The Internal Revenue Service knew R. Allen Stanford was taking loans from his Antigua bank and found nothing wrong with the arrangement, the Texas tycoon’s tax lawyer testified at Stanford’s fraud trial Tuesday.
“The IRS always treated those as loans to Mr. Stanford,” said Larry Campagna, who represented Stanford in personal and business tax disputes with the IRS in 1998 and again in 2003.
The IRS did change its position, however, about the correct way to characterize payments from Stanford to his Houston-based Stanford Financial Group, the parent company of Stanford’s scores of business operations. He was sole owner of Stanford Financial and its subsidiaries.
Although the tax agency ruled that those should be listed as loans on 1998 tax returns, it said the payments should be recorded on 2001 and 2002 returns as dividend payments to Stanford, Campagna said.
Defense attorney Robert Scardino asked Campagna if anything about the returns prompted the IRS to ask criminal investigators to initiate a fraud probe.
“No,” Campagna said before he was dismissed from the witness stand.
Stanford, a native of Mexia, is accused of leading a fraud that prosecutors allege took $7 billion from clients who bought certificates of deposit in Stanford’s bank in Antigua. They were led to believe their money was invested conservatively, according to prosecution testimony, while much of it really went to personal loans to Stanford for his pet business projects and luxurious life.
Two other defense witnesses testified Monday. However, U.S. District Judge David Hittner decided Stanford’s coughing from an apparent cold needed medical attention and stopped the trial early.
Osvaldo Pi, an accountant who went to work in 2001 for Stanford Venture Capital, spent much of his time on the stand explaining venture capital, private equity and other financial terms to jurors.
Private equity firms often seek investments, on their own behalf or for well-heeled clients, in ventures that aren’t publicly traded and seek to raise capital by selling ownership shares. Private equity firms also may arrange buyout deals that take public companies private.
Pi said his job included identifying investment opportunities for Stanford Venture Capital, and that it raised millions of dollars for companies Pi and others vetted for risk and potential.
In the trial’s fifth week, the defense is attempting to show that Stanford was interested in legitimate investments, that he was consolidating his companies to make them more manageable and that the companies would have remained solvent if the U.S. government hadn’t filed a fraud suit and shut them down in February 2009.
Pi testified that the receiver who took over the assets of Stanford Financial Group and its subsidiaries didn’t seem interested in pursuing investments that remained viable, but in liquidating the companies’ assets. He said he stayed with the firm for seven months after it went into receivership.
Karen Pittman, a librarian for Andrew College, a private junior college in Georgia, testified that Stanford hired her to research whether he was related to Leland Stanford, founder of Stanford University in California. Stanford touted the relationship in his promotional brochures although university officials deny any kinship.
Pittman said she found a common relative, but after two years of research could not say for sure that Leland Stanford and Allen Stanford were related.
Defense witnesses have portrayed Stanford as the company visionary who left details to others – notably Chief Financial Officer James Davis. Davis pleaded guilty to three felony charges and testified that he and Stanford knowingly misled investors and misused their money.
Stanford and others were indicted in June 2009. He has been held without bail as a possible flight risk since his arrest that month.
Three other Stanford executives indicted separately and scheduled for trial later are free on bail, and an Antiguan regulator accused of taking bribes is fighting extradition from that Caribbean nation. Davis was charged separately in connection with his guilty plea and is cooperating with the government.
terri.langford@chron.com
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2012年2月23日星期四
2012年2月19日星期日
City fund to invest in business startups and expansions
Anchorage city government is creating a fund that will invest in private businesses — specifically, local start-ups and existing operations that are expanding.
The investment money comes from a $13.2 million federal allocation. Anchorage is the first city in the U.S. to receive an allocation from the Treasury Department’s state small business credit initiative, according to the mayor’s office. Elsewhere, states are operating such funds.
The Anchorage fund, called the 49th State Angel Fund, will loan money or take an ownership interest of up to 10 percent of the value of enterprises it invests in, said Allan Johnston, a former investment firm manager who is helping the city put the fund together. He is married to Assembly member Jennifer Johnston.
The fund’s purpose is to spur economic development, create jobs and promote entrepreneurship, city Chief Financial Officer Lucinda Mahoney said in a written presentation.
Exactly how the program will work is still being developed, Allan Johnston said. Eventually, he said he thinks the best system would be for private “angel funds” to be established and for the city money to go through them.
But in the initial version, the mayor and the city’s chief financial officer will make decisions on which businesses to invest in based on recommendations from an advisory committee of financial experts.
The Anchorage Assembly unanimously approved the plan last week.
Anchorage Assemblyman and mayor candidate Paul Honeman sent out a campaign statement critical of the way the fund management is set up. He thinks the Assembly should have a role in confirming advisory committee members and maybe confirm who gets loans.
But he said Friday that he voted for it without proposing any changes because he didn’t want to jeopardize Anchorage getting the money.
He noted the city has 90 days to set up the program and says there’s time within that period to make changes.
Assembly member Patrick Flynn, in his blog, questioned whether it would be a good idea for the Assembly to be more involved. “We want to substitute our political judgment for the fiscal judgment of financial professionals?” he asked.
Bill Popp, president and CEO of the Anchorage Economic Development Corp., said his group supports the city’s move.
“Angel funds” such as this one fill gaps in the financing of a new or expanding business, Popp said. Such funds tend to be small and community based, he said.
“AEDC is pretty excited this fund is coming into being,” he said.
Popp told the Assembly it “fills a role the private sector has not been willing to take on to this point.”
Strings attached to the federal funds:
• There has to be a 10-to-1 match for the federal money. A $1 investment from the 49th State Angel Fund must lead to at least $10 of private funding, the city news release said.
So the $13.2 million in federal money could generate $140 million or more in economic activity, Popp said.
• The target investment is a firm with 500 or fewer employees. Seven hundred fifty employees is the upper limit.
With these requirements, it won’t be for mom-and-pop retail outfits, Popp said. The start-up or expanding business venture would have to have a sizable investment, he said. Asked what kinds of businesses might qualify, he said a company making high-value electronics might, or an information technology firm with significant reach.
Lance Ahern, now a city employee, testified at the Assembly that when he started Internet Alaska Inc. in 1994 investment money was scarce. The company was the first local and statewide Internet service provider in Alaska, Ahern said.
He wasn’t able to get bank loans. “When I started my first company the investors were me, Visa and Mastercard,” he said. “This program is really good.”
Reach Rosemary Shinohara at rshinohara@adn.com or 257-4340.
http://tourism9.cm/ http://vkins.com/
The Anchorage fund, called the 49th State Angel Fund, will loan money or take an ownership interest of up to 10 percent of the value of enterprises it invests in, said Allan Johnston, a former investment firm manager who is helping the city put the fund together. He is married to Assembly member Jennifer Johnston.
The fund’s purpose is to spur economic development, create jobs and promote entrepreneurship, city Chief Financial Officer Lucinda Mahoney said in a written presentation.
Exactly how the program will work is still being developed, Allan Johnston said. Eventually, he said he thinks the best system would be for private “angel funds” to be established and for the city money to go through them.
But in the initial version, the mayor and the city’s chief financial officer will make decisions on which businesses to invest in based on recommendations from an advisory committee of financial experts.
The Anchorage Assembly unanimously approved the plan last week.
Anchorage Assemblyman and mayor candidate Paul Honeman sent out a campaign statement critical of the way the fund management is set up. He thinks the Assembly should have a role in confirming advisory committee members and maybe confirm who gets loans.
But he said Friday that he voted for it without proposing any changes because he didn’t want to jeopardize Anchorage getting the money.
He noted the city has 90 days to set up the program and says there’s time within that period to make changes.
Assembly member Patrick Flynn, in his blog, questioned whether it would be a good idea for the Assembly to be more involved. “We want to substitute our political judgment for the fiscal judgment of financial professionals?” he asked.
Bill Popp, president and CEO of the Anchorage Economic Development Corp., said his group supports the city’s move.
“Angel funds” such as this one fill gaps in the financing of a new or expanding business, Popp said. Such funds tend to be small and community based, he said.
“AEDC is pretty excited this fund is coming into being,” he said.
Popp told the Assembly it “fills a role the private sector has not been willing to take on to this point.”
Strings attached to the federal funds:
• There has to be a 10-to-1 match for the federal money. A $1 investment from the 49th State Angel Fund must lead to at least $10 of private funding, the city news release said.
So the $13.2 million in federal money could generate $140 million or more in economic activity, Popp said.
• The target investment is a firm with 500 or fewer employees. Seven hundred fifty employees is the upper limit.
With these requirements, it won’t be for mom-and-pop retail outfits, Popp said. The start-up or expanding business venture would have to have a sizable investment, he said. Asked what kinds of businesses might qualify, he said a company making high-value electronics might, or an information technology firm with significant reach.
Lance Ahern, now a city employee, testified at the Assembly that when he started Internet Alaska Inc. in 1994 investment money was scarce. The company was the first local and statewide Internet service provider in Alaska, Ahern said.
He wasn’t able to get bank loans. “When I started my first company the investors were me, Visa and Mastercard,” he said. “This program is really good.”
Reach Rosemary Shinohara at rshinohara@adn.com or 257-4340.
2012年1月13日星期五
GE ordered to defend lawsuit tied to 2008 crisis
(Reuters) – A federal judge refused on Thursday to throw out a lawsuit accusing General Electric Co and its chief executive of misleading investors about the conglomerate’s financial health and exposure to risky debt during the 2008 financial crisis.
The decision by District Judge Richard Holwell in Manhattan keeps alive litigation seeking to hold the company responsible for investor losses during a six-month period when its stock price fell to about $10 from about $26, causing its market value to tumble by more than $150 billion.
Investors claimed that GE withheld information regarding its health and the health of its GE Capital finance arm, including exposures to subprime and other low-quality loans. They also said GE misleadingly touted itself as being safer than rivals, despite the effects of the financial crisis.
Holwell also let stand some claims accusing bank underwriters of omitting statements from offering documents for a $12.2 billion GE stock offering in October 2008. He dismissed several other claims, and did not rule on the case’s merits.
A GE spokesman and lawyers for the investors did not immediately respond to requests for comment. Antonio Yanez, a lawyer for the banks, declined to comment.
Holwell said investors led by the State Universities Retirement System of Illinois adequately alleged that GE made material misrepresentations during the crisis about its access to commercial paper and ability to maintain its dividend.
He also let the investors pursue claims alleging that company officers, including Chief Executive Jeffrey Immelt and Chief Financial Officer Keith Sherin, misled them and had sufficient intent, known as “scienter,” to mislead.
CATEGORICAL STATEMENTS
“Immelt’s categorical statements that investors could ‘count on’ a dividend and that GE was having ‘no difficulties’ issuing commercial paper are not the sort of cautious statements one would expect of a CEO attempting to come to grips with the effects of the economic crisis on his company,” Holwell wrote in a 53-page decision.
“A CEO is allowed to convince the public to invest in his company, but not at the expense of providing it with accurate information about the company’s financial health,” Holwell continued. “Taking the factual allegations in the (complaint) as true, the inference that Immelt acted with scienter is at least as compelling as the inference that he did not.”
Among the banks that were sued were Bank of America Corp, Citigroup Inc, Deutsche Bank AG Goldman Sachs Group Inc, JPMorgan Chase & Co, and Morgan Stanley, court records show.
The lawsuit covered investors who owned GE stock from September 25, 2008 to March 19, 2009.
During that period the Fairfield, Connecticut-based company cut its dividend and lost its “triple-A” credit rating. It also received a $3 billion infusion from Warren Buffett’s Berkshire Hathaway Inc.
GE’s many products include jet engines, turbines and light bulbs. It also owns part of NBC Universal, in which Comcast Corp holds a majority stake.
The case is In re: General Electric Co Securities Litigation, U.S. District Court, Southern District of New York, No. 09-01951.
(Reporting by Jonathan Stempel in New York; editing by Andre Grenon, Phil Berlowitz)
The decision by District Judge Richard Holwell in Manhattan keeps alive litigation seeking to hold the company responsible for investor losses during a six-month period when its stock price fell to about $10 from about $26, causing its market value to tumble by more than $150 billion.
Investors claimed that GE withheld information regarding its health and the health of its GE Capital finance arm, including exposures to subprime and other low-quality loans. They also said GE misleadingly touted itself as being safer than rivals, despite the effects of the financial crisis.
Holwell also let stand some claims accusing bank underwriters of omitting statements from offering documents for a $12.2 billion GE stock offering in October 2008. He dismissed several other claims, and did not rule on the case’s merits.
A GE spokesman and lawyers for the investors did not immediately respond to requests for comment. Antonio Yanez, a lawyer for the banks, declined to comment.
Holwell said investors led by the State Universities Retirement System of Illinois adequately alleged that GE made material misrepresentations during the crisis about its access to commercial paper and ability to maintain its dividend.
He also let the investors pursue claims alleging that company officers, including Chief Executive Jeffrey Immelt and Chief Financial Officer Keith Sherin, misled them and had sufficient intent, known as “scienter,” to mislead.
CATEGORICAL STATEMENTS
“Immelt’s categorical statements that investors could ‘count on’ a dividend and that GE was having ‘no difficulties’ issuing commercial paper are not the sort of cautious statements one would expect of a CEO attempting to come to grips with the effects of the economic crisis on his company,” Holwell wrote in a 53-page decision.
“A CEO is allowed to convince the public to invest in his company, but not at the expense of providing it with accurate information about the company’s financial health,” Holwell continued. “Taking the factual allegations in the (complaint) as true, the inference that Immelt acted with scienter is at least as compelling as the inference that he did not.”
Among the banks that were sued were Bank of America Corp, Citigroup Inc, Deutsche Bank AG Goldman Sachs Group Inc, JPMorgan Chase & Co, and Morgan Stanley, court records show.
The lawsuit covered investors who owned GE stock from September 25, 2008 to March 19, 2009.
During that period the Fairfield, Connecticut-based company cut its dividend and lost its “triple-A” credit rating. It also received a $3 billion infusion from Warren Buffett’s Berkshire Hathaway Inc.
GE’s many products include jet engines, turbines and light bulbs. It also owns part of NBC Universal, in which Comcast Corp holds a majority stake.
The case is In re: General Electric Co Securities Litigation, U.S. District Court, Southern District of New York, No. 09-01951.
(Reporting by Jonathan Stempel in New York; editing by Andre Grenon, Phil Berlowitz)
2012年1月12日星期四
Saratoga Investment Corp. to Report Q3 2012 Financial Results and Hold Conference Call on Jan. 13, 2012
NEW YORK, Jan. 11, 2012 /PRNewswire/ – Saratoga Investment Corp. (NYSE: SAR), a business development company, will report its financial results for the quarter ended Nov. 30, 2011, on Friday, Jan. 13, 2012, at approximately 11:00 a.m. (ET). A conference call to discuss the financial results will be held on the same day. Details for the conference call are provided below.
About Saratoga Investment Corp.
Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses. The Company invests primarily in mezzanine debt, leveraged loans and, to a lesser extent, equity. Saratoga Investment Corp.’s investment objective is to create attractive risk-adjusted returns by generating current income from its debt investments and capital appreciation from its equity investments. The Company partners with business owners, management teams and financial sponsors to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives. It has elected to be regulated as a business development company under the Investment Company Act of 1940.
About Saratoga Investment Advisors, LLC
Saratoga Investment Advisors, LLC is a New York-based investment firm formed to focus on credit-driven strategies. It is the external investment adviser to Saratoga Investment Corp. and is affiliated with Saratoga Partners, a middle-market private equity investment firm that primarily invests in businesses with strong management teams and valuations of between $50 million and $500 million. Saratoga Partners’ investment strategy focuses on companies in manufacturing and business services and it has significant experience in special situations and distressed investing.
Since Saratoga Partners was founded in 1984 as a division of the New York investment firm Dillon, Read & Co., Inc., it has invested in 35 companies with an aggregate value of more than $3.7 billion. It has been an independent firm since its spinoff in 1998 after Dillon Read was acquired by Swiss Bank Corporation (a predecessor to UBS AG).
SOURCE Saratoga Investment Corp.
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| Who: | Christian L. Oberbeck, Chief Executive Officer Richard A. Petrocelli, Chief Financial Officer | |||
| When: | Friday, Jan. 13, 2012 11:00 a.m. Eastern Time (ET) | |||
| How: | Call: Interested parties may participate by dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside U.S. and Canada). A replay of the call will be available from 2:00 p.m. ET on Friday, Jan. 13, 2012 through 11:59 p.m. ET on Wednesday, Jan. 18, 2012 by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada), passcode for both replay numbers: 42061505. | |||
| Webcast: Interested parties may also access a simultaneous webcast of the call by going to http://ir.saratogainvestmentcorp.com/events.cfm. | ||||
| Information: | Saratoga Investment Corp.’s Form 10-Q for the quarter ended Nov. 30, 2011 will be filed on Jan. 12, 2012 with the Securities and Exchange Commission. | |||
Saratoga Investment Corp. is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses. The Company invests primarily in mezzanine debt, leveraged loans and, to a lesser extent, equity. Saratoga Investment Corp.’s investment objective is to create attractive risk-adjusted returns by generating current income from its debt investments and capital appreciation from its equity investments. The Company partners with business owners, management teams and financial sponsors to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives. It has elected to be regulated as a business development company under the Investment Company Act of 1940.
About Saratoga Investment Advisors, LLC
Saratoga Investment Advisors, LLC is a New York-based investment firm formed to focus on credit-driven strategies. It is the external investment adviser to Saratoga Investment Corp. and is affiliated with Saratoga Partners, a middle-market private equity investment firm that primarily invests in businesses with strong management teams and valuations of between $50 million and $500 million. Saratoga Partners’ investment strategy focuses on companies in manufacturing and business services and it has significant experience in special situations and distressed investing.
Since Saratoga Partners was founded in 1984 as a division of the New York investment firm Dillon, Read & Co., Inc., it has invested in 35 companies with an aggregate value of more than $3.7 billion. It has been an independent firm since its spinoff in 1998 after Dillon Read was acquired by Swiss Bank Corporation (a predecessor to UBS AG).
| Contact: | Rich Petrocelli | |||||
| Saratoga Investment Corp. | ||||||
| 212-906-7800 | ||||||
| Roland Tomforde | ||||||
| Broadgate Consultants | ||||||
| 212-232-2222 | ||||||
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