Dienstag, 27. April 2010

Antiguan Charged in Stanford Case Ordered to U.S.

April 27, 2010
By Miami Herald
Antigua's former top banking regulator, Leroy King, was ordered extradited to the U.S. to face charges he helped financier R. Allen Stanford conceal a $7 billion fraud scheme, Antigua's top prosecutor said.

Director of Public Prosecutions Anthony Armstrong said that Chief Magistrate Ivan Walters ordered King removed to the U.S. in a decision issued today. Armstrong, who argued for the removal, said King has 15 days to appeal the decision to the nation's High Court.

King was formerly chief executive officer of Antigua and Barbuda's Financial Services Regulatory Commission. He has been under house arrest in Antigua since June, when he was indicted by a federal grand jury in Houston for allegedly accepting bribes from Stanford to mislead U.S. securities regulators.

His lawyer, Dane Hamilton Sr. of St. John's, Antigua, did not immediately return a call seeking comment on the court's ruling. Andy Laine, a spokesman for the U.S. State Department, said he could not immediately comment.

U.S. prosecutors allege Stanford and his co-conspirators took money from new investors to repay earlier investors who bought allegedly bogus certificates of deposit from the Antigua- based Stanford International Bank Ltd.

Blood Oath

King and Stanford took a blood oath in 2003 to support the alleged fraud scheme, which netted King hundreds of thousands of dollars in bribes, according to a document signed by former Stanford chief financial officer James M. Davis when he pleaded guilty to criminal charges in the probe last year.

Stanford, who is being held without bail pending a January 2011 trial, has denied all allegations of wrongdoing. He also faces parallel charges in a civil enforcement action filed by the U.S. Securities and Exchange Commission.

The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas).

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Montag, 19. April 2010

SEC Enforcement Lawyer Who Quashed Stanford Probes Later Did Legal Work For Stanford

RAS indicted April 19, 2010

The new inspector general report on the SEC's handling of the Allen Stanford alleged Ponzi scheme case paints a devastating picture of the agency's repeated failures to pursue the billionaire banker, despite a widespread belief within the SEC's Fort Worth office that he was a fraud.

Spencer Barasch, leader of Andrews Kurth's corporate governance & securities enforcement team.
At the center of the story is Spencer Barasch, the chief of enforcement at the SEC's Fort Worth office, who declined to pursue Stanford multiple times, only to later jump ship to become a partner at a big private law firm where he proceeded to represent none other than "Sir" Allen Stanford.

In fact, the IG found, Barasch was involved in deciding at least four times to close investigations of Stanford Financial or to not pursue findings by SEC investigators that the firm was a fraud.
Art Simon This former head of Enforcement in Fort Worth was responsible for: (1) in 1998, deciding to close a MUI opened regarding Stanford after the 1997 broker-dealer examination; (2) in 2002, deciding to forward the [redacted] complaint letter to the TSSB and deciding not respond to the [redacted] complaint or investigate the issues it raised; (3) in 2002, deciding not to act on the Examination staff's referral of Stanford for investigation after its investment adviser examination; (4) in 2003, participation in a decision not to investigate Stanford after receiving [Confidential Source]'s complaint letter comparing Stanford's operations to the [redacted] fraud;
Indicted financier R. Allen Stanford, accused of leading a $7 billion investment fraud scheme.
(5) in 2003, participating in a decision not to investigate Stanford after receiving the complaint letter from an anonymous insider alleging that Stanford was engaged in a "massive Ponzi scheme"; and (6) in 2005, informing senior Examination staff after a presentation was made on Stanford at a quarterly summit meeting that Stanford was not a matter they planned to investigate.

The OIG investigation found that the former head of Enforcement in Fort Worth's representation of Stanford appeared to violate state bar rules that prohibit a former government employee from working on matters in which that individual participated as a government employee. Accordingly, we are referring this Report of Investigation to the Commission's Ethics Counsel for referral to the Office of Bar Counsel for the District of Columbia and the Chief Disciplinary Counsel for the State Bar of Texas, the states in which he is admitted to practice law.

The inspector general David Kotz has referred Barasch to the bars of Washington and Texas, where he is licensed, for potential violation of conflict of interest rules.

In March 2005, Barasch announced he was leaving the SEC after 17 years, with seven of those as the head of the Fort Worth enforcement division, for the international law firm Andrews Kurth. He joined the firm's securities enforcement team.

A couple months later, Stanford Financial Group executives were looking for representation to help them handle a burgeoning SEC inquiry in to the company. They got wind of Barasch's new gig and word made its way up to Stanford himself, who said in an email to an underling, "This guy looks good and probably knows everyone at the Fort Worth office. Good job."

A few days later, Barasch emailed an SEC ethics counsel to get the green light to work for Stanford. "I am not aware of any conflicts and I do not remember any matters pending on Stanford while I was at the Commission," he wrote.

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

SEC aware of Stanford Ponzi scheme since 1997

April 19, 2010
By Leslie Turk
The Robert Allen Stanford alleged Ponzi scheme and its impact on middle class investors still isn't getting the media attention it deserves. Last week, a blistering report on the incompetence of the Securities and Exchange Commission was buried by the Goldman Sachs fraud charges; both were released Friday.

The Inspector General for the SEC issued a detailed 159-page report, dated March 31, concluding that the agency's Fort Worth office knew the Texas businessman was operating a Ponzi scheme in 1997. The Stanford Victims Coalition, a group that represents American investors, was quick to accuse the agency of trying to "minimize the revelation of the truth" by releasing the IG's report on the same day it announced fraud charges against investment bank Goldman Sachs.

The IG's report was requested by Republican U.S. Sen. David Vitter.

Among the most damning findings was the warning issued by a retiring assistant district administrator for the Fort Worth examination program in 1997 to the branch chief: "Keep an eye on these people [Stanford] because it looks like a Ponzi scheme to me, and some day it's going to blow up."

It was not the examiners, but rather the enforcement division, that dropped the ball. Fort Worth examiners repeatedly conducted examinations of Stanford in 1997, 1998, 2002 and 2004, concluding each time that Stanford's CDs were likely a Ponzi scheme. "The only significant difference in the Examination group's findings over the years was that the potential fraud grew exponentially, from $250 million to $1.5 billion," according to the report. However, "no meaningful effort was made by Enforcement to investigate the potential fraud or to bring an action to attempt to stop it until late 2005."

The report also noted that the former head of the SEC's enforcement office in Fort Worth impeded investigations into Stanford's operations for years. Spencer Barasch repeatedly decided "to quash the matter," the report reads. Later, when the SEC began investigating, "Barasch repeatedly attempted to represent Stanford in connection with the investigation he had blocked for seven years." Barasch is now a partner at the law firm Andrews Kurth LLP. Andrews Kurth managing partner Bob Jewell said Barasch did not violate any ethics laws and will remain with the firm, Dow Jones reported. However, because Barasch's representation of Stanford appears to have violated state bar rules that prohibit a former government employee from working on matters in which he participated as a government employee, Inspector General H. David Kotz referred the findings of his investigation to the SEC's ethics counsel for referral to the bar counsel offices in the two states Barasch is admitted to practice law.

Additionally, the IG noted that SEC enforcement officials also ignored a number of warnings from insiders at Stanford's operations. The report notes that a letter was forwarded to the SEC in October 2003 by the National Association of Securities Dealers warning that Stanford's businesses "WILL DESTROY THE LIFE SAVINGS OF MANY."

After the initial red flags, it would be another eight years, 2005, before a serious effort to expose the alleged fraud was launched. And another several years before the SEC stopped it. In February 2009 the SEC shut down Stanford's operations.

It is estimated that about $1 billion was invested in the CDs in Louisiana. The flamboyant Texas billionaire remains in jail facing charges of operating a $7 billion Ponzi scheme.

In the conclusion of the report, the IG noted:

We found that senior Fort Worth officials perceived that they were being judged on the numbers of cases they brought, so-called "stats," and communicated to the Enforcement staff that novel or complex cases were disfavored. As a result, cases like Stanford, which were not considered "quick-hit" or "slam-dunk" cases, were not encouraged.

The OIG's findings during this investigation raise significant concerns about how decisions were made within the SEC's Division of Enforcement with regard to the Stanford matter. We are providing this Report of Investigation ("ROI") to the Chairman of the SEC with the recommendation that the Chairman carefully review its findings and share with Enforcement management the portions of this ROI that relate to the performance failures by those employees who still work at the SEC, so that appropriate action (which may include performance-based action, if applicable) is taken, on an employee-by-employee basis, to ensure that future decisions about when to open an investigation and when to recommend that the Commission take action are made in a more appropriate manner.

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/

Freitag, 16. April 2010

SEC's corruption allowed Stanford's fraud

Allen Stanford April 16, 2010

The Securities and Exchange Commission knew that Allen Stanford was involved in a Ponzi scheme as far back as 1997, according to a report released Friday by SEC Inspector General David Kotz.

The 159-page report said the scheme was able to continue for so long due to "institutional influences" within the SEC, and the agency's desire to chase after slam-dunk cases.

Indicted financier R. Allen Stanford, accused of leading a $7 billion investment fraud scheme.
"In the Madoff case, we saw the Commission's depth of incompetency, now in the Stanford case, we see that not only is the SEC incompetent, it is also appears to be corrupt".

The report also mentioned an SEC regional enforcement official who three times left the commission in an effort to represent Stanford, saying he was successful in one of these attempts.

Kotz also found that the former head of enforcement in Fort Worth, Spencer Barasch, "played a significant role" in quashing investigations of Stanford and sought to represent him on three occasions after he left the SEC. In 2006, he did briefly represent Stanford before being informed by the SEC ethics office that it was improper to do so.

Spencer Barasch could have done something years ago about the Allen Stanford Ponzi scheme, but didn't. Four times red flags went up in the Securities and Exchange Commission's Fort Worth, Texas, office about Stanford, who has been accused of crafting a $7 billion fraud, but Barasch - the SEC's local chief of enforcement - declined to investigate or closed down probes begun by others.

(Washington, D.C.) - U.S. Sen. David Vitter today reacted to the report released by the Inspector General of the Securities and Exchange Commission that revealed the agency was aware of fraud committed by Texas financier Allen Stanford and did not pursue an investigation.

"The depth of the failure at the SEC in the Stanford investigation is unbelievable," said Vitter. "There were four examinations in 1997, 1998, 2002, and 2004, and in each case examiners concluded that Stanford's CDs were likely a Ponzi scheme. Yet the SEC did absolutely nothing while Stanford fleeced investors for roughly $8 billion. What is clear from the report is that the debt the SEC owes the Stanford victims is enormous."

In August of 2009 Vitter hosted a U.S. Senate Banking Committee field hearing on the Stanford case in Baton Rouge. At that time, it was determined that the original IG report was insufficient, which led Vitter, along with Sen. Richard Shelby, to request a more complete report from the SEC on the investigation. Vitter will meet with David Kotz, inspector general of the SEC and author of the report, later this week.

Visit the Stanford International Victims Group - SIVG official forum http://sivg.org/forum/