Congratulations! Your boss was just accused of running an $8 billion Ponzi scheme. Yes, you’re still employed. No, you can’t file for unemployment. Yes, you have to come to work. No, you won’t get paid. Yes, your reputation is trashed. No, you won’t get severance if and when you’re released.
Such is life for Allen Stanford’s swindled employees.
Stanford employees have been left in limbo, unsure if they’re still on the payroll or will receive pending paychecks.
Federal regulators sent Stanford Financial Group employees home last week after seizing the company and freezing its assets. At the Houston offices, regulators told workers they were still employed and would continue to receive paychecks. Some were even called back in to work.
But no one was paid Friday, the company’s payday.
“That leaves me staying here and not going to Florida for two weeks to take care of my mum, who has cancer,” said Lynette Burns, who worked for three years in the company’s marketing department in Houston. Friday’s check would have been two weeks worth of wages. “It’s left a lot of my colleagues unable to pay their mortgage, and unfortunately with the economy the way it’s been, a lot of people are living paycheck to paycheck.”
A written statement posted on the receiver’s Web site credits “extraordinary financial circumstances” for the failure to meet payroll and promised more information next week.
“The receiver acknowledges that all employees have a claim for salary or wages accrued during the two-week period ending Friday, February 27, 2009,” the statement reads…
Similar to a bankruptcy, in a receivership claims are prioritised. Wages are considered unsecured claims, meaning they’re lower on the priority list.
“What if the receiver does not have the money to pay the employees? They have a claim. But that’s all it is, a claim,” said David Findling, a Michigan attorney who specialises in running receiverships.