes and even clothing belonging to Stanford executives who allegedly engineered the $8 billion Ponzi scheme to defraud more than 20,000 investors.
Clement among them
Former Stanford financial adviser Neal Clement of Saltillo is listed among the "relief defendants."
His father, Dr. Aubrey O'Neal Clement, recovered $8,524,408 by cashing in his Stanford CDs, while the AFA regained $5,722,450.
In a recent lawsuit, Walt Walton of Tupelo claims Neal Clement told him he had withdrawn his father's CD investments as Walton sought unsuccessfully to safeguard his own life savings with Stanford. Walton claims Clement knew things were going downhill at Stanford and should have told him.
Neal Clement's attorney, William F. Ray of Jackson, termed his client "a victim of the Stanford failure," saying Clement's own accounts have been frozen.
He also said Clement had no reason to suspect problems at Stanford.
Patrick Vaughn, AFA's general counsel, said Wednesday it was he, not Clement, who moved to recover AFA's investments.
"Basically, when the markets were getting real shaky last summer, I was alarmed," Vaughn said. "It was me that raised the issue and said 'We gotta get out of here.'"
The $5.2 million investment represented about four months of operating reserves for AFA, and with interest the cashout exceeded $5.7 million. The deal was closed out in September.
Now, it's in federally insured Renasant Bank.
"But if the court claws them back, we would lose them," Vaughn noted. "We wouldn't like that."
AFA Chairman Donald Wildmon, through his son Tim, Thursday said Clement never told him the Stanford investments were insured offshore.
"Neal was just a facilitator," Tim Wildmon, AFA president, said about his brother-in-law. "Discussions on where and how much to invest were made by my dad and the board.
"Dad didn't want you to think Neal was the money manager here."
MLB players in jam
Stanford's assets were frozen Feb. 16 when the U.S. Securities amp& Exchange Commission sued company executives and sent it into receivership. The SEC acted after it became apparent Stanford didn't have enough money to fill cash-ins from thousands of customers suddenly worried about the crumbling world financial sector.
Thursday, Corinth-based Mississippi Polymers President Jerry Waxman had no comment about MPI's now-frozen $556,363 investment with Stanford.
Stanford CEO Allen Stanford, Chief Financial Officer James M. Davis and Chief Investment Officer Laura Pendergest-Holt, both of Baldwyn, and others are accused of masterminding a scheme to defraud investors with claims their high-yielding certificates of deposit were safe and desirable investments.
The government claims Stanford's CDs weren't high-yielding but paid out dividends from funds that came in from later investors.
Among the individuals, businesses and non-profits whose cashed-in investments are caught in this new freeze include MLB greats Greg Maddux and Bernie Williams, as well as current and former players Andruw Jones, JD Drew, Carlos Pena, Jay Bell and Johnny Damon.
Their investments totaled more than $9.5 million, with former All-Star pitcher Maddux taking the biggest hit at $3.6 million-plus.
At issue now before the 5th Circuit is the July 31 U.S. District court decision that the "claw backs" are not allowed under law. Oral arguments on the issue are set for Nov. 2 in New Orleans.
Among the 66 former Stanford financial advisers listed as "relief defendants," Clement is alleged to have received some $260,640 in "fraudulent commissions" traceable to the Stanford scheme, as well as what the receiver calls "other tainted compensation."
In AFA's most recent federal tax returns posted on Guidestar.org, Clement's employers Stanford and FSC Securities Corp. were paid $41,947 in commissions to handle its investments.
The Stanford advisers' total compensation for just the previous two years exceeded $40 million, the receiver claims. Four worked in the Memphis area.
"The fact that the relief defendants are innocent and committed no wrongdoing does not entitle them to retain proceeds received from the fraudulent SIB CDs," Janvey adds.
All Stanford investors making claims against the company will have a chance to get some money back when the receiver's distribution begins. When that will be is unknown.
James Davis is expected to plead guilty in a few weeks. The others have pleaded not guilty and face a yet-to-be-set trial date in a Houston, Texas, federal court.
Contact Patsy R. Brumfield at (662) 678-1596 or patsy.brumfield@djournal.com. Read her blog, From the Front Row, on NEMS360.com.
Among frozen cashouts:
* Carlos Pena - first baseman, Tampa Bay Rays; $303,635
* J.D. Drew - right fielder, Boston Red Sox; $1,299,424
* Jay Bell - former shortstop and second baseman, last for Arizona and N.Y. Mets; $1,288,685
* Johnny Damon - outfielder, New York Yankees; $400,070
* Greg Maddux - former Cy Young-award winner; $3,669,735
* Bernie Williams - former outfielder, New York Yankees; $1,542,962
* Andruw Jones - outfielder for Atlanta Braves, Texas Rangers; $1,033,732
SOURCE: U.S. District Court for the Northern District of Texas
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