The motion, submitted by an attorney for the receiver, stated that 16,000 accounts containing assets of $4.1 billion would be released, leaving another 4,000 with assets of $1.8 billion frozen. Previously, Godbey had granted a motion releasing accounts with assets of less than $250,000.
The SEC complaint, filed Feb. 17, alleges a massive fraud surrounding CDs issued by Stanford National Bank, part of Stanford's Houston-based financial empire. Earlier this week, Stanford asserted his Fifth Amendment right against self-incrimination when asked to testify before the SEC.
Kevin M. Sadler, the lead attorney for the receiver, stated in the motion that releasing the additional accounts will make it more difficult to recover claims, but the move was considered necessary to ease the financial difficulties faced by a large number of Stanford customers.
"The hardship of a continued hold on these accounts must be balanced against the benefits of the hold," he wrote.
Attorneys representing Stanford clients attended the hearing but weren't given the opportunity to speak. Several left the courtroom grumbling, saying the receiver is still penalizing investors who had nothing to do with the alleged fraud.
Dallas attorney Ernest Leonard said most of the 100 investors he represents have a mixture of funds in their accounts and about half received proceeds from Stanford CDs, making it likely that their assets will remain frozen.
"My clients weren't involved in the wrongdoing," he said. "(The receiver) should release their money, and, if he feels he has a claim, file a lawsuit."
Also during Thursday's proceeding, Godbey declined to deal immediately with an emergency motion filed by the attorney for Stanford's chief investment officer, Laura Pendergest-Holt. She is seeking to overturn an order placing her assets under control of the receiver.
Godbey said he wanted to review briefs before conducting a hearing on the motion, which claims that Pendergest-Holt agreed to placing her assets under the receiver's control without knowing she would be the subject of criminal charges. The government has charged her with obstructing justice for allegedly lying about her knowledge of the company's activities.
The motion contends that the receiver's attorneys engaged in a "stunning act of bad faith" when they seized Pendergest-Holt's family car and rummaged through her personal possessions at her Mississippi home.
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