(CN) - A fund controlled by the Libyan government can hold onto $54.8 million in payments it allegedly received from Allen Stanford's massive Ponzi scheme, the 5th Circuit ruled, just as another court sat poised to put the disgraced executive away for life.
Court-appointed receiver and Dallas attorney Ralph Janvey filed a federal complaint last year against the Libyan Investment Authority and the Libyan Foreign Investment Company. He claimed that Stanford had fraudulently transferred $54.8 million of $101 million in illegal proceeds to the Libryan-controlled entities.
The Northern District of Texas refused to order a preliminary injunction against the authority's funds, and the New Orleans-based federal appeals court affirmed Wednesday.
"Because we conclude that the Foreign Sovereign Immunities Act prevents the entry of such an injunction, we affirm the district court's judgment," the unsigned decision from a three-judge panel states.
Since a preliminary injunction would effectively freeze the authority's funds before resolution of the merits of the case, it would act as an attachment in violation of the ban against attachments under the Foreign Sovereign Immunities Act, the judge said.
Janvey also failed to show the funds are not "property of a foreign state," according to the court, which said there is no evidence that the sought-after money has ever been the subject of a fraudulent transfer by the Stanford International Bank.
"The funds sought by the receiver are 'property of a foreign state' and are not subject to attachment," the panel wrote Wednesday.
Libyan Investment Authority is the sole shareholder of the Libyan Foreign Investment Co., which allegedly withdrew $51.6 million from the funds it had invested with Stanford just before regulators uncovered the fraud and the Stanford fund collapsed. Since the Libyan entity had invested $139.6 million with Stanford, the District Court concluded that it had been the scheme's "biggest net loser."
On Thursday, Stanford was sentenced to 110 years in federal prison for his role in the scheme.