U.S. District Judge David Godbey ordered early October 2016 that David Nanes, the former president and director of the Latin America branches of Stanford International Bank Ltd. liable for nearly 14 million USD for his role in the Ponzi scheme run by R. Allen Stanford, though the man remains an international fugitive.
Nanes ran the company Wealth Management Services Ltd. and held liable for a $12.3 million judgment against the business. Nanes must also return $1.6 million he was paid in fraudulent transfers from the Stanford scheme.
Judge Godbey found it would be “inequitable” to uphold a distinction between Nanes and his business after Nanes admitted the company was undercapitalized and did not follow corporate formalities, and that he transferred corporate funds to himself for personal use. So Nanes is being held liable as an alter ego for Wealth Management Services, against which summary judgment was already granted, and is enjoined from disposing of assets that could satisfy the judgments.
According to the court, though Nanes and Wealth Management Services initially retained counsel and were defending the lawsuits, their attorneys withdrew and the defendants became unresponsive. Nanes evaded law enforcement authorities in Central America and avoided service until he was arrested living under a fake name on a resort island off the coast of Belize. Nanes skipped bail after he was arrested by authorities in Belize and served with the lawsuit and “has not appeared, literally or legally, since,” Judge Godbey said.
“Nanes, as an international fugitive, has evaded law enforcement authorities in multiple countries and has consistently been an unresponsive litigant,” the judge said. “Based on Nanes’ conduct, the receiver has established that Nanes will transfer or otherwise dispose of assets that could satisfy the receiver’s judgments.”
But Judge Godbey denied without prejudice the receiver’s request for about $550,000 in fees and costs associated with the fraudulent transfer claim against Nanes, saying he was unconvinced that the amount requested bore a reasonable relationship to the work described in the uncontested case.
Also on Wednesday, lawyers for a proposed class action by Stanford Financial Group investors from Mexico and Venezuela asked Judge Godbey to approve paying them $30 million in fees — a 22 percent share of a $120 million settlement reached with insurance broker Willis Towers Watson Public Limited Co. and a $12.85 million settlement with broker Bowen Miclette & Britt Inc.
Both brokers had been accused of facilitating Stanford’s fraud by vouching for the bank that issued CDs and falsely assuring investors that their funds were adequately protected. The suit complains the brokers sent “safety and security” letters that made depositors believe there were insurance policies to protect their interests, while in reality Stanford and his advisers were the only parties covered, and that the brokers had touted Stanford and his executives as “first class business people.” The BMB settlement amount represents virtually all of the broker’s insurance coverage, the attorneys said in their fee motion.