March 4, 2009 — With dozens of St. Croix employees of Stanford Financial Group suddenly left jobless in the wake of allegations of massive fraud, court orders appointing a receiver and freezing the assets of financier Allen Stanford, the V.I. Labor Department held a rapid-response workshop to help them sign up for unemployment benefits.
The Securities and Exchange Commission filed a complaint against Stanford in February, alleging fraud at the Antigua-based Stanford International Bank, triggering the freezing of assets and closures on St. Croix and elsewhere. (See "St. Croix Projects Uncertain as Feds File Charges Against Stanford.")
Dallas attorney Ralph Janvey has been appointed by the U.S. District Court in Dallas, Texas, as the receiver for Stanford's assets. Locally, the law firm of Dudley, Topper and Feuerzeig are the assigned receivership representatives for Stanford Financial Global. On Feb. 24, the receiver's agents locked up Stanford's offices on St. Croix, leaving employees in the lurch.
The department's Rapid Response Workshops are designed for mass layoffs or plant closings, to provide workers who were severed from their places of employment with vital information about the various services available to them to help in the transition.
About 38 former employees came out for the workshop Wednesday at Gertrude's Restaurant in Castle Coakley, where Labor Department officials Prudence Tuitt and Jaime Velez showed a film on the benefit process, spoke about what to expect and what to do, and helped the employees file for benefits.
"About 12 more came in last week asking questions," Tuitt said. With a large group, it is much more efficient to address them all at once rather than process them one at a time at the Labor Department offices, she said.
Last year Stanford held a groundbreaking for a large complex by the Henry E. Rohlsen International Airport on St. Croix. The complex was to be the base for the corporate-support functions of Stanford's global network of financial-services companies; house the business technology, compliance, finance, human resources, investment strategy and legal departments of Stanford Global Management; and be the headquarters of Stanford Caribbean Investments. Workers interviewed at the workshop said the headquarters were not fully up and running when operations were shut down, but staff had been hired and some work was being done. While waiting for construction to begin on the planned office complex, Stanford staff were working out of offices in Christiansted's Kings Alley Hotel, which Stanford owns, and out of Bjerget House, a $7 million historic Christiansted mansion owned by Stanford.
The newly unemployed run the gamut from information-technology professionals to investment analysts to electricians. What they all share is a sudden employment crises and financial uncertainty.
"I sold my house and moved here with my family to take this job," said Kenneth Cary, an IT professional who said he was a senior vice president at Citigroup for 10 years before joining Stanford a year and a half ago. "Now my family is here, my house is here. I've been looking off-island for work. I will probably have to leave my family here and let my kids finish school while I look for work. It's been a struggle."
Velez had good and bad news for the workers.
The amount of unemployment benefits depends on both the employee and employer contributions to unemployment insurance.
"For you to get the employer share of the contributions, the employer would have to have deposited their contribution," he said. But not all Stanford's employer contributions had been made, and with all the assets frozen by the receiver for now, it is not clear when or if those employer contributions will be made.
Employees' 401(k) retirement plans are frozen and out of reach, too, said Shaun Dalton, an investment analyst for Stanford.
"Legally Charles Schwab and you own the funds in your 401(k)," Dalton said. "Stanford has never been the owner. But because the receiver has frozen all funds related to Stanford, you can't have your money."
Dalton said he believed the receiver was "out of control."
On the brighter side, unemployment checks should come quickly for those who sign up.
"Payments could start in about two weeks if you sign up now," Velez said. "We strive to have that unemployment check within several days."
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