See the results »
View previous polls »
A thief walks unseen into a church and drops stolen cash into the collection plate.
Can the church — unaware of the money’s source — keep and spend it?
No, not legally, because the money belongs to the thief’s victims.
That was the parable U.S. Court of Appeals Chief Judge Richard Posner used in a 1995 ruling to force a religious group to return funds it received from Ponzi architect Michael S. Douglas.
His ruling is the basic premise of a lawsuit filed Tuesday that would grab back $7.3 million from St. Jude Children’s Research Hospital; its fundraising arm, American Lebanese Syrian Associated Charities; and the Le Bonheur Children’s Hospital Foundation.
The lawsuit calls for the money to be returned to investors allegedly defrauded by the Stanford Financial Group’s Ponzi scheme.
The group of Stanford investors call the suit they filed against the Memphis nonprofit organizations Tuesday an “unfortunate reality.” They say the money was “stolen” from them by Stanford Financial Group and they want it back.
The $7.3 million suit is one of many lodged across the globe by amittee that represents thousands of investors trying to retrieve billions they lost in Stanford’s Ponzi scheme.
The group, called The Official Stanford Investorsmittee, sued the Le Bonheur foundation, St. Jude and ALSAC for charitable contributions made by Stanford since 2006.
The investorsmittee is a seven-member groupprising a court-appointed examiner, and attorneys and investors who represent those allegedly defrauded by Stanford’s scheme.
“We regret having to take this action, but the bottom line is that this was stolen money that was, unfortunately, given to many charities by Allen Stanford,” saidmittee member and San Antonio attorney Edward C. Snyder. “Our function is to recover the stolen money, just as the Madoff Trustee is doing.”
Themittee issued a statement Wednesday saying so far it has identified “hundreds of millions” of dollars fraudulently transferred from Stanford to third parties who, by law, have to return the money, themittee said.
“These recipients of stolen investor funds include professional athletes, political campaigns, various professional service providers and unfortunately, charitable organizations,” the statement said. “In many instances, the funds stolen from Stanford’s victims were used to buy legitimacy and further perpetuate the Ponzi scheme.”
A representative from the Le Bonheur Foundation said they were “baffled” by the suit’s grouping.
“It doesn’t make a lot of sense from our end why we’re bundled in with them on this specific lawsuit,” said Le Bonheur spokeswoman Anne Glankler. “Stanford did give a financial donation to us, specifically to the capital campaign (to build the new Le Bonheur Children’s Hospital). So, it’spletely separate from ALSAC and St. Jude and any of the funds they gave to them.”
While taking tainted money back from a nonprofit group may seem unfair, legal precedent exists and experts say these cases aremon.
Ponzi law expert Kathy Bazoian Phelps has represented numerous trustees and receivers in Ponzi cases and is a partner in Los Angeles law firm Danning, Gill, Diamond & Kollitz.
She said claiming back money from nonprofit organizations in Ponzi cases can be a “difficult call” that can depend on the type of the charity, how much money is at stake and whether the charity took the money knowing it was tainted.
“If there really was good faith across the board and smaller dollars at issue, many trustees and receivers will make the political call, if you will, not to pursue (nonprofit organizations),” she said. “You have to balance the sympathy you have for the charity against the sympathy you have for the defrauded investors.”
Similar Posts:
- A Veteran Venture Capitalist on Needing That Plan
- Disrupt Education. Save the World.
- Carilion Clinic’s financial bottom line improves
- Memphis’ Regional Medical Center moves to become more competitive, change patients’ perceptions
- Nonresidential: Commercial Environment Improves
