Accountant details Stanford investment spending

February 1, 2012
By Associated Press

An accountant who worked for Texas tycoon R. Allen Stanford testified Wednesday that he grew increasingly concerned that the financier wouldn't be able to return the $2 billion he secretly borrowed from investors to pay for business and personal expenses, including millions to maintain his yachts and private jets.

Henry Amadio told jurors at Stanford's federal fraud trial in Houston that various businesses into which Stanford sunk funds were basically a money pit that ate up investor dollars and didn't turn a profit. The money Stanford borrowed included $330 million for two airlines and a $20 million prize for a cricket tournament, Amadio said.

"As it continued to grow ... the concern was: Was it (investors' money) ever going to be paid back?" he said.

Amadio told jurors he faults himself for not leaving Stanford's company after realizing what the financier was doing. "I'm not proud. I regret looking the other way," said Amadio, whose voice choked with emotion.

Prosecutors allege Stanford masterminded a fraud in which he bilked investors out of more than $7 billion in a massive Ponzi scheme centered on the sales of certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua. Authorities allege he used depositors' money to fund his businesses as well as his lavish billionaire lifestyle and that he lied to depositors by telling them their funds were being safely invested.

Stanford's attorneys contend the financier was a savvy businessman whose financial empire, headquartered in Houston, was legitimate. They have suggested James Davis, the ex-chief financial officer for the financier's company, is behind the fraud. Davis has pleaded guilty in the case and is expected to be called by prosecutors this week.

Stanford is on trial for 14 counts, including mail and wire fraud, and faces up to 20 years in prison if convicted.

Amadio said Davis also expressed concern about the growing amount of CD funds that kept Stanford's businesses afloat, even making the comment on two occasions that "the emperor has no more clothes."

"I interpreted that (comment to mean) that Mr. Stanford didn't have any money to cover these debts," Amadio said.

The accountant told jurors the profits the bank purported it was making were not enough to cover the $2 billion Stanford had borrowed by 2009.

"Was it even close?" prosecutor Gregg Costa asked.

"No," replied Amadio, who worked six years for the Stanford Financial Group Co. in Houston.

Amadio detailed for jurors the investor funds the financier allegedly poured into his many companies. They included $30 million for expenses related to Stanford's six private jets; more than $346 million for construction projects on Antigua; $11 million for a newspaper on the island; nearly $19 million to maintain Stanford's yachts.

Amadio also testified that in 2006, he was ordered to remove various documents he prepared, including a monthly report that tracked the amount of CD deposits going to Stanford's businesses, from the company's network drive and place them on an external drive and that this information would be held at the bank in Antigua.

Amadio said he was not aware that around the time this request had been made, the U.S. Securities and Exchange Commission had begun investigating.

The accountant described a working environment full of secrecy where "everything was on a need to know basis" and where he could be fired if the monthly reports he prepared tracking investor funds were made public.

Amadio said one of the secrets he stumbled onto was a Swiss bank account with Societe Generale belonging to Stanford that detailed payments made to the outside auditor for Stanford's bank. Bank statements shown to jurors indicated payments of $100,000 and $125,000 made to the auditor in 2005 and 2006. Prosecutors allege Stanford used the account to bribe the auditor with millions of dollars to hide the bank's fraud.

While questioning Amadio, Robert Scardino, one of Stanford's attorneys, told jurors Stanford was a "risk taker" and that some of his businesses made money and some didn't. Scardino said despite the economic crash of 2008, Stanford continued paying depositors who withdrew their CDs until his businesses were put in receivership.

Amadio, who acknowledged he fainted after first speaking with FBI agents when authorities shut down his office in 2009, said an agreement he has with prosecutors doesn't prevent him from being charged.

"If you testified to something that is different than what the prosecutors think is the truth, you are in trouble aren't you?" Scardino asked.

"I'm here to tell the truth," Amadio said.

Stanford was once considered one of the United States' wealthiest people, with an estimated net worth of more than $2 billion. He's been jailed without bond since being indicted in 2009.

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Allen Stanford Investors Sue His Accounting Firm

	May 26, 2011 Nearly two years after Texas financier Allen Stanford was indicted in an alleged massive Ponzi scheme, investors have just filed a $10 billion proposed class action suit against his auditor-the giant accounting firm BDO. The suit-filed Thursday in federal court in Dallas-says BDO did not only aid and abet the $7 billion dollar fraud...it was a "co-conspirator."
Indicted financier R. Allen Stanford, accused of leading a $7 billion investment fraud scheme.
"BDO's cozy relationship with the Stanford Financial Group was steeped in conflicts of interest and required ongoing deceptive and duplicitous manipulation of the facts to allow the Ponzi scheme's exponential growth for over a decade," the complaint says. "The result of this deception is the loss of thousands of investors' life savings." BDO not only audited Stanford's U.S. operations, it also did critical work in Antigua, where the alleged fraud was based. Before his indictment in 2009, Stanford told CNBC about a task force he put together-including a "major accounting firm" to rewrite Antigua's banking laws. "Back in the early '90s, I was asked by the then-government if I would put together a civilian team of professionals, which I got," Stanford said. "Ex-FBI, ex-DEA, an ex-U.S. Attorney…a major accounting firm and others to come up with a strong, if not the strongest platform for international banking." Authorities and investors say that platform paved the way for the fraud. Stanford has denied wrongdoing. He faces a trial currently scheduled for September 12 on 14 criminal counts. BDO has not had a chance to respond to the suit, but for months it has been fighting a civil subpoena for documents filed by the court-appointed receiver in the SEC's lawsuit against Stanford. In a court filing in April, BDO attorneys said the firm "has no clue as to what it may have done wrong." The filing called the subpoena "a fishing expedition." Stanford's 30-thousand investors have so far recovered just pennies on the dollar. PLAINTIFFS' ORIGINAL CLASS ACTION COMPLAINT X. ACTUAL DAMAGES 113. Plaintiffs and the First Class have suffered the loss of at least $7.2 billion that was proximately caused by the wrongful conduct of BDO as described herein. Plaintiffs and the Second Class have suffered the loss of approximately $3.5 billion that was proximately caused by the wrongful conduct of BDO as described herein. BDO is jointly and severally liable to Plaintiffs and both Classes for the injuries caused by the Stanford Financial Group, including SGC, STC, SFIS, and SIBL, under Texas common law of joint and several liability, as well as under the Texas Securities Act. Read the complete CLASS ACTION COMPLAINT here!

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Dismay as official Stanford Investors Committee file lawsuit against St Jude's children's cancer hospital charity

February 16, 2011

On this day today, the second anniversary of the civil action by the SEC against the Stanford Financial Group, wholly owned by Allen Stanford awaiting trial on 23 counts of fraud in Texas, allegedly too incompetent to stand trial after being beaten-up in prison and fed a cocktail of anti-depressants. What have we learned?

Firstly Allen Stanford is apparently competent enough today to file a lawsuit against the US prosecutors, the FBI and SEC, accusing them of "abusive law enforcement" and seeking $7.2bn in damages. Since he was declared indigenous after Lloyds of London contested their officer's insurance policy, following the hiring and firing of a carousel of well tailored attorneys, he is now represented by two public defenders. It begs the question who is paying for his lawsuit, and how did he miraculously recover well enough to instruct them.

Now he has recovered, please let the criminal trial begin, and that $7.2bn would also be the same amount the innocent victims of the alleged Stanford fraud have lost. If he's so innocent, where's the money?

On this day today, the Statute of Limitations for any lawsuits in connection with the Stanford case also expired.

Three months ago we woke up to the fact the so-called (SIC) Stanford Investors Committee was going to do nothing very much to help us, so we found a new attorney and launched our own campaign to file FTCA claims against the Securities and Exchange Commission (SEC), for their negligence in not closing down Stanford sooner. They knew he was a fraud 13 years ago. Some of the SEC were merely asleep on the job, while others were caught with their pants down watching porn on their computers. The campaign has been a resounding success, and several thousand Stanford investors have now filed claims.

On this day today, we also anticipated a flood of claims from the receiver and the (SIC) Stanford Investors Committee, who have reportedly been toiling away tirelessly for several months in total secrecy, all in our best interests.

We anticipated a plethora of lawsuits against, amongst others;

BDO Seidman, one of the worlds largest accounting firms, who audited Stanford Group Company, and who fudged their accounts four years running to hide from SIPC it was insolvent and only being supported by tainted funds from SIB in Antigua.

FINRA, who twice fined Stanford for misleading investors, a mere slap on the wrist, but despite all the red flags, could see no further.

The State of Florida, who through their Dept of Banking and Finance granted the newly formed (in 1998) Stanford Fiduciary Investor Services, the illegal right to move vast amounts of money offshore without the reporting a penny to regulators. Yes, Jeb Bush the brother of former President George W Bush became Governor of Florida earlier that same year, and both were recipients of generous campaign donations from Allen Stanford.

Greenburg Traurig, the deep pocketed Miami lawfirm who lobbied endlessly to set up Stanfords Florida deal, and who have been implicated in numerous other murky transactions.

Forbes, and who could forget their endorsement of Stanford as one of Americas 40 richest billionaires with $50bn under management. They gave Stanford his greatest aura of credibility.

One would have anticipated, with four experienced attorneys on the (SIC) Stanford Investors Committee; together with the examiner, the receiver, and Angela Shaw Kogutt, the director and founder of the SVC; these would all be rich pickings; but did they choose to file any suits against any of these? No, not one.

On this day today, sadly, we learned they chose instead to file a suit against St Jude's, the children's cancer research hospital charity who give hope to sick children and their families. Allen Stanford donated $7m towards St Jude's, quite possibly the only truly good deed the "Knight" ever did. No matter where those funds came from, there is one indisputable fact; St Jude's received and spent them in good faith to keep a lot of sick kids alive, and who can begrudge them that?

On this day today, it should have been the day we were all celebrating having made the first step towards recovery from the US Government, who knew for 13 years that Allen Sanford was a fraud, but did nothing. Instead I am sickened that the Stanford Investors Committee, who supposedly act in our best interests, could have instigated such a callous and insensitive action against such a deserving institution as St Jude's without our knowledge, and without our consent.

To all the Stanford investors reading this, I urge you to write or email the Stanford Investors Committee members to withdraw this suit against St Jude's. In the eyes of the world we are all as equally guilty as those undeserving members of the committee who are behind it. Please let us do one good thing and make this right.

Thank you.
Stanford's victim.

Group that lost money in Stanford ponzi scheme sues St. Jude, Le Bonheur

Investors trying to retrieve billions they lost in Stanford Financial Group's Ponzi scheme have sued St. Jude Children's Research Hospital, its fundraising arm American Lebanese Syrian Associated Charities Inc. and Le Bonheur Children's Medical Center Foundation for more than $7.37 million Stanford had donated.

The "Official Stanford Investors Committee" filed suit late Tuesday in the U.S. District Court for the Northern District of Texas, Dallas Division.

The claim represents the Ponzi scheme's latest fallout for Memphis.

Stanford Financial assumed a major profile in town in 2007 and 2008 as title sponsor of Memphis' PGA Tour golf tournament, which benefits St. Jude.

Earlier this month, the investors and the court-appointed receiver also sued the PGA Tour for $12.9 million, an amount that may be related to Stanford Financial's sponsorship of the tournament in 2007-08.

In the hospitals' case, the money that investors are trying to get back was given when Stanford Financial was insolvent and R. Allen Stanford operated the company "in furtherance of his fraudulent scheme," the suit states.

The sum in the suit, however, will be adjusted if the committee finds any additional payments made to the groups from Stanford, according to the lawsuit.

Since the litigation is pending, ALSAC/St. Jude could not reveal a precise amount Stanford gave to the charities, Emily Callahan, chief marketing officer for ALSAC/St. Jude, said in a statement.

But she said, "Our records show that we received less than the amount named in the suit."

The money, she said, was received "in good faith directly from Stanford Financial Group" and was spent immediately "on our mission of saving kids' lives in the U.S. and around the world and finding cures for catastrophic diseases in children...

"While our hearts go out to those impacted by the Stanford investment issues, it would hurt our charitable mission to have to return the money already spent directly on clinical care and support for children suffering from cancer and other deadly diseases, including bone marrow transplants, chemotherapy treatments, on education and training of doctors and nurses who help kids worldwide, and on groundbreaking research," Callahan said in a prepared statement.

Before authorities cracked down in February 2009, Stanford also had contributed a substantial portion of its $2.5 million pledge to Le Bonheur Children's Medical Center's campaign for a new $327 million hospital.

The suit states Stanford donated to ALSAC, St. Jude and the Le Bonheur foundation $2.56 million in 2006, $2.14 million in 2007 and $2.62 million in 2008 and $35,174 in 2009.

Investors who lost an estimated $7 billion to Stanford Financial want as much of their money back as they can retrieve, and some of their other recent "clawback" lawsuits apparently have Memphis ties.

They filed a $12.9 million suit Feb. 7 against the PGA Tour.

The suit says Stanford Financial parties paid the PGA Tour $5.9 million in 2007 and $6.9 million in 2008. Although the suit didn't mention the Memphis tournament, those were the years Stanford was its title sponsor.

This past year, FedEx took over as title sponsor of the FedEx St. Jude Classic.

As he does in his filings against all defendants in the clawback suits, receiver Ralph Janvey claims the PGA received the money from Stanford without providing any services or anything of equivalent value.

The PGA Tour says it doesn't respond in the media to lawsuits.

However, Ty Votaw, the organization's vice president for communications, told The Commercial Appeal on Wednesday that Stanford, as title sponsor of the Memphis event, "received all the rights, benefits and privileges associated with that."

Stanford, like any such tournament sponsor, received such benefits as "naming rights, commercial inventory in the four-day telecast, the benefit associated with being title sponsor of a sporting event that had over 12 hours of television coverage, pro-am spots, hospitality.

"How they use those, I can't comment on," Votaw said.

"We did provide value."

For example, the international TV coverage encompasses 225 countries and 589 million homes, he said.

Stanford is accused of creating a huge pyramid scheme by guiding clients to invest more than $7 billion in certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua and then misusing the money.

Staff reporter Tom Bailey Jr. contributed to this story.

Source.

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