Allen Stanford Ponzi Scheme

[scion]

Allen Stanford’s house of cards: How TD banked the 2nd-largest Ponzi scheme in U.S. history

By Gil Shochat and Francesca Fionda 16x9
http://globalnews.ca/news/2485811/allen-stanfords-house-of-cards-how-td-banked-the-2nd-largest-ponzi-scheme-in-u-s-history/

Allen Stanford’s con was epic. He was responsible for the second biggest Ponzi scheme in U.S. history outdone only by Bernie Madoff.

With a silver tongue and endless charisma, the brash Texan built a multi-billion dollar bank on the island of Antigua. By the late 2000s Stanford Financial Group had grown into an empire with over 21,000 clients throughout the U.S. and South America.

When it collapsed in 2009, over $7 billion in investments disappeared in what one U.S. judge would call “one of the most egregious criminal frauds ever presented to a trial jury in federal court.”

To pull off that massive scam, Stanford needed help and he found it in the most unlikely of places – the Toronto Dominion Bank in Canada.

TD banked Stanford and his Antiguan bank for 18 years, starting in 1991, helping him move money from his clients in the U.S. and South America – to accounts he controlled in Toronto.

“[In] the approximate last 12 months almost $3 billion went through the correspondent account [in Toronto],” said Lincoln Caylor, whose firm Bennett Jones is suing TD. “Without external set up banks that have access to the U.S. market financial system, he couldn’t have done what he did.”
According to Caylor, Stanford used TD to move billions. Much of that money came from investors who put their cash into Stanford’s certificates of deposit. These were advertised as ultra-safe investments promising returns that were roughly three per cent higher than similar investments sold by his competitors.

In reality, the crooked banker “sat atop a massive Ponzi scheme” a U.S. court of appeals would later say. According to the court, by 2008 he bilked approximately $1 million per day from investors to finance his “personal endeavors.”

WATCH: Lincoln Caylor is a Toronto lawyer whose firm is suing TD over its involvement with Allen Stanford. He tells 16×9 why one of Canada’s biggest banks was important for Stanford.

VIDEO


When the bank fell apart, so too did many of Kathleen Mier’s retirement dreams. Mier, a retired high school teacher from rural Louisiana, didn’t live the high life. She and her husband, Louis, lost $240,000, a big chunk of their savings.

“We just wanted to retire comfortable and not rely on the government or our children,” Mier said.

Stanford funnelled much of the money from unsuspecting investors to fund a lavish lifestyle. From big boats to a fleet of private jets, and mansions including an 18,000 square foot castle in Florida.

In one instance, according to prosecutors, from 2000 to 2002 he spent more than $400,000 on suits from “a private Beverly Hills clothier that advertised itself as the world’s ‘most expensive’ men’s clothing store.”

A major money laundering bank?

Before the fancy suits and mansions, Stanford started small. In the mid-1980s he set up a bank on the island of Montserrat, considered the Wild West of banking at the time. But by 1990, things were changing as Monserrat authorities decided to crack down on shady operators.

According to one former FBI official, Stanford left in a hurry before the government had a chance to shut him down.

“He realised the handwriting was on the wall that the British government was going to revoke his license and …he saw an opportunity to buy a bank very cheaply in Antigua,” said Ross Gaffney who ran the white collar crime squad for the Miami FBI.

In the early 1990’s, Stanford set up Stanford International Bank in Antigua. According to Caylor, TD was crucial in giving that bank access to U.S. dollar accounts.

Gaffney says Stanford ran a major money laundering operation in Antigua and the FBI moved to take him down.

“We set up a sting operation based on actionable intelligence,” Gaffney said. “We recorded conversations with Stanford in which he very candidly laid out what he charged to launder money, who he paid off. He was very boastful that he was a major money laundering bank.”
But the FBI could not make a case against Stanford stick. Gaffney says drug kingpins were good at hiding their tracks and investigators couldn’t conduct extensive covert operations in Antigua because of tough jurisdictional rules.

However, the U.S. government did keep a close watch as Stanford’s operation expanded.

According to prosecutors Stanford bribed Antiguan officials with money, free flights and “expensive Super Bowl tickets” to run interference and keep his operation from being disclosed to U.S. regulators.

By 1999, the U.S. government was fed up with Antigua and Stanford’s relationship. One State Department wire obtained by 16×9 said that “the Antiguan government has effectively ceded oversight of its offshore sector to an offshore banker and his minions.”

Around the same time, one TD official became nervous with the bank’s continued relationship with Stanford International Bank, according to a court document filed by Lincoln Caylor.

After taking a due-diligence trip to Stanford’s operation in Houston, Stephen Cullen, one of the TD personnel responsible for handling the Stanford account, told another TD official that he was uncomfortable with TD Bank’s continued correspondent banking relationship with Stanford International Bank.

According to the court document, Cullen said that the bank needed to conduct a due diligence investigation of SIB, as “something did not seem right.”

Cullen, who is now retired, refused to speak with 16×9.

Over the next decade, TD officials took due diligence trips to look at Stanford’s operations.

But while Stanford was looting his own bank, Caylor says, TD was doing next to nothing.

“The content of the presentations that we’ve found given by SIB to the TD bankers were very superficial,” he said. “We know other bankers who asked the tough questions didn’t get the answers and stopped banking them.”

According to internal documents obtained by 16×9, there was also socializing between TD and Stanford officials. One TD official participated in the Stanford-sponsored St. Jude PGA Pro-Am golf tournament, and Stanford staff and TD bankers ate together at Spuntini Italian Restaurant, an upscale Toronto eatery.

The broker

By 2003, at least one of Stanford’s employees was asking hard questions.

“You know I was questioning…questioning the godfather if you will,” said Charles Hazlett, a former broker, who worked in Stanford’s Miami office.

“All they told me was something like it’s 20 per cent stocks, 15 per cent bonds, 10 per cent..but they didn’t give me enough. My client wanted more information. My client wanted to see the portfolio basically and they claimed it was proprietary,” he said. “Banks here …aren’t allowed to do that. Banks show their balance sheet.”

Hazlett eventually quit.

“I was ruffling too many feathers, I wasn’t a team player, I wasn’t a family. It was almost like Mafia. I wasn’t family member.”
Stanford ended up coming after Hazlett for the bonus money he got when he joined, and Hazlett says he lost hundreds of thousands of dollars in fees and legal costs.

Stanford may have won that fight, but by 2008 his bank was facing big problems. Wall Street and the big banks were collapsing around him.

By 2009, Stanford’s problems got even bigger. The bank was raided by the Securities and Exchange Commission. He would eventually be convicted and sentenced to 110 years in a U.S. penitentiary.

“It was at night when it came on the evening news,” Mier says. “Louis had already gone to bed. And it said, ‘The SEC had shut the Stanford entity down,’ and I went and woke Louis up and I said, ‘Baby, we may have lost our money with Stanford.’”

Kathleen Mier is still angry at Stanford and his lies.

“Shame on you! That’s what I’d tell him. Poor people, who trusted … shame. For the lives you’ve ruined.”

In a statement to 16×9, Stanford said “Without exception everyone in the media has lied to [him], and swallowed hook, line and sinker the government propaganda.”

Stanford maintains his innocence and says he plans to continue his legal fight. He will “walk out of prison a free man…[and] will lead the way for full restitution to…depositors who were financially harmed, all caused by the illegal and unconstitutional actions of the SEC…and DOJ.”

16×9 made repeated requests to speak with TD. In a statement the bank said “it is TD policy to not comment on matters before the courts.”

TD has in the past denied any knowledge of Stanford’s “fraudulent or illegal activities” and said it was neither reckless or willfully blind as Stanford’s correspondent bankers.

With rumours of money laundering, red flags about Antigua, the payment of bribes, and persistent questions about Stanford’s credibility, Caylor says TD should have been a lot more careful.

“There’s a level of due diligence they’re supposed to go and keep doing over the time of the relationship,” Caylor said. “It’s our client’s position that they fell below that standard when they dealt with Allen Stanford and his bank.”

16×9’s “The Billionaire and the Bank” airs Saturday, Jan 30, 2016 at 7pm.

http://globalnews.ca/news/2485811/allen-stanfords-house-of-cards-how-td-banked-the-2nd-largest-ponzi-scheme-in-u-s-history/

[scion]

Eleventh Circuit: Carlos Zelaya v. United States

The National Law Journal
March 30, 2015
http://www.nationallawjournal.com/id=1202722018002/Eleventh-Circuit-Carlos-Zelaya-v-United-States-?cmp=share_twitter&slreturn=20150230111235

The U.S. Court of Appeals for the Eleventh Circuit on Monday said the United States is shielded from liability for the alleged negligence of the U.S. Securities and Exchange Commission over its handling of R. Allen Stanford's multibillion-dollar Ponzi scheme. A three-judge panel upheld the dismissal of a suit against the United States.

"In reviewing the district court’s dismissal, we reach no conclusions as to the SEC’s conduct, or whether the latter’s actions deserve plaintiffs’ condemnation. We do, however, conclude that the United States is shielded from liability for the SEC’s alleged negligence in this case," the appeals court said.

Read the Eleventh Circuit ruling below.
https://s3.amazonaws.com/s3.documentcloud.org/documents/1697851/zelaya-v-us-ca11-20150330.pdf


http://www.nationallawjournal.com/id=1202722018002/Eleventh-Circuit-Carlos-Zelaya-v-United-States-?cmp=share_twitter&slreturn=20150230111235

[scion]

Five years after Stanford scandal, many victims penniless

February 18, 2015

Five years after learning they were victims of a $7 billion Ponzi scheme, investors in the Stanford Financial Group say they feel abandoned, even though their losses rival those in the Madoff scam that was revealed two months earlier.

Unlike the Madoff case, in which a court-appointed trustee has said he is well on his way to recovering all of the investors’ principal—estimated at $17.5 billion—Stanford victims have recovered less than one penny on the dollar since the Securities and Exchange Commission sued the firm and a court placed it in receivership on Feb. 17, 2009.

“I do have to say the Stanford victims do feel like the stepchildren in the Ponzi world,” said Angela Shaw Kogutt, who estimates her family lost $4.5 million in the scam. Shaw heads the Stanford Victims Coalition, which has been trying for years to drum up support in Washington.

Some 28,000 investors—10 times the number of direct investors in the Madoff case—bought certificates of deposit from Stanford International Bank in Antigua, which was owned by Texas financier R. Allen Stanford. Stanford’s U.S. sales force had promised the investors—many of them retired oil workers—that the CDs were at least as safe as instruments from a U.S. bank. But a jury later found most of the clients’ money financed Stanford’s lavish lifestyle instead of the high-grade securities and real estate it was supposed to.

Read The Full Article Here: http://sivg.org.ag/topic478.html


For a full and open debate on the Stanford receivership visit the Stanford International Victims Group – SIVG official Forum http://sivg.org.ag/

https://stanfordinternationalvictimgroup.wordpress.com/

[scion]

U.S. SEC won't appeal court ruling on Allen Stanford fraud

Fri Sep 5, 2014 3:48pm EDT
http://www.reuters.com/article/2014/09/05/us-sec-stanford-idUSKBN0H023M20140905

(Reuters) - The U.S. Securities and Exchange Commission decided not to appeal a recent court decision that said victims of financier Allen Stanford's Ponzi scheme were not eligible under federal law to file claims to recoup their losses, a spokesman for the regulator said on Friday.

On July 18, a federal appeals court in Washington, D.C. let stand a lower court ruling rejecting the SEC's effort to force the Securities Investor Protection Corp, which oversees failed brokerages, to start court proceedings on behalf of victims of the fraud at Stanford Group Co.

The SEC decided "after very careful deliberation" not to appeal that decision, spokesman John Nester said. He said the regulator remains committed to working with the receiver for Stanford's firm, the U.S. Department of Justice, and others to maximize recoveries for harmed investors.


(Reporting by Jonathan Stempel in New York; Editing by Meredith Mazzilli)

http://www.reuters.com/article/2014/09/05/us-sec-stanford-idUSKBN0H023M20140905

[scion]

Madoff, Stanford fraud victims refused appeals by U.S. top court

By Jonathan Stempel
June 30 Mon Jun 30, 2014 9:51am EDT
http://www.reuters.com/article/2014/06/30/usa-court-madoff-stanford-idUSL2N0P80LD20140630

(Reuters) - Victims of the Ponzi schemes of Bernard Madoff and Allen Stanford, two of the largest in U.S. history, suffered setbacks on Monday as the U.S. Supreme Court refused to hear appeals in two cases seeking to recoup more money for them.

In the Madoff case, the court rejected a request by Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, to review the dismissal of his claims against banks he accused of enabling Madoff's fraud.

Separately, the court rejected a request by Ralph Janvey, a receiver unwinding Stanford's businesses, to review a ruling that blocked him from pursuing claims against Stanford employees on behalf of the receivership's creditors, not the businesses themselves.

In both cases, lower courts concluded that Picard and Janvey lacked standing to bring their respective claims.

The Supreme Court did not give reasons for its decisions, which leave intact a June 2013 ruling in the Madoff case by the federal appeals court in New York, and an August 2013 ruling in the Stanford case by the federal appeals court in New Orleans.

Representatives for Picard and Janvey were not immediately available to comment.

Picard has recovered about $9.82 billion for former Madoff customers, who he has estimated lost $17.5 billion of principal in a decades-long fraud uncovered in December 2008. A Ponzi scheme is one in which the early investors are usually paid high returns using money from later investors.

Picard had sued banks including JPMorgan Chase & Co, Britain's HSBC Holdings Plc, Italy's UniCredit SpA and Switzerland's UBS AG over their dealings with Madoff.

JPMorgan, which was Madoff's main bank, was dropped from the case after reaching a $325 million settlement with Picard in January, part of a $2.6 billion global resolution of federal and private Madoff claims.

Stanford's estimated $7.2 billion fraud was based on the sale of bogus certificates of deposit issued by Antigua-based Stanford International Bank to customers who thought the CDs were safe. The Ponzi scheme was uncovered in February 2009.

Janvey won court approval for an initial $55 million distribution to CD investors in April 2013.

Madoff, 76, is serving a 150-year prison term after pleading guilty in March 2009. Stanford, 64, is serving a 110-year term following his jury conviction in March 2012.

The cases are Picard v. JPMorgan Chase & Co et al, U.S. Supreme Court, No. 13-448; and Janvey v. Alguire et al, U.S. Supreme Court, No. 13-913. (Reporting by Jonathan Stempel in New York; Editing by Grant McCool)

http://www.reuters.com/article/2014/06/30/usa-court-madoff-stanford-idUSL2N0P80LD20140630

[scion]

Stanford Ponzi Victims To Be Compensated
Using Imprisoned American's Liquidated Swiss Operations

By John Letzing
Updated March 10, 2014 11:10 a.m. ET
http://online.wsj.com/news/articles/SB10001424052702304020104579430981439459094?KEYWORDS=Stanford+ponzi&mg=reno64-wsj

ZURICH—Victims of the Ponzi scheme run by R. Allen Stanford will receive compensation from the imprisoned American's liquidated Swiss operations, Swiss officials said Monday.

The Office of the Attorney General of Switzerland said in a statement that it had fined Stanford Group (Suisse) AG in Liquidation for aggravated money laundering. The company has been fined one million Swiss francs ($1.1 million) and must pay between six million and nine million francs in compensatory claims, the office said.

Both the fine and the claims will go to the victims of the fraud, the attorney general's office said. It added that during its five-year probe, the attorney general's office lifted a freeze on related Swiss bank accounts containing more than 200 million francs in assets, which have been handed over to Switzerland's financial regulator to compensate victims once bankruptcy proceedings involving Stanford International Bank Limited, Antigua, are completed.

The attorney general's office also said it was abandoning a criminal prosecution of Mr. Stanford and two accomplices because they have already been convicted in the U.S.

Marcus Wide, a liquidator of Stanford International Bank, said in a statement the Swiss development is a positive step "in the Stanford saga," which should help get the balance of related funds still held in the country distributed to victims.

The Swiss decision comes less than two weeks after the U.S. Supreme Court opened the door for further compensation of victims of Mr. Stanford's $7 billion Ponzi scheme, by ruling that victims may sue law firms and others on allegations that they aided the fraud.

Mr. Stanford was convicted in the U.S. in 2012 of defrauding investors by selling them worthless certificates of deposit in his Antigua-based bank. Proceeds from those sales were then used to pay other clients and to fund Mr. Stanford's businesses.

The Swiss investigation into Mr. Stanford opened in 2009, based on suspicions that proceeds from the fraud had entered the Alpine nation, the attorney general's office said in its statement.

Write to John Letzing at [e-mail]

http://online.wsj.com/news/articles/SB10001424052702304020104579430981439459094?KEYWORDS=Stanford+ponzi&mg=reno64-wsj

[scion]

Supreme Court Rules Allen Stanford Ponzi Victims Can Sue Third Parties
Stanford Serving 110-Year Prison Sentence After 2012 Conviction for Defrauding Investors

By Brent Kendall
Updated Feb. 26, 2014 12:02 p.m. ET
http://online.wsj.com/news/articles/SB10001424052702304709904579406962894463586#printMode

WASHINGTON—Victims of R. Allen Stanford's $7 billion Ponzi scheme can sue law firms and other third parties on allegations they aided the fraud, the U.S. Supreme Court ruled Wednesday.

The court, in a 7-2 ruling written by Justice Stephen Breyer, said the victims' class-action lawsuits were allowed even though a 1998 federal law largely prohibits state-law class-action claims for securities fraud. The ruling gives Stanford victims a chance to recover more of their losses. But it likely doesn't open the floodgates for a wave of securities litigation since the holding is limited to products sometimes sold in Ponzi schemes that aren't considered securities.

The court in a 19-page opinion underscored it wasn't making changes to the federal law. Instead, it said the law's text leaves room for investors to take legal action when they are deceived with bogus private offerings like Mr. Stanford's. The ruling "will permit victims of this (and similar) frauds to recover damages under state law," Justice Breyer wrote.

Mr. Stanford is serving a 110-year prison sentence after being convicted in 2012 of defrauding investors on a grand scale. U.S. authorities alleged Mr. Stanford sold investors bogus certificates of deposit in his Antigua-based bank, using new CD proceeds to pay other customers and funnel money into his own businesses.

In the fraud's aftermath, multiple investor groups brought lawsuits based on state law in Louisiana and Texas against law firms and financial services companies that had relationships with the Stanford operations. They alleged SEI Investments Co. and insurance brokers, including subsidiaries of Willis Group Holdings PLC, misrepresented the CDs as safe investments. They also brought claims against law firms Proskauer Rose LLP and Chadbourne & Parke LLP, alleging the firms helped Mr. Stanford's Antigua-based bank evade regulatory oversight.

The law firms have said they didn't make misrepresentations to investors. SEI said it merely provided a Stanford affiliate with back-office services, while Willis Group said it helped Mr. Stanford's bank purchase ordinary insurance policies.

The defendants said the investors targeted third parties with deep pockets because Mr. Stanford's operations are insolvent.

The Supreme Court said the federal law's restrictions on state-law securities lawsuits didn't apply because Mr. Stanford's bogus CD offerings weren't real securities traded on national markets. The court also said it didn't matter that Stanford's bank claimed that it would use investors' money to buy securities.

The Supreme Court's ruling affirmed a decision by the Fifth U.S. Circuit Court of Appeals in New Orleans which allowed the lawsuits to proceed.

"We're very happy the victims of this fraud will finally get their day in court," said Thomas C. Goldstein of Goldstein & Russell PC, a lawyer for the investors.

A spokesman for Chadbourne & Parke said the firm disagreed with the court's ruling "but it is important to remember the court only considered one narrow procedural issue." The firm said it still was raising other arguments on why the lawsuit should be dismissed.

The other defendants didn't immediately respond to requests for comment.

Write to Brent Kendall at [e-mail]

http://online.wsj.com/news/articles/SB10001424052702304709904579406962894463586#printMode

[scion]

Where is the Stanford Ponzi loot? This is the man who knows

Scott Cohn | @ScottCohnCNBC
Thursday, 6 Mar 2014 | 6:24 PM ET
http://www.cnbc.com/id/101472860

Victims of the massive Allen Stanford Ponzi scheme got a rare bit of good news Thursday. Some $18 million in Stanford funds that had been parked in Canada was returned to the U.S. for distribution to investors.

But the payment is tiny in comparison to the $5 billion in actual losses from the scam, and the court-appointed receiver who has spent the past five years searching for Stanford's billions tells CNBC it is unlikely investors will ever recover much because for the most part, "the money is gone."

"I think about the victims every day," Dallas attorney Ralph Janvey told CNBC in an exclusive interview, his first since being appointed five years ago.

"They believed what they were told. And I will say publicly I don't think the victims should be blamed for anything," Janvey said. "They made an investment based on what they were told. What they were told was wrong and it was fraud."

A federal judge placed Stanford's global financial empire in receivership—and under Janvey's control—after the Securities and Exchange Commission filed suit in 2009. The suit accused Stanford of running "a fraud of shocking magnitude" based on bogus certificates of deposit.

Stanford's brokers sold the CDs—issued by his offshore bank in Antigua and Barbuda—to investors around the world. But a federal jury found in 2012 that most of the funds went to support Stanford's lavish lifestyle. Stanford is serving a 110-year prison sentence, and appealing his conviction on 13 criminal counts.

Comparisons to Madoff Ponzi scheme

Since taking over as receiver, Janvey has been searching the world for assets as well as enduring frequent comparisons to the much more successful recovery effort in the Bernard Madoff Ponzi scheme.

"I don't minimize the Madoff fraud and I don't want to minimize the Madoff tragedy," Janvey said. "But Stanford was much more complicated."

That is reflected in the fact that while Janvey's counterpart in the Madoff case—trustee Irving Picard—has said investors could eventually recoup all of their principal. Janvey says the best case scenario for Stanford investors is "pennies on the dollar."

So far, Stanford's 28,000 victims—more than 10 times the number of victims in the Madoff case—have received next to nothing. Janvey received court approval last year to begin making his first distribution to clients. The $55 million being paid out amounts to less than one penny on the dollar.

To date, Janvey says, he has recovered only about $263 million. But nearly half of that—around $120 million—has been eaten up by expenses including $57 million just to wind down Stanford's global operations including 130 companies and 3,000 employees in 30 countries. Janvey says the money, including fees for him and a team of experts, "had to be spent" because of the complexity of the fraud.

"Stanford was spending $33 million a month on expenses," Janvey said. "We had to shut that down. It's also going to litigation; with the goal being what we spend is to bring money back into receivership to distribute to the victims."

Janvey has filed dozens of lawsuits seeking more than $680 million from banks, law firms, politicians and charities that benefited from Stanford's largess. For the most part, they have been unwilling to give any of the money back.

"We had to sue the Democratic and Republican committees to get back over a million dollars.That shouldn't happen," Janvey said.

It took a federal appeals court ruling last year to get the campaign contributions returned, after the committees challenged Janvey's standing to claw back the money.

"Stanford had no right to give the money for political contributions, and they had no right to give it away," Janvey said. "We have other politicians who still have money who haven't given it to us yet."

They include President Barack Obama's 2008 presidential campaign, which received $4,600, according to court filings, and Senate Minority Leader Mitch McConnell, R-Ky., who received $2,500. Janvey said the amounts are too small to justify the cost of litigation.

"Another example is the University of Miami," Janvey said. "They got $6 million to do a study of fish and coral in Antigua. That did not help the victims. That money should come back to the receivership estate so it can be distributed to the victims."

A university spokeswoman declined to comment.

Janvey is also a party in suits against five banks that did business with Stanford, alleging they knew or should have known about the fraud.

"They were on notice and they did nothing about it. And they enabled that fraud to go on for years and years and years," he said.

The cases are similar to allegations against Madoff's primary banker—JPMorgan Chase—which earlier this year agreed to pay more than $2 billion to head off criminal charges. But Stanford's banks, HSBC, Societe Generale, Toronto Dominion, Trustmark and Bank of Houston, have all moved to dismiss the allegations. Janvey said the Justice Department should be investigating Stanford's banks the way it did with Madoff's.

"I would encourage the government to look at the banks," Janvey said. "We are here to assist them if they want our assistance."

Further frustrating Janvey's efforts is the fact that the Securities Investor Protection Corporation (SIPC) has refused to provide coverage to Stanford victims—another contrast to the Madoff case, where the SIPC has not only paid victims but also covered the trustee's expenses.

Money hidden offshore?

Stanford's deep political connections as well as rumors—mostly cultivated by him—that he worked as a government informant have led to speculation he may have some money hidden offshore. But Janvey says that is not the case.

"And we've looked. It's one of the things we did in the early days of the receivership. It doesn't exist," he said. "We've traced the money. The money is gone. And that's very frustrating for the victims, I understand that. But the money was gone before we came in."

Janvey says the money that was not redeemed by Stanford investors "went to his spending."

"He had to buy the reputation that he—quote—'earned,' and he used victims' money to get there."

Some $208 million is frozen in Swiss banks, with about two-thirds of the money to go into the receivership controlled by Janvey, and the rest to go to court-appointed liquidators in Antigua. But much of that money is contingent on Stanford's criminal appeal. Stanford, who is representing himself, recently filed a motion from prison asking for another six months to file his initial brief.

Janvey estimates it will take another five years of litigation before he has exhausted his recovery efforts.

Since the scandal broke in 2009, 67 Stanford clients have died.

—By CNBC's Scott Cohn. Follow him on Twitter @ScottCohnCNBC

http://www.cnbc.com/id/101472860

[scion]

Five years after Stanford scandal, many victims penniless

Scott Cohn | @ScottCohnCNBC
Saturday, 15 Feb 2014 | 2:23 PM ET
http://www.cnbc.com/id/101418516

Five years after learning they were victims of a $7 billion Ponzi scheme, investors in the Stanford Financial Group say they feel abandoned, even though their losses rival those in the Madoff scam that was revealed two months earlier.

Unlike the Madoff case, in which a court-appointed trustee has said he is well on his way to recovering all of the investors' principal—estimated at $17.5 billion—Stanford victims have recovered less than one penny on the dollar since the Securities and Exchange Commission sued the firm and a court placed it in receivership on Feb. 17, 2009.

"I do have to say the Stanford victims do feel like the stepchildren in the Ponzi world," said Angela Shaw Kogutt, who estimates her family lost $4.5 million in the scam. Shaw heads the Stanford Victims Coalition, which has been trying for years to drum up support in Washington.

Some 28,000 investors—10 times the number of direct investors in the Madoff case—bought certificates of deposit from Stanford International Bank in Antigua, which was owned by Texas financier R. Allen Stanford. Stanford's U.S. sales force had promised the investors—many of them retired oil workers—that the CDs were at least as safe as instruments from a U.S. bank. But a jury later found most of the clients' money financed Stanford's lavish lifestyle instead of the high-grade securities and real estate it was supposed to.

Stanford, who portrayed himself as a self-made billionaire, exuded the American Dream. He claimed to have built his global financial empire from a family insurance business in his rural hometown of Mexia, Texas. A generous contributor to politicians of all stripes, Stanford effectively took over the financial sector in Antigua while nurturing rumors of his unique connections.

But asked directly by CNBC in 2009 about suggestions he was a government informant, Stanford demurred.

"You talkin' about the CIA?" he asked. "I'm not gonna talk about that."

On the eve of the fifth anniversary of the scandal, Dallas attorney Ralph Janvey, appointed by a federal judge to head the receivership and round up assets for the victims, said he feels the victims' pain.

"Even though my team and I have worked hard and made much progress over the last five years, the process of unwinding the fraud and the pace of recovering money have been frustratingly slow," Janvey wrote in an open letter to "all those affected by the Stanford fraud."

In the Stanford case, progress is relative.

Last April, Janvey won court approval to begin distributing $55 million to some investors. In the letter, he said $25 million has already been distributed, another $5.5 million could be paid this month and another $18 million in Stanford assets from Canada could be distributed this year as well.

But the rest of the investors' money was either spent by Stanford or is tied up in litigation. Janvey said some $200 million in assets is in Swiss banks and tied up in the criminal forfeiture process. He has sued dozens of people and institutions that allegedly profited from the Ponzi scheme, seeking more than $680 million. The prospects for recovering anything close to that amount, however, are unclear.

"Asset recovery litigation is difficult, lengthy and expensive," Janvey wrote. "The defendants, many of whom have significant resources, are defending the cases aggressively, and many of the favorable rulings in these cases have already been appealed."

Further complicating matters, victims allege: the Justice Department has not been as aggressive in the Stanford case as it has been in the Madoff case.

Even the federal judge overseeing the Stanford receivership, David Godbey in Dallas, made note of the apparent contrast during a status hearing Jan. 16, a week after authorities announced a $2 billion settlement with JPMorgan Chase for its role in the Madoff scandal.

"I read with interest in the media that JPMorgan Chase is paying the Madoff folks a whole bunch of money. I assume our check will follow shortly," Godbey said, according to a transcript of the hearing.

No fewer than five banks—though not JPMorgan Chase—have been sued in the Stanford case for allegedly facilitating the fraud, but there have been no signs of interest from criminal authorities. A spokesman for the Justice Department did not respond to a request for a comment.

The government did prosecute Allen Stanford and several of his top executives. Stanford, 63, is serving a 110-year sentence at a federal penitentiary in Florida. He has appealed his 2012 conviction on 13 criminal counts, but with his assets frozen and having fired his court-appointed attorney, Stanford is representing himself and filing handwritten legal motions from prison. One was filed March 4, 2013 and another on March 12, 2013.

"I or any other American citizen deserve better than this," he wrote in a filing last March. "The presumed innocent part of our constitution is only a myth in America today."

The pending appeal is yet another complication for Stanford's victims, since approximately $300 million he was ordered to forfeit as a result of his conviction cannot be released until the appeals process is complete.

But one of the biggest sources of frustration for the victims is another stark contrast to the Madoff case.

The Securities Investor Protection Corp. (SIPC), which insures U.S. brokerage accounts, has refused to pay Stanford victims, while qualified Madoff victims are eligible for SIPC's maximum coverage of $500,000 per account.

The SEC sued SIPC in 2012 on behalf of the Stanford investors, arguing they also were entitled to coverage, as Stanford's U.S. brokerage was an SIPC member. But SIPC says its insurance covers only securities, and even if the Stanford CDs are considered securities, they are worthless.

The judge in the case sided with SIPC. A federal appeals panel is considering the SEC's appeal, and victims are anxiously waiting for a ruling.

"I really think the only chance the victims really have to recover something is either years down the road or through SIPC," said Kogutt of the victims' coalition.

Because many of the victims are elderly, there is no time to waste. Since the scandal broke in 2009, 176 of Stanford's investors have died.

—By CNBC's Scott Cohn. Follow him on Twitter @ScottCohnCNBC

http://www.cnbc.com/id/101418516

[scion]

Stanford Investors Start Getting Payouts

Latest Wednesday, 04 September 2013 03:30
By caribarena news
http://www.caribarena.com/antigua/news/latest/104512-stanford-investors-start-getting-payouts.html

Antigua St. john's - Stanford investors have started getting some money back, after more than 4.5 years.

Nonetheless, the amounts being returned to them are merely a pittance in comparison to their investments in the $7 billion Ponzi Scheme.

According to information online, the largest claim paid out was about $50,000 and the smallest was $2.81. The average claim was said to be in the range of $1,000 to $4,000.

One investor, British retiree Kate Freeman, was quoted as saying, "After nearly five years, it's just the biggest disappointment — isn't it? — that this is all we're getting.”

Freeman lost $820,000.


An attorney for Ralph Janvey said he expected about $1 M to be distributed within the next few months.

David Arlington said, "Obviously it's a huge milestone in this receivership to be able to begin making payments to investors. We're pleased with the fact that we are doing that.”

R Allen Stanford is serving 110 years in prison after being convicted on 13 fraud-related charges.

However, liquidators in Antigua said they will not begin distributing funds until November or December.

Marcus Wide, of the Stanford International Bank Joint Liquidators, could not give a figure for the distribution however.

R Allen Stanford is serving 110 years in prison after being convicted on 13 fraud-related charges.

http://www.caribarena.com/antigua/news/latest/104512-stanford-investors-start-getting-payouts.html

[scion]

SEC wins dismissal of lawsuit over handling of $7 billion Stanford fraud

By Jonathan Stempel
Tue Aug 13, 2013 1:43pm EDT
http://www.reuters.com/article/2013/08/13/us-sec-stanford-lawsuit-idUSBRE97C0O820130813

(Reuters) - A federal judge in Florida has thrown out a lawsuit accusing the U.S. Securities and Exchange Commission of negligence for failing to report that the now-imprisoned swindler Allen Stanford was running a $7.2 billion Ponzi scheme.

U.S. District Judge Robert Scola in Miami said the market regulator was shielded under an exception to the Federal Tort Claims Act that bars claims arising from misrepresentation or deceit.

The plaintiffs, Carlos Zelaya and George Glantz, said they lost a combined $1.65 million with Stanford, and sought class-action status on behalf of investors who were victims of his fraud. They plan to appeal Monday's decision, their lawyer Gaytri Kachroo said. SEC spokesman Kevin Callahan declined to comment.

Stanford, 63, is serving a 110-year prison sentence after he was convicted on criminal charges in March 2012 for a fraud that the government said was centered in certificates of deposit issued by his Antigua-based Stanford International Bank.

Zelaya and Glantz claimed that the SEC considered Stanford's business a fraud after each of four examinations between 1997 and 2004, but failed to advise the Securities Investor Protection Corp, which compensates victims of failed brokerages.

The SEC filed civil charges against Stanford in February 2009, two months after the multibillion-dollar Ponzi scheme of New York-based swindler Bernard Madoff was uncovered. In a typical Ponzi scheme, investors are promised high or consistent returns relative to the amount of risk taken, and older investors are paid with money from newer investors.

Last September, Scola let the lawsuit against the SEC go forward, saying the plaintiffs could argue that the regulator had breached a duty to report Stanford's misconduct.

But on Monday, he said the FTCA exception barring claims of misrepresentation deprived him of jurisdiction.

"The plaintiffs claim that they were induced into entering disadvantageous business transactions because of the SEC's misrepresentation," he wrote. "The plaintiffs' cause of action is a classic claim for misrepresentation."

Their lawyer Kachroo said: "We believe that the judge did not draw the appropriate distinction between a claim based on a misrepresentation and our claim based on a failure to warn in line with the SEC's mandatory duty to notify SIPC."

In 2010, the SEC's inspector general criticized the regulator, finding that it knew as early as 1997 that Stanford was likely running a Ponzi scheme.

Earlier this year, federal appeals courts in New York and California dismissed lawsuits against the SEC by victims of Madoff's fraud.

The case is Zelaya et al. v. U.S., U.S. District Court, Southern District of Florida, No. 11-62644.

(Reporting by Jonathan Stempel in New York; Editing by Grant McCool)

http://www.reuters.com/article/2013/08/13/us-sec-stanford-lawsuit-idUSBRE97C0O820130813

[scion]

SEC judge rules Stanford executives are liable for fraud

By Sarah N. Lynch
WASHINGTON | Mon Aug 5, 2013 6:02pm EDT
http://www.reuters.com/article/2013/08/05/us-sec-stanford-idUSBRE97410620130805?feedType=RSS&feedName=businessNews

(Reuters) - In a victory for federal regulators, an administrative judge has found three former executives who worked for Allen Stanford's now-defunct brokerage liable for fraud and said they should banned from the industry.

The ruling comes more than a year after Stanford was sentenced to 110 years in prison for bilking investors through a Ponzi scheme with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

In her ruling, Securities and Exchange Commission Judge Carol Fox Foelak described as "egregious" the conduct of former Stanford Group Co. chief compliance officer Bernerd Young, former president Daniel Bogar and Jason Green, a former head of the private client group.

Foelak also ordered the three executives to pay fines and forfeit ill-gotten profits.

The SEC's case against the three executives did not allege they actually knew about Stanford's Ponzi scheme.

Instead, it hinged on whether they sufficiently ensured that marketing materials and other disclosures were adequate for investors.

All three executives have vigorously denied any wrongdoing.

Young, who was previously a regulator with the group now known as the Financial Industry Regulatory Authority, told Reuters in the summer of 2012 that he took due diligence steps including reviewing quarterly financial statements and reading annual reports about the bank.

But he said in the exclusive interview that Antiguan privacy laws kept him from seeing more details about the investment portfolio, so he relied on the bank's compliance experts.

"If there is such a thing as a...perfect scam, this was the perfect scam," Young told Reuters last year.

Foelak ordered Young, Bogar and Green to each pay a $260,000 civil penalty.

In addition, Young was ordered to return roughly $592,000 plus interest. Bogar was ordered to forfeit about $1.5 million, and Green must pay $2.6 million.

Lawyers for both Young and Bogar said they were disappointed in the judge's ruling and are still considering their options.

If they decide to appeal, the case would first go before the full five-member SEC.

"Mr. Young...is deeply troubled by the initial decision's disturbing implications for the securities compliance industry and the newer and more Draconian standards that compliance officers may be facing," said Randle Henderson, Young's attorney.

"The decision demonstrates the real danger to compliance officers relying upon advice of independent outside counsel, fully licensed and qualified accounting firms and the audited financial opinions they issue, and the sovereign financial regulatory agencies of foreign countries."

Thomas Taylor, a lawyer for Bogar, said that while he felt his client got a "full and fair hearing," he disagreed with her outcome profoundly.

An attorney for Green could not be immediately reached.

Friday's ruling by the administrative judge marked the second big trial victory for the SEC in one week.

On Thursday, a jury in New York found former Goldman Sachs Group Inc. vice president Fabrice Tourre liable for federal securities law violations for his role in a complex mortgage deal that cost investors $1 billion when it failed.

(Reporting by Sarah N. Lynch; additional reporting by Stuart Gittleman in New York; Editing by Ken Wills)

http://www.reuters.com/article/2013/08/05/us-sec-stanford-idUSBRE97410620130805?feedType=RSS&feedName=businessNews

[scion]

Stanford settlement clear way for investor recoveries

Tuesday, March 12, 2013
http://blog.chron.com/lorensteffy/2013/03/stanford-settlement-clear-way-for-investor-recoveries/?utm_medium=twitter&utm_source=twitterfeed#print

A legal settlement between the court-appointed receiver in Dallas for Allen Stanford’s financial empire and the liquidators winding down the Stanford International Bank in Antigua should clear the way for Stanford’s long-suffering investors to recover some of their losses.

The deal frees up most of the $350 million in assets that had been frozen in various foreign bank accounts since Stanford’s global investment scheme was revealed to be a $7 billion fraud in 2009.

“It is important to note that this agreement is one of the most complex undertakings of its kind,” said Kevin Sadler, the attorney for the receiver. “Hundreds of millions in assets are spread over three countries, all subject to multiple competing claims of civil and criminal enforcement officials and court-appointed officials in five different countries.

The overlapping legal jurisdictions involved in the case include the U.S., Antigua, Canada, the U.K. and Switzerland.

The receiver had already begun the process of distributing other money he had recovered on behalf of investors.

Even with the latest settlement, though, investors are still likely to recover only a pittance of what they initially invested.

The lawsuit between the receivers and the bank liquidators had been one of the biggest hurdles to resolving the investor claims in the Stanford case. Many investors worried that the battle would drain off what little money was still left.

Allen Stanford is serving a 110-year prison sentence, and several other top lieutenants in his firm also received lengthy sentences.

http://blog.chron.com/lorensteffy/2013/03/stanford-settlement-clear-way-for-investor-recoveries/?utm_medium=twitter&utm_source=twitterfeed#print

[scion]

Stanford Investors Sue Antigua, Caribbean Central Bank

By Laurel Brubaker Calkins - Feb 18, 2013 2:39 PM GMT-0500
http://www.bloomberg.com/news/2013-02-18/stanford-investors-sue-antigua-caribbean-central-bank.html

R. Allen Stanford’s receiver and investors’ committee sued Antigua, the Eastern Caribbean Central Bank and 23 former Stanford Financial Group Co. executives over allegations they aided the financier’s $7 billion fraud.

The Official Stanford Investors Committee seeks repayment of at least $90 million in documented loans Stanford made to the dual-island nation of Antigua and Barbuda and accuses its elected officials of having been “Stanford’s partners in crime.” The nation’s leaders shielded Stanford’s scheme and traded choice real estate for as much as $230 million in loans that haven’t been repaid, according to the lawsuit.

“Antigua knowingly provided necessary assistance to Stanford’s $7 billion Ponzi scheme and, in exchange, received millions of dollars in loans whose repayment terms Stanford did not enforce,’’ the committee said in a complaint filed in Dallas federal court on Feb. 15. “For well over a decade, Antigua was a prime participant in, and beneficiary of, the Stanford Ponzi scheme, and actively protected and shielded Stanford’s criminal enterprise from real regulatory scrutiny.’’

Stanford, 62, was convicted in March of masterminding a Ponzi scheme that defrauded investors through the sale of bogus certificates of deposit at his Antigua-based Stanford International Bank Ltd. He is serving a 110-year sentence in a Florida federal prison as he appeals his verdict and sentence.

Falsified Audits

Evidence at Stanford’s trial showed he bribed Antiguan banking regulator Leroy King to falsify audits certifying the bank’s investment returns and mislead U.S. securities regulators investigating the former Texas billionaire’s operations. Stanford was also allowed to underwrite and participate in banking reform legislation that Antigua claimed had cleaned up its corrupt offshore banking industry, according to trial evidence. Antigua has so far failed to extradite King to face criminal charges in the U.S.

The investors on Feb. 15 separately sued the Eastern Caribbean Central Bank, which nationalized Stanford’s other island financial institution, the Bank of Antigua, after the U.S. Securities and Exchange Commission seized Stanford’s enterprise on suspicion of fraud in February 2009.

The ECCB in turn parceled out ownership in the bank to the government of Antigua and to other Caribbean banks in what the investors called “a second act of brazen thievery.” The head of ECCB’s monetary council at the time was Antiguan Minister of Finance Errol Cort, who was both King’s supervisor and one of Stanford’s personal attorneys, according to court papers.

‘Rightful Owners’

“The considerable value of the Bank of Antigua, believed to be in the tens or hundreds of millions of dollars, should be distributed as compensation to its rightful owners, Stanford’s victims and creditors,’’ the committee said in court papers.

Recent comments by Antiguan elected officials indicate the country intends to repay the bank instead of the defrauded investors, Peter D. Morgenstern, a lawyer for the investors’ committee, wrote, meaning that “in essence, Antigua intends to use CD investors’ money to pay itself.’’

Tom Bayko, Antigua’s attorney, didn’t immediately respond to voice or e-mail messages seeking comment on the lawsuit. In an earlier suit, Bayko said Antigua was protected from such litigation by foreign sovereign immunity.

Officials at the ECCB didn’t immediately return telephone or e-mail messages seeking comment on the lawsuit.

Ralph Janvey, Stanford’s court-appointed receiver, filed another lawsuit on Feb. 15 claiming breach of fiduciary duty lawsuit by 23 former directors and officers of Stanford’s operations, including three executives convicted of furthering the fraud scheme. The suit seeks return of all compensation from these individuals, some of whom have been previously sued by the receiver on similar claims.

“Many directors and officers simply looked the other way, while others actively assisted Stanford in defrauding thousands of people out of billions of dollars,’’ Kevin Sadler, Janvey’s lead lawyer, said in the filing in Dallas federal court. They “put their continued employment and substantial compensation ahead of the best interests of the entities they were hired to serve,” he said.

The cases are The Official Stanford Investors Committee v. Antigua and Barbuda, 3:13-cv-0760; The Official Stanford Investors Committee v. Bank of Antigua, 3:13-cv-0762; Janvey v. Alvarado, 3:13-cv-0775. All are in U.S. District Court, Northern District of Texas (Dallas).

The main criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).

To contact the reporters on this story: Laurel Brubaker Calkins in Houston at [e-mail];

To contact the editor responsible for this story: Michael Hytha at [e-mail]

http://www.bloomberg.com/news/2013-02-18/stanford-investors-sue-antigua-caribbean-central-bank.html

[scion]

Stanford investors must repay bogus CD interest, judge says

BLOOMBERG NEWS | January 23, 2013 | Updated: January 23, 2013 10:10pm
http://www.chron.com/news/houston-texas/houston/article/Stanford-investors-must-repay-bogus-CD-interest-4218700.php

R. Allen Stanford's defrauded investors must repay any interest they earned on the bogus certificates of deposit at the heart of the convicted Texas financier's $7 billion Ponzi scheme, a Dallas judge ruled this week.

About 800 investors had urged U.S. District Judge David Godbey to reject lawsuits by Ralph Janvey, Stanford's court-appointed receiver, seeking recovery of more than $220 million in profits they'd taken out of Stanford's scheme before it was shut down by U.S. securities regulators in February 2009.

"The court recognizes that forcing net winners to pay back interest payments will cause some pain," Godbey wrote in an order released Wednesday in federal court in Dallas. "But for victims of a Ponzi scheme, everyone is a loser. And the net winners will be in far better shape, having recovered at least their principal, than most Stanford victims, who lost everything."

Ponzi scheme

Godbey ruled that while investors have legitimate claims to recover cash they originally invested in a fraud scheme, they have no contractual claim to any interest from those funds because investment contracts with a Ponzi scheme are unenforceable.

"Judge Godbey agreed with the receiver's position that the fictitious interest payments that Stanford made to investors on their Stanford International bank CDs simply represented money taken from one set of investors and paid to another; it was just part of Stanford's efforts that kept the Ponzi scheme going for well over a decade," Kevin Sadler, Janvey's lead attorney, said in a statement.

Stanford, 62, was convicted in March of stealing more than $2 billion in investor deposits at his Antigua-based bank to fund a lavish personal lifestyle and bankroll money-losing private enterprises ranging from Caribbean airlines to cricket tournaments. He is serving a 110-year sentence in a Florida federal prison while he appeals that verdict.

One cent on the dollar

Janvey has asked Godbey's permission to distribute $55 million of the funds he has recovered from Stanford's estate to more than 17,000 investors within the next few months. That payment represents about 1 cent on the dollar of the funds investors lost through the scheme, according to court documents.

http://www.chron.com/news/houston-texas/houston/article/Stanford-investors-must-repay-bogus-CD-interest-4218700.php

[scion]

Stanford's Forgotten Victims

This blog is a member of the Stanford International Victims Group who are dedicated to fighting for the recovery of the Billions of Dollars belonging to the thousands of International Investors who are affected by the alleged fraud of Stanford Financial Group and Stanford International Bank in Antigua.

http://stanfordsforgottenvictims.blogspot.co.uk/

[scion]

Allen Stanford victims to receive $55 mln under receiver plan

1/14/2013
By Dan Levine
http://newsandinsight.thomsonreuters.com/Securities/News/2013/01_-_January/Allen_Stanford_victims_to_receive_$55_mln_under_receiver_plan/

Jan 11 (Reuters) - Roughly 18,000 defrauded investors in Allen Stanford's $7 billion Ponzi scheme would receive an initial payment of $55 million for their claims, according to a plan submitted by a court appointed receiver on Friday.

Stanford was sentenced last year to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua.

Following a lawsuit by the U.S. Securities and Exchange Commission, a Texas-based federal judge appointed a receiver to settle the Stamford estate and disburse any assets to claimants.

The plan filed in court on Friday proposes that $55 million be disbursed to investors. "Many of these people entrusted their entire life savings to the scheme and have received a pittance or nothing at all from it," the receiver wrote.

A victim's advocate group immediately criticized the plan, saying the fees involved in collecting the money far outweighed that payout.

"To say the recovery of one penny on the dollar is disappointing is a dramatic overstatement," Angela Shaw, the director the Stanford Victims Coalition, said in a statement.

Attorneys for the receiver, Ralph Janvey, could not immediately be reached for comment.

Separately, the SEC had requested that an industry backed fund, the Securities Investor Protection Corp, start a court proceeding that could help further compensate victims.

But a U.S. judge turned down the SEC's request, saying the agency had not met its legal burden to show why SIPC should be compelled to act. SIPC, which has handled high-profile liquidations such as Bernard Madoff's Ponzi scheme, contended that Stanford's offshore bank fell outside the scope of its authority.

The SEC has appealed.

The case in U.S. District Court, Northern District of Texas is Securities and Exchange Commission vs. Stanford International Bank Ltd et al, 09-cv-0298.

http://newsandinsight.thomsonreuters.com/Securities/News/2013/01_-_January/Allen_Stanford_victims_to_receive_$55_mln_under_receiver_plan/

[scion]

Stanford hired corporate spies to silence, discredit Ponzi scheme's critics

By Murray Waas
McClatchy Newspapers
Posted Friday, Nov. 30, 2012
http://www.star-telegram.com/2012/11/30/4451489/stanford-hired-corporate-spies.html#storylink=cpy

WASHINGTON -- In 2006, Allen Stanford had yet to be identified as the mastermind of one of the largest and longest-running Ponzi schemes in U.S. history, but he faced mounting pressure.

Federal securities examiners were pushing for an investigation into his investment operation, which tens of thousands of soon-to-be victims had entrusted with nearly $7 billion. Some of the Texas financier's own employees were threatening to tell authorities what they knew about his fraud.

Stanford was so concerned that a former senior State Department official named Jonathan Winer might expose his colossal con game that he ordered an investigation into Winer's private life, according to Stanford's previously secret records obtained by McClatchy Newspapers.

Kroll Inc., an international corporate intelligence firm that Stanford had retained for more than a decade, obliged. Tom Cash, a Miami-based managing director of Kroll, soon informed Stanford in an e-mail that he was looking into whether Winer's ex-wife was a lesbian, according to the internal documents obtained by McClatchy.

Winer "is pure cockroach," Stanford e-mailed back, encouraging Cash to try to unseal Winer's divorce records. "Go after him as hard on as many fronts as possible."

Winer, who said in an interview that Kroll's characterization of his ex-wife was "patently absurd," wasn't the company's only target.

The documents show that Kroll also investigated and passed to Stanford personal information about several of his former employees, his defrauded investors, other U.S. government officials and journalists who were questioning his bank's financial stability. Stanford used the information to silence and discredit several of them.

Stanford is serving a 110-year jail sentence after having been found guilty in March of 13 federal fraud charges related to the scheme he ran from his offshore bank, Stanford International Bank, once located on the Caribbean island of Antigua.

The newly obtained documents shed light on some of the steps Stanford took to elude law enforcement officials for years. By the time his scheme was uncovered in 2009, nearly all of the cash that he stolen from investors had disappeared. The records also show how Kroll stepped into ethically questionable territory as it foraged for damaging or embarrassing information that might be used to intimidate or smear Stanford's perceived adversaries.

Kroll, which has been referred to as Wall Street's "private eye," says its employees had no clue they were helping to conceal the second-biggest Ponzi scheme in U.S. history.

The disclosures regarding Kroll's work for Stanford come as a string of governmental investigations and private lawsuits surrounding those who allegedly aided Stanford's Ponzi scheme heat up. Even though Stanford is in jail, the Justice Department and the Securities and Exchange Commission are still investigating the conduct of other lawyers and accounting firms who worked for Stanford, according to people close to the inquiries.

A federally appointed court receiver has also been attempting to claw back money for defrauded investors, suing several law firms and accounting firms for work they did for Stanford.

SEC examiners concluded as early as 1997 that Stanford was running a massive Ponzi scheme, agency records show. But Stanford was able to stall the opening of any formal inquiry for a full decade, much like the man behind the only bigger U.S. Ponzi scheme, Bernard Madoff. The Fort Worth regional office of the SEC was eventually criticized by government watchdogs and Congressional committees for failing to go after Stanford faster.

Federal law enforcement officials, private lawyers seeking to recover money for victims and even some of Stanford's former aides say that his fraud likely would have been discovered years earlier if it hadn't been for the collective assistance of respected law firms, accountants and Kroll.

Kroll, the law firms and accountants have said they acted in good faith, but were duped themselves.

Citing "legal reasons," Kroll said it could not comment on "these specific events," but added that "none of the individuals associated with the investigation six years ago are currently employees of Kroll."

Cash left Kroll in 2009.

The firm said it "takes active steps to ensure that the company conducts its business activities in compliance with the laws of the countries in which it operates."

Stanford, a North Texas native who graduated from Eastern Hills High School in Fort Worth, considered Winer one of the most serious threats to unmask his Ponzi scheme in the late 1990s during Winer's service as deputy assistant secretary of state for law enforcement. Among Winer's responsibilities was to combat international money laundering and encourage greater regulation of offshore banks, such as those headquartered in Antigua.

By locating his bank there, Stanford was able to evade regulation and oversight from U.S. authorities, while Antiguan banking regulators allegedly took bribes and other favors to turn a blind eye to his activities.

Over several years, Winer joined federal regulators and members of Congress, including then-Democratic Sen. Barack Obama of Illinois, in calling for legislation that eventually limited U.S. operations in countries that permit bank secrecy, perhaps indirectly leading to the exposure of Stanford's fraud.

http://www.star-telegram.com/2012/11/30/4451489/stanford-hired-corporate-spies.html#storylink=cpy

[scion]

Stanford’s Accountants Guilty of Hiding $7 Billion Fraud

By Laurel Brubaker Calkins - Nov 19, 2012 5:32 PM GMT-0500
http://www.bloomberg.com/news/2012-11-19/stanford-s-accountants-guilty-of-hiding-7-billion-fraud-1-.html


Two former accounting executives were convicted of helping Texas financier R. Allen Stanford hide a Ponzi scheme that bilked investors of $7 billion.

A jury of seven men and five women in federal court in Houston deliberated for 16 hours over three days before convicting Stanford’s ex-Chief Accounting Officer Gilbert Lopez, 70, and former Global Controller Mark Kuhrt, 40, of conspiring to hide a fraud scheme built on bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

The men were each found guilty today of 9 of 10 wire fraud counts and one count of conspiracy to commit wire fraud.

“They knew the bank was doing one thing and promising investors another, and they helped hide it,” prosecutor Jason Varnado told jurors during closing arguments Nov. 14. “The only explanation for that is a criminal explanation.”

The men face prison terms of more than 20 years when they are sentenced Feb. 14 by U.S. District Judge David Hittner, who presided over the trial. Hittner ordered both men to be taken into custody over the government’s recommendation that they remain free on bond.

“Based upon the facts in this case and this being an international scheme, I believe there are enough potential contacts out there that I decline to allow them to remain free,” Hittner said.

Lawyers for both defendants said they will appeal the verdicts.

Cricket Tournaments

Lopez and Kuhrt are the last former Stanford executives to face criminal trial over the scheme. Prosecutors told jurors the accountants were among a handful of employees carefully tracking funds Stanford “sucked out” of the bank to finance risky private ventures ranging from Caribbean airlines to resort developments to international cricket tournaments.

Stanford, 62, was convicted in March of masterminding the fraud and stealing more than $2 billion of investor deposits to finance a lavish lifestyle of private jets, yachts and waterfront mansions along with his money-losing side enterprises. He is serving a 110-year term in a Florida federal prison while he appeals his verdict and sentence.

Lawyers for Lopez and Kuhrt urged jurors to acquit the men, claiming they were duped by Stanford and finance chief James M. Davis into creating the false financial statements investors relied on in buying the bogus CDs.

Bank’s Assets

Stanford told CD buyers their money was invested in conservative liquid assets and overseen by international money managers. Evidence at his jury trial showed that Stanford and Davis secretly controlled more than 80 percent of the bank’s investments, much of which was loaned to Stanford or used to underwrite his other businesses.

Jurors heard Lopez, Kuhrt and Davis testify during the five-week trial. Davis pleaded guilty to his role in the scheme in 2009, testified against Stanford at his trial and is awaiting sentencing.

The defense attorneys told jurors the accountants relied on investment returns provided by Stanford and Davis and never intended to falsify company records or break any laws. The accountants also lobbied Davis to publicly disclose Stanford’s borrowings to investors and were overruled, they said.

“There’s no doubt whatsoever there was a massive fraud going on, but it was a Stanford and Davis fraud, not a Lopez and Kuhrt fraud,” Richard Kuniansky, Kuhrt’s lawyer, told jurors in closing arguments Nov. 14.

The case is U.S. v Lopez, 4:09-cr-0342, U.S. District Court, Southern District of Texas (Houston).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at [e-mail].

To contact the editor responsible for this story: Michael Hytha at [e-mail].

http://www.bloomberg.com/news/2012-11-19/stanford-s-accountants-guilty-of-hiding-7-billion-fraud-1-.html

[scion]

Stanford Victims to Get Bipartisan Ponzi Funds

By DAVID LEE
http://www.courthousenews.com/2012/10/24/51617.htm

DALLAS (CN) - Several Republican and Democratic political committees must return more than $1.6 million contributed by convicted Ponzi schemer R. Allen Stanford, the 5th Circuit ruled.

Stanford, 62, was sentenced in August to 110 years in federal prison. He was convicted in Houston of 13 of 14 counts of conspiracy, wire fraud and mail fraud for running a $7 billion Ponzi scheme by selling phony certificates of deposit.

From 2000 to 2008, entities he controlled gave the money to two Democratic committees - the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee - and three Republican committees - the Republican National Committee, the National Republican Senatorial Committee and the National Republican Congressional Committee.

Ralph Janvey, the court-appointed receiver for the Stanford entities, filed sued the committees over the money in 2010, and a Dallas federal judge later granted summary judgment in his favor. Janvey is a partner with Krage Janvey of Dallas.

A three-judge appellate panel based in New Orleans affirmed the judgment Tuesday.

"Because we conclude that the receiver may stand in the shoes of the creditors of the Stanford defendants, the receiver's [Texas Uniform Fraudulent Transfer Act] claims were brought 'within one year after the transfer[s] ... w[ere] or reasonably could have been discovered by the claimant,' and they are not preempted, we reject the committees' arguments," Judge James Dennis wrote for the court.

The panel agreed that Janvey can bring claims on behalf of the Stanford entity creditors.

In Jones v. Wells Fargo Bank, the 5th Circuit ruled that "[a] receiver is 'the representative and protector of the interests of all persons, including creditors, shareholders and others, in the property of the receivership" under Texas law, according to the ruling.

"Not only is Jones controlling, but its reasoning finds support in the decisions of several other circuits," Dennis wrote.

The panel also rejected claims that Janvey took too long to file suit, and that the claims were not filed within one year of the transfers. The committees argued that the latest Janvey could have reasonably discovered the payments was February 2009 and that their existence was not "inherently indiscoverable" because they are public record and were discussed in the media.

But Dennis said this "argument misses the mark."

"Even if the existence of the donations was discoverable, their fraudulent nature was not. Moreover, when the Receiver was first appointed on February 16, 2009, he had a number of duties to attend to, which involved the many Stanford offices, systems, and employees," the decision states.

It is not reasonable to expect Janvey to have immediately discover the fraudulent transfers given the extent of the Stanford entities and the extent of the fraud, according to the ruling.

The committees failed to submit any summary judgment evidence indicating Janvey actually discovered the transfers earlier than February 20, 2009, anyway.

The Federal Election Campaign Act furthermore does not expressly pre-empt Janvey's TUFTA claims, the court found.

"TUFTA is a general state law that happens to apply to federal political committees in the instant case," Dennis wrote. "In cases like this one, we have rejected express preemption arguments and construed" federal law narrowly.

He adds: "Nor does TUFTA implicate the 'core concerns' of FECA. As the Receiver correctly explains, he does not seek a refund of the contributions. Rather, the TUFTA claims are brought on behalf of the creditors of the Stanford Defendants and assert that the contributions should not have been made in the first place."

Since his appointment, Janvey has filed approximately 45 fraudulent transfer, fraud and disgorgement suits to recover investor money.

Defendants have included the Miami Heat basketball team, New Orleans-based law firm Adams & Reese, Baton Rouge-based law firm Breazeale Sachse & Wilson, the University of Miami, Texas A&M University, The Golf Channel, the PGA Tour, the ATP tennis tour, and several Stanford entity investors, members and officers.

Opinion
http://www.ca5.uscourts.gov/opinions/pub/11/11-10704-CV0.wpd.pdf

http://www.courthousenews.com/2012/10/24/51617.htm

[scion]

Ex-Stanford Exec Gets 3 Years for $7 Billion Swindle

By The Associated Press
Posted 3:00PM 09/13/12
Posted under: Crime
By JUAN A. LOZANO, Associated Press
http://www.dailyfinance.com/2012/09/13/ex-stanford-exec-gets-3-years-for-7-billion-swindle/

HOUSTON (AP) - A top executive in the now-defunct empire of disgraced Texas financier R. Allen Stanford was sentenced to three years in prison Thursday for her role in helping the once jet-setting businessman bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history.

Former Stanford chief investment officer Laura Pendergest-Holt's sentence was part of a plea agreement reached with federal prosecutors. She had pleaded guilty in June to one count of obstruction of a U.S. Securities and Exchange Commission proceeding in exchange for the sentence.

After U.S. District Judge David Hittner handed down the sentence he revoked Pendergest-Holt's bond, and she was taken into custody. She waved to her husband Jim Holt before she was put in handcuffs and taken from the courtroom by federal marshals.

A tearful Pendergest-Holt told Hittner prior to sentencing that she was sorry for putting her trust in Stanford and others in his financial empire, including the former chief financial officer, James M. Davis, who also has pleaded guilty and faces up to 30 years in prison.

"I'm sorry I was so trusting in people who didn't deserve my trust, and my trusting them caused harm in others. I apologize greatly," she said.

Prosecutors said Stanford, 62, used the money from investors who bought certificates of deposit from his bank on the Caribbean island nation of Antigua to fund a string of failed businesses, bribe regulators and pay for a lavish lifestyle that included yachts, a fleet of private jets and sponsorship of cricket tournaments. Authorities said Stanford and others in his companies lied to investors from more than 100 countries, telling them their funds were being safely invested in stocks, bonds and other securities.

Pendergest-Holt, 38, a native of Baldwyn, Miss., was the first person indicted in the case. Prosecutors said she and other executives conspired to hide the bank's true financial health and provide misleading testimony to the SEC in 2009 when it was investigating Stanford's bank.

One of her attorneys, Chris Flood, told Hittner that Pendergest-Holt was also a victim of Stanford's Ponzi scheme and lost her life savings. Flood had asked that she not be imprisoned for three years but be allowed to serve that time in home confinement, a halfway house or a combination of the two.

She "is an extremely upstanding citizen and not a danger to anyone," Flood said. "Don't punish her for the crimes of Allen Stanford or Jim Davis."

But prosecutor Jason Varnado told Hittner that from Pendergest-Holt's statement in court on Thursday and from letters her family and friends had submitted calling her a victim, the former Stanford executive wasn't taking full responsibility for what she had done. Varnado asked that she be sent to prison.

"She led (investors) to believe (their money) was invested in a particular manner ... Ms. Holt is not a victim. She is a federal felon," Varnado said.

As part of the plea deal, prosecutors will drop 20 other counts she faced, including conspiracy, wire and mail fraud.

Stanford, the one-time billionaire, was convicted in March on 13 of 14 fraud-related counts. In June, Hittner sentenced Stanford to 110 years in prison. He is serving his sentence in a prison in Central Florida.

Two other indicted ex-executives - Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller - are set for trial later this month. A former Antiguan financial regulator was also indicted and awaits extradition to the U.S.

http://www.dailyfinance.com/2012/09/13/ex-stanford-exec-gets-3-years-for-7-billion-swindle/

[scion]

Fallout from Stanford case continues

BY Bill lodge
Advocate staff writer
September 13, 2012
http://theadvocate.com/columnists/3864016-55/inside-report-for-sept-13

The Securities and Exchange Commission has initiated regulatory proceedings against four men, including a Baton Rouge resident, for their alleged knowing failure to protect investors from convicted swindler Robert Allen Stanford’s $7 billion fraud.

Stanford, 62, was sentenced in June to 110 years in federal prison for defrauding more than 20,000 people through a phony offshore bank that simply funneled money to Stanford and his other companies. Stanford denied that he defrauded anyone.

Baton Rouge resident Jason T. Green, 49, was employed by Stanford Group Co. from February 1996 until February 2009, when the SEC shut down Stanford’s operations.

Green, according to an Aug. 31 SEC filing in Washington, was president of SGC’s private client group before the SEC alleged Stanford was nothing more than a Ponzi schemer.

Ponzi schemes are masked as legitimate investment companies, but they are nothing more than piggy banks for the criminals who operate them. Early investors receive dividends that actually are only crumbs from the money of later investors. While the scheme remains in operation, the criminals pocket the largest portions of their customers’ money.

The SEC does not accuse Green and the other three men of knowingly participating in a Ponzi scheme. But the commission alleges all of the men either knew, or ignored evidence, that bank depositors were falsely told their money was safely insured.

“Green earned over $7 million” from Stanford, the SEC alleged while announcing that it may seek repayment of such earnings from all four men.

The SEC alleged Green falsely told Louisiana investors that Stanford’s certificates of deposit were “as safe as U.S. treasuries” or “insured by Lloyds of London” or “safer than U.S. banks” because of insurance “stronger than FDIC coverage.”

Green’s attorneys, John Kincade and George Freeman, told the Thompson Reuters news service on Aug. 31 that Green was unaware of Stanford’s frauds.

“We look forward to the opportunity to clear Mr. Green’s name, and we are confident we will succeed,” Kincade and Freeman said in that statement.

Former Baton Rouge broker Jay T. Comeaux, 64, moved to Houston in 1996 to become president of SGC, the SEC reported. The SEC said Comeaux then served as the firm’s executive director from March 2005 until February 2009.

The SEC alleged Comeaux received at least $1.3 million and that he knew investors were falsely promised their bank deposits were insured.

Without admitting any wrongdoing, Comeaux agreed to a settlement that bars him from work with registered investment companies or in the promotion or sale of penny stocks. Comeaux also must cooperate with SEC officials who will determine whether to recommend that he repay money received from Stanford.

Daniel Bogar, 53, of Fort Lauderdale, Fla., and Bernerd E. Young, 53, of Fullshear, Texas, also are alleged by the SEC to have ignored evidence that false statements were made to Stanford’s investors.

Bogar earned $4 million and was president of both SGC and its parent, Stanford Group Holdings, the SEC said. Young was chief compliance officer for both firms, and the SEC said he earned $1 million.

Bill Lodge covers federal courts for The Advocate. He can be reached at [e-mail].

http://theadvocate.com/columnists/3864016-55/inside-report-for-sept-13

[scion]

Stanford's Ponzi Victims Can Advance on SEC

By DAVID LEE
http://www.courthousenews.com/2012/09/10/50127.htm

(CN) - Investors swindled by Allen Stanford's $7 billion Ponzi scheme can sue the Securities and Exchange Commission, a Miami federal judge ruled.


Check out Courthouse News' Securities Law Review.
http://www.cnssecuritieslaw.com/

Zelaya and George Glantz filed suit last year, claiming that the SEC received complaints about Stanford's Ponzi scheme as early as 1997 but waited until 2009 to take action.

They say regulators concluded that Stanford was engaged in a Ponzi scheme yet still failed to report the alleged activity to the Securities Investor Protection Corporation and approved the company's annual registration.

Congress created the SIPC in 1970 to protect investors when a broker-dealer fails. It organizes the distribution of customer cash and securities back to investors and provides insurance coverage up to $500,000 of the customer's net equity balance.

The SEC moved to dismiss, but U.S. District Judge Robert Scola Jr. ruled the complaint adequately alleges that the SEC failed to do its duty and report the scheme to the SIPC.

"The government's argument that a determination that Stanford's company was operating as a Ponzi scheme is not the same as a determination that the company was in or approaching financial difficulty is not convincing," Scola wrote. "A Ponzi scheme is a 'fraudulent investment scheme in which money contributed by later investors generates artificially high dividends or returns for the original investors. Money from the new investors is used directly to repay or pay interest to earlier investors, usually without any operation of revenue-producing activity other than the continual raising of new funds.'"

Scola concluded that a company operating a Ponzi scheme is "by definition" in financial difficulties, and that the SEC should have reported the Stanford entities.

The SEC also said that it did not know about Stanford's Ponzi scheme, but Scola said this is an issue for summary judgment.

Scola did dismiss claims that the SEC failed to comply with a "nondiscretionary duty" regarding the re-registration of Stanford's company as an investment advisor.

"The plaintiffs are unable to articulate any duty owed by the Securities and Exchange Commission regarding reviewing or approving investment advisors' registration amendments," the eight-page order states. "Without a statute or regulation prescribing a specific course of action for a federal employee to follow, any action or inaction by the Securities and Exchange Commission regarding the registration amendments was necessarily discretionary."

"Even if the Securities and Exchange Commission owed a duty to act upon the registration amendments, as if they were initial applications, the decision whether to grant or deny a registration amendment is discretionary," he added.

In March, a Houston federal jury convicted Stanford of 13 of 14 counts of conspiracy, wire fraud and mail fraud, after a seven-week trial. He was sentenced to 110 years in federal prison.

The SEC took the highly unusual action of filing a federal complaint against the SIPC in Washington that December, seeking an order to force the SIPC to initial liquidation proceedings to protect investors.

U.S. District Judge Robert Wilkins denied the application in July 2012, although he did express sympathy to the scheme's victims.

Meanwhile, injured investors have not stood idly by. In May, the Official Stanford Investors Committee went after Stanford's auditor, BDO, in Dallas.

"Despite the pervasive fraud that infected Stanford Financial Group's operations, BDO USA repeatedly issued unqualified audit opinions on its Stanford clients' annual financial statements," the committee's federal complaint states. "BDO USA's audit opinions on SGC's financial statements were critical to Stanford Financial Group's success."

Last year, U.S. District Judge David Godbey in Dallas refused to let investors intervene in the SEC's case against Stanford, despite their claims that court-appointed receiver Ralph Janvey had recovered little money and spent too much on lawyers.

Order
http://www.courthousenews.com/2012/09/10/Stanford%20Ponzi.pdf

http://www.courthousenews.com/2012/09/10/50127.htm

[scion]

Commentary: Ripped-off Stanford victims wait and hope

Thursday, September 6, 2012 | Updated: Wednesday, September 5, 2012 7:15pm
http://www.chron.com/business/article/Commentary-Ripped-off-Stanford-victims-wait-and-3842287.php

And the wait goes on.

It goes on for Ann Lestarjette, who has returned to work as an office manager for an acupuncturist. She's working again even though she and her husband had planned to retire by now.

“I feel like I can't be weary,” said Lestarjette, 61, whose husband died a year after the Securities and Exchange Commission revealed that Allen Stanford's financial empire was a $7 billion Ponzi scheme.

In an instant, their years of savings and retirement plans evaporated.

Lestarjette's story is sadly representative of thousands of Stanford victims, many of whom have had to abandon retirement after Stanford, who is serving a 110-year prison sentence, stole their life savings.

Last week, the SEC said it will appeal a federal judge's ruling that denied insurance coverage for some victims of Stanford's fraud, including Lestarjette.

For 31/2 years, the wait has gone on as investors awaited the outcome of one glacial legal proceeding after another. Now, they hang their hopes on yet another court battle.

“Everywhere the victims have turned, there has been another obstacle,” said Angela Shaw, head of the Stanford Victims Coalition, which represents U.S. investors.

A federal judge in July struck down the SEC's efforts to force the Securities Investor Protection Corp. to cover losses for Stanford's brokerage clients. SIPC is designed to protect investors who are the victims of broker fraud. It's paid out in the case of Bernie Madoff's Ponzi scheme, for example.

But the insurance fund, which is paid for by the brokerage industry, has insisted it shouldn't have to pay in the Stanford case because Stanford investors bought certificates of deposits issued by Stanford's bank on the Caribbean island of Antigua.

U.S. District Judge Robert Wilkins agreed with that, finding that investors such as Lestarjette weren't brokerage “customers,” even though they were clients.

It's a mind-bending legal distinction that simply means that Stanford's clients were ripped off the wrong way.

Wilkins found that it was Stanford's bank — not the brokerage — that stole from investors, and therefore SIPC coverage doesn't apply. Never mind that Stanford's brokerage, a SIPC member, peddled the CDs like candy — internally, brokers referred to them as “bank crack” — and often touted the SIPC insurance in the sales pitch.

Recently, a federal judge in Dallas contradicted Wilkins' findings. Ruling in a different Stanford-related case, he found the various Stanford entities “were operated as one for purposes of perpetrating a fraud on investors.”

That case also found that Stanford's bank operated nothing like a traditional bank — its only source of funds was the CDs — and that it had been insolvent since 1999.

That may give the SEC some ammo for its appeal, but it remains an uphill battle.

For Lestarjette and other U.S. investors, it also remains their best hope, however slim. Otherwise, they will be left with whatever miniscule amounts can be recovered from Stanford's estate.

As of last week, almost 20,000 claims had been filed for more than $6.3 billion, according to documents filed by the court-appointed receiver in charge of Stanford's estate. Yet with only a few hundred million in assets recovered, investors can expect pennies on the dollar.

Meanwhile, Ann Lestarjette spends another day on the job. She's determined, though, to see the case through.

“What's another couple of months? What's another year?” she asks. After 31/2 years, waiting has come to symbolize hope.

And so, for Lestarjette and thousands of other Stanford victims, the wait goes on.

Loren Steffy is the Houston Chronicle's business columnist. [e-mail]

http://www.chron.com/business/article/Commentary-Ripped-off-Stanford-victims-wait-and-3842287.php

[scion]

SEC charges former Stanford Group executives

9/4/2012
By Aruna Viswanatha and Andrew Longstreth
http://newsandinsight.thomsonreuters.com/Legal/News/2012/09_-_September/SEC_charges_former_Stanford_Group_executives/

WASHINGTON, Aug 31 (Reuters) - U.S. securities regulators charged former officials of Stanford Group Co for their role in the demise of the brokerage and bank controlled by Ponzi-schemer Allen Stanford.

Former Stanford Group Co president Daniel Bogar, former compliance officer Bernerd Young, and Jason Green, who oversaw parts of the private client group at Stanford were charged with aiding in the fraud, according to an order made public Friday instituting administrative proceedings against them.

In the order, the SEC alleged that the three executives knew or should have known that offering documents in connection to certificates of deposits sold by Stanford International Bank were false or misleading. Instead, the SEC alleged, they encouraged their colleagues to use the incomplete offering documents to help sell the CDs.

In a statement, Green's lawyers, John Kincade and George Freeman, said that Green had no knowledge of the fraud.

"We look forward to the opportunity to clear Mr. Green's name, and we are confident we will succeed," they said.

Lawyers for Bogar and Young did not immediately respond to messages seeking comment.

Allen Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent CDs by Stanford International Bank, his bank in Antigua.

Separately, on Friday the SEC settled allegations of securities fraud against Jay Comeaux, who managed the brokerage's Houston branch office, according to a filing that instituted administrative proceedings against him.

Comeaux, who settled the case without admitting or denying the SEC's findings, faces a bar from the industry, and may face penalties that have not yet been determined, the SEC said

Comeaux was responsible for supervising the brokerage's financial consultants, and received commissions of at least $1.3 million on the sales of fraudulent CDs, the SEC said.

According to the SEC, Comeaux knew that the bank wouldn't disclose details of its investment holdings, but still used marketing material that told investors that the bank maintained a "well-diversified portfolio of highly marketable securities."

A lawyer for Comeaux did not immediately respond to a request for comment.

Follow us on Twitter @ReutersLegal | Like us on Facebook

http://newsandinsight.thomsonreuters.com/Legal/News/2012/09_-_September/SEC_charges_former_Stanford_Group_executives/

[scion]

Blamed over Stanford, SEC's Texas office plots comeback

By Aruna Viswanatha and Sarah N. Lynch
FORT WORTH | Fri Jul 20, 2012 3:20am EDT
http://www.reuters.com/article/2012/07/20/us-sec-fortworth-idUSBRE86J05R20120720?feedType=RSS&feedName=domesticNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=60573

(Reuters) - Convicted Texas financier Allen Stanford haunted the U.S. Securities and Exchange Commission's Fort Worth office long after he was arrested in June 2009.

The office was battered by scathing criticism from Congress and within the agency for allegedly missing or ignoring clues for years that Stanford was running a $7 billion Ponzi scheme.

But in the past year the office has undergone a sort of corporate turnaround, with new leadership, a more inventive approach to policing market players, and a patched-up relationship with the SEC's headquarters in Washington.

The Fort Worth office has also been entrusted with two of the agency's biggest investigations that former insiders say are the type of probes often run out of the SEC in New York or Washington.

The office is taking the lead on investigations into allegations of misconduct at Wal-Mart Stores Inc and Chesapeake Energy Corp, according to public filings and people familiar with the matter.

The probes are heating up, with lawyers from the SEC Fort Worth office making document demands for the past several weeks on Chesapeake and its chief executive as part of an inquiry into special financial perks, one person familiar with the investigation said.

Overseeing the Fort Worth office revival is David Woodcock, a defense attorney from Austin who had never previously worked for the SEC or any other government agency.

Woodcock, with distinguished silver hair at only 43, had no ties to the Stanford scandal but he quickly learned when he took the helm of the Fort Worth office in September 2011 that its reputation was synonymous with the swindler.

In his first speech before a group of financial executives, four of the five questions were about Stanford, and how the agency goes about investigating a Ponzi scheme.

"They ... weren't just asking an academic question. There was something heartfelt in what they were asking," Woodcock, who most recently worked as a litigation partner at Vinson & Elkins, said in an interview. "I was not expecting it."

THE STANFORD STORY

Allen Stanford was charged by the SEC in February 2009, and arrested four months later for his role in bilking investors out of billions through certificates of deposit from his bank in Antigua that were sold to investors in the United States and Latin America.

In June this year, Stanford was sentenced to 110 years in jail. The SEC's civil action against Stanford is still pending.

A scathing 2010 report by the SEC's inspector general found that examiners from the Fort Worth office had suspected as early as 1997 that Stanford was running a fraud, but the agency did not launch an inquiry into the matter until late 2005.

Even then, it took almost four more years to bring charges. To add insult to injury, the SEC's former Fort Worth enforcement director, Spencer Barasch, then tried to represent Stanford despite being told by the SEC's ethics office that such a move was improper.

The 2010 inspector general report, which accused the office of being more concerned with racking up case numbers rather than tackling complex matters, was the subject of relentless media reports and multiple congressional hearings.

The SEC's Fort Worth office was left reeling.

"These are people who have dedicated all or large parts of their professional lives to public service and to protecting investors and pursuing those who break the law," said SEC enforcement director Robert Khuzami in an interview.

"When that doesn't happen as it should, or where there is even the perception that an investigation was not handled properly, it is a significant event for them."

With morale at a low point, top leaders at Fort Worth, including its director at the time, Rose Romero, left to take jobs in the private sector. Even though Romero and other officials were responsible for getting the Stanford case filed, the stigma of the inspector general's report had left a cloud over the office that some believe overshadowed their work.

It has taken a few years, but employees say the office is reenergized and is seen as a place that can advance a career.

In addition to Woodcock, the SEC in March brought back Marshall Gandy, a former SEC trial and enforcement lawyer who recently worked for the Dallas office of the Financial Industry Regulatory Authority, an industry-funded self-regulatory group for brokerages. He heads up the Fort Worth's examinations unit.

Gandy said that when he left his FINRA job, people asked if he was "crazy" to return to the SEC where "things are a mess."

But he said his 100-mile-a-day roundtrip commute from Richardson, Texas, is more than worth it. "It took me less than a week to realize they're wrong. Things are not a mess over here at all," he said.

The office is trying to think differently about policing markets, having hired in the past year a geophysicist who is helping examiners root out misleading oil and natural gas claims in securities offerings, such as whether or not there is a chance of finding oil in certain drilling locations.

It also has filed complex cases in the past year, including one that is still being litigated against Life Partners for allegedly failing to tell investors that the company was underestimating life expectancies used to price its life settlement products.

COWBOY STREAK

The 110 employees of the SEC in Fort Worth are housed in three floors of a non-descript office building, some four miles from the Stockyards, the historic livestock market.

Their jurisdiction includes Texas, Kansas, Oklahoma and Arkansas, and covers public company giants including AT&T, Dell, Exxon-Mobil.

For many years, the office had a reputation for having a bit of a cowboy streak to it.

It was considered more informal and approachable than other SEC offices, with assistant directors in the office routinely distributing their cell phone numbers to defense lawyers.

As Woodcock arrived, the office started to think more like a lawyer whose client is the commission, said Michael King, an assistant regional director in Fort Worth who also works in the enforcement division's unit that specializes in bribery cases.

"We are more focused on identifying and investigating cases that advance the commission's overall enforcement program," he said.

King, who was among the lawyers in the office who helped ultimately bring a case against Stanford, is handling both the Wal-Mart and the Chesapeake probes, according to people familiar with the matter.

Both are complex cases. Wal-Mart is facing allegations that its top executives covered up widespread bribery involving its Mexico operations, while Chesapeake is under scrutiny for a controversial program that granted Chief Executive Aubrey McClendon a share in each of the natural gas producer's wells.

David Peavler, the enforcement director for the office, said employees have "moved on" from the Stanford scandal and adopted a greater intensity in the enforcement division.

Defense lawyers who practice before the SEC say they too have noticed that the office has changed, though some say this change has caused Fort Worth to lose its compromising streak, making it tougher for defendants.

"They had adopted the whole useful Texan mentality of just getting things done," said Brent Baker, an attorney at Clyde Snow & Sessions who worked at the SEC for more than 10 years. "You could reach real-world solutions, they could be flexible."

"Now they just seem to be following the message out of Washington: ‘We are tough cops on the beat,' which is frankly a problem in all the regional offices because it is terribly inefficient and rarely is in the investor's best interest," Baker said.

(Reporting By Aruna Viswanatha and Sarah N. Lynch; Editing by Tim Dobbyn)

http://www.reuters.com/article/2012/07/20/us-sec-fortworth-idUSBRE86J05R20120720?feedType=RSS&feedName=domesticNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=60573

[scion]

The Massive Fraud Everyone Forgot About

By Matt Koppenheffer, The Motley Fool
Posted 1:41PM 07/06/12
Posted under: Investing
http://www.dailyfinance.com/2012/07/06/the-massive-fraud-everyone-forgot-about/?source=edddlftxt0860001

If ever there was a public service announcement against financial fraud, it's the picture of former Antiguan financier and playboy R. Allen Stanford, all 6 feet 4 inches of him, face battered and bloody, shackled to a hospital bed, hunched over and hacking up blood into a plastic tub following a jailhouse beating.

Though "Sir" Allen presided over a multibillion-dollar Ponzi scheme that is one of the largest financial frauds in U.S. history, the whole affair could be labeled "The forgotten fraud."

Major news sources have reported on developments in the case -- the most recent of which was the 110-year sentence that a judge slapped on the disgraced financier. But whereas it was difficult to open a paper or pull up a news website for a while without Bernie Madoff coverage in your face, the curious have had to search out updates on the Stanford case. It's not that the media aren't meeting readers' demand; it's that few seem to care.


A fellow writer described it as "Madoff fatigue." Maybe that's it. Or maybe it's a Madoff overshadowing. Or perhaps it's that many of Stanford's victims were outside of the U.S.

In any case, it's a shame, because in a great many ways, the Stanford saga is far more interesting and eye-opening than Madoff's.

Stanford rising
To say that Allen Stanford's meteoric rise was a rags-to-riches story is an exaggeration, but not by much.

Stanford's father, James, ran an insurance brokerage that was founded in 1932 by his father, Lodis Stanford. But far from the financial capital of New York or the palm-treed banking havens in the Caribbean, Allen Stanford was raised in Mexia (pronounced Muh-HAY-uh), a small Texas town that had just over 6,500 residents as of 2008.

Roughly 90 miles south of Dallas, Mexia had a recent median income of $35,503, well short of the Texaswide $48,259. Nearly 28% of Mexia residents are counted as living in poverty. The town made national headlines during a 1981 controversy over the drowning death of three young black men who had been taken into police custody during the city's Juneteenth celebration. It was also known as the one-time home of model Anna Nicole Smith, who had worked at Jim's Krispy Fried Chicken in Mexia. Of the Stanford family, one Mexia resident said, "These are churchgoing, small-town people."

But Mexia was no stranger to fast talkers looking for a quick buck. An oil boom in the early 1920s bloated the city's population and attracted a cast of colorful characters. A paper in 1922 proclaimed "last call" to invest in the Mexia Subbie oil well and touted "we have ... a plan and purpose that brought riches to thousands who did just this -- GET A WELL -- SELL IT QUICKLY -- PAY ONE VAST DIVIDEND." In 1930, Texas National Guard Brig. Gen. Jacob Wolters wrote of Mexia: "Murder, highway robbery, gambling, bootlegging, prostitution and every conceivable crime became the order of the day and night."

It was out of this unlikely beginning that Robert Allen Stanford rose to be one of the Forbes 400 richest Americans.

The wild life of R. Allen Stanford
In April, fellow Fool Brian Stoffel took a closer look at the Madoff case and highlighted the fact that Madoff's riches were the product of his legitimate market-making business, not his fraudulent hedge fund. Madoff, wealthy on the back of a real business, was apparently driven by pride and hubris to steal, rather than simple greed.

For Stanford, greed, opulence, ego, and the glorification of his own name were front and center in his fraudulent global empire.

Much of the Stanford story swirls around the small island nation of Antigua and Barbuda, a twin-island nation in the Caribbean that had a 2011 population of just under 82,000. Stanford lived like royalty in Antigua. With a one-time net worth of $2.2 billion, the man towered over an island that has an annual GDP of $1.2 billion. In 2006, the royal image was set in stone when Queen Elizabeth II named Stanford a Knight Commander of the Order of the Nation of Antigua and Barbuda during the Silver Jubilee Celebration. Allen Stanford of Mexia, Texas, thus became Sir Allen of Antigua and Barbuda.

The small-town Texan reveled in the upper-crust view of himself. At one point he had the mansion of Stanford University founder Leland Stanford restored "to help preserve an important piece of Stanford family history." When questions arose over the veracity of the familial ties between Allen and Leland, Allen hired researchers who connected the two as sixth cousins, twice removed. That's a lot of money to spend to graft your branch of the family tree onto one in an entirely different forest.

Stanford owned a 112-foot Hakvoort yacht dubbed "Sea Eagle." He purchased the boat for $3.9 million and then had it upgraded through a $16 million retrofitting that ripped out teak in favor of mahogany, extended the length, and plunked in new engines and generators. The empire also included two airlines, a $100 million fleet of jets, one of Antigua's two major newspapers, restaurants, and multiple sprawling multimillion-dollar homes in the U.S. and the Caribbean, including the $10 million, 18,000-square-foot Wackenhut Estate, a Coral Gables, Fla., castle that Stanford had demolished in 2008. He also owned a private Caribbean island (yes, the whole thing).

Children from an ex-girlfriend flew in private jets and were chauffeured by insured drivers. They attended a $50,000-per-year private school and had $1 million trust accounts. A man who apparently liked to spread his seed as much as he liked to spread his financial firm's logo, Stanford reportedly had at least five children by three women other than his wife.

And while the financier stamped his company's emblem all over the globe through sponsored golf tournaments and other sporting events, many outside the U.S. know him best through his love of cricket. Not far from the Antigua airport lies the Stanford Cricket Ground, named for Sir Allen after he rebuilt the stadium in 2004.

In 2008, the brazen billionaire made an indelible impression on the cricket world with his helicopter entrance to a press conference announcing the five-year, $100 million Stanford Super Series, a series of $20 million, Twenty20-style, winner-take-all championships between England and -- I'm not making this up -- the Stanford Superstars. He made the announcement from behind a Plexiglas crate of U.S. $50 bills wrapped in $10,000 bundles.

If you could say nothing else of Allen Stanford, it's that he made the most of his enormous wealth.

But it was all a farce. Stanford's life in the lap of luxury was afforded by bilking investors out of billions via a surprisingly simple scam. To continue with part two of the story, click here.
http://www.dailyfinance.com/2012/07/06/a-simple-plan-how-allen-stanford-stole-7-billion-/?source=edddlftxt0860001

[scion]

U.S. judge rules against SEC in Stanford claims case

7/3/2012
http://newsandinsight.thomsonreuters.com/Legal/News/2012/07_-_July/U_S__judge_rules_against_SEC_in_Stanford_claims_case/


WASHINGTON, July 3 (Reuters) - A federal district judge on Tuesday delivered a blow to the victims of Allen Stanford's $7 billion Ponzi scheme, rejecting a request for an industry-backed fund to start a court proceeding that could lead to victim compensation. The Securities and Exchange Commission had sought to force the Securities Investor Protection Corp to start liquidation proceedings for the victims, some of whom lost millions of dollars to the fraud. The judge found that the SEC did not meet its legal burden of showing why SIPC should be compelled to act. SIPC, which has handled high-profile liquidations such as Bernard Madoff's Ponzi scheme, contended that Stanford's offshore bank fell outside the scope of its authority. The law, SIPC argued, limits it to protecting customers against the loss of missing cash or securities in the custody of failing or insolvent SIPC-member brokerage firms. While Stanford's Texas-based brokerage Stanford Group Company was a SIPC member, its offshore bank was not. And in any case, SIPC said it was not chartered by Congress to combat fraud or guarantee an investment's value. Allen Stanford was sentenced in June to 110 years in prison for bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his bank in Antigua. Since 2009 when Stanford was first arrested and charged, victims of the fraud have been fighting for SIPC to start a liquidation proceeding in the hope of getting back at least some of the funds they lost. "The court is truly sympathetic to the plight" of the victims, Judge Robert Wilkins for the U.S. District Court for the District of Columbia wrote in dismissing the SEC's case. "But this court has a duty to apply the SIPA statute as written by Congress." This marks the first time in the 42-year-history of the Securities Investor Protection law that the SEC asked a court to try and force SIPC to start a liquidation proceeding. In a brokerage liquidation, a trustee winds down the business, returns securities and other assets to customers and creditors, and often tries to recover additional assets. The goal is to maximize what customers and creditors recover, and distribute assets fairly. Stephen Harbeck, the president and CEO of SIPC, called the judge's order the "right ruling," but noted that SIPC doesn't "take a lot of joy" out of it because of the plight of the victims. "We never crossed swords with the SEC to start a case in 40 years," he said. "We did it with great seriousness." The SEC now has 60 days to decide whether or not to appeal the judge's ruling. SEC spokesman John Nester said the agency is "reviewing the decision." Angela Shaw, the director of the Stanford Victims Coalition, said she was "floored" by the decision, and urged the SEC to appeal and keep on fighting for the victims. "I hope the SEC does go back to bat for investors," she said. "I am upset, but I am still hopeful." In his first-of-its-kind ruling, Judge Wilkins found that the SEC relied on an "extraordinarily broad" interpretation of the law on which to base its case. He also criticized the agency, saying its argument for why SIPC should act "cannot be squared with the SEC's longstanding interpretation" of the law over the years. Republican Senator David Vitter, who has been a vocal advocate for the victims, sought to apply some pressure on the SEC on Tuesday to continue fighting the matter in court. "This is horribly disappointing news, especially since it's clear that Allen Stanford was more than guilty in fraudulently losing the victims investments," he said. "I will be encouraging the Securities and Exchange Commission Chairwomen Mary Schapiro to explore every possible appeal option. The Stanford Ponzi scheme victims should not take the fall over SIPC's concerns to cover their own losses." (Reporting By Sarah N. Lynch)

http://newsandinsight.thomsonreuters.com/Legal/News/2012/07_-_July/U_S__judge_rules_against_SEC_in_Stanford_claims_case/

[scion]

Ex-Stanford exec Holt pleads guilty to obstruction

Kristen Hays
Reuters
4:17 p.m. CDT, June 21, 2012
http://www.chicagotribune.com/news/sns-rt-us-stanford-pleabre85k1m8-20120621,0,2310960.story

HOUSTON (Reuters) - The chief investment officer of disgraced former billionaire Allen Stanford's defunct financial firm pleaded guilty on Thursday to lying to U.S. regulators in 2009 in an effort to delay their probe into a $7 billion Ponzi scheme.

Laura Pendergest-Holt, 38, admitted to a single count of obstruction of a Securities and Exchange Commission investigation for her role in the scheme. She originally was charged in 2009 with 21 counts of fraud, conspiracy and obstruction.

"I knew I was delaying the SEC," she said tearfully before U.S. District Judge David Hittner in Houston of her testimony before SEC lawyers without sharing details about the firm's fraudulent portfolio she knew they wanted.

"Did you know what you were doing at the time?" Hittner demanded loudly.

"Yes, your honor," Holt replied, her voice breaking.

The maximum penalty for the obstruction charge is five years in prison, a $250,000 fine and probation for three years.

However, the plea deal is structured so that Holt's lawyers, prosecutors and Hittner agree up front to a sentence of three years followed by three years' probation, attorneys told the judge. If all three parties agree, such structured plea deals negate the need for federal probation officers to conduct investigations and submit sentencing recommendations to the judge.

Hittner did not accept the plea deal up front on Thursday. He said he would consider it at her sentencing on September 13.

He noted that he had received "many" letters from victims of the fraud "directly aimed at this defendant."

If Hittner rejects the deal, Holt can withdraw her plea and go to trial, or maintain it and receive whatever sentence the judge deems appropriate.

Stanford was convicted in March of bilking investors around the world by using bogus certificates of deposit from his offshore bank in Antigua. He was sentenced to 110 years in prison on June 14.

Hittner has rejected a structured plea deal before. In 2004, defense lawyers for Lea Fastow, wife of former Enron Corp finance chief Andrew Fastow, and prosecutors presented a plea deal on a single felony tax violation with a sentence of five months in prison and five months confined at home.

Hittner rejected the deal, Lea Fastow withdrew her plea and the judge scheduled a trial on her six original felony charges of conspiracy and filing false tax forms to help her husband's ill-gotten income.

Prosecutors later wiped out those charges by filing a single misdemeanor tax charge. She pleaded guilty to that count and Hittner sentenced her to the maximum one-year prison term.

(Reporting By Kristen Hays; editing by Jeffrey Benkoe, Lisa Von Ahn and Andre Grenon)

http://www.chicagotribune.com/news/sns-rt-us-stanford-pleabre85k1m8-20120621,0,2310960.story

[scion]

Stanford Officer to Plead Guilty

June 18, 2012, 10:43 p.m. ET
By VANESSA O'CONNELL
http://online.wsj.com/article/SB10001424052702303836404577475324247878902.html?mod=WSJ_business_LeftSecondHighlights

Stanford Financial Group's top investment executive, Laura Pendergest-Holt, is expected to plead guilty to obstruction of justice Thursday for her alleged role in a $7 billion Ponzi scheme that was among the largest frauds in U.S. history, a person familiar with the case said.

A spokeswoman for the Justice Department declined comment.

The expected plea by Ms. Pendergest-Holt, Stanford's chief investment officer, follows the sentencing last week of convicted Ponzi schemer R. Allen Stanford to 110 years in prison.

That punishment amounts to a life sentence for Mr. Stanford, 62 years old, who for years enjoyed the life of a billionaire aboard jets, yachts and in homes around the globe.

He remains in federal custody until the U.S. Bureau of Prisons decides where he will serve the time.

A Federal Bureau of Investigation affidavit filed in U.S. District Court in Dallas had alleged that Ms. Pendergest-Holt misled Securities and Exchange Commission investigators who took her testimony in the probe of alleged fraud at Stanford International Bank, Mr. Stanford's Antigua-based offshore bank.

Ms. Pendergest-Holt was scheduled to go on trial in September.

An obstruction charge can carry a three-year sentence.

http://online.wsj.com/article/SB10001424052702303836404577475324247878902.html?mod=WSJ_business_LeftSecondHighlights

[scion]

Convicted Ponzi-schemer R. Allen Stanford has just been sentenced to 110 years in prison, marking the latest chapter in a case that has captivated parts of the financial world for three years.

Allen Stanford Sentencing: The Arguments From Both Sides

June 14, 2012, 1:10 PM
http://blogs.wsj.com/deals/2012/06/14/allen-stanford-sentencing-the-arguments-from-both-sides/

Convicted Ponzi-schemer R. Allen Stanford has just been sentenced to 110 years in prison, marking the latest chapter in a case that has captivated parts of the financial world for three years.

The government has come down on Stanford as more than just some white-collar criminal. In a blistering sentencing proposal, prosecutors sought a life sentence of 230 years for Stanford, calling him a “ruthless predator responsible for one of the most egregious frauds in history.”

Stanford, however, sought only “time served” according to the government’s filings. He maintains that his operations were not, in fact, a Ponzi scheme at all, given he was actually investing the money in real-estate and other properties.

That left a wide gap of time and beliefs between the two sides, and the court came down at 110 years.

Here are some of the more memorable points from their filings about the sentencing.

From the government’s page-turning memo:

The broad description– For more than twenty years, Stanford orchestrated an epic, multibillion dollar fraud to indulge an extraordinarily lavish lifestyle and to finance a personal business empire, with devastating consequences for thousands of victims who entrusted him with their savings.

A big per diem– By 2008, Stanford was stealing $1 million a day from the bank to keep his failing personal businesses open

Using his own words against him 1– During the fraud, Stanford boasted he was the “hardest working person at the company” in a speech delivered to employees in Antigua. He was certainly the hardest working person in the fraud– at every step, from the marketing materials to the faked financials to the bank transfers, Stanford was in charge and the prime beneficiary.

Using his own words against him 2– To promote the mirage of Stanford as a successful businessman, he frequently and publicly touted his supposed wealth, boasting of his billionaire status in the media, including interviews with Forbes and CNBC, and even a University of Houston commencement address (where Stanford also stressed the importance of integrity and warned that “BS may get you to the top, but it won’t keep you there.”

Gambling zinger– After the Napa Valley holiday, Stanford spent a week in January 2009 in Las Vegas, proving as successful a gambler as he was a businessman. Stanford burned through more than $515,000––again, all depositor money—at the Bellagio, both in gambling and jewelry for his then-girlfriend. After that trip, he went to Libya in an unsuccessful bid to obtain additional funds from the Muammar Gaddafi regime.

Here are the important points from Stanford’s response.

(His actual sentencing document is sealed.)

Government spin job– Continuing along a well-worn path the Government repeatedly replicates its now familiar, worn-out arguments using terms like “predator”, and files matters in the public forum in an attempt to further enrage public opinion by continuing to distort facts, and ignore reality. Their latest public filing again claims that Mr. Stanford orchestrated a Ponzi scheme and is now asking for time served…In filing such a document the Government is once again embarking in factual manipulations and “spin” worthy only of a political campaign for national office.

No Ponzi–Both of these cases further demonstrate why the Stanford companies were not a Ponzi scheme, unlike the individuals accused in those matters Stanford made real actual investments. He made investments in real estate, private equity; he invested and created foreign banks, foreign and domestic investment companies and airlines. There were investments, which among other matters created banks in Panama, Ecuador, Venezuela and Peru. Stanford also established investment companies in those countries and others countries such as Switzerland and Mexico.

http://blogs.wsj.com/deals/2012/06/14/allen-stanford-sentencing-the-arguments-from-both-sides/

[scion]

Allen Stanford: From king of the Caribbean to penniless in prison

Allen Stanford, one of the richest men in the world, will appear before a court in Houston, Texas, on Thursday to be sentenced to up to 230 years in jail.

By Rosa Prince, New York
7:00PM BST 09 Jun 2012
http://www.telegraph.co.uk/finance/financetopics/sir-allen-stanford/9321282/Allen-Stanford-From-king-of-the-Caribbean-to-penniless-in-prison.html

As he bounced the attractive wife of England wicket keeper Matt Prior on his knee and waved to the crowds watching the cricket match he had bankrolled, financier Sir Allen Stanford must have thought he had it all.

Roll forward four years, and that happy day on the Caribbean island of Antigua will seem far away when Stanford – now stripped of his title – appears before a court in Houston, Texas, on Thursday to be sentenced to up to 230 years in jail.

Just a few months after embarrassing the England cricket team by brazenly flirting with their WAGs, the womanising 6'4 Texan banker was arrested on suspicion of running an $7 billion (£4.5 billion) Ponzi scheme, one of the biggest frauds in history.

Following his conviction in March on 13 charges of conspiracy, wire and mail fraud, obstruction and money laundering, prosecutors last week requested he serve the maximum jail term possible under the law, which could see him leave detention in a coffin.

In contrast, Stanford's lawyers are seeking a prison term of between 31 and 44 months, which, if granted, would likely mean his immediate release given he has already been in custody for more than three years.

They are expected to argue that he has suffered considerably in prison already, at one point receiving a severe beating when his cellmates – 14 of them in a room designed for eight – attacked him, apparently irritated by his habit of chatting on his mobile telephone.

Stanford later tried to claim that his injuries - which included fractures to his cheekbones and eye socket - meant he was unfit to stand trial, but the prosecution went ahead.

At his sentencing, it will be the investors he swindled rather than enthusiastic cricket fans who will form his audience. As much as they relish seeing Stanford behind bars, it is only the recovery of their money which will bring them closure.

The man once named by Forbes Magazine as the 605th richest person in the world now claims to be impoverished. The US Justice department recently dropped an attempt to issue him with a restitution order forcing him to hand over any earnings he made to his victims, saying his financial affairs were so complicated it would be impossible.

So far, it is estimated that victims will receive only 5 cents for every dollar they invested.

Lisa Teti, from Florida, who lost $1.3 million along with her husband. said: "It will be nice to see Stanford behind bars for the rest of his life but to be honest, restitution would be even nicer.

"I blame the authorities for failing to warn us – for whatever reason they turned a blind eye to what he was up to, and if they hadn't, 90 per cent of his victims would not have lost money.

"My husband and I checked Stanford out thoroughly with all of the authorities and nothing came up to show that there was a problem. We did not learn anything was wrong until we heard it on the news – that was the worst day of our lives, a terrible sinking feeling. So many people have been left destitute – some don't even know where their next loaf of bread is coming from."

So many victims applied to address the Federal Courthouse in Houston that a special lottery was held to decide which of his more than 20,000 victims will get to look Stanford in the eye and tell him exactly what the fraud he used to fund an extravagant playboy lifestyle has cost them.

And what a lifestyle it was, for the man born to a lower middle-class family in the small Texan town of Mexia in 1950.

As well as the $100 million fleet of private jets, the yacht off the coast of his adopted home of Antigua and the $10 million faux castle in Florida, Stanford also had expensive family commitments, paying hundreds of thousands of dollars a year to fund the four children he had by four secret "outside wives," including Kent-born Louise Sage.

He also has a legitimate daughter, Randi, by wife Susan, who he married age 25. She began divorce proceedings in 2007, but extensive wrangling over her financial settlement meant they had not been completed when he was arrested and it is unclear whether it ever went through.

By then, Antigua had become known as Stanford-land – he had a private terminal at the airport, had built a much-needed hospital, was so well-connected politically he was said to attend cabinet meetings and, with a fortune exceeding the island's GDP, was one of its biggest employers.

Knighted by Antigua's governor general in 2006, the popular joke that new "Sir Allen" saw himself as a colonial gentleman seemed confirmed as fact when he began to take an interest in cricket.

But if his ambition was to be seen as landed gentry, his method of wooing the English Cricket Board was pure Texas.

Announcing he would underwrite the Twenty20 game, Stanford flew into Lords by helicopter, wheeling a glass Perspex box filled with $20 million in prize money on to the pristine outfield.

Many felt that the ECB had been blinded by the ostentatious display of wealth to the whispers about his financial dealings which had led other cricketing authorities, in South Africa and Australia, to shun him.

Indeed, by 2008, when Stanford performed his Lords stunt, the warning signs should have been clear.

Stanford had originally located his businesses in Montserrat, only moving to Antigua in 1990 after authorities on the British colony began to ask questions, leading him to voluntarily resign his banking licence.

Free and easy Antigua was a safer bet; when reports began to circulate about possible financial misconduct, he pulled off the extraordinary feat of having himself named as the island's regulator. Stanford and his company had by now come to the attention of both the US and British financial authorities, who wrote several reports warning of irregularity and protested about Antigua's failure to follow up on them.

Added to this, a steady flow of Stanford employees began bringing law suits against his company, alleging that they had been fired for refusing to carry out acts they considered illegal or improper.

Unaware of this, investors continued to pour money into the Stanford Group Company and Stanford Investment Bank, which promised them high yields on investments in safe, heavily-audited financial instruments.

Instead, it would later emerge, the "vast majority" of the portfolio was personally handled by Stanford and his best friend of 40 years James Davis (who would later testify against him) who invested it in far riskier private equity and real estate, the proceeds of which the financier used to fund his extravagant lifestyle.

It took the unraveling of another Ponzi scheme, run by Bernie Madoff, for federal investigators to focus on Stanford.

He was finally arrested at the Virginia home of his latest live-in girlfriend, Andrea Stoelker, a 33-year-old former cocktail waitress, in June 2009.

Madoff would go on to be found guilty of running the largest fraud in history and sentenced to 150 years in jail – ironically, 80 years less than Sanford's prosecutors are seeking.

However, any pleas by Stanford's defence lawyers that his sentence is unduly harsh is likely to get little sympathy from his victims.

"The only appropriate sentence is life," said Mrs Teti. "I would not want him to get out and be in a position to hurt anyone else. That is the nature of the man. If he is not in prison he will keep doing this."

http://www.telegraph.co.uk/finance/financetopics/sir-allen-stanford/9321282/Allen-Stanford-From-king-of-the-Caribbean-to-penniless-in-prison.html

[scion]

U.S. urges 230 years prison for Allen Stanford

6/6/2012
http://newsandinsight.thomsonreuters.com/Legal/News/2012/06_-_June/U_S__urges_230_years_prison_for_Allen_Stanford/

June 6 (Reuters) - U.S. prosecutors urged a judge on Wednesday to send convicted financier Allen Stanford to prison for 230 years, calling him a "ruthless predator" whose $7 billion Ponzi scheme was among the most egregious frauds ever undertaken.

Such a sentence, the maximum recommended under federal sentencing guidelines, would be 80 years longer than Bernard Madoff got in 2009 for his Ponzi scheme, and according to prosecutors reflects Stanford's place as "among the greediest, most selfish, and utterly remorseless criminals."

Stanford's lawyers are seeking a prison term of 31 to 44 months for their client, which could result in his immediate release because he has already been in custody for three years, according to the government.

Once considered a billionaire but later declared indigent, Stanford was convicted on March 6 by a federal jury in Houston on fraud, conspiracy and obstruction charges.

Prosecutors said he ran a two-decade scheme centered on the sale of bogus certificates of deposit from his Antigua-based Stanford International Bank Ltd.

"Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history," prosecutors said in a filing in U.S. District Court in Houston. "The sheer magnitude of the money stolen, the duration of the crime, and the extent to which Stanford lived a life steeped in deceit are almost unrivaled."

Saying that Stanford's request reflected "an audacity that only further illustrates his depravity," prosecutors countered that "the nature and circumstances of Stanford's fraud, his own role and personal history, and the need for forceful deterrence calls for the most severe punishment permitted by law."

Robert Scardino, a lawyer for Stanford, in a phone interview said: " We feel like our recommendations are every bit as appropriate as I'm sure they think theirs are."

U.S. District Judge David Hittner, who presided over Stanford's six-week trial, is scheduled to sentence Stanford on June 14.

In addition to convicting Stanford on 13 criminal counts, the jury also found that federal authorities should try to seize $330 million of frozen funds that Stanford stashed in 29 foreign bank accounts.

Stanford also faces civil charges by the U.S. Securities and Exchange Commission.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No. 09-cr-00342.

For USA: Gregg Costa of the U.S. Attorney's Office.

For Stanford: Ali Fazel and Robert Scardino Jr. of Scardino & Fazel.

(Reporting by Jonathan Stempel)

Follow us on Twitter @ReutersLegal | Like us on Facebook

http://newsandinsight.thomsonreuters.com/Legal/News/2012/06_-_June/U_S__urges_230_years_prison_for_Allen_Stanford/

[scion]

U.S.: Restitution impractical for Stanford victims

Mon Jun 4, 2012 10:15pm EDT
http://www.reuters.com/article/2012/06/05/us-stanford-ponzi-idUSBRE85313420120605?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943

(Reuters) - The government said it would be "impracticable" to enforce an order of restitution against financier Allen Stanford to victims of his estimated $7 billion Ponzi scheme and that it should be permitted to compensate fraud victims with forfeited assets.

In a Monday filing with the federal court in Houston, the Department of Justice said the large number of victims, the difficulty of calculating their losses and the freezing of Stanford's assets in various jurisdictions would make restitution difficult.

A federal jury on March 6 convicted Stanford, 62, on fraud, conspiracy and obstruction charges over what prosecutors called the sale of bogus certificates of deposit from his Antigua-based Stanford International Bank Ltd.

Stanford is scheduled to be sentenced on June 14 and could spend the rest of his life in prison. The jury also found that federal authorities should try to seize $330 million of frozen funds that Stanford stashed in 29 foreign bank accounts.

Once considered a billionaire, Stanford later claimed to be indigent.

The Justice Department said restitution would be complicated because customer accounts were credited with $1.3 billion of interest that was not paid and some customers but not others withdrew "fictitious" interest or principal from their accounts.

It said it has agreed in principle with the U.S. Securities & Exchange Commission on a joint distribution process.

The Justice Department also said a receiver winding down parts of Stanford's business will to ensure fairness try to calculate "net" amounts lost by each investor. Such an approach is also being used in the winding down of Bernard Madoff's firm.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No. 09-cr-00342.

(Reporting by Jonathan Stempel in New York; editing by Andre Grenon)

http://www.reuters.com/article/2012/06/05/us-stanford-ponzi-idUSBRE85313420120605?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943

[scion]

Stanford Victim for Hire

Written By Al Lewis
Published March 30, 2012
FOXBusiness
http://www.foxbusiness.com/investing/2012/03/30/stanford-victim-for-hire/

Richard Cochran of Baton Rouge, La., is 79 years old and looking for work in the construction industry.

"I'm a tough, old construction manager," he said after six decades of building everything from gas stations to the Kennedy Space Center.

Cochran had the misfortune of investing in Certificates of Deposit at the Stanford Financial Group. Turns out, his hard-earned retirement funds went into a $7 billion international Ponzi scheme, and its mastermind, Allen Stanford, is slated for sentencing June 14.

Angie Shaw, the volunteer director of the Stanford Victims Coalition, said she gets about 500 emails a day from folks like Cochran.

"Their stories are horrific, and they're getting even worse," she said. "A lot of these people have died impoverished."

Cochran grew up in Indiana, getting up at 5 a.m. to dig ditches. "They use backhoes today," he said. "I used a pick and shovel."

He served in the Korean War, rising to the level of staff sergeant, and worked in the Army Corps of Engineers piping gasoline and diesel fuel to troops.

In 1962, he found himself in a boat in the Atlantic, watching John Glenn getting blasted into orbit. He said to himself, "I sure would like to see this thing go." He moved to Florida and eventually landed construction work at the Kennedy Space Center.

Over the years, Cochran helped build everything from oil refineries to nuclear power plants, and he did not retire until age 70. "I guess I should have just stayed working when I retired," he said, "but that's the way it goes."

His wife died in 1998. When he remarried, to a woman 22 years younger, his best man told him about Stanford.

Cochran said he was frustrated with his IRA account at Merrill Lynch, always losing whatever money it gained, and never really going anywhere but up and down.

The local Stanford rep ran Iron Man triathlons and "had an office that would impress the president," Cochran said.

"He said we'd have to be worth a million before we'd ever be considered for Stanford," Cochran said. "When I ran up my net worth, it was only $800,000. He said, "Let's just make that house worth a little more money, and that property--40 acres in Mississippi--let's just make that a little higher. That'll get you up to $1 million. Had he not done that, I would have never got in, see."

Cochran kept his money in Stanford CDs for five years, until one morning in 2009, when he saw a news report about an alleged Ponzi scheme and government regulators shutting the sprawling operation down.

"I turned sick," Cochran said. "I spent all my time nursing my retirement money. I knew when I went to bed at night, I had enough money to last me 30 years. Then I woke up the next morning and it was gone."

His wife has gone back to work as a nurse after seven years of retirement. And Cochran is not only looking for work himself, but dipping into his apocalypse account.

"My daddy always told me, be prepared," Cochran said. "Have something backed up if you lose your money. So I would buy gold and silver coins, and guns."

Cochran's father raised seven kids working as a welder. It turned out to be good advice, allowing Cochran to get by selling gold and guns.

He still has at least one shot to recover his money.

The Securities and Exchange Commission has sued the Securities Investor Protection Corporation, demanding it accept claims from Stanford investors. SIPC has argued that while parts of the Stanford empire are covered by SIPC, the Antiguan bank that issued the CDs weren't.

"I don't believe the people at the SIPC know what the SIPC stands for," Cochran said. "Every time I turn around, somebody isn't doing their job."

Shaw, the Stanford Victims Coalition director, said a court ruling is due out any day.

"People like Dick Cochran are living Social Security check to Social Security check, sitting on pins and needles, waiting for a court order that SIPC will probably turn around and appeal," she said.

Cochran said he's fit enough to put in the long hours construction work demands, but he wasn't planning on selling guns and gold to get through his golden years. "I would love getting up in the morning with no place to go, and nothing to do once I got there," he said.

He keeps moving forward, uncertain how things will turn out.

"If I was to get my money back that I lost, I'd have to invest it again," he said. "It scares the hell out of me."

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at [e-mail] or tellittoal.com)

http://www.foxbusiness.com/investing/2012/03/30/stanford-victim-for-hire/

[scion]

R. Allen Stanford must forfeit $330 million in 29 bank accounts held outside the United States

March 08, 2012
http://texaslawyer.typepad.com/texas_lawyer_blog/2012/03/r-allen-stanford-must-forfeit-330-million-in-29-bank-accounts-held-outside-the-united-states.html

Two days after finding R. Allen Stanford, former chairman of Stanford Financial Group of Houston, guilty of 13 of 14 criminal counts against him, a federal court jury in Houston today agreed that he should forfeit $330 million in 29 bank accounts held outside the United States.

The jury in Senior U.S. District Judge David Hittner’s court delivered the verdict on the civil forfeiture issues shortly after 1:30 p.m. today.

Stanford’s 14 criminal charges stemmed from an alleged conspiracy to defraud investors who bought about $7 billion in certificates of deposit sold through Stanford International Bank.

On March 6, the jury of four women and eight men found Stanford guilty of one count of conspiracy to commit mail fraud, four counts of wire fraud, five counts of mail fraud, one count of conspiracy to obstruct an SEC proceeding, one count of obstruction of an SEC proceeding, and one count of conspiracy to commit money laundering. Jurors in United States v. Stanford found Stanford not guilty of one count of wire fraud. Stanford remains in custody; his sentencing hearing is set for June 14 and he faces up to 230 years in prison.

Prosecutor Gregg Costa, an assistant U.S. attorney in the Southern District of Texas, declined comment on the forfeiture verdict.

Stanford defense lawyer Ali Fazel said, “I don’t think we can have a reaction one way or the other -- the gag order.”

But Fazel and co-counsel Robert Scardino, partners in Scardino & Fazel in Houston, did express disappointment. “We did the best we could with what we had,” Scardino said.

-- Brenda Sapino Jeffreys

http://texaslawyer.typepad.com/texas_lawyer_blog/2012/03/r-allen-stanford-must-forfeit-330-million-in-29-bank-accounts-held-outside-the-united-states.html

[scion]

Stanford foreign accounts should be forfeited-jury

3/8/2012
http://newsandinsight.thomsonreuters.com/Legal/News/2012/03_-_March/Stanford_foreign_accounts_should_be_forfeited-jury/

HOUSTON, March 8 (Reuters) - Some $330 million stashed in foreign accounts linked to convicted fraudster Allen Stanford should be forfeited, a jury found on Thursday.

The verdict allows the U.S. government to start trying to seize the funds, which are held in 29 accounts around the world, and return them to investors.

The forfeiture proceedings followed Stanford's conviction in federal court in Houston on Tuesday of running a $7 billion Ponzi scheme. He will be sentenced on June 14.

During a six-week trial, prosecutors said Stanford stole the deposits of investors in Stanford International Bank in Antigua to fund a lavish lifestyle of girlfriends, mansions, private jets and yachts.

Thursday's verdict, delivered by the same jury that found him guilty in the criminal case, kicks off what is likely to be a long process for investors hoping to recover lost money.

Receiver Ralph Janvey is pursuing funds for investors in the United States. There are also two receivers in Antigua who are pursuing the same foreign bank accounts that the U.S. government would like to seize.

Janvey has just $113 million cash on hand, so the $330 million in foreign accounts could be the largest amount available to Stanford investors.

(Reporting by Anna Driver)


Follow us on Twitter: @ReutersLegal

http://newsandinsight.thomsonreuters.com/Legal/News/2012/03_-_March/Stanford_foreign_accounts_should_be_forfeited-jury/

[scion]

David Vitter testifies that Stanford fraud victims' rights ignored

Published: Wednesday, March 07, 2012, 10:51 AM
By Bruce Alpert, Times-Picayune The Times-Picayune
http://www.nola.com/politics/index.ssf/2012/03/david_vitter_tells_house_subco.html

WASHINGTON -- Sen. David Vitter, R-La., today told a House hearing that the agency set up to protect investors from fraud is more a captive of the financial industry than a financial regulator protecting investors. Vitter was testifying to the House Capital Markets and Government Sponsors Enterprises Subcommittee this morning about the victims, a good number from Baton Rouge, who were defrauded by Texas investment broker R. Allen Stanford. The government has estimated that investors lost about $7 billon.

A Texas jury found Stanford guilty of 13 of 14 charges Tuesday, including conspiracy, wire and mail fraud. Prosecutors hope to seize $300 million in foreign assets but that's only a tiny fraction of the money owed investors.

That's where the industry financed Securities Investor Protection Corp. is supposed to come in. But Vitter said the corporation has resisted efforts by investors to be partially reimbursed for their losses from the SIPC.

"I fear we are in a situation where, if SIPC were a true financial regulator, we would call it regulatory capture," Vitter said in his testimony. "The actions of SIPC are dictated by the member companies rather than by the law. SIPC is functioning more like a trade association and advocate than a quasi-regulator."

Vitter said he first got involved in the Stanford matter after hearing from victims of his fraudulent schemes.

"Allen Stanford was adept at preying upon the savings of retired oil and gas workers in Louisiana, in particular," Vitter said. "Many of the victims have told me their entire savings has been lost because of the Stanford fraud and that they have been forced to sell their homes and re-enter the work force."

Stanford is accused of using investor money that was supposed to be used to purchase foreign certificates of deposits and instead pocketing the money himself.

The Securities and Exchange Commission has begun litigation against the SIPC to force it to compensate victims for some of their losses. Vitter had urged the commission to take the action, accusing the SIPC of trying "every conceivable idea to drag out making a final determination."

http://www.nola.com/politics/index.ssf/2012/03/david_vitter_tells_house_subco.html

[scion]

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61365753

[Stock]

I think I mentioned that the Fort Worth office is (was?) in need of a total overhaul.

There has been some turnover. But I bet, not enough.

[scion]

Time for regulators to wake up, enforce rules

11:00 PM, Mar. 7, 2012
http://www.theadvertiser.com/article/20120308/OPINION/203080302/Time-regulators-wake-up-enforce-rules?odyssey=nav%7Chead

How many lessons may be drawn from Tuesday's federal conviction of R. Allen Stanford, the man behind a $7 billion Ponzi scheme that stretched from the "greed is good" Eighties to the "bubble, bubble, toil and trouble" Aughts?

Nine Acadiana people filed a related lawsuit. They reported losing amounts ranging from $52,000 that once belonged to a Breaux Bridge woman to $4.8 million thrown in by an Opelousas man and the $7.2 million from a Lafayette man. The average loss reported by the plaintiffs was $2.3 million. Lesson 1: The rich may be different from you and me, but that doesn't necessarily mean they're smarter with their money.

Stanford ran his con game for two decades — about the length of the prison sentence he's expected to get — and became one of the country's richest men, living it up on yachts and private jets. Lesson 2: Crime seems to pay for a while sometimes.

But the biggest lesson, and the hardest to learn, is what happens when those whose duty it is to protect the public from thieves and grifters get too cozy with those they're supposed to be watching. In the 1980s and 1990s, when everything seemed to be going our way all the time, we could afford the fiction that regulators and the regulated are partners in the long march to perpetual prosperity. In the Stanford case, and in the near-meltdown of the financial system in 2008-09, we learned something different and should act accordingly.

The federal lawsuit was filed in Texas. In it, the Acadiana people alleged more than $19 million in losses to Stanford's Ponzi scheme. They blame — and named as a defendant — the Securities and Exchange Commission and one of its former lapdog-watchdogs, Spencer Barasch.

How, you may ask, could a Ponzi scheme grow so big for so many years without attracting attention from the feds? The plaintiffs have a theory about that.

Their lawsuit notes that Barasch was once the top man in enforcement for the SEC's Fort Worth office. Barasch, an attorney, was said in an inspector general's report to have tried on several occasions to represent Stanford, and actually served as counsel for a Stanford company for a short time in 2006 before the agency's ethics officials said he had to stop.

So it shouldn't be a big surprise that Barasch didn't exactly go after Stanford like a Saints linebacker eager to collect a bounty.

But, by the standards for regulatory zeal being set at the same time, the Stanford case wasn't unusual. The SEC was one of several federal agencies accused of being asleep while mortgage companies and investment banks conspired to package trillions in subprime mortgages into bonds with inflated ratings. Eventually, the housing bubble, like Stanford's Ponzi scheme, was crushed by its own weight. Unlike Stanford, the top executives at the financial institutions that pushed the world to the brink of financial disaster, erasing trillions in wealth and millions jobs, don't seem to be in danger of going to prison.

If we're going to have regulators, with their thick rulebooks and mounds of red tape, we should get some of the benefits of regulations, too.

http://www.theadvertiser.com/article/20120308/OPINION/203080302/Time-regulators-wake-up-enforce-rules?odyssey=nav%7Chead

[scion]

Verdict in Ponzi case will not replace losses

Investor-victims of $7B swindle

Thursday, March 8, 2012
By Juan A. Lozano THE ASSOCIATED PRESS
http://www.telegram.com/article/20120308/NEWS/103089875/1002/business

HOUSTON — Investors taken in by Texas tycoon R. Allen Stanford expressed relief and a sense of vindication after a federal jury convicted the jet-setting financier of swindling them out of more than $7 billion. But they said the verdict will never replace the loss of their life savings.

“He sentenced them to a life of hardship and poverty, and they have no chance to ever recover from what has happened to them,” British retiree Kate Freeman said in a telephone interview from her home in Antigua. She lost $820,000 in Stanford’s Ponzi scheme. “I don’t think (the verdict) will make a lot of difference with regard to victims seeing any money any sooner.”

Prosecutors hope to seize about $300 million from more than 30 Stanford-controlled accounts in countries including Switzerland, Britain and Canada in a civil trial that will resume Wednesday. The civil trial is being heard by the same jury that convicted Stanford Tuesday on 13 of 14 charges, including conspiracy, wire and mail fraud. He was acquitted on a single count of wire fraud that accused him of bribing a regulator with Super Bowl tickets.

Angela Shaw, who founded the Stanford Victims Coalition after she and her husband lost $2 million in the scheme, called the verdict “bittersweet.”

“Of course we wanted him to be convicted,” she said.

“In an ideal world, that would mean we would get some of our money back. But it doesn’t work that way.”

The recovery process has been complicated by conflicts among authorities in securing Stanford’s assets, which are scattered across several countries. While Stanford once had a net worth estimated at more than $2 billion, he received court-appointed attorneys after his assets were seized or frozen.

Prosecutors say Stanford used investors’ money to fund a string of failed businesses, bribe regulators and pay for luxuries such as yachts and private jets. His attorneys portrayed Stanford as a visionary entrepreneur who made money for investors and conducted legitimate business deals.

The most serious charges against Stanford carry up to 20 years in prison, and if he is ordered to serve his sentences consecutively, the 61-year-old could spend the rest of his life behind bars. In a similar but unrelated case, disgraced financier Bernard Madoff was sentenced to 150 years in prison for orchestrating the largest Ponzi scheme in history.

U.S. District Judge David Hittner will likely set Stanford’s sentencing date after the civil trial, which started after the verdict Tuesday and could last as little as a full day.

Stanford, whose financial empire once spanned the Americas, looked down when the verdict was read in federal court in Houston. His mother and daughters hugged one another, and one daughter started crying.

“We are disappointed in the outcome. We expect to appeal,” Stanford attorney Ali Fazel said after the hearing. He said he couldn’t comment further because of a gag order.

Prosecutors and Stanford’s family declined to comment.

During the more than six-week trial, prosecutors presented testimony they said showed how Stanford took billions of dollars over 20 years from certificates of deposit, or CDs, at his bank on the Caribbean island nation of Antigua. They said he lied to investors from more than 100 countries, telling them their funds were being safely invested.

Stanford did not testify in his own defense.

His attorneys told jurors the financier was trying to consolidate his businesses to repay investors when authorities seized his companies. They accused the prosecution’s star witness — James M. Davis, the former chief financial officer for Stanford’s various companies — of being behind the fraud and lying to get a reduced sentence.

Three other former Stanford executives are scheduled for trial in September.

A former Antiguan financial regulator was indicted and awaits extradition to the U.S.

The financier’s trial was delayed after he was declared incompetent in January 2011 due to an anti-anxiety drug addiction he developed in jail. He underwent treatment and was declared fit for trial in December.

A U.S. Securities and Exchange Commission lawsuit that also accuses Stanford and his former executives of fraud is pending.

http://www.telegram.com/article/20120308/NEWS/103089875/1002/business

[scion]

U.S. Senator says fund should cover Stanford claims

3/7/2012
http://newsandinsight.thomsonreuters.com/Legal/News/2012/03_-_March/U_S__Senator_says_fund_should_cover_Stanford_claims/

WASHINGTON, March 7 (Reuters) - A U.S. senator attacked on Wednesday an industry-backed fund that covers claims for investors of failed brokerages, saying the fund was failing to help people who had been victimized by convicted financier Allen Stanford's $7 billion Ponzi scheme.

Louisiana Senator David Vitter's criticism of Securities Investor Protection Corp (SIPC) came one day after a jury in Texas convicted Stanford of carrying out the elaborate fraud.

Prosecutors had accused Stanford of bilking investors with fraudulent certificates of deposit issued by Stanford International Bank, his offshore bank in Antigua.

SIPC, whose directors are confirmed by the Senate, has argued that it cannot help Stanford's victims because the bogus certificates of deposit involved in the fraud were issued by Stanford's offshore bank and not by Stanford Group Co, the SIPC-member brokerage based in Texas.

In testimony before a House Financial Services panel, Vitter, a Republican, accused SIPC of ignoring investor protection laws that are designed to protect customer accounts when a brokerage fails.

He criticized SIPC for failing to launch a liquidation process to allow Stanford clients to file claims over their losses.

In a brokerage liquidation, a trustee winds down the business, returns securities and other assets to customers and creditors, and often tries to recover additional assets. The goal is to maximize what customers and creditors recover, and distribute assets fairly.

"I do not think SIPC is focused enough on following the law and executing the law," said Vitter, who said he had heard from dozens of Stanford victims in his home state. "It is far too focused on serving the industry and its member companies and looking after their interests."

The U.S. Securities and Exchange Commission last year asked a federal judge in Washington, D.C., to order SIPC to start a liquidation proceeding in Texas so that investors can begin recovering losses.

SIPC has argued that the law does not cover Stanford victims, and that its power is limited to protecting customers against the loss of missing cash or securities in the custody of failing or insolvent member brokerages.

Stanford's offshore bank falls outside its scope, SIPC says.

"The investors in the Stanford case ... knowingly sent their money away from the brokerage firm to an offshore bank," Stephen Harbeck, SIPC's president and chief executive, told lawmakers on Wednesday. "They were specifically told in writing that SIPC does not protect their investments."

Lawyers for the SEC and SIPC argued the issue at a federal court hearing in Washington on Monday before an audience that included Stanford investors from around the country. The court must now rule on the matter.

LAWMAKERS ALSO CRITICAL OF SIPC ROLE IN MADOFF

The fund has also faced congressional scrutiny over its handling of the estimated $64.8 billion Ponzi scheme engineered by Bernard Madoff, whose victims have been eligible to file claims. But the method used by SIPC and Madoff trustee Irving Picard to calculate claims has been opposed by many investors.

Rather than basing the claims on final account statements, which might be fictitious, Picard has used a "net equity" method, the difference between what investors put in and what they withdrew.

Investors are appealing Picard's methodology to the U.S. Supreme Court.

Frustrated U.S. House lawmakers such as New Jersey's Scott Garrett have drafted bills that would allow investors to rely on their account statements.

"The failures of SIPC in regards to the Madoff liquidation are so fundamental relative to the protections SIPC is supposed to provide to investors," Garrett said.

But Harbeck defended the net equity method and said Garrett's proposed changes to the law would be devastating to many investors.

"To base the payment on the last statement is to allow the fraudulent actor ... the final say on who wins and who loses," Harbeck said.

(Reporting By Sarah N. Lynch; Additional reporting by Jonathan Stempel)


Follow us on Twitter: @ReutersLegal

http://newsandinsight.thomsonreuters.com/Legal/News/2012/03_-_March/U_S__Senator_says_fund_should_cover_Stanford_claims/

[scion]

Today’s reckoning for Stanford: whether to forfeit international accounts

http://blog.chron.com/stanford/2012/03/todays-reckoning-for-stanford-whether-to-forfeit-international-accounts/

Jurors in the R. Allen Stanford case return today to federal court court, perhaps for the last time, to consider whether international accounts held by the one-time billionaire and cricket mogul’s Antigua bank should be forfeited.

Yesterday, the same jury convicted Stanford on 13 of 14 fraud-related counts against him that accused him of masterminding a $7 billion Ponzi scheme through his offshore bank’s certificates of deposit, or CDs sold to customers worldwide.

He now faces up to 230 years in prison. A sentencing date has not been scheduled.

The 61-year-old looked at his crying family members after the verdict was read on Tuesday and mouthed to them the words, “It will be OK.”

His lawyers say they will appeal the verdict.

Today’s forfeiture hearing involves accounts held by Stanford International Bank at banks outside the United States containing some $300 million. If the jury agrees with the government, the accounts will likely be added to what the federal receiver has located.

http://blog.chron.com/stanford/2012/03/todays-reckoning-for-stanford-whether-to-forfeit-international-accounts/

[scion]

Stanford verdict could boost civil actions against law firms

3/6/2012
http://newsandinsight.thomsonreuters.com/Legal/News/2012/03_-_March/Stanford_verdict_could_boost_civil_actions_against_law_firms/

NEW YORK, March 6 (Reuters) - The conviction of Allen Stanford on Tuesday for orchestrating a $7 billion Ponzi scheme could be bad news for two prominent law firms and an attorney facing civil lawsuits arising out of the Texas financier's crimes.

Attorney Thomas Sjoblom and New York-based law firms Chadbourne & Parke and Proskauer Rose are defendants in several class actions and other lawsuits brought by Stanford Financial investors, who claim they lost hundreds of millions of dollars as a result of the fraud. Filed mostly in Texas, they allege that Sjoblom, who worked at Chadbourne & Parke from 2002 to 2006 and at Proskauer Rose from 2006 to 2009, helped Stanford cover up the Ponzi scheme and evade authorities. Investors claim that the firms failed to properly supervise Sjoblom and were negligent in hiring him.

Sjoblom and the law firms also are defendants in a $1.8 billion lawsuit filed in January in Washington, D.C. federal court by the receiver for Stanford Financial, who alleges claims similar to those filed by the investors.

Legal experts said that Tuesday's jury verdict against Stanford on 13 counts of fraud could bolster the class actions and individual cases against the firms and Sjoblom.

"We now know there were bad actors and people suffered. The only question left is who should pay for it," said Michael Downey, a legal malpractice attorney with law firm Armstrong Teasdale who is not involved in the Stanford matter. "The issue will be 'should we make these poor innocent investors bear the losses or the lawyers who helped make it all happen.'"

Daniel Richman, an evidence professor at Columbia Law School, said the criminal conviction does not guarantee a win in the civil actions. But the verdict could mean that information favorable to the civil cases about the scheme will "shake out," he said.

"It may well reveal the nature of any co-conspirators," he said.

Sjoblom did not respond to messages seeking comment. Prior to private practice, he was an attorney with the U.S. Securities and Exchange Commission's enforcement division. He is now a solo practitioner in Washington.

Proskauer Rose, which has about 650 attorneys, did not respond to a request for comment. Chadbourne & Parke, which has about 440 lawyers, declined to comment.

'BETTER POSITION'

Stanford was accused of defrauding about 30,000 investors for more than 20 years in 113 countries with high-interest certificates of deposit at Stanford National Bank, based in Antigua. He denied the allegations, but the jury on Tuesday convicted him of fraud, conspiracy and obstructing an investigation by the SEC. He was found not guilty on one count of wire fraud. He could face up to nearly 20 years in prison.

Edward Valdespino, an attorney representing some of the investors suing the law firms and Sjoblom, said that the conviction likely will give him better access to employees at the firm who were questioned by prosecutors in the criminal case, but who were unable or unwilling to talk to him.

"It puts us in a better position," Valdespino said.

And Jesse Castillo, a lawyer representing about 350 plaintiffs in class actions against Sjoblom and the firms, said the criminal conviction "reinforces" his cases.

"It's satisfying to our clients," he said.

(Reporting by Leigh Jones)

Follow us on Twitter: @ReutersLegal

http://newsandinsight.thomsonreuters.com/Legal/News/2012/03_-_March/Stanford_verdict_could_boost_civil_actions_against_law_firms/

[scion]

Jury Convicts Stanford in $7 Billion Ponzi Fraud

March 6, 2012
By CLIFFORD KRAUSS
http://www.nytimes.com/2012/03/07/business/jury-convicts-stanford-in-7-billion-ponzi-fraud.html

HOUSTON — A federal jury on Tuesday convicted R. Allen Stanford, a Texas financier, on 13 out of 14 counts of fraud in connection with a worldwide fraud that lasted more than two decades and involved more than $7 billion in investments.

The ruling came after jurors on Monday sent the judge a note, one of several since deliberations began Feb. 29, saying they were unable to reach a unanimous verdict on all 14 counts. The judge ordered them to continue deliberating.

The jury decision came three years after Mr. Stanford was accused of defrauding nearly 30,000 investors in 113 countries in a Ponzi scheme involving $7 billion in fraudulent high-interest certificates of deposit at the Stanford International Bank, which was based on the Caribbean island of Antigua. Prosecutors argued that Mr. Stanford had lied for more than two decades, promoting safe investments for money that he channeled into an unimaginably luxurious lifestyle, a secret Swiss bank account and half-baked business deals that consistently lost money.

The prosecutors heavily relied on James M. Davis, Mr. Stanford’s old roommate from Baylor University, who served as his chief financial officer. Mr. Davis testified that the Stanford business empire was a fraud complete with bribes for Antiguan regulators and schemes to cover up operations from federal investigators. He described how Mr. Stanford had sent him to London to send a fax to a prospective client from a bogus insurance company office to reassure him that his investment would be safe.

“There really is no dispute that Allen Stanford lied,” a federal prosecutor, William J. Stellmach, told the jurors in his closing argument, “lining his pockets with billions of dollars of other people’s money.” Another prosecutor, Gregg Costa, compared Mr. Stanford to Bernard L. Madoff, who is in a federal penitentiary for orchestrating an even larger Ponzi scheme until his empire collapsed four years ago.

The defense denied those charges, basing their case on the fact that Mr. Stanford’s clients were paid on schedule until the Securities and Exchange Commission made the first allegations three years ago, destroying the value of his businesses. His lawyers repeatedly pointed out that his investment literature said a loss of principal was possible and that Mr. Stanford’s assets still had value when his businesses were shut down by the federal government. In their opening arguments, they suggested that Mr. Stanford would testify in his own defense, but after days of preparing him, the defense decided to rest its case without putting Mr. Stanford on the stand.

His lawyers sought to portray Mr. Stanford as detached when it came to financial details, which he supposedly left to Mr. Davis, who pleaded guilty to charges of fraud and conspiracy to obstruct an S.E.C. investigation into the Stanford business.

The defense argued that Mr. Davis often acted without Mr. Stanford’s knowledge even as they argued that the Stanford bank was fulfilling its promises to investors until the government stepped in and shut the firm down.

“The government wants you to believe it was all a fraud,” said Robert A. Scardino, a defense lawyer. “That’s just not what happened.”

Mr. Stanford is no longer the swaggering financier who only three years ago had an estimated fortune of more than $2 billion, a knighthood awarded by Antigua and a collection of yachts, jets and mansions. He even owned his own professional cricket team and stadium and, according to prosecutors, he treated Antigua like his personal business haven, with politicians and regulators in tow, through bribes and political campaign contributions.

In his testimony, Mr. Davis portrayed his former boss as a charismatic, bullying manager who manipulated him to lie and cheat investors. He described how Mr. Stanford invited him to drive with him in his new Mercedes-Benz on a highway outside Houston and floored the accelerator until the car reached 170 miles an hour. “He instilled intimidation and fear,” Mr. Davis said.

During cross-examination, Mr. Scardino accused Mr. Davis of manipulating financial statements and requesting that bribes be sent to an Antiguan auditor without Mr. Stanford’s knowledge. Mr. Davis countered that it was Mr. Stanford who engineered the fraud for more than two decades. Near the end of his testimony, he shook his finger at Mr. Stanford and said that anyone who wanted to know the truth about the Stanford enterprises had only to “follow the money, just follow the money.”

For the prosecution, the Stanford case was a Ponzi scheme in which he and five conspirators gave investors false financial statements indicating that the certificates of deposit were invested in conservative assets when $2 billion was actually lent to Mr. Stanford. All along, auditors, along with the head of Antigua’s Financial Services Regulatory Commission, received bribes to cover up the scheme and misinform the S.E.C., they said.

For Mr. Stanford’s lawyers, the financier has been a victim of an overly aggressive federal government willing to imprison him before proving his guilt. While Mr. Madoff was released on $10 million bail before his trial, prosecutors successfully argued that Mr. Stanford, who also held an Antiguan passport, could flee before a trial.

It took three years to bring Mr. Stanford to trial because he was severely beaten in a 2010 brawl with another federal inmate in a prison outside Houston and then became addicted to prescription anti-stress drugs. He underwent a year of therapy before Judge David Hittner of United States District Court ruled that he was fit to stand trial. The defense had said he could not properly defend himself because he had lost much of his memory.

http://www.nytimes.com/2012/03/07/business/jury-convicts-stanford-in-7-billion-ponzi-fraud.html

[scion]

Judge tells Stanford jurors to keep at it

http://blog.chron.com/stanford/2012/03/judge-tells-stanford-jurors-to-keep-at-it/


A federal judge late Monday told jurors in the R. Allen Stanford fraud case to keep deliberating after the panel sent him a note saying they couldn’t reach a unanimous verdict on all 14 counts against the Texas financier.

The note, which did not detail which of the charges against Stanford were giving them difficulty, came at 4:30 p.m. Monday, the jury’s third complete day of deliberation.

After discussing the note with prosecutors and defense attorneys, U.S. District Judge David Hittner called the jurors in to read them a set of instructions called an “Allen Charge,” which explains why jurors who report being deadlocked should keep deliberating.

“This trial has been expensive in time, effort, money and emotional strain to both the defense and the prosecution,” Hittner told the jurors. “If you should fail to agree upon a verdict, the case will be left open and may have to be tried again.”

“Any future jury,” he said, “must be selected in the same manner and from the same source as you were chosen, and there is no reason to believe that the case could ever be submitted to 12 men and women more conscientious, more impartial or more competent to decide it, or that more or clearer evidence could be produced.”

The jury then adjourned until 9:30 a.m. Tuesday.

The news of the possible deadlock on some or even all of the counts against Stanford, accused of masterminding a $7 billion investment fraud through his offshore bank in Antigua, appeared to cheer him.

Before Hittner called in the jurors, Stanford, 61, looked at their note, smiled and gave a thumbs up to family members in the courtroom.

It was the jury’s third note of the day. The first two, just before noon, asked questions about evidence.

The first sought a definition of a financial term that appeared in documents but wasn’t discussed in testimony during the trial, which began Jan. 23.

The second involved testimony about Antiguan rules limiting gifts to the Caribbean nation’s bank regulators. The indictment against Stanford includes allegations that Antiguan regulator Leroy King, one of four co- defendants to be tried later, received bribes including Super Bowl tickets in exchange for favorable treatment of Stanford’s bank.

Defining a word

The jury sent notes last week requesting a dictionary and seeking a definition of “scheme” as used in the indictment – even though the term was spelled out in Hittner’s 44 pages of jury instructions. He denied the request for a dictionary and provided a simple definition of “scheme” after conferring with lawyers for both sides.

Stanford family members in the courtroom on Monday included his mother, father, stepmother, two daughters, a half-sister and a niece.

‘Good news, I think’

At one point before the jury came in, Stanford appeared to be praying at the defense table.

Stanford’s mother, Sammie Stanford, said she was encouraged by the jury’s lengthy and perhaps contentious deliberations.

“It’s good news, I think,” she said. “They’re very attentive. They took notes.”

[e-mail]
Twitter @tlangford

http://blog.chron.com/stanford/2012/03/judge-tells-stanford-jurors-to-keep-at-it/

[scion]

Jurors Still Deliberating in Stanford Fraud Trial

Updated: Friday, 02 Mar 2012, 9:11 AM CST
Published : Friday, 02 Mar 2012, 9:11 AM CST
JUAN A. LOZANO, Associated Press
http://www.myfoxhouston.com/dpp/business/120302-jurors-still-deliberating-in-stanford-fraud-trial

HOUSTON (AP) — A federal jury will continue deliberating the fate of jailed Texas tycoon R. Allen Stanford on charges he bilked $7 billion from investors in a massive Ponzi scheme.

Jurors in the financier's fraud trial in Houston were to resume deliberating in federal court Friday. They began deliberations Wednesday.

If the jury reaches a verdict Friday, it won't be announced until Monday because the trial judge isn't available to hear the decision due to a prior engagement.

Defense attorneys told jurors Stanford made money for investors who bought certificates of deposit from his Caribbean bank.

Prosecutors countered that Stanford took investors' money and flushed it away on failed businesses and his lavish lifestyle.

If convicted, Stanford could be sentenced to more than 20 years in prison.


http://www.myfoxhouston.com/dpp/business/120302-jurors-still-deliberating-in-stanford-fraud-trial

[scion]

Will Allen Stanford Testify? Oh No He Won't

Bruce Carton
February 28 2012
http://www.complianceweek.com/will-allen-stanford-testify-oh-no-he-wont/article/229781/

It now appears that we will never learn how a person who claims to presently have total amnesia could have testified in his own defense about complicated events from years ago.

Allen Stanford's lawyers reportedly promised in their opening statements in his criminal trial that the jury would hear from Stanford, but the defense rested its case today without ever calling Stanford as a witness. Although Stanford supposedly wanted to testify, he was persuaded otherwise by his lawyers. A Reuters article today points out that testifying would have placed his "credibility with the jury on the line" and might also have put Stanford's "fiery temper to the test." This is no doubt true, but again I ask: what about the amnesia Stanford claimed to have in December 2011 concerning all "personal life events or business dealings that predated the head trauma he sustained" in September 2009???

http://www.complianceweek.com/will-allen-stanford-testify-oh-no-he-wont/article/229781/

[scion]

Only drama left besides verdict is whether Stanford will talk

http://blog.chron.com/stanford/2012/02/only-drama-left-besides-verdict-is-whether-stanford-will-talk/


The R. Allen Stanford fraud trial appears to be winding down, and the big question is whether the Texas tycoon will take the stand today, Monday or at all.

The defense team will continue this morning with their paid expert accountant witness, Morris Hollander. Once his testimony is over, another paid witness is expected to come on, and then possibly Stanford himself.

Stanford doesn’t have to take the stand. And the defense team does not have to tell U.S. District Judge David Hittner or the prosecution team that he is testifying until the last possible moment.

The 61-year-old financial services king is accused of running a $7 billion Ponzi scheme through sales of certificates of deposit from his Antigua bank and if convicted on the 14 counts against him, could spend 20 years in prison.

The government claims CD customers were told their money was going toward safe and conservative investments and presented evidence that two-thirds of it was used to fund his other companies and Stanford’s high-end tastes.

But the defense says the bank was solvent, in the midst of a reorganization and would be here today if the government had not shut it down in 2009.

http://blog.chron.com/stanford/2012/02/only-drama-left-besides-verdict-is-whether-stanford-will-talk/