Assets of Stanford investors to stay frozen: court

Texas billionaire Allen Stanford gives members of the media a thumbs up as he leaves the Bob Casey Federal courthouse in the custody of U.S. Marshals in Houston June 29, 2009.

LOS ANGELES (Reuters) - A U.S. appeals court ruled on Tuesday that assets of some customers of accused swindler Allen Stanford will remain frozen while the court decides whether their principal -- not just ill-gotten "interest" -- can be "clawed back" to repay victims of Stanford's alleged $7 billion Ponzi scheme.

Stanford is in jail awaiting trial after pleading not guilty to 21 criminal counts related to an alleged fraudulent scheme centering on the sale of phony certificates of deposit issued by his Stanford International Bank in Antigua.

Ralph Janvey, the Dallas attorney appointed by a federal court to oversee assets owned by Stanford, last month sued about 600 holders of $925 million worth of the CDs who had cashed out before Janvey took over as receiver.

Janvey asked a Dallas court to freeze the funds, now held in investment accounts at Pershing LLC, JPMorgan Clearing Corp and SEI Private Trust Co, while he litigates how much of the funds can be used to pay back other Stanford investors.

The trial court ruled last month that proposed claw back of investors' principal is not legal, and the injunction freezing those accounts was set to expire on August 13.

The case is now before the Fifth U.S. Circuit Court of Appeals. The appeals court on Tuesday said it will expedite the case, with a hearing tentatively set for November 2.

In a statement, Janvey said he was "pleased" with the appeals court ruling, and that he hoped to protect all investors affected not just those who were able to cash out before the receivership took effect.

The $925 million is the largest asset in Stanford's estate, which also included dozens of offices, mansions, private jets and a yacht.

The U.S. Securities and Exchange Commission, which has filed a separate case against Stanford, has opposed Janvey's lawsuit, saying it would harm innocent investors who did not act improperly.

In its order on Tuesday, the appeals court said it would allow the SEC to file an opposition in the case.

The case is Janvey v. Alguire et al, case no. 4:09-cv-00724 in federal court in Dallas.

(Reporting by Gina Keating; editing by Carol Bishopric)