Sonntag, 27. Dezember 2009

Feds probe banker Allen Stanford's ties to Congress

Stanford and Barack Obama December 27, 2009

The ties between indicted banker Allen Stanford and members of Congress -- including millions in contributions and weekends in five-star Caribbean resorts -- are now the subject of a sweeping federal investigation.

Just hours after federal agents charged banker Allen Stanford with fleecing investors of $7 billion, the disgraced financier received a message from one of Congress' most powerful members, Pete Sessions.
"I love you and believe in you," said the e-mail sent on Feb. 17. "If you want my ear/voice -- e-mail," it said, signed "Pete."
The Ponzi scheme was able to continue for so long due to "institutional influences" within the SEC.
As Feds Closed In, Stanford Boosted Efforts To Buy Influence.
The message from the chair of the National Republican Congressional Committee represents one of the many ties between members of Congress and the indicted banker that have caught the attention of federal agents.

The Justice Department is investigating millions of dollars Stanford and his staff contributed to lawmakers over the past decade to determine if the banker received special favors from politicians while building his spectacular offshore bank in Antigua, The Miami Herald has learned.

Agents are examining campaign dollars, as well as lavish Caribbean trips funded by Stanford for politicians and their spouses, feting them with lobster dinners and caviar.

The money Stanford gave Sessions and other lawmakers was stolen from his clients while he carried out what prosecutors now say was one of the nation's largest Ponzi schemes.

Sessions, 54, a longtime House member from Dallas who met with Stanford during two trips to the Caribbean, did not respond to interview requests.

Supporters say the lawmaker, who received $44,375 from Stanford and his staff, was not assigned to any of the committees with oversight over Stanford's bank and brokerages.

His press secretary, Emily Davis, said she was unable to comment on the e-mail sent at 11:31 a.m. on the day Stanford was charged by the U.S. Securities and Exchange Commission. "I haven't seen it, so I can't verify its authenticity at this time," she said.

But the message found on Stanford's computer servers and the contributions he made to Sessions and other lawmakers -- totaling $2.3 million -- are now part of the government's inquiry.

Records show Stanford also doled out $5 million on lobbying since 2001, setting up his own Washington firm last year with expensive furnishings and artwork -- the money plundered from his customers' accounts.

Over the years, he took on battles to protect his banking network while fending off regulators.

In 2001, he pressed successfully to kill a bill that would have exposed the flow of millions into his secretive offshore bank in Antigua.

The next year, he helped block legislation that would have drawn more government scrutiny to his bank.

While he was fighting reforms to financial secrecy and offshore banking laws, Stanford was hobnobbing with dozens of lawmakers.

Stanford hosted New York Congressman John Sweeney's wedding dinner at his five-star restaurant in Antigua in 2004 -- toasting the couple for photographers -- and staged a cocktail fundraiser for now-disgraced Ohio congressman Bob Ney at his bayfront Miami office.

"He legitimized himself by having himself vetted by powerful members of Congress," said Steven Riger, a former vice president at Stanford's Miami brokerage. "It was all about the public's perception."

The federal investigation comes after months of criticism from victims' groups complaining that elected leaders failed to vet Stanford before accepting money from him the past 10 years. If they had, they would have discovered that the U.S. State Department in 1999 concluded that Stanford helped create a haven for money-laundering in Antigua.

Political contributions from Mr. Stanford and his affiliated companies. For which purpose?
$950,000 Democratic Senatorial Campaign Committee
$238,500 National Republican Congressional Committee
$202,000 Democratic Congressional Campaign Committee
$128,500 Republican National Committee
$ 83,345 National Republican Senatorial Committee
$ 25,000 Rangel Victory Fund
$ 16,000 Friends of Chris Dodd
$ 14,000 Shelby for US Senate
$ 11,500 Chris Dodd for President
$ 10,000 New Jersey Democractic State Committee
$ 10,000 Representative Pete Sessions (R-TX)
$ 8,000 Friends for Harry Reid
$ 6,600 Representative Gregory Meeks (D-NY)
$ 6,100 Senator Bill Nelson (D-FL)
$ 5,000 Americans for a Republic Majority PAC
$ 5,000 Friends of John Boehner
$ 5,000 Friends of Jay Rockefeller
$ 5,000 Delegate Donna Christensen (D-USVI)
$ 5,000 Representative Charles Gonzalez (D-TX)
$ 5,000 KPAC (affiliated with Senator Kay Bailey Hutchinson of Texas)
$ 5,000 Lone Star Fund
$ 5,000 Representative Charles Rangel (D-NY)
$ 5,000 Senator Roger Wicker (R-MS)
$ 4,600 Senator Barack Obama (D-IL) (presidential campaign)
$ 4,550 Representative Dan Maffei (D-NY)
$ 4,000 Arcuri for Congress
$ 4,000 Senator John Cornyn (R-TX)
$ 4,000 Representative Richard Neel (D-MA)
$ 4,000 Senator Charles Schumer (D-NY)
$ 3,300 Representative Charles Rangel (D-NY)
$ 3,300 Pete Olson for Congress
$ 3,000 Representative James E. Clyburn (D-SC)
$ 3,000 Representative Rahm Emanuel (D-IL)
$ 3,000 ERICPAC
$ 3,000 Leadership PAC 2006
$ 3,000 Alexander for Senate 2014, Inc.
$ 3,000 Mel Watt for Congress
$ 2,550 Representative Eric Massa (D-NY)
$ 2,550 Representative Mike McMahon (D-NY)
$ 2,500 Senator Richard J. Durbin (D-IL)
$ 2,500 Freedom Fund
$ 2,500 Representative Timothy Johnson (R-IL)
$ 2,500 Representative Paul Kanjorski (D-PA)
$ 2,500 Senator Mary Landreiu (D-LA)
$ 2,500 Representative John Lewis (D-GA)
$ 2,500 Senator Mitch McConnell (R-KY)
$ 2,500 National Leadership PAC
$ 2,500 Friends of Mark Warner
$ 2,500 Representative Adam Putnam (R-FL)
$ 2,500 Senator Gordon Smith (R-OR)
$ 2,500 Former Senator John Sunnunu (R-NH)
$ 2,500 Representative John Tanner (D-TN)
$ 2,500 Representative Bennie Thompson (D-MS)
$ 2,500 Collins for Senator
$ 2,500 Campaign Account of Robert Wexler
$ 2,300 Minnick for Congress
$ 2,300 Representative John Boccieri (D-OH)
$ 2,300 Representative Deborah Halvorson (D-IL)
$ 2,300 Senator John McCain (R-AZ)
$ 2,300 Olson-Texas Victory Committee
$ 2,300 Senator Roger Wicker (R-MS)
$ 2,100 Senator Orrin Hatch (R-UT)
$ 2,000 Senator Patty Murray (D-WA)
$ 2,000 Neugebauer Congressional Committee
$ 2,000 Lloyd Doggett for Congress
$ 2,000 People for Patty Murray
$ 2,000 Representative Spencer Bachus (R-AL)
$ 2,000 Senator Evan Bayh (D-IN)
$ 2,000 Reprentative Kevin Brady (R-TX)
$ 2,000 Representative Vern Buchanan (R-FL)
$ 2,000 Representative Dave Camp (R-MI)
$ 2,000 LEADPAC
$ 2,000 Representative Ileana Ros-Lehtinen (R-FL)
$ 2,000 Representative Lamar Smith (R-TX)
$ 2,000 Representative Patrick Tiberi (R-OH)
$ 2,000 Representative Donald Payne (D-NJ)
$ 1,500 Representative Sam Johnson (R-TX)
$ 1,500 Representative Peter King (R-NY)
$ 1,500 Representative Kendrick Meek (D-FL)
$ 1,500 David Scott for Congress
$ 1,500 Charles Boustany Jr. MD for Congress
$ 1,000 Representative Joe Barton (R-TX)
$ 1,000 Senator Max Baucus (D-MT)
$ 1,000 Senator Maria Cantwell (D-WA)
$ 1,000 Representative Shelley Moore Capito (R-WV)
$ 1,000 Representative Steve Cohen (D-TN)
$ 1,000 Former Senator Elizabeth Dole (R-NC)
$ 1,000 Senator Byron L. Dorgan (D-ND)
$ 1,000 Representative Michael McCaul (R-TX)
$ 1,000 Freedom Funds - Mike Crapo, Honorary Chairman
$ 1,000 Barney Frank for Congress Committee
$ 1,000 Senator Pat Roberts (R-KS)
$ 1,000 Marsha Blackburn for Congress
$ 500 Representative Steve Cohen (D-TN)

Visit the Stanford International Victims Group - SIVG official forum

Donnerstag, 26. November 2009

Stanford victims ask why Texas didn't act sooner

November 26, 2009
By Brian Gaar
In the aftermath of the R. Allen Stanford case, some local investors are asking: Where was the State of Texas?

Investors who lost money in the Houston financier's alleged Ponzi scheme now say the state's financial oversight was too lax.

"We have the right to know what the (Texas State Securities Board) knew and when they knew it, details of their past investigations, and why they didn't disclose anything to the citizens of Texas all these years," Austin investor Annalisa Mendez said.

In fact, the state looked into Stanford's dealings years ago.

The Securities Board wrote a memo in the mid-1990s, expressing concern "that the high return rates and commissions for CDs made it difficult for the Stanford bank to make a legitimate profit on the CDs," according to a September Financial Industry Regulatory Authority report on the aftermath of both the Bernard Madoff and Stanford cases.

FINRA is a private corporation that provides regulatory oversight of all securities firms nationwide.

Texas Securities Commissioner Denise Voigt Crawford mentioned the securities board's involvement with the Stanford case in Feb. 20 testimony to the state Senate Committee on Finance, just after the scandal broke.

"We looked at him about 10 years ago, because there was evidence of potential money-laundering," Crawford said in response to a question from state Sen. Steve Ogden, R-Bryan.

The FBI and the Securities and Exchange Commission took the case, "which is what should have happened," she said. "But why it took 10 years for the feds to move on it, I could not answer."

The SEC has been criticized by investors who say the agency didn't do enough, quickly enough, to stop Stanford.

In 2003, some Stanford employees told the SEC they suspected fraud at the company.

In 2005, the SEC's Fort Worth office started an informal investigation into the sale of certificates of deposit by Stanford International Bank, which is based in Antigua.

But it was not until this past February that the SEC sued Stanford, alleging he was running a "massive Ponzi scheme" based on fraudulent CDs.

The SEC's inspector general concluded in a report that the agency had fulfilled its duty to check out accusations against Stanford.

The report found that the agency's inquiry was "hampered by a lack of cooperation" from Stanford and his attorneys, as well as by jurisdictional obstacles and obstruction by regulators in Antigua.

Stanford's attorney, Kent Schaffer, denied that his client had operated a Ponzi scheme, saying that money from the CD program was invested in a "wide range of investments."

What caused the losses were the government's lawsuit and fraud investigation, which prompted a run on the bank, he said.

Visit the Stanford International Victims Group - SIVG official forum

Donnerstag, 19. November 2009

Stanford lawyers and Lloyd's of London butt heads in court

November 19, 2009
R. Allen Stanford sat in court glumly for three hours Tuesday while a dozen lawyers debated whether insurance should pay for his criminal attorneys and whether those lawyers will have to report to a civil receiver when they find something new in the case.

Lloyd's of London lawyers announced in court that under a Stanford company policy, they've paid out $4.2 million to some criminal defense lawyers for work done before the August guilty plea of the Stanford company's chief financial officer, James Davis.

The Lloyd's lawyers said they won't pay further for the criminal defense of Stanford or those accused with him because Davis said they conspired with him. They said that the insurance contract said Lloyd's could stop payment if it determined money laundering was committed. Though Davis didn't plead guilty to money laundering, Lloyd's contends the terms of the policy were violated.

Dan Cogdell, lawyer for the former Stanford chief investment officer, Laura Holt, disputed that position.

"It's a bad faith denial of coverage," he said.

Stanford, Holt and others are accused of cheating investors who bought certificates of deposit issued by Stanford International Bank, on the Caribbean island of Antigua, and sold through companies affiliated with Houston-based Stanford Financial Group.

Stanford, a native Texan who founded Stanford Financial Group and is the only one of the defendants in the case who is behind bars while awaiting trial, faces 21 counts of conspiracy, fraud, bribery and obstruction of justice.

Lawyers for Stanford and other defendants asked U.S. District Judge David Hittner to order Lloyd's to pay on its policy, possibly unprecedented in a criminal case.

"We're in uncharted water," Hittner said, asking lawyers on both sides to submit briefs on the issue.

Hittner observed that the insurance lawyers' position would mean taxpayers have to pay for legal representation of Stanford and his codefendants.

Frozen assets

The payment of the criminal defense lawyers has been an ongoing issue. When the Securities and Exchange Commission filed a civil fraud suit last February in Dallas, it froze all the company assets and the personal assets of Allen Stanford and Holt.

Holt filed a separate lawsuit against Lloyd's in Houston federal court Tuesday, saying it was denying her coverage in bad faith. It's unclear whether Hittner will hear that case.

Also discussed Tuesday, but left undecided, is whether a receiver appointed by the Dallas court in the SEC case should be allowed to force criminal defense lawyers to hand over information they obtain while conducting their defense investigations.

Constitutional rights

Kent Schaffer, Stanford's lawyer, argued that the receiver's demands could violate defendants' constitutional rights and interfere with attorney-client privilege.

On that and the insurance issue, prosecutor Gregg Costa asked the judge to consider moving the case along as quickly as possible, especially since Stanford is imprisoned.

Stanford, who has had two surgeries since he went to jail in late June and has dropped more than 35 pounds, was unshaven and gaunt.

Concern on health

He leaned his head down so much at the beginning of the hearing that Hittner asked his lawyers to check on him and admonished that if Stanford is not well enough to attend court, he should stay in the detention center downtown.

Stanford perked up during a break, engaging in animated conversation with two U.S. marshals.

Visit the Stanford International Victims Group - SIVG official forum

Dienstag, 3. November 2009

Miami's ex-DEA chief could escape charge in Allen Stanford case

November 3, 2009
By Rob Barry and Michael Sallah
In a blow to prosecutors, a federal judge Monday called for the dismissal of an obstruction charge against Miami's former DEA chief in the Allen Stanford bank fraud case.

Two months after one of Miami's most celebrated drug cops was charged in the Allen Stanford financial scandal, a federal magistrate is recommending that one of the key charges be thrown out.

Judge Robin Rosenbaum said prosecutors failed to prove Tom Raffanello -- head of security for Stanford's worldwide enterprise -- interfered with a federal investigation by ordering the destruction of reams of company documents.

The former Drug Enforcement Administration chief, who left the agency to join Stanford's security force in 2004, was charged with ordering the shredding of records just days after federal agents shut down Stanford's empire in a massive fraud case in February.

Though prosecutors said Raffanello defied a court order by destroying the documents, Rosenbaum said the government failed to show he impeded the U.S. Securities and Exchange Commission's probe.

The magistrate fell short of rejecting the entire case, however, saying prosecutors were able to show the former drug cop destroyed records in the course of a federal investigation. Her recommendation will be taken up by presiding Judge William Zloch later this month.

The charges over the destruction of the records -- including sensitive background checks on employees and investors -- are just part of the government's case against Stanford, who prosecutors say orchestrated a $7 billion Ponzi scheme.

Raffanello's attorney, Richard Sharpstein, said he was pleased with Rosenbaum's recommendation. "We hope Judge Zloch not only agrees with Judge Rosenbaum, but throws out the entire case," he said.

Lead prosecutor Paul Pelletier could not be reached on Monday. However, prosecutors have argued in prior hearings that Raffanello and co-defendant Bruce Perraud were aware of a judge's order to preserve all company documents when they called a shredding truck to the company's Fort Lauderdale security bunker on February 25.

Federal agents have been scrambling to trace billions of dollars that flowed through Stanford's Antiguan bank over the past decade.

Ruling mostly on technical grounds, Rosenbaum said the order to preserve the records was for the court-appointed receiver and not the SEC. "[The indictment] does not assert that defendants knew that when they allegedly obstructed the receiver's investigation, they were also interfering with the SEC's proceeding," Rosenbaum wrote.

She also threw out a portion of a conspiracy count relating to the obstruction charge. A trial on the remaining counts is tentatively set for January.

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Montag, 5. Oktober 2009

Receiver Goes after Law Firms

October 5, 2009
By Hazra C Medica
Court-appointed receiver Ralph Janvey has turned the spotlight on two law firms. The Miami Herald reported over the weekend that Janvey, who has been working with federal agents, is now pressing for more information directly from Stanford's lawyers.

The receiver has made a request for legal files provided to R Allen Stanford by Greenberg Traurig and another firm, Hunton & Williams. The Herald listed this latest move by Janvey as "one of the most aggressive moves waged by the receiver to search for assets from Stanford's far-flung banking network".

While Greenberg Traurig is not under criminal investigation, the firm is facing a legal review of its actions in Antigua. Ross Gaffney, a former FBI agent who investigated Stanford, was quoted as saying: "I'm sure one of the things they will look at is what did Greenberg Traurig know, and when did they know it, and did they have any liability?"

According to the article, Greenberg Traurig's effort to assist Stanford in 1998 was but one move in a series which saw the Florida law firm rescuing Stanford from crisis and propelling his business interests. The Herald sought interviews with five lawyers who represented Stanford while working for the firm. Two of the five declined to comment, but assured that they were simply providing legal support and were not aware of any illegal schemes by Stanford.

The article spoke of a "money pipeline" between Miami and Antigua which Greenberg lawyers helped Stanford create. It went on to describe Stanford's creation of a trust office in downtown Miami which could move millions overseas without reporting anything to the government.

According to the article, "The unusual arrangement -- created over the objections of Florida's chief banking lawyer -- let Stanford open the office without submitting to fraud checks or money-laundering requirements. Over the next decade, the Miami center sold millions in Stanford's key investments -- certificates of deposit -- the checks stuffed in pouches and sent in jets to Antigua."

The article also chronicled the changes in Antigua's banking system and Stanford's effort to "keep the pipeline alive". The US Treasury, the article explained, was considering blacklisting all of Antigua's offshore institutions because of money laundering and fraud. In response, Stanford met with then prime minister, Lester Bird and agreed to pay out of his own pocket for a task force to rewrite the banking laws.

This task force, the article said, which included Greenberg lawyer Carlos Loumiet, met in Miami and St John's to examine ways to avoid a shutdown of the banks. According to the article, the 1998 legislation gave birth to a new regulatory agency - with Stanford on board - which would give protection to the investor from regulators for the next decade.

The Herald pointed to a particular incident which highlighted the power Stanford gained in Antigua by owning the largest bank. It spoke of the new regulatory agency requesting all of the island's secret offshore banking records. The head regulator, Althea Crick, refused. The agency waited until Crick had left for the day before seizing the filing cabinets containing the records and taking them to another building.

According to the story, the February 1999 takeover was approved by the new regulatory board, including an advisor to Bird, Errol Cort. The Herald rebutted statements which suggested that the takeover "was not done under the cover of darkness". According to the article, records show that Cort was a director of Stanford Trust Company and one of Stanford's Antigua lawyers.

International pressure from US and British authorities would later force Stanford to step down from his position and Antigua officials agreed to change the laws crafted by the task force. However, according to the article, "the momentum was in motion to help Stanford's bank for years to follow."

It noted, "With the new regulatory agency enforcing new banking rules, most of the 56 offshore banks on the island were eliminated, swatting away much of his competition." It also explained that court records show that Stanford's own bank was fabricating financial reports at the same time he was taking over the regulatory agency.

With millions of dollars coming into the Antiguan bank, Stanford switched to Hunton & Williams, after Loumiet joined the firm in 2001. In 2002, regulator Crick was replaced by Leroy King, who has been accused of taking more than $200,000 in bribes.

Loumiet and Hunton & Williams have agreed to turn over records of legal work for Stanford's US companies to Janvey. But they are fighting to keep secret the details of Stanford's businesses in Antigua and other foreign countries.

A spokeswoman for Hunton & Williams, Eleanor Kerlow, was quoted as saying: "There are legal issues regarding jurisdiction and client privilege that must be resolved before we proceed further."

According to the Herald, it is anticipated that Houston Judge David Godbey will decide whether the firm must meet Janvey's demands. Kristie Blumenschein, an attorney with the receiver's firm, has indicated that they are ready to fight for the records. According to Blumenschein, Janvey will not only search for assets, but the actions of the lawyers, dating to the 1990s, will also be under review.

It is being suggested that Janvey can demand lawyers be coerced into testifying about what they knew, since any conversations they had with Stanford about his ongoing crises are not protected by attorney-client privilege.

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Freitag, 2. Oktober 2009

Finra Missed Chances to Catch Stanford and Madoff

David Kotz October 2, 2009
By Joshua Gallu, David Scheer and Ian Katz

The Financial Industry Regulatory Authority didn't fully probe transactions at Bernard Madoff's firm and repeatedly failed to investigate tips about R. Allen Stanford's alleged $7 billion fraud, an internal report found.
David Kotz.
Employees at the U.S. brokerage industry's main regulator must more aggressively exercise their authority, and escalate suspicions of serious fraud to senior managers or special investigators, according to the report released today. Finra said it will create an Office of Fraud Detection and Market Intelligence to ensure that investigators with expertise in fraud detection can respond rapidly.

The report shows regulatory lapses linked to Madoff's record Ponzi scheme weren't confined to the Securities and Exchange Commission, which has been faulted by its own internal watchdog for inadequately pursuing tips over 16 years. In Stanford's case, Finra also received "credible information" from at least five sources, including the SEC, according to the internal report.

"As regulators, we owe it to investors -- especially those harmed by recent scandals -- to develop a better, more comprehensive, response to fraud," Finra Chief Executive Officer Richard Ketchum said in a statement. "I am committed to taking the lessons from the report's findings to make Finra even stronger."

SEC Chairman Mary Schapiro led Finra and its predecessor NASD from 2006 until taking over the SEC in January this year. During that time, the brokerage regulator conducted some examinations of Madoff's firm and fined Stanford Group Co. The SEC oversees Finra and approves its rules.

Jurisdictional Limits

In a series of reports this year, SEC Inspector General H. David Kotz has faulted his agency's oversight of Madoff and examined its attempts to investigate Stanford. In the Stanford case, he concluded the SEC was hampered by jurisdictional limits and Stanford's refusal to cooperate.

Kotz found that the SEC never fully investigated at least six tips on Madoff since 1992 while he was building a $65 billion Ponzi scheme. While there is no evidence that Finra received similar whistleblower complaints, its examiners did uncover several facts worthy of inquiry that, "with the benefit of hindsight, should have been pursued," the Finra report said.

In 2005, the SEC sent a five-page letter to Finra about Stanford. The letter said his certificates of deposit "appear too good to be true" and that his firm had aggressive sales tactics commonly associated with fraudulent schemes.


According to the report, Finra's lead examiner "thought the letter signaled that the SEC had taken over the CD case" when it was actually meant to refer the investigation to Finra. In light of the misinterpretation, the examiner "did not do all he could have done on the CD issue."

In 2006, Finra examiners noticed Madoff was making payments to Cohmad Securities Corp., according to the report. Had examiners sought more documents, they might have realized that the fees were for steering clients to Madoff's investment advisory business. Such a discovery "may not have uncovered the Ponzi scheme, but it would have undermined the Madoff firm's longstanding representations" that it didn't have customer accounts, the report said.

In 2007, Finra staff uncovered commissions from a London affiliate that criminal investigators have linked to money laundering, according to the report. If examiners had fully scrutinized the transactions, they may have fueled suspicions and prompted a broader investigation, it said.

Anonymous Letter

In 2003, Finra received an anonymous letter calling Stanford's business a "massive Ponzi scheme that will destroy the life savings of many." The letter was not seen by the organization's enforcement staff until six years later after an analyst determined Stanford's CDs were not securities and therefore outside of Finra's jurisdiction, the report said. The analyst referred the letter to the SEC.

"By more aggressively using its authority, Finra could have obtained evidence of wrongdoing much earlier than it did," the report said.

If examiners had fully pursued information that Stanford's customers were selling securities to purchase CDs based on his allegedly false advertising, they might have found sufficient evidence of fraud, the report said.

On at least two occasions, Finra handled complaints from former Stanford employees who claimed they had been fired after refusing to sell CDs without conducting due diligence. One said Stanford was soliciting unsophisticated investors in Latin America and that the value of his bank's assets were "well below" his obligations to clients, indicating he was running a Ponzi scheme. Finra didn't follow up on the allegations, the report said.

150-Year Sentence

Madoff, 71, is serving a 150-year prison sentence after pleading guilty to a fraud that federal investigators said dated to at least the 1980s. Cohmad, which was sued by the SEC in June, has denied wrongdoing.

Stanford, 59, faces 21 fraud and conspiracy counts linked to what the SEC has called a "massive" scheme to defraud investors through the sale of bogus CDs by Antigua-based Stanford International Bank. He denies wrongdoing and remains in a Texas jail awaiting trial.

The report was prepared by a special panel formed to review Finra's examination program, particularly the Madoff Ponzi scheme and Stanford's alleged fraud. It was led by Charles Bowsher, U.S. comptroller general from 1981 to 1996. Other members included Harvey Goldschmid, a former SEC commissioner; Joel Seligman, president of the University of Rochester; and Ellyn Brown, Maryland's securities commissioner from 1987 to 1992.

Finra, funded by Wall Street firms and overseen by the SEC, writes rules for and polices almost 4,800 brokerages. Its board includes representatives of the financial industry along with former regulators and academics.

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Mittwoch, 23. September 2009

Stanford scam bilked Jews out of millions

By Todd Bensman
SAN ANTONIO, Texas - Over the past 15 years, Kadima, a Jewish charity in Mexico City, has helped developmentally disabled Jews live to their fullest potential. The charity, which has 250 beneficiaries, offers day care for adults with Downs Syndrome, and provides job training and placement for the mentally handicapped.

To ensure that the aid would be there despite the frequent turmoil in Mexico's economy, for years the charity has vigorously raised funds, and has scrimped and saved wherever possible. "What we really wanted to do with the money is to make sure the institution can go for another 10 years," said Sofie Freiman, head of Kadima's fundraising efforts. "It was a great deal of money for an institution that relies on donations by other people.
It took us 13 years to save it."

By 2009, Kadima had amassed enough money that its directors planned to expand the clinic and start up new programs.

Now, most of that money is gone. The charity had invested its nest egg with R. Allen Stanford's Houston-based Stanford Financial Group, which, according to U.S. prosecutors and the Securities and Exchange Commission, was an $8 billion Ponzi scheme. The alleged Stanford fraud is the world's second biggest Ponzi scheme, after the $65 billion Bernard L. Madoff case.

It has been widely reported that Madoff wiped out the fortunes of many wealthy Jewish families and charities. Now a GlobalPost Passport investigation reveals that, as a victim of Stanford, Kadima was far from alone among the Jewish communities of Latin America.

According to numerous interviews with victims, community leaders and lawyers representing them, Stanford laid financial waste to Jewish organizations and individuals of every income level. A lawyer representing Latin American victims estimates that half of the one billion dollars lost in Mexico came from the capital's 40,000-strong Jewish population. The smaller Jewish community of Caracas, Venezuela also appears to have been hit hard.

In both cities, Stanford - who was called Sir Allen after being knighted by the Antiguan prime minister in 2006 - mounted aggressive advertising campaigns and hired Jewish salesmen, who used their connections and trust within the community to bring in money.

The same way that many American Jews entrusted Madoff with their fortunes, many Latino Jews were so confident in the consistently high returns from Stanford's investments that they invested substantial portions of their savings with him.

And while he had many victims from other faiths, as a single ethnic group, the Jewish population was disproportionately hurt by the scandal. Many Christians were among his victims as well. Stanford is a graduate of Baylor University, a Baptist institute in Waco, Texas. He reportedly prayed with his sales force and used Christian connections to raise money. Nonetheless, the Jewish community is asking, did he deliberately target Jews? Or were they merely easy prey?

"This is where it's most painful, because they knew exactly who they were hurting," said Sofie Freiman, head of Kadima's fundraising efforts. Stanford's salesmen "targeted the Jewish community because they knew all these people. This is why we were hit. We are deeply hurt by this fraud and not just because we lost money."

It is well known that the $65 billion Madoff Ponzi operation exploited a phenomenon known to criminologists as "ethnic affinity crime" to gain the trust necessary to lure investments from thousands of American Jewish institutions and families. Madoff's exploitation of fellow American Jews has resonated as a caveat to future unsuspecting investors, not to be taken in by their own kind.

But dozens of interviews with Stanford victims and their lawyers show the scheme in Mexico alone left a trail cluttered with damage: Jewish schools struggling to pay teachers; widows and retirees without the means to support themselves; young married couples without wedding endowments; and once-wealthy families bereft of prosperity built over lifetimes. Childrens' college funds are gone. After-hours day care facilities are struggling, along with libraries and synagogues as donations from hard-hit donors dry up.

"Everybody knows somebody who got hurt," said Monika Unikel, a Jewish Mexican who conducts walking tours of a historic Jewish neighborhood. "In Mexico, so many Jews lost everything. A lot of widows and institutions lost their money from that. Each one has an individual story to tell, but no one has written it."

In Venezuela, the Jewish community of 14,000 reports many similar misfortunes from investing in Stanford, also the result of the company's strategy to hire trusted Jewish sales people from the community.

Chief Rabbi Penchas Brener, who represents Caracas' largest synagogue, acknowledged that he lost $50,000 to Stanford from the endowment of an important local foundation he heads. That's a substantial sum in a country where per capita income is less than a third of that in the U.S.

"I don't know how hard it hit the community, but I know it hit," Brener told GlobalPost.

Easy Prey

The Texas born Stanford's rise was nearly as abrupt as his fall. He had owned several gyms in Waco, Texas that went bankrupt in the 1980s. Afterwards, he emerged as a financier who grew an investment banking empire, based in Antigua and Houston. By the time he landed on the Forbes 500 list, he was known as a colorful multi millionaire aficionado of mansions, cricket, fancy cars and women - including exes to whom he paid lavish alimony.

In February 2009, the U.S. Securities and Exchange Commission filed a civil suit alleging that Stanford's operations were fraudulent. Subsequently, Stanford and all of its subsidiaries collapsed, leaving investors with between $6 billion and $8 billion in worthless paper. He is now in federal custody facing 21 counts of conspiracy, fraud, bribery and obstruction of justice. He insists he is innocent.

To clients, Stanford had peddled seemingly-safe certificates of deposit that paid as much as twice the market rate. According to the SEC, the assets were in highly-illiquid real estate and private equity investments. The firm's victims were more far-flung internationally than Madoff's, the bulk of them in Mexico, South America and the Caribbean.

As class action lawsuits and criminal indictments move forward, the Stanford strategy of targeting Latin American Jews is only now beginning to emerge, according to several of the American law firms signing on clients.

San Antonio lawyer Ed Snyder is one of several Texas and New York attorneys representing well over 1,500 Mexican and Venezuelan victims in various lawsuits against Stanford, a number that is growing fast.

Snyder recounted how he first became aware of this one victim demographic: On his first trip to sign up Mexican clients in February, he was surprised to encounter furious Hasidic Jews wearing yarmulkes and other religious attire, speaking Yiddish before switching to Spanish. Subsequent trips to sign up clients and to hear their stories more than confirmed Snyder's initial impression.

He estimates that out of an estimated one billion dollars lost by some 4,000 Mexicans, about half came from Mexico City's Jews.

"My perception is that the Jewish community in Mexico City, for various reasons, has been heavily impacted by the Stanford disaster," Snyder said. "I think what you have here is a situation where that community was specifically targeted."

The story of Stanford's depredations in Mexico's Jewish community, however, has been slow to emerge because it is not one that anyone there is eager to tell. Although a number of people agreed to speak privately to GlobalPost, dozens impacted by the scam declined requests for on-the-record interviews, for fear of repercussions from both criminals and law enforcement officials. Some believed they were expatriating more money than Mexico legally allows, via Stanford. Others feared drawing the attention of Mexico's rampant kidnappers, which have so far largely left the community alone.

"What I can tell you," said Rabbi Marcelo Rittner, who leads one of Mexico City's larger synagogues "is that some people were really hit hard by this situation. I don't have much to tell you more than that because of confidentiality."

Jews weren't the only target. A practicing Protestant, he opened meetings with a prayer, the Brisbane Times reported. He also used his faith to recruit sales representatives, and to lure many of his estimated 30,000 victims worldwide.

There is no evidence that Stanford set out deliberately to target particular religious group, and no motive has emerged. But there was money to be had in the Jewish community, and he soon discovered them to be easy prey.

Stanford hired a Mexican Jew named David Nanes to open up a sales operation in Mexico ten years ago. Nanes actively recruited other Jews well known in the community, to devastating effect.

Kadima's chief fundraising officer, Sofie Frieman, described why Stanford was so successful duping Jews: "The Jewish community is very tight, so if someone comes up with a great idea recommended by another person you know, you listen," she said.

"It's word of mouth. If your brother and brother-in-law, and the friend of your wife, is making money you might go ahead and participate. You would never think in your life, if you're a widow, that a nice Jewish boy is going to fool you in a scam, because you know his mother and you never think he's going to take advantage," she said. "This is where it's most painful."

A favorite son, or a traitor?

Jewish victims in Mexico almost universally blame their ills on Nanes, who was born and raised in the Jewish community, married a local woman there and had children there.

According to his Houston lawyer, Stanford hired the 41-year-old MBA about ten years ago to take charge of opening up Mexico - and more recently, South America - to sales of financial products. When Stanford collapsed earlier this year, Nanes left Mexico with his family, facing death threats that his lawyer says continue to this day.

Neither U.S. nor Mexican authorities have accused Nanes of any wrongdoing, although serious alleged misdeeds are detailed at length in the San Antonio class action lawsuit, and in a new book published in Mexico called "The Paper Empire" by Mexican journalist Gabriel Bauducco.

Nanes' Houston attorney, Charles Parker, said his client always believed in the financial products he was selling.

"He never suspected anything was wrong," Parker said, adding that Nanes and his wife "lost several million, his parents even more." Believing that Stanford products were legitimate, Nanes naturally decided to market them to the Jewish community because "that's who he knew. That was the wealthiest community," Parker said.

It made sense for Nanes to recruit other Jews from the communities as sales officers because they also had extensive local connections there, Parker said.

"And word spread, and people were happy," Parker continued. "They got their return and passed it on to others. Everybody was pretty happy until everything went to hell in a hand basket."

The same strategy of targeting wealthy Jews and hiring Jewish sales officers also apparently unfurled in Venezuela, instilling a comfort level in potential clients like Rabbi Brener.

Brener said he felt almost no wariness about reaching out to one of Stanford's "account executives," a local Jewish man whose family he'd known for decades, to invest his foundation's $50,000 reserve account. "I didn't pay too much attention to the credentials," Brener said. "They were Venezuelan Jews. They worked for a bank. He didn't have to convince me; I called him. This was made easier, so to speak, by the fact that he was Jewish."

Reached by phone, the former Stanford salesman, Morris Serrero, told GlobalPost Passport he sold extensively to fellow Jews in Caracas and also to Jews in Panama and as far away as Switzerland. But he insisted he had no clue it was all a scam and said that he too lost most of his personal money and his parents' money when the Ponzi scheme was exposed. Serrero refused to talk further.

The good corporate neighbor

In Mexico, Kadima's Frieman refuses to believe that Nanes and at least some of his sales recruits didn't know their investments were being diverted and couldn't be redeemed.

Not long after Nanes brought Stanford to Mexico City's Jews, he instituted an aggressive marketing campaign that targeted the community. The company became a major, consistent corporate sponsor of cultural and sporting events, doling out generous amounts of money to local charities and organizations.

Stanford also advertised heavily in community publications, including a well-read sports center newsletter about teams the bank sponsored, said Renee Shabot, director of Tribuna, an organization that acts as a liaison between the Jewish community and the non-Jewish world.

"People got used to seeing the name, seeing their faces and so they trusted them," Shabot said.

Stanford was especially generous to Kadima. In fact, the company sponsored Kadima's annual fundraiser for so many years that board members felt they couldn't say no when Nanes put the squeeze on for the charity's endowment, Frieman said.

"If you're sponsoring me and helping me out, I understand it would be good to move my money to your bank," she said. "And also, some of the people on our board had their money there already. This is why we were so confident. But it was a scam. We were fooled like everybody else."

Today, Frieman counts herself among the minions of Mexican Jews who feel a strong enmity toward Nanes. She doesn't buy his story about not knowing the whole operation was a confidence swindle.

"I know a lot of people looking for him," she said. "People would probably spit in his face if they saw him. He harmed many, many honest hardworking people."

Read more:

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Sonntag, 13. September 2009

Former agent goes to court on Stanford-related charge

September 13, 2009
A former top federal drug agent appeared handcuffed in a Fort Lauderdale, Fla., federal court today, a day after he was indicted on charges related to the Stanford Financial Group fraud case.

Thomas Raffanello, who was Stanford Financial's global security director, is accused of conspiracy, destroying records and impeding a probe by the U.S. Securities and Exchange Commission into the operations of Stanford Financial, founded by Texas native R. Allen Stanford-who also faces criminal charges.

Raffanello is the former head of the U.S. Drug Enforcement Administration's Miami office.

Magistrate Robin Rosenbaum set bail at $100,000 and set Raffanello's arraignment for next Friday.

Raffanello, 61, is the second Stanford executive to be charged in Florida by prosecutors and federal securities regulators who accuse Stanford and others of bilking investors out of more than $7 billion through a scheme involving bogus certificates of deposit.

Thursday's three-count indictment accuses Raffanello, 61, and Bruce Perraud, 42, of helping to shred documents at Stanford Financial's office in Fort Lauderdale. Their lawyers have said the men only destroyed documents after giving investigators electronic duplicates.

R. Allen Stanford, who also denies wrongdoing, is being held without bail in a Conroe jail awaiting trial on a 19-count indictment by a federal grand jury in Houston. That indictment also named three other company executives and a banking regulator in the Caribbean island nation of Antigua and Barbuda.

Another company executive was charged separately, pleaded guilty and is cooperating with prosecutors.

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Freitag, 4. September 2009

Toronto-Dominion Sued Over Stanford Investments

September 4, 2009
By Joe Schneider
Toronto-Dominion Bank, Canada's second-biggest bank, was accused in a lawsuit of negligence and knowing assistance for allegedly helping R. Allen Stanford, who is accused of swindling investors of more than $7 billion, the National Post reported.

The lawsuit, filed in Ontario Superior Court Aug. 26 by Bennett Jones LLP, seeks C$17 million ($15.5 million) for five Canadian investors who say Toronto-Dominion's role as a correspondent bank increased the credibility of Stanford's investments, the Post said. The investors claim they lost money in certificates of deposits based on recommendations made by a financial adviser who worked for the Stanford Group of companies, the Post said.

Toronto-Dominion conducted its business in an "appropriate and lawful manner," Susan Webb, a spokeswoman at the bank, told the newspaper.

Stanford, who faces 21 criminal charges, denies all wrongdoing tied to what the government says was a scheme to pay early investors "improbable if not impossible" returns with funds taken from later investors in Antiguan certificates of deposit. He is being held without bail until he can go on trial.

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Samstag, 29. August 2009

Stanford Investors Accuse Lawyer, Law Firm of Aiding Fraud

August 29, 2009
By Andrew Harris
Three people who say they invested with R. Allen Stanford, the Texas financier accused of running a $7 billion fraud, sued New York law firm Proskauer Rose LLP and attorney Thomas Sjoblom, accusing them of aiding the deception.

The investors claim that the firm and Sjoblom, listed on the Proskauer Web site as a partner, worked for Stanford knowing he was engaged in illegal and improper conduct, according to a complaint in federal court in Dallas.

"Defendants aided and abetted and participated" with Stanford Financial Group Co. and Antigua-based Stanford International Bank Ltd. "in a fraudulent scheme, making defendants directly liable for fraud," according to the complaint filed Aug. 27.

Stanford, the principal of Stanford Financial Group and the bank, was sued in February by the U.S. Securities and Exchange Commission for allegedly running a "massive" fraud scheme involving the sale of certificates of deposit.

A federal grand jury in Houston indicted Stanford and four other people in June on parallel criminal allegations. Stanford has denied all allegations of wrongdoing.

Proskauer Rose said yesterday it will seek dismissal of the suit.

Legally Flawed

"This suit is legally flawed and factually erroneous," Josh Epstein, a firm spokesman, said in an e-mail. "There is no basis whatsoever for any claim that Proskauer, which functioned as defense counsel in a regulatory investigation, bears any responsibility for the fraud allegedly inflicted upon investors."

Sjoblom didn't reply to voice-mail and e-mail messages seeking comment yesterday.

The investors, two U.S. citizens and one Mexican national, seek class-action, or group, status on behalf of other Stanford investors. They're also seeking more than $7 billion in compensation and punitive damages.

The case is Troice v. Proskauer Rose LLP, 09cv1600, U.S. District Court, Northern District of Texas (Dallas).

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Freitag, 28. August 2009

Ex-Stanford CFO Davis Pleads Guilty in Fraud Case

August 28, 2009
James M. Davis, chief financial officer of Stanford Financial Group Co., pleaded guilty to helping R. Allen Stanford in a $7 billion Ponzi scheme and prosecutors said he will testify against his former colleagues.

Davis, 60, admitted three felony counts today before U.S. District Judge David Hittner in Houston and agreed to forfeit $1 billion. Davis has been "cooperating like crazy" with authorities investigating the company, said his defense attorney, David Finn of Dallas.

"Mr. Davis knows he's looking at very, very stiff punishment down the road," Finn said after the plea hearing. "Probation is out of the question in this case."

The Justice Department will request leniency in Davis's sentencing if it deems his cooperation "sufficient," Assistant U.S. Attorney Paul Pelletier told Hittner. Davis has met for hundreds of hours with federal investigators, helping them find hundreds of millions of dollars that he claimed Stanford stashed in European banks, Finn said.

"You'll see just how far back this goes," Finn said of the alleged fraud. "This didn't get cooked up overnight."

Stanford, the company founder who is being held without bail, was to appear before Hittner later today for a hearing on his legal defense. Instead, he was taken to a medical center with what a court aide said was an elevated pulse rate.

Getting Together

"I think it had everything to do with my client and Hittner and the government getting together in court today," Finn said of Stanford's health emergency. "You could call it serendipity, but what are the odds?"

Stanford's assets were frozen by the court at the U.S. Securities and Exchange Commission's request and his current lawyer has asked to leave the case, saying he might not get paid. A U.S. grand jury indicted Stanford and Chief Investment Officer Laura Pendergest-Holt for fraud in June.

Davis waived indictment and was charged separately with conspiracy to commit mail, wire and securities fraud, as well as mail fraud and conspiracy to obstruct an SEC investigation.

The SEC in a civil suit accused Stanford, Davis and Pendergest-Holt of running a fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. Stanford and Davis promised "improbable if not impossible" returns on the CDs, the SEC said.

After today's hearing, Finn told reporters Davis's cooperation included a visit to his family farm in rural Mississippi, where he helped a government dive team search for evidence in tanks and ponds.

Not a Dime

Asked what the nature of that evidence was, Finn replied, "you'll find out." Davis is working as a laborer on a Michigan farm, where he's being paid $10 an hour, and is penniless, his lawyer said.

"He doesn't have a dime," Finn said. "He can't even pay me."

Since his July 13 arraignment, Davis has been free on $500,000 bond, which includes a $5,000 cash deposit. He faces as many as 30 years in prison and won't be sentenced until the government no longer needs his cooperation.

Finn said Davis's cooperation has focused on two fronts: locating assets Stanford stashed overseas and helping the U.S. extradite Antigua's top banking regulator, Leroy King, who was indicted along with Stanford for allegedly taking bribes to conceal the fraud.

"Cash payments were being made under the table in an airplane hanger by Allen Stanford to the regulator," Finn said.

King, who is under house arrest, is scheduled for an extradition hearing in Antigua next month, according to prosecutors.

The case is U.S. v. Davis, 4:09-cr-00335, U.S. District Court, Southern District of Texas (Houston).

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Dienstag, 25. August 2009

Stanford Victims file Class Action Suit against Trustmark National Bank, HSBC Bank PLC, The Toronto-Dominion Bank, SG Private Banking (SUISSE) S.A., and Bank of Houston TX

August 25, 2009
By Peter Morgenstern
Victims of Stanford International Bank, Ltd., part of R. Allen Stanford's Stanford Finanical Group, filed a class action lawsuit in Texas state court in Houston on August 23, alleging that Trustmark National Bank, HSBC Bank PLC, The Toronto-Dominion Bank, SG Private Banking (Suisse) S.A., and Bank of Houston "provided essential assistance to Stanford in one of the largest financial crimes in history."

The class action petition alleges that the banks conspired with Stanford to commit fraud. The plaintiffs seek more than $7 billion in damages. The lawsuit also seeks to recover of all of the fees paid to the banks by Stanford under the Uniform Fraudulent Transfers Act.

The plaintiffs are represented by the New York law firm of Morgenstern & Blue, LLC, which last month filed a class action complaint against the Commonwealth of Antigua and Barbuda alleging that the island nation conspired with Stanford and protected Stanford's banking activities from scrutiny by the Securities and Exchange Commission and other regulators.

The case is Rotstain v. Trustmark National Bank, Harris County (Houston).

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Montag, 27. Juli 2009

Texas Department of Banking

July 27, 2001 Texas Banking Commissioner And Antigua & Barbuda International Financial Sector Regulatory Authority Sign Agreement On Information Sharing.

The Texas Banking Commissioner and the Antigua & Barbuda International Financial Sector Regulatory Authority announce the signing of an Agreement on Information Sharing between the two financial institution supervisory authorities. The agreement provides for information sharing and efficient supervision for jointly supervised financial institutions.

The Agreement on Information Sharing is the first between the State of Texas, the Texas Department of Banking, and a foreign government regarding the supervision of financial institutions. The agreement is the culmination of more than a year's effort between the two banking supervisory authorities.

"Our goal is coordinated comprehensive supervision," said Texas Banking Commissioner Randall S. James today. "This document represents a landmark in cooperation between financial institution supervisory authorities of the State of Texas and a foreign government. It underscores that seamless supervision of both Texas State-chartered financial institutions with offices in other countries and foreign institutions with offices in Texas can be achieved."

The Executive Director of the Antigua and Barbuda Authority, Althea Crick, hailed the agreement as "an instrument of benefit to the supervisory authorities of both Texas and Antigua and Barbuda which will be able to share information about any Antigua and Barbuda or Texas banks operating in both jurisdictions in the interest of all parties including depositors."

"As international commerce becomes commonplace, closer cooperation between nations is essential on matters relating to banking and financial institutions," said Secretary of State Henry Cuellar. "The agreement that the Texas Banking Commissioner has signed with fellow financial institution supervisors in Antigua and Barbuda should serve as a model for similar agreements and as a preview of the kind of information sharing that will be increasingly common in the Global Century."

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Freitag, 24. Juli 2009

Stanford's Shredded Florida Papers Being Reassembled

Shredded documents seized from R. Allen Stanford's South Florida offices are being pieced back together by prosecutors probing allegations the Texas financier ran a $7 billion Ponzi scheme.

U.S. Magistrate Judge Barry Seltzer of Fort Lauderdale, Florida, said federal prosecutors told him yesterday that within the next two months they will have "re-assembled the contents of three bags of shredded documents," according to a report posted today on the court's Web site.

The shredded evidence will initially be used against Bruce Perraud, a former Stanford Financial Group security specialist who is charged with destroying documents after an investigation began. Perraud's trial date, set for Aug. 24, will probably change to accommodate his lawyer's vacation plans, Seltzer said.

Stanford, four of his executives and Antigua's former top banking regulator are charged with defrauding investors of as much as $7 billion through bogus certificates of deposit sold by Antigua-based Stanford International Bank. The charges mirror U.S. Securities and Exchange Commission civil claims filed against Stanford and three of his companies on Feb. 17.

Perraud, who isn't accused of participating in the alleged fraud, worked at Stanford's Fort Lauderdale office, according to an indictment unsealed in June. Prosecutors claim Perraud told a document-shredding company to destroy a 95-gallon bin full of papers on Feb. 25, a week after a Texas judge presiding over the SEC case issued an order forbidding the alteration, removal or destruction of Stanford Financial records.

Edward Shohat, Perraud's lawyer, said in a July 22 telephone interview that his client intends to fight the charge.

Prosecutors told Seltzer that, in addition to the reassembled shredded documents, they intend to use six seized computer hard drives as evidence against Perraud.

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Freitag, 17. Juli 2009

Stanford "was informant for US anti-drug agents"

RAS indicted July 17, 2009

Sir Allen Stanford, the Texan billionaire who ploughed millions of pounds into English cricket, may have been working as an informant for American anti-drug agents in return for official protection which gave him free rein to run his banking empire, it emerged yesterday.

An investigation into the financier has found that just $500m (£331m) of the claimed $7.2bn of deposits held by his Stanford International Bank, based in Antigua, has been traced by a UK-based receiver who was called in by authorities when fraud allegations were laid against Stanford in February.

The resulting $6.7bn hole in the bank's balance sheet, which leaves 28,000 depositors - including 200 Britons - with near-worthless investment certificates, raises serious concerns about the extent to which officials in America and Britain were aware of Stanford's personal finance issues and the activities of his banks long before the current economic crisis.

Sir Allen Stanford, the Texan billionaire who ploughed millions of pounds into English cricket.
A BBC Panorama programme, to be screened tonight, alleges that the 6ft 4in-tall businessman may have been allowed to run his banking business unfettered for up to a decade because he was passing information on to America's Drug Enforcement Administration (DEA) about the money-laundering activities of drug baron clients from Colombia, Mexico and Venezuela.

His status as a confidential informant could have secured Stanford a degree of protection from financial regulators such as the US Securities and Exchange Commission (SEC) and may explain why a SEC investigation into his dealings in 2006 was quietly dropped following a request by another American government agency.

A source close to the DEA told Panorama: "We were convinced that Stanford's bank attracted millions of narco-dollars but it was very difficult to get the evidence to nail him. The word is that Stanford has been a confidential informer for the DEA since at least 1999."

Confidential documents show the British Foreign Office and the American authorities also knew as early as 1990 that Stanford, who was once listed as the 205th most wealthy man in the United States with a personal fortune of $2.2bn, had been made personally bankrupt in 1984 after his first business, a chain of health clubs, went bust.

British authorities ceased their investigation into Stanford after he moved his operations from the volcanic island of Montserrat, a British overseas territory, to Antigua, which has been independent from the UK since 1981.

Stanford, shot to prominence last year when he signed a multimillion-dollar deal to sponsor a Twenty/20 cricket tournament, culminating in a $20m match between England and an all-stars West Indian team. The billionaire was famously allowed to land his helicopter on the hallowed turf of Lords.

He vigorously denied all allegations of wrongdoing when the SEC froze his assets and accused him of orchestrating a "fraudulent, multibillion-dollar investment scheme" which effectively used the money of new investors to pay large dividends to existing depositors. The Texan has vowed to return money to all depositors and ruled out running a pyramid scheme.

The Foreign Office said it was not responsible for the investment decisions of individuals. But a spokesperson said: "The UK Government does take financial malpractice very seriously."


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Mittwoch, 15. Juli 2009


July 15, 2009
By Stanford Victims Coalition
Dear President Obama,

We are the victims of what has been alleged to be one of the most fraudulent, politically corrupt,and criminal financial operations in history. We are the innocent investors who fell through the cracks of the US financial regulatory structure. We lost our entire life's savings to a largely unregulated financial broker dealer headquartered in the United States of America – Stanford Financial Group.

The Stanford scandal has devastated the lives of thousands of victims from around the world including 35 states in the US and 60 countries. The victims are people who did everything right and our life's savings totaling $7.2 billion is now gone. We are retired school teachers, war veterans, small business owners, and honest, hard-working people who took every possible step to ensure the safety of our retirement funds. We did not simply make bad investments. We relied on the information provided by our financial regulators and our licensed financial advisors – all of which pointed to a healthy and growing American financial institution.

For over two decades, the Stanford Financial Group and its various entities, including Stanford International Bank-Antigua, were able to operate without adequate oversight by numerous government agencies charged with protecting us. Multiple US government agencies had knowledge of Stanford's alleged fraudulent business practices and corruption within the government of Antigua, yet Stanford investors were never warned. The US State Department, the Department of Justice, the US Treasury, the SEC and FINRA all had considerable evidence to warn investors and to take actions to protect investors dating back to at least 1999.

In the aftermath of the SEC's February 2009 raid of Stanford's offices, we have learned that the US sat back and allowed a financial institution to take in billions of dollars in IRAs, ERISA pension plans, college funds and general life's savings despite well-documented internal evidence that should have warranted enforcement actions on multiple fronts, but instead resulted in the endorsement of Stanford by numerous members of Congress and even at the highest echelons of the US government.

The Stanford victims are collateral damage - caught between the "massive ongoing fraud" alleged by the SEC and the lack of government action on a national and international level that would have saved us from devastation.

President Obama, you have taken extraordinary measures to help put America on a path to financial recovery, yet thousands of financial fraud victims are now becoming burdens on their families and the government because the US government has not been accountable for its actions and inactions. Our request of you is, at a minimum, to ensure the US government discloses what really happened with the Stanford Financial Group and how such an intricate scheme was able to infiltrate the global financial system and ruin the lives of so many innocent victims.

The entire world is watching how the American regulatory and legal systems will handle the debilitating losses of innocent victims of alleged financial fraud like the Stanford case. These victims have been denied the SIPC insurance coverage we legally qualify for and now face a long road to what appears to be an extremely limited recovery. The American financial system cannot afford to convey the message that defrauded investors in the US and abroad will be deprived of the right to have their life's savings protected. We are the prime example of the need for regulatory reform – and a plan to compensate victims when the system fails.

We ask the US government to explore all options to help Stanford victims recover their losses and to address the legislative need for compensation for those who suffer catastrophic losses when compliance requirements are not appropriately enforced by government regulators. We are not asking for a bailout – we simply want to get back what is rightfully ours.

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