Saturday 29 August 2009
STANFORD'S DAY IN COURT DELAYED BY RACING PULSE
Texas financier R. Allen Stanford, who is awaiting trial on allegations he swindled investors out of more than $7 billion, was rushed to the hospital yesterday morning with his heart racing at more than 300 beats a minute -- three to five times the normal rate.
Stanford's attack came on the same day that one of his lieutenants, James Davis, pleaded guilty to conspiracy to commit securities fraud, among other charges.
Stanford, 59, who denies accusations that he defrauded investors through his Caribbean bank, Stanford International Bank and who was scheduled to appear in a separate hearing, has been detained on the grounds that he represents a flight risk. He was taken by ambulance to the Conroe Regional Medical Center in Texas, seven miles south of his jail cell.
The defendant's condition was unknown and he was still undergoing testing, said Alfredo Perez, of the US Marshals Service of the Southern District of Texas.
Stanford's lawyer, Dick DeGeurin, didn't respond to several requests for comment.
Last month DeGeurin demanded cushier digs in downtown Houston for his client, complaining the current jail cell in Conroe, Texas, had no air conditioning despite the sweltering heat and "outdoor temperatures of 100 or more." DeGuerin also said the cell suffers frequent power outages and can be packed with as many as 10 people at a time.
Davis, 60, was the chief financial officer of Stanford International, the Antigua-based financial company where authorities say Stanford and his cohorts sold $7 billion worth of phony certificates of deposit.
The plea agreement said Davis had been covering up and lying for Stanford as far back as 1988. According to the authorities, Davis falsified documents that allowed the Texan business to use investors' CD money to take out $2 billion in loans.
He also wired money to Stanford for bribes paid to Leroy King, the bank's primary regulator in Antigua, according to the agreement.
The plea agreement describes a strange "blood oath brotherhood ceremony" Stanford performed with King and another Antigua regulator to ensure they remain faithful to him and the bank.
As part of the plea agreement, Davis is expected to cooperate fully with investigators. Sentencing is scheduled for Nov. 20.
Stanford's attack came on the same day that one of his lieutenants, James Davis, pleaded guilty to conspiracy to commit securities fraud, among other charges.
Stanford, 59, who denies accusations that he defrauded investors through his Caribbean bank, Stanford International Bank and who was scheduled to appear in a separate hearing, has been detained on the grounds that he represents a flight risk. He was taken by ambulance to the Conroe Regional Medical Center in Texas, seven miles south of his jail cell.
The defendant's condition was unknown and he was still undergoing testing, said Alfredo Perez, of the US Marshals Service of the Southern District of Texas.
Stanford's lawyer, Dick DeGeurin, didn't respond to several requests for comment.
Last month DeGeurin demanded cushier digs in downtown Houston for his client, complaining the current jail cell in Conroe, Texas, had no air conditioning despite the sweltering heat and "outdoor temperatures of 100 or more." DeGuerin also said the cell suffers frequent power outages and can be packed with as many as 10 people at a time.
Davis, 60, was the chief financial officer of Stanford International, the Antigua-based financial company where authorities say Stanford and his cohorts sold $7 billion worth of phony certificates of deposit.
The plea agreement said Davis had been covering up and lying for Stanford as far back as 1988. According to the authorities, Davis falsified documents that allowed the Texan business to use investors' CD money to take out $2 billion in loans.
He also wired money to Stanford for bribes paid to Leroy King, the bank's primary regulator in Antigua, according to the agreement.
The plea agreement describes a strange "blood oath brotherhood ceremony" Stanford performed with King and another Antigua regulator to ensure they remain faithful to him and the bank.
As part of the plea agreement, Davis is expected to cooperate fully with investigators. Sentencing is scheduled for Nov. 20.
Friday 28 August 2009
Ex-Stanford CFO Davis Pleads Guilty in Fraud Case (Update2)
James M. Davis, chief financial officer of Stanford Financial Group Co., pleaded guilty to helping R. Allen Stanford in a $7 billion Ponzi scheme and prosecutors said he will testify against his former colleagues.
Davis, 60, admitted three felony counts today before U.S. District Judge David Hittner in Houston and agreed to forfeit $1 billion. Davis has been “cooperating like crazy” with authorities investigating the company, said his defense attorney, David Finn of Dallas.
“Mr. Davis knows he’s looking at very, very stiff punishment down the road,” Finn said after the plea hearing. “Probation is out of the question in this case.”
The Justice Department will request leniency in Davis’s sentencing if it deems his cooperation “sufficient,” Assistant U.S. Attorney Paul Pelletier told Hittner. Davis has met for hundreds of hours with federal investigators, helping them find hundreds of millions of dollars that he claimed Stanford stashed in European banks, Finn said.
“You’ll see just how far back this goes,” Finn said of the alleged fraud. “This didn’t get cooked up overnight.”
Stanford, the company founder who is being held without bail, was to appear before Hittner later today for a hearing on his legal defense. Instead, he was taken to a medical center with what a court aide said was an elevated pulse rate.
‘Getting Together’
“I think it had everything to do with my client and Hittner and the government getting together in court today,” Finn said of Stanford’s health emergency. “You could call it serendipity, but what are the odds?”
Stanford’s assets were frozen by the court at the U.S. Securities and Exchange Commission’s request and his current lawyer has asked to leave the case, saying he might not get paid. A U.S. grand jury indicted Stanford and Chief Investment Officer Laura Pendergest-Holt for fraud in June.
Davis waived indictment and was charged separately with conspiracy to commit mail, wire and securities fraud, as well as mail fraud and conspiracy to obstruct an SEC investigation.
The SEC in a civil suit accused Stanford, Davis and Pendergest-Holt of running a fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. Stanford and Davis promised “improbable if not impossible” returns on the CDs, the SEC said.
After today’s hearing, Finn told reporters Davis’s cooperation included a visit to his family farm in rural Mississippi, where he helped a government dive team search for evidence in tanks and ponds.
Not a Dime
Asked what the nature of that evidence was, Finn replied, “you’ll find out.” Davis is working as a laborer on a Michigan farm, where he’s being paid $10 an hour, and is penniless, his lawyer said.
“He doesn’t have a dime,” Finn said. “He can’t even pay me.”
Since his July 13 arraignment, Davis has been free on $500,000 bond, which includes a $5,000 cash deposit. He faces as many as 30 years in prison and won’t be sentenced until the government no longer needs his cooperation.
Finn said Davis’s cooperation has focused on two fronts: locating assets Stanford stashed overseas and helping the U.S. extradite Antigua’s top banking regulator, Leroy King, who was indicted along with Stanford for allegedly taking bribes to conceal the fraud.
“Cash payments were being made under the table in an airplane hanger by Allen Stanford to the regulator,” Finn said.
King, who is under house arrest, is scheduled for an extradition hearing in Antigua next month, according to prosecutors.
The case is U.S. v. Davis, 4:09-cr-00335, U.S. District Court, Southern District of Texas (Houston).
Davis, 60, admitted three felony counts today before U.S. District Judge David Hittner in Houston and agreed to forfeit $1 billion. Davis has been “cooperating like crazy” with authorities investigating the company, said his defense attorney, David Finn of Dallas.
“Mr. Davis knows he’s looking at very, very stiff punishment down the road,” Finn said after the plea hearing. “Probation is out of the question in this case.”
The Justice Department will request leniency in Davis’s sentencing if it deems his cooperation “sufficient,” Assistant U.S. Attorney Paul Pelletier told Hittner. Davis has met for hundreds of hours with federal investigators, helping them find hundreds of millions of dollars that he claimed Stanford stashed in European banks, Finn said.
“You’ll see just how far back this goes,” Finn said of the alleged fraud. “This didn’t get cooked up overnight.”
Stanford, the company founder who is being held without bail, was to appear before Hittner later today for a hearing on his legal defense. Instead, he was taken to a medical center with what a court aide said was an elevated pulse rate.
‘Getting Together’
“I think it had everything to do with my client and Hittner and the government getting together in court today,” Finn said of Stanford’s health emergency. “You could call it serendipity, but what are the odds?”
Stanford’s assets were frozen by the court at the U.S. Securities and Exchange Commission’s request and his current lawyer has asked to leave the case, saying he might not get paid. A U.S. grand jury indicted Stanford and Chief Investment Officer Laura Pendergest-Holt for fraud in June.
Davis waived indictment and was charged separately with conspiracy to commit mail, wire and securities fraud, as well as mail fraud and conspiracy to obstruct an SEC investigation.
The SEC in a civil suit accused Stanford, Davis and Pendergest-Holt of running a fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. Stanford and Davis promised “improbable if not impossible” returns on the CDs, the SEC said.
After today’s hearing, Finn told reporters Davis’s cooperation included a visit to his family farm in rural Mississippi, where he helped a government dive team search for evidence in tanks and ponds.
Not a Dime
Asked what the nature of that evidence was, Finn replied, “you’ll find out.” Davis is working as a laborer on a Michigan farm, where he’s being paid $10 an hour, and is penniless, his lawyer said.
“He doesn’t have a dime,” Finn said. “He can’t even pay me.”
Since his July 13 arraignment, Davis has been free on $500,000 bond, which includes a $5,000 cash deposit. He faces as many as 30 years in prison and won’t be sentenced until the government no longer needs his cooperation.
Finn said Davis’s cooperation has focused on two fronts: locating assets Stanford stashed overseas and helping the U.S. extradite Antigua’s top banking regulator, Leroy King, who was indicted along with Stanford for allegedly taking bribes to conceal the fraud.
“Cash payments were being made under the table in an airplane hanger by Allen Stanford to the regulator,” Finn said.
King, who is under house arrest, is scheduled for an extradition hearing in Antigua next month, according to prosecutors.
The case is U.S. v. Davis, 4:09-cr-00335, U.S. District Court, Southern District of Texas (Houston).
Blood Oath’ Sealed Stanford Deal
At a meeting in 2003, they became blood brothers, cutting their wrists and mixing their blood in a “brotherhood ceremony” that Mr. Stanford’s chief financial officer said promoted an elaborate scheme to hide a multibillion-dollar fraud from American and other regulators.
The assertion that the two took a “blood oath” was laid out in a plea agreement signed by the officer, James M. Davis, and filed Thursday. After the pact, Leroy King, Antigua’s chief banking supervisor, called Mr. Stanford “Big Brother.” He received Super Bowl tickets, valued at thousands of dollars, for himself and his girlfriend. And he accepted regular bribe payments from a secret Swiss bank account that Mr. Davis said he was told to handle by Mr. Stanford.
The unusual twist to the case, in which Mr. Stanford is accused of operating a multibillion-dollar Ponzi scheme, was disclosed by Mr. Davis as he pleaded guilty on Thursday to fraud and conspiracy in Federal District Court in Houston. Mr. Davis, who oversaw the movement of vast sums of money at Stanford International Bank, also said in a plea agreement that Mr. Stanford ordered him to report false revenue and false investment portfolio balances to banking regulators as far back as 1988, when Mr. Stanford ran an offshore bank on the Caribbean island of Montserrat.
“I did wrong. I’m sorry. I apologize. And I take responsibility for my actions,” Mr. Davis said after the hearing.
Mr. Stanford was also supposed to appear in court on Thursday, but he was hospitalized in the morning after his pulse rate soared, his lawyer said.
While he has repeatedly denied accusations that he ran a Ponzi scheme involving certificates of deposit issued by Stanford International Bank, he has also insisted that if anything illegal did happen, it must have been Mr. Davis’s fault.
Mr. Davis, who had been a friend of Mr. Stanford’s since they were roommates at Baylor University in Waco, Tex., started his own church in Mississippi and led prayers before bank business meetings. His lawyer, David Finn, said Mr. Davis was now working on a family farm in Michigan doing manual labor for $10 an hour as an expression of penance. He now faces up to 30 years in prison.
“He had a very heavy heart,” Mr. Finn said. “He was very contrite, and not all of my clients are.”
The plea agreement and a court presentation on Thursday by prosecutors repeated many facts that were outlined in June in an indictment of Mr. Stanford, several Stanford aides and Mr. King. Mr. Stanford and others are accused of defrauding 30,000 investors of $7 billion, filing false reports to regulators and investors, diverting more than $1.6 billion into undisclosed personal loans to Mr. Stanford, and conspiring to obstruct an investigation by the Securities and Exchange Commission.
But the plea agreement offered an assortment of new details, particularly about the relationship between Mr. Stanford and Mr. King, who ran Antigua’s Financial Services Regulatory Commission for much of the last decade. He has been arrested in Antigua and is awaiting extradition to the United States.
Shortly after their 2003 blood-brother ceremony, which also included a second, unnamed Antiguan regulator, Mr. Stanford complained that two Antiguan regulators who worked for Mr. King were “becoming aggressive and suspicious in their examination” of the Stanford bank on the island, the plea agreement said. Both employees “soon thereafter were reassigned or replaced,” Mr. Davis said in the plea agreement.
To show appreciation for Mr. King’s services, Mr. Stanford paid $8,000 for tickets to the 2004 Super Bowl game in Houston so the regulator could take his girlfriend to the event. The next year, in June, Mr. King showed Mr. Stanford a confidential letter he had received from the S.E.C. seeking information about the Stanford bank’s certificates of deposit investment portfolio, stating that the agency had evidence to suggest the bank was engaged in a “possible Ponzi scheme.” Mr. Stanford and an unnamed aide then drafted “a false and misleading response” to the S.E.C., according to the plea agreement.
In September 2006, Mr. King tipped Mr. Stanford off to another letter from the S.E.C. Mr. Stanford, Mr. Davis and others proposed various responses designed to mislead the American regulators, which Mr. King was expected to transmit back to the S.E.C.
Mr. King also helped mislead regulators of the Eastern Caribbean Central Bank when they began raising questions about Mr. Stanford’s bank, the plea agreement said. He faxed a proposed response to the Caribbean regulators to an unnamed lawyer working for Mr. Stanford. In it, Mr. King joked in a handwritten note: “Please do not bill me (laugh), Thanks a million, Lee.” The note was taken as an oblique reference to bribes already paid, according to the agreement.
Mr. King, who holds American and Antiguan passports, is reviewing legal documents and has not yet publicly responded to the charges against him, according to Attorney General Justin Simon of Antigua and Barbuda. In an interview in February, just after Mr. Stanford’s offices in Houston were raided by federal authorities, Mr. King said, “I am absolutely sure that my banking system is clean.”
Mr. Simon said in an interview that he had become aware of the blood-brotherhood ceremony from his own sources. “It is believable,” he said. “As far as how many people are involved, we are still investigating.”
By the middle of 2008, the agreement asserts, Mr. Stanford, Mr. Davis and others were scrambling “desperately” to hide the details of their fraud by inflating the value of their assets on the books with “bogus real estate.” The conspirators “designed a real estate transaction wherein they would falsely inflate and convert an approximate $65 million real estate transaction in Antigua into a purported $3.2 billion dollar asset,” according to the agreement. But by January the S.E.C. was moving in fast, and when Mr. Davis met with Mr. King, “King appeared very stressed” and wondered if they could still hide their secrets. Mr. Davis tried to reassure him.
In an interview in April, Mr. Stanford said he gave Mr. Davis broad responsibilities to oversee investments. “If bad things were happening, he never brought them to my attention,” Mr. Stanford said. “He did his job and I stayed out of his hair.”
Mr. Finn acknowledged after Thursday’s plea hearing that Mr. Stanford would attempt to discredit his client during a future trial. “The only way he walks is if he can convince a jury that my client is the mastermind,” he said. “Allen Stanford uses people. Did my client allow himself to be used? Absolutely.”
Mr. Finn said it would be strange for his client to have run a fraudulent scheme to pay for Mr. Stanford’s lavish lifestyle when he was getting paid relatively little for his efforts. He said Mr. Davis had earned between $5 million and $6 million after taxes over the last decade, and was now virtually penniless.
Mr. Stanford’s lawyer, Dick DeGuerin, has asked for court permission to quit the case because his client can not assure that he will be paid. Mr. Stanford was supposed to appear in court for a hearing on whether he could retain a new legal team. Mr. Stanford has asked to be represented by two other lawyers, but they also have said they need assurances that they will be paid
The assertion that the two took a “blood oath” was laid out in a plea agreement signed by the officer, James M. Davis, and filed Thursday. After the pact, Leroy King, Antigua’s chief banking supervisor, called Mr. Stanford “Big Brother.” He received Super Bowl tickets, valued at thousands of dollars, for himself and his girlfriend. And he accepted regular bribe payments from a secret Swiss bank account that Mr. Davis said he was told to handle by Mr. Stanford.
The unusual twist to the case, in which Mr. Stanford is accused of operating a multibillion-dollar Ponzi scheme, was disclosed by Mr. Davis as he pleaded guilty on Thursday to fraud and conspiracy in Federal District Court in Houston. Mr. Davis, who oversaw the movement of vast sums of money at Stanford International Bank, also said in a plea agreement that Mr. Stanford ordered him to report false revenue and false investment portfolio balances to banking regulators as far back as 1988, when Mr. Stanford ran an offshore bank on the Caribbean island of Montserrat.
“I did wrong. I’m sorry. I apologize. And I take responsibility for my actions,” Mr. Davis said after the hearing.
Mr. Stanford was also supposed to appear in court on Thursday, but he was hospitalized in the morning after his pulse rate soared, his lawyer said.
While he has repeatedly denied accusations that he ran a Ponzi scheme involving certificates of deposit issued by Stanford International Bank, he has also insisted that if anything illegal did happen, it must have been Mr. Davis’s fault.
Mr. Davis, who had been a friend of Mr. Stanford’s since they were roommates at Baylor University in Waco, Tex., started his own church in Mississippi and led prayers before bank business meetings. His lawyer, David Finn, said Mr. Davis was now working on a family farm in Michigan doing manual labor for $10 an hour as an expression of penance. He now faces up to 30 years in prison.
“He had a very heavy heart,” Mr. Finn said. “He was very contrite, and not all of my clients are.”
The plea agreement and a court presentation on Thursday by prosecutors repeated many facts that were outlined in June in an indictment of Mr. Stanford, several Stanford aides and Mr. King. Mr. Stanford and others are accused of defrauding 30,000 investors of $7 billion, filing false reports to regulators and investors, diverting more than $1.6 billion into undisclosed personal loans to Mr. Stanford, and conspiring to obstruct an investigation by the Securities and Exchange Commission.
But the plea agreement offered an assortment of new details, particularly about the relationship between Mr. Stanford and Mr. King, who ran Antigua’s Financial Services Regulatory Commission for much of the last decade. He has been arrested in Antigua and is awaiting extradition to the United States.
Shortly after their 2003 blood-brother ceremony, which also included a second, unnamed Antiguan regulator, Mr. Stanford complained that two Antiguan regulators who worked for Mr. King were “becoming aggressive and suspicious in their examination” of the Stanford bank on the island, the plea agreement said. Both employees “soon thereafter were reassigned or replaced,” Mr. Davis said in the plea agreement.
To show appreciation for Mr. King’s services, Mr. Stanford paid $8,000 for tickets to the 2004 Super Bowl game in Houston so the regulator could take his girlfriend to the event. The next year, in June, Mr. King showed Mr. Stanford a confidential letter he had received from the S.E.C. seeking information about the Stanford bank’s certificates of deposit investment portfolio, stating that the agency had evidence to suggest the bank was engaged in a “possible Ponzi scheme.” Mr. Stanford and an unnamed aide then drafted “a false and misleading response” to the S.E.C., according to the plea agreement.
In September 2006, Mr. King tipped Mr. Stanford off to another letter from the S.E.C. Mr. Stanford, Mr. Davis and others proposed various responses designed to mislead the American regulators, which Mr. King was expected to transmit back to the S.E.C.
Mr. King also helped mislead regulators of the Eastern Caribbean Central Bank when they began raising questions about Mr. Stanford’s bank, the plea agreement said. He faxed a proposed response to the Caribbean regulators to an unnamed lawyer working for Mr. Stanford. In it, Mr. King joked in a handwritten note: “Please do not bill me (laugh), Thanks a million, Lee.” The note was taken as an oblique reference to bribes already paid, according to the agreement.
Mr. King, who holds American and Antiguan passports, is reviewing legal documents and has not yet publicly responded to the charges against him, according to Attorney General Justin Simon of Antigua and Barbuda. In an interview in February, just after Mr. Stanford’s offices in Houston were raided by federal authorities, Mr. King said, “I am absolutely sure that my banking system is clean.”
Mr. Simon said in an interview that he had become aware of the blood-brotherhood ceremony from his own sources. “It is believable,” he said. “As far as how many people are involved, we are still investigating.”
By the middle of 2008, the agreement asserts, Mr. Stanford, Mr. Davis and others were scrambling “desperately” to hide the details of their fraud by inflating the value of their assets on the books with “bogus real estate.” The conspirators “designed a real estate transaction wherein they would falsely inflate and convert an approximate $65 million real estate transaction in Antigua into a purported $3.2 billion dollar asset,” according to the agreement. But by January the S.E.C. was moving in fast, and when Mr. Davis met with Mr. King, “King appeared very stressed” and wondered if they could still hide their secrets. Mr. Davis tried to reassure him.
In an interview in April, Mr. Stanford said he gave Mr. Davis broad responsibilities to oversee investments. “If bad things were happening, he never brought them to my attention,” Mr. Stanford said. “He did his job and I stayed out of his hair.”
Mr. Finn acknowledged after Thursday’s plea hearing that Mr. Stanford would attempt to discredit his client during a future trial. “The only way he walks is if he can convince a jury that my client is the mastermind,” he said. “Allen Stanford uses people. Did my client allow himself to be used? Absolutely.”
Mr. Finn said it would be strange for his client to have run a fraudulent scheme to pay for Mr. Stanford’s lavish lifestyle when he was getting paid relatively little for his efforts. He said Mr. Davis had earned between $5 million and $6 million after taxes over the last decade, and was now virtually penniless.
Mr. Stanford’s lawyer, Dick DeGuerin, has asked for court permission to quit the case because his client can not assure that he will be paid. Mr. Stanford was supposed to appear in court for a hearing on whether he could retain a new legal team. Mr. Stanford has asked to be represented by two other lawyers, but they also have said they need assurances that they will be paid
Thursday 27 August 2009
Stanford in hospital with rapid heart beat
Allen Stanford, the accused swindler, was rushed to hospital from his prison cell in Texas at 5.50am, Dick DeGuerin, his lawyer, confirmed today.
The Texas-born financier and cricket impresario was taken to Conroe Regional Medical Center with a rapid heart rate of more than 300 beats a minute.
Mr Stanford, 59, faces charges, which he denies, of defrauding US investors out of $7 billion (£4.3 billion), and was recently denied bail on the ground that he represented a flight risk.
He has been sharing a cell with about ten inmates at a prison in Conroe, Texas, where he has complained of the "intolerable" conditions with temperatures reaching 38C (100F).
"They have almost non-existent medical care there. A fellow cellmate almost died with rapid heart beat several weeks ago," he said.
Mr DeGuerin was speaking on his way to a court hearing at 9am that was due to include Mr Stanford.
The lawyer is seeking to withdraw from the case because, among other reasons, he has yet to be paid.
"I don’t think the hearing can go ahead in Sir Allen’s absence," he said.
Meanwhile, James Davis, Mr Stanford's former finance director, pleaded guilty to fraud charges when he appeared in court today.
The Texas-born financier and cricket impresario was taken to Conroe Regional Medical Center with a rapid heart rate of more than 300 beats a minute.
Mr Stanford, 59, faces charges, which he denies, of defrauding US investors out of $7 billion (£4.3 billion), and was recently denied bail on the ground that he represented a flight risk.
He has been sharing a cell with about ten inmates at a prison in Conroe, Texas, where he has complained of the "intolerable" conditions with temperatures reaching 38C (100F).
"They have almost non-existent medical care there. A fellow cellmate almost died with rapid heart beat several weeks ago," he said.
Mr DeGuerin was speaking on his way to a court hearing at 9am that was due to include Mr Stanford.
The lawyer is seeking to withdraw from the case because, among other reasons, he has yet to be paid.
"I don’t think the hearing can go ahead in Sir Allen’s absence," he said.
Meanwhile, James Davis, Mr Stanford's former finance director, pleaded guilty to fraud charges when he appeared in court today.
Stanford’s Private-Equity Stakes to Be Sold Over His Objection
Stanford’s investments in an Israeli development fund and a luxury Houston hotel can be sold immediately, over objections from the financier that he hasn’t been convicted of any wrongdoing, a federal judge ruled.
Court-appointed receiver Ralph Janvey won approval to sell several pieces of Stanford’s private-equity portfolio on an emergency basis to avoid meeting capital calls or diluting the investments, according to an order posted yesterday by U.S. District Judge David Godbey in Dallas.
The transactions “are in the best interest of the receivership estate,” the judge wrote.
Stanford is fighting criminal and civil allegations that he defrauded investors of more than $7 billion through the sale of bogus certificates of deposit at Antigua-based Stanford International Bank Ltd. He had urged Godbey to block the sales.
The Texas financier, who is in jail awaiting trial, complained Janvey is selling his investments at steeply discounted prices and increasing investor losses by failing to let the stakes mature.
Janvey asked Godbey’s permission to sell Stanford’s share of the Israeli fund and the Houston hotel after receiving offers from other limited partners already participating in each project.
Court-appointed receiver Ralph Janvey won approval to sell several pieces of Stanford’s private-equity portfolio on an emergency basis to avoid meeting capital calls or diluting the investments, according to an order posted yesterday by U.S. District Judge David Godbey in Dallas.
The transactions “are in the best interest of the receivership estate,” the judge wrote.
Stanford is fighting criminal and civil allegations that he defrauded investors of more than $7 billion through the sale of bogus certificates of deposit at Antigua-based Stanford International Bank Ltd. He had urged Godbey to block the sales.
The Texas financier, who is in jail awaiting trial, complained Janvey is selling his investments at steeply discounted prices and increasing investor losses by failing to let the stakes mature.
Janvey asked Godbey’s permission to sell Stanford’s share of the Israeli fund and the Houston hotel after receiving offers from other limited partners already participating in each project.
Tuesday 25 August 2009
Stanford Victims file Class Action Suit against Trustmark National Bank, HSBC Bank PLC, The Toronto-Dominion Bank, SG Private Banking (SUISSE) S.A.
STANFORD VICTIMS FILE CLASS ACTION SUIT AGAINST TRUSTMARK NATIONAL BANK, HSBC BANK PLC, THE TORONTO-DOMINION BANK, SG PRIVATE BANKING (SUISSE) S.A., AND BANK OF HOUSTON
HOUSTON, TX - Victims of Stanford International Bank, Ltd., part of the Stanford Financial Group, filed a class action lawsuit in Texas state court in Houston on August 23, alleging that Trustmark National Bank, HSBC Bank PLC, The Toronto-Dominion Bank, SG Private Banking (Suisse) S.A., and Bank of Houston "provided essential assistance to Stanford in one of the largest financial crimes in history."
The class action petition alleges that the banks conspired with Stanford to commit fraud. The plaintiffs seek more than $7 billion in damages. The lawsuit also seeks to recover all of the fees paid to the banks by Stanford under the Uniform Fraudulent Transfers Act.
The plaintiffs are represented by the New York law firm of Morgenstern & Blue, LLC, which last month filed a class action complaint against the Commonwealth of Antigua and Barbuda alleging that the island nation conspired with Stanford and protected Stanford's banking activities from scrutiny by the Securities and Exchange Commission and other regulators.
The case is Rotstain v. Trustmark National Bank, Harris County (Houston), cause number 2009-53845.
Contact: Peter D. Morgenstern
pmorgenstern@mfbnyc.com
(212) 750-6776
HOUSTON, TX - Victims of Stanford International Bank, Ltd., part of the Stanford Financial Group, filed a class action lawsuit in Texas state court in Houston on August 23, alleging that Trustmark National Bank, HSBC Bank PLC, The Toronto-Dominion Bank, SG Private Banking (Suisse) S.A., and Bank of Houston "provided essential assistance to Stanford in one of the largest financial crimes in history."
The class action petition alleges that the banks conspired with Stanford to commit fraud. The plaintiffs seek more than $7 billion in damages. The lawsuit also seeks to recover all of the fees paid to the banks by Stanford under the Uniform Fraudulent Transfers Act.
The plaintiffs are represented by the New York law firm of Morgenstern & Blue, LLC, which last month filed a class action complaint against the Commonwealth of Antigua and Barbuda alleging that the island nation conspired with Stanford and protected Stanford's banking activities from scrutiny by the Securities and Exchange Commission and other regulators.
The case is Rotstain v. Trustmark National Bank, Harris County (Houston), cause number 2009-53845.
Contact: Peter D. Morgenstern
pmorgenstern@mfbnyc.com
(212) 750-6776
Saturday 22 August 2009
Lawyers' dispute turns physical
Jailed former billionaire R. Allen Stanford has had trouble paying, and thus keeping, his attorneys, and now it appears two of them got into a physical altercation last month.
A Houston Police Department report shows that on the evening of July 10 several officers responded to a call to the office of Dick DeGuerin, a criminal defense lawyer who has since asked to be released from representing Stanford.
DeGuerin said he called police because Houston attorney Michael Sydow punched him and was trespassing and refused to leave.
But Sydow, a civil lawyer who has attempted to serve in limited capacity in Stanford's criminal case, told police that DeGuerin pushed him into a chair and bumped him with his chest.
Houston Police spokesman John Cannon confirmed that the report includes a photo of DeGuerin's chest with a red mark where DeGuerin said Sydow punched him with his fist.
Neither lawyer pressed charges.
DeGuerin said the two argued over a written statement in which Stanford allowed DeGuerin to collect his fees from an insurance policy Stanford's company carried. Exactly how Stanford will pay whoever ends up representing him is unclear, because his assets were frozen when federal regulators filed a civil fraud complaint against him, his companies, and other company executives.
DeGuerin said Sydow called him a liar. He said he then ordered Sydow out of the office and grabbed the document, at which point Sydow punched him. DeGuerin, who had a knee replacement a month before the incident, said he neither pushed nor chest bumped Sydow. He said two other men from the office intervened and corralled Sydow into an outer office while DeGuerin called police.
Sydow, who said he is serving as local counsel in the criminal case, said Friday that they were discussing DeGuerin charging a $30 million flat fee to Stanford.
Sydow said he told DeGuerin he thought it unethical to change fees mid-representation, and that riled DeGuerin.
Sydow said he stood up and DeGuerin shoved him back into a chair, grabbed the document and then claimed Sydow assaulted DeGuerin. Sydow said he never punched DeGuerin.
DeGuerin said details of this altercation are among many papers he's supplied Senior U.S. Judge David Hittner in his effort to get off the case. He said the documents show that Stanford wishes to have other attorneys, including Sydow. DeGuerin said he can't work with Sydow.
Stanford faces 21 criminal charges in an alleged $7 billion scam focusing on CDs at his offshore bank.
On July 31, a news release announced Stanford's new criminal lawyer would be Robert Luskin of Washington, D.C.
Luskin said he would enter the case only if he could be assured he would be paid.
Hittner refused to release DeGuerin from the case until another lawyer entered unconditionally.
Hittner denied Sydow's request to enter the case just to receive notices regarding whether Luskin could be paid. Luskin and Sydow went to an appeals court to remove Judge Hittner from the case but were denied.
“It's an impossible situation,” DeGuerin said.
A Houston Police Department report shows that on the evening of July 10 several officers responded to a call to the office of Dick DeGuerin, a criminal defense lawyer who has since asked to be released from representing Stanford.
DeGuerin said he called police because Houston attorney Michael Sydow punched him and was trespassing and refused to leave.
But Sydow, a civil lawyer who has attempted to serve in limited capacity in Stanford's criminal case, told police that DeGuerin pushed him into a chair and bumped him with his chest.
Houston Police spokesman John Cannon confirmed that the report includes a photo of DeGuerin's chest with a red mark where DeGuerin said Sydow punched him with his fist.
Neither lawyer pressed charges.
DeGuerin said the two argued over a written statement in which Stanford allowed DeGuerin to collect his fees from an insurance policy Stanford's company carried. Exactly how Stanford will pay whoever ends up representing him is unclear, because his assets were frozen when federal regulators filed a civil fraud complaint against him, his companies, and other company executives.
DeGuerin said Sydow called him a liar. He said he then ordered Sydow out of the office and grabbed the document, at which point Sydow punched him. DeGuerin, who had a knee replacement a month before the incident, said he neither pushed nor chest bumped Sydow. He said two other men from the office intervened and corralled Sydow into an outer office while DeGuerin called police.
Sydow, who said he is serving as local counsel in the criminal case, said Friday that they were discussing DeGuerin charging a $30 million flat fee to Stanford.
Sydow said he told DeGuerin he thought it unethical to change fees mid-representation, and that riled DeGuerin.
Sydow said he stood up and DeGuerin shoved him back into a chair, grabbed the document and then claimed Sydow assaulted DeGuerin. Sydow said he never punched DeGuerin.
DeGuerin said details of this altercation are among many papers he's supplied Senior U.S. Judge David Hittner in his effort to get off the case. He said the documents show that Stanford wishes to have other attorneys, including Sydow. DeGuerin said he can't work with Sydow.
Stanford faces 21 criminal charges in an alleged $7 billion scam focusing on CDs at his offshore bank.
On July 31, a news release announced Stanford's new criminal lawyer would be Robert Luskin of Washington, D.C.
Luskin said he would enter the case only if he could be assured he would be paid.
Hittner refused to release DeGuerin from the case until another lawyer entered unconditionally.
Hittner denied Sydow's request to enter the case just to receive notices regarding whether Luskin could be paid. Luskin and Sydow went to an appeals court to remove Judge Hittner from the case but were denied.
“It's an impossible situation,” DeGuerin said.
Wednesday 19 August 2009
Appellate court: Stanford criminal case stays put
An appellate court today refused to move R. Allen Stanford's criminal case to a new federal judge as the fallen billionaire requested.
A three-member panel of the 5th U.S. Circuit Court of Appeals denied the request in a one-sentence order.
Houston civil attorney Michael Sydow and Washington criminal defense lawyer Robert Luskin had asked that Senior U.S. District Judge David Hittner be removed from the case and it be moved to U.S. District Judge Vanessa Gilmore, who drew the first case against one of Stanford's codefendants. Stanford and others are accused of bilking investors in a $7 billion fraud.
“We're disappointed in the result but hopeful that Mr. Stanford will ultimately be permitted to be represented by counsel of his choice,” Luskin said Tuesday.
Luskin and Sydow argued Hittner exhibited “unexplained hostility” in refusing Sydow's request to make an appearance and in ordering that Sydow have no further involvement in the criminal case.
Sydow asked the court to consider him Stanford's lawyer for the limited purpose of receiving notices on a motion filed by Luskin's firm, Patton Boggs, which wants assurance it will be paid before it agrees to represent Stanford.
Houston criminal defense lawyer Dick DeGuerin has asked to be released from the case but Hittner has required DeGuerin stay on until another lawyer enters unconditionally on Stanford's behalf.
Today's appellate ruling came just hours after prosecutors Gregg Costa and Paul Pelletier asked the court to deny Stanford's request to move the case. They said the request for appellate intervention was premature and that allowing attorneys into the case conditionally would cause delay.
The prosecutors said Hittner did not display bias against Sydow and that the matter of fees could be resolved in other courts.
Stanford has not been able to pay his lawyers because his personal assets were frozen along with his company's assets in a civil suit filed in Dallas by the Securities and Exchange Commission. Attorneys for several Stanford-related entities and individuals are attempting to be paid through unfrozen assets or an insurance policy.
A three-member panel of the 5th U.S. Circuit Court of Appeals denied the request in a one-sentence order.
Houston civil attorney Michael Sydow and Washington criminal defense lawyer Robert Luskin had asked that Senior U.S. District Judge David Hittner be removed from the case and it be moved to U.S. District Judge Vanessa Gilmore, who drew the first case against one of Stanford's codefendants. Stanford and others are accused of bilking investors in a $7 billion fraud.
“We're disappointed in the result but hopeful that Mr. Stanford will ultimately be permitted to be represented by counsel of his choice,” Luskin said Tuesday.
Luskin and Sydow argued Hittner exhibited “unexplained hostility” in refusing Sydow's request to make an appearance and in ordering that Sydow have no further involvement in the criminal case.
Sydow asked the court to consider him Stanford's lawyer for the limited purpose of receiving notices on a motion filed by Luskin's firm, Patton Boggs, which wants assurance it will be paid before it agrees to represent Stanford.
Houston criminal defense lawyer Dick DeGuerin has asked to be released from the case but Hittner has required DeGuerin stay on until another lawyer enters unconditionally on Stanford's behalf.
Today's appellate ruling came just hours after prosecutors Gregg Costa and Paul Pelletier asked the court to deny Stanford's request to move the case. They said the request for appellate intervention was premature and that allowing attorneys into the case conditionally would cause delay.
The prosecutors said Hittner did not display bias against Sydow and that the matter of fees could be resolved in other courts.
Stanford has not been able to pay his lawyers because his personal assets were frozen along with his company's assets in a civil suit filed in Dallas by the Securities and Exchange Commission. Attorneys for several Stanford-related entities and individuals are attempting to be paid through unfrozen assets or an insurance policy.
Monday 17 August 2009
Stanford Regulators Admit Not Pursuing '03 Fraud Claim
The industry self-regulatory organization that was supposed to police the brokers at the Stanford Financial Group acknowledges that a Stanford employee alleged in 2003 that the company was running a Ponzi scheme, but the organization did not follow up on the claim based of its own policy, which has since been changed.
The disclosure comes in testimony from Daniel Sibears, Executive Vice President of the Financial Industry Regulatory Authority, FINRA, prepared for a Senate Banking Committee hearing on Monday.
In 2003, Stanford advisor Leyla Wydler alleged in an arbitration case that the company was "engaged in a Ponzi scheme to defraud its clients."
Wydler lost the arbitration case, and FINRA is now acknowledging that her allegations of fraud were never passed on to investigators by the FINRA arbitration panel. Sibears' testimony said that prior to this year, FINRA procedure was to review fraud claims in arbitrations involving customers, but not those that involved employment disputes like Leyla Wydler's.
"This was based on an assessment that customer claims were most likely to evidence misconduct leading to investor harm," the testimony says.
Sibears insists in the testimony that "FINRA reviews every customer complaint and regulatory tip it receives." Nontheless, he acknowledged, the procedure involving employment disputes was changed in March of this year. The change came less than a month after the Securities and Exchange Commission sued Stanford, alleging an $8 billion Ponzi scheme.
Sibears' testimony claimed that even if the agency had followed up on Wydler's allegations, it likely would have run into barriers from regulators in Antigua, home of Stanford's offshore bank, where he says officials were less than cooperative in investigating subsequent tips.
After she lost the arbitration in 2004, Wydler brought her concerns to the Securities and Exchange Commission, which launched a formal investigation the following year. But the SEC did not sue Stanford until this year. The agency says it, too, was thwarted by Antiguan regulators, and added the nation's chief financial regulator to its complaint in June.
Hundreds of people attended the Banking Committee hearing, which was held in Baton Rouge, LA, home to a large concentration of Stanford investors. They have complained that regulators were slow to catch the alleged fraud, which affected some 28,000 investors.
The disclosure comes in testimony from Daniel Sibears, Executive Vice President of the Financial Industry Regulatory Authority, FINRA, prepared for a Senate Banking Committee hearing on Monday.
In 2003, Stanford advisor Leyla Wydler alleged in an arbitration case that the company was "engaged in a Ponzi scheme to defraud its clients."
Wydler lost the arbitration case, and FINRA is now acknowledging that her allegations of fraud were never passed on to investigators by the FINRA arbitration panel. Sibears' testimony said that prior to this year, FINRA procedure was to review fraud claims in arbitrations involving customers, but not those that involved employment disputes like Leyla Wydler's.
"This was based on an assessment that customer claims were most likely to evidence misconduct leading to investor harm," the testimony says.
Sibears insists in the testimony that "FINRA reviews every customer complaint and regulatory tip it receives." Nontheless, he acknowledged, the procedure involving employment disputes was changed in March of this year. The change came less than a month after the Securities and Exchange Commission sued Stanford, alleging an $8 billion Ponzi scheme.
Sibears' testimony claimed that even if the agency had followed up on Wydler's allegations, it likely would have run into barriers from regulators in Antigua, home of Stanford's offshore bank, where he says officials were less than cooperative in investigating subsequent tips.
After she lost the arbitration in 2004, Wydler brought her concerns to the Securities and Exchange Commission, which launched a formal investigation the following year. But the SEC did not sue Stanford until this year. The agency says it, too, was thwarted by Antiguan regulators, and added the nation's chief financial regulator to its complaint in June.
Hundreds of people attended the Banking Committee hearing, which was held in Baton Rouge, LA, home to a large concentration of Stanford investors. They have complained that regulators were slow to catch the alleged fraud, which affected some 28,000 investors.
Sunday 16 August 2009
Who is Ralph Janvey? Stanford's victims know he wants a third
Sir Allen Stanford's attorney doesn't like Ralph Janvey, but that's not surprising. The SEC isn't crazy about him either, and U.S. Judge David Godbey told him, "You know everyone in the courtroom is angry with you," according to a report in USA Today.
Janvey has been tasked with taking over and cleaning up the wreckage from Stanford's $7 billion Ponzi scheme -- the second largest known disaster of this kind. Along the way, he's managed to piss off everyone he's encountered. The latest "transgression" is his demand for more than $27 million in fees for his team and the consultants he's hired to track down the missing billions of dollars in Stanford's former empire.
More than 20,000 investors are waiting in line for their respective pounds of flesh. And now, they have to wait in line behind the lawyer.
The full request, which hasn't been ruled on yet, consists of $20 million for which Janvey asked in mid-May, covers his team's work through April 12, with another $7.6 million covering the seven weeks that followed.
And, he wants much more ... a third, actually.
Janvey's team stretches to more than 100, and he's asking for 34% of the $81.1 million on hand to compensate these guys. The investors, of course, would walk away with a fraction of their lost money. The SEC is pushing back on the bill, which includes $8.9 million for advisory firm FTI Consulting and $8.4 million for law firm Baker Botts (interesting note: I did a jury duty stint where Baker Botts was defense council ... hopefully it will do better this time).
The SEC objects to $500 an hour rates for FTI ... and $280 an hour to make copies. But, what's the big deal? Digging through and sorting out fraud is not easy. The discounts that clients can usually squeeze out of consultants and attorneys are harder to come by. So, even the 20% discount Janvey's offered doesn't amount to much
Janvey has been tasked with taking over and cleaning up the wreckage from Stanford's $7 billion Ponzi scheme -- the second largest known disaster of this kind. Along the way, he's managed to piss off everyone he's encountered. The latest "transgression" is his demand for more than $27 million in fees for his team and the consultants he's hired to track down the missing billions of dollars in Stanford's former empire.
More than 20,000 investors are waiting in line for their respective pounds of flesh. And now, they have to wait in line behind the lawyer.
The full request, which hasn't been ruled on yet, consists of $20 million for which Janvey asked in mid-May, covers his team's work through April 12, with another $7.6 million covering the seven weeks that followed.
And, he wants much more ... a third, actually.
Janvey's team stretches to more than 100, and he's asking for 34% of the $81.1 million on hand to compensate these guys. The investors, of course, would walk away with a fraction of their lost money. The SEC is pushing back on the bill, which includes $8.9 million for advisory firm FTI Consulting and $8.4 million for law firm Baker Botts (interesting note: I did a jury duty stint where Baker Botts was defense council ... hopefully it will do better this time).
The SEC objects to $500 an hour rates for FTI ... and $280 an hour to make copies. But, what's the big deal? Digging through and sorting out fraud is not easy. The discounts that clients can usually squeeze out of consultants and attorneys are harder to come by. So, even the 20% discount Janvey's offered doesn't amount to much
Saturday 15 August 2009
Stanford's Latest Appeal: Requesting a New Judge
Citing "unexplained hostility" by the judge in his criminal case, accused fraudster Allen Stanford is asking for a new judge.
Stanford, indicted on 21 felony counts in an alleged $8 billion Ponzi scheme, has had a run of rulings against him by U.S. District Judge David Hittner. Hittner has revoked Stanford's bail, refused to move him to a jail closer to Houston, and denied his request to hire new attorneys.
Now, those attorneys are petitioning the Fifth Circuit Court of Appeals to remove Hittner from the case and reassign it to U.S. District Judge Vanessa Gilmore in Houston, who presided over an earlier Stanford case.
The petition centers on Hittner's ruling last week barring Houston attorney Michael Sydow from appearing for Stanford, and ordering that Sydow have "no further involvement" in the case.
Sydow had hoped to appear along with Washington attorney Robert Luskin to argue for the release of some of Stanford's funds to pay for a defense. But Hittner ruled that because Sydow had not received prior approval to appear, he should be barred from the case for good.
The petition says Hittner is denying Stanford's Constitutional right to the attorney of his choice, and Hittner should be removed from the case.
It's not the first time Stanford's attorneys have gone to the Court of Appeals over Hittner's rulings. Still pending is an appeal of Hittner's decision to revoke Stanford's bail, which his attorneys claim also violates his Constitutional rights.
Stanford has been in custody non-stop since the day he was indicted, June 18.
Stanford, indicted on 21 felony counts in an alleged $8 billion Ponzi scheme, has had a run of rulings against him by U.S. District Judge David Hittner. Hittner has revoked Stanford's bail, refused to move him to a jail closer to Houston, and denied his request to hire new attorneys.
Now, those attorneys are petitioning the Fifth Circuit Court of Appeals to remove Hittner from the case and reassign it to U.S. District Judge Vanessa Gilmore in Houston, who presided over an earlier Stanford case.
The petition centers on Hittner's ruling last week barring Houston attorney Michael Sydow from appearing for Stanford, and ordering that Sydow have "no further involvement" in the case.
Sydow had hoped to appear along with Washington attorney Robert Luskin to argue for the release of some of Stanford's funds to pay for a defense. But Hittner ruled that because Sydow had not received prior approval to appear, he should be barred from the case for good.
The petition says Hittner is denying Stanford's Constitutional right to the attorney of his choice, and Hittner should be removed from the case.
It's not the first time Stanford's attorneys have gone to the Court of Appeals over Hittner's rulings. Still pending is an appeal of Hittner's decision to revoke Stanford's bail, which his attorneys claim also violates his Constitutional rights.
Stanford has been in custody non-stop since the day he was indicted, June 18.
Lawyer wants 34% of money recovered in Stanford case
The attorney supposed to clean up what the government says was Texas businessman R. Allen Stanford's multibillion-dollar Ponzi scheme is managing to anger just about every party involved in the case.
The Securities and Exchange Commission and other stakeholders in the complicated and far-flung case say Dallas attorney Ralph Janvey, appointed by the court to track down billions of missing dollars, has instead become a rogue receiver who refuses to cooperate with the SEC.
"You know everyone in the courtroom is angry with you," said U.S. Judge David Godbey at a recent court hearing.
Stanford's attorneys say Janvey is "exceeding his authority." And John Little, the court-appointed examiner who represents the interests of jilted investors, said they feel Janvey's actions have been shocking and outrageous.
The latest flash point has been Janvey's demands for more than $27 million in fees for himself and the team of lawyers and consultants he hired to take over Stanford's business empire and track down the missing billions. The giant paycheck would come from the same pot of money he is amassing that is supposed to be divided among Stanford's allegedly defrauded investors.
The SEC has accused Stanford and some of his top company officials of running a $7 billion scheme by promising inflated returns to more than 20,000 investors on certificates of deposit at his bank in Antigua. Instead of investing the money, Stanford, who faces additional criminal charges in Houston, paid off old investors with deposits from new investors, according to the government.
Godbey has not ruled on Janvey's mid-May request for nearly $20 million, covering work through April 12. Nor has he ruled on Janvey's request last week for another $7.6 million to cover work for a seven-week period from mid-April to the end of May.
Janvey wants to pay himself and the more than 100 lawyers and consultants he has hired to work the case. But his requested share of the pie is 34% of the $81.1 million of cash on hand the receiver has under his control in a bank account, according to court records. While investors will be fortunate to get back just pennies on the dollar, the attorneys could walk away with millions.
Janvey is requesting nearly $800,000 in fees and expenses for his law firm. The bill also covers nearly $8.9 million in fees and expenses for the advisory firm FTI Consulting, and about $8.4 million for the law firm Baker Botts.
The SEC is fighting Janvey's bill, telling the judge it would be "inappropriate" to pay him the $1.1 million a week he asked for in a filing last week.
The agency complained that Janvey is employing too many high-priced lawyers, including nine partners at Baker Botts and six financial consultants from FTI Consulting who were charging at least $500 an hour. SEC lawyers also took issue with a bill from FTI charging $280 an hour for photocopying and creating shipping labels and binders.
Peter Henning, a professor at Wayne State University's law school and former SEC attorney, said Janvey is in a difficult spot because "these are not cheap cases."
"But there is a concern that it for firms becomes free billing," Henning said.
Securities experts say the relationship between receivers and the SEC is typically more cooperative than contentious. But the friction in this case led the agency, which recommended Janvey for appointment, to try to get a court order stripping him of some of his authority, a motion which was denied.
SEC lawyers acknowledged that they were unable to recall ever before trying to rein in a receiver.
"It is very unusual for there to be this level of conflict between the receiver and the SEC," said Kelly Crawford, a securities lawyer who four times has been a court-appointed receiver. "The SEC remains a watchdog for investors even after the receiver appointment, and if the SEC believes he is not acting in the best interests of investors by charging exorbitant fees ... they are going to step in."
SEC officials declined to publicly discuss their displeasure with Janvey. Rose Romero, the agency's regional director in Fort Worth, said only that the SEC's job is to "look out for the interests of the investors. As with all cases, we are aggressively carrying out this mission in the Stanford case."
For his part, Janvey replied in court papers that "skilled professional services are inherently costly." He said he and the firms he hired are working at a 20-percent discount.
At a recent court hearing, he said this was the first time in his career that he has been in a dispute with the SEC. He also pointed out that he does work for the SEC, but answers to the court.
Janvey's lawyer did not return a message left by the Associated Press. Through his PR firm, for which the receiver requested $165,000 in fees and expenses, Janvey pointed to court documents in which SEC attorney Kevin Edmundson discussed an inability to work out areas of disagreement, but added that "We still want the receiver. We still support the receiver."
One of the impasses is over whether Janvey is targeting innocent investors by going after their original investments in CDs at Stanford's bank in Antigua, as the SEC believes. Janvey has filed lawsuits for $925 million that he is trying to recover from 650 investors and former financial advisers — a move known as a "clawback." The SEC said many of those investors are innocent victims.
Janvey said he is trying to increase the pot of money and make everyone share equally in the losses.
But securities lawyers and the SEC say such a tactic victimizes investors a second time. Last month, Godbey ruled against Janvey, who has taken the issue of whether he can claw back principal to a federal appeals court. Experts in securities law said Janvey's strategy is unusual and unfair.
"To go after principal is just enlarging the number of victims unnecessarily and unwisely," Crawford said.
In addition to the civil case against Stanford in Dallas, he and four executives of his now defunct Stanford Financial Group are accused of orchestrating the massive Ponzi scheme in a criminal indictment in Houston. Investigators said Stanford secretly diverted more than $1.6 billion in investor funds as personal loans to himself.
Stanford and executives Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt pleaded not guilty to various criminal charges in Houston, including wire and mail fraud, in a 21-count indictment issued June 18. The three Stanford executives are free on bond while Stanford himself remains jailed in the Houston area.
James Davis, ex-chief financial officer for Stanford's business empire, has been cooperating with prosecutors and is free on bond.
The Securities and Exchange Commission and other stakeholders in the complicated and far-flung case say Dallas attorney Ralph Janvey, appointed by the court to track down billions of missing dollars, has instead become a rogue receiver who refuses to cooperate with the SEC.
"You know everyone in the courtroom is angry with you," said U.S. Judge David Godbey at a recent court hearing.
Stanford's attorneys say Janvey is "exceeding his authority." And John Little, the court-appointed examiner who represents the interests of jilted investors, said they feel Janvey's actions have been shocking and outrageous.
The latest flash point has been Janvey's demands for more than $27 million in fees for himself and the team of lawyers and consultants he hired to take over Stanford's business empire and track down the missing billions. The giant paycheck would come from the same pot of money he is amassing that is supposed to be divided among Stanford's allegedly defrauded investors.
The SEC has accused Stanford and some of his top company officials of running a $7 billion scheme by promising inflated returns to more than 20,000 investors on certificates of deposit at his bank in Antigua. Instead of investing the money, Stanford, who faces additional criminal charges in Houston, paid off old investors with deposits from new investors, according to the government.
Godbey has not ruled on Janvey's mid-May request for nearly $20 million, covering work through April 12. Nor has he ruled on Janvey's request last week for another $7.6 million to cover work for a seven-week period from mid-April to the end of May.
Janvey wants to pay himself and the more than 100 lawyers and consultants he has hired to work the case. But his requested share of the pie is 34% of the $81.1 million of cash on hand the receiver has under his control in a bank account, according to court records. While investors will be fortunate to get back just pennies on the dollar, the attorneys could walk away with millions.
Janvey is requesting nearly $800,000 in fees and expenses for his law firm. The bill also covers nearly $8.9 million in fees and expenses for the advisory firm FTI Consulting, and about $8.4 million for the law firm Baker Botts.
The SEC is fighting Janvey's bill, telling the judge it would be "inappropriate" to pay him the $1.1 million a week he asked for in a filing last week.
The agency complained that Janvey is employing too many high-priced lawyers, including nine partners at Baker Botts and six financial consultants from FTI Consulting who were charging at least $500 an hour. SEC lawyers also took issue with a bill from FTI charging $280 an hour for photocopying and creating shipping labels and binders.
Peter Henning, a professor at Wayne State University's law school and former SEC attorney, said Janvey is in a difficult spot because "these are not cheap cases."
"But there is a concern that it for firms becomes free billing," Henning said.
Securities experts say the relationship between receivers and the SEC is typically more cooperative than contentious. But the friction in this case led the agency, which recommended Janvey for appointment, to try to get a court order stripping him of some of his authority, a motion which was denied.
SEC lawyers acknowledged that they were unable to recall ever before trying to rein in a receiver.
"It is very unusual for there to be this level of conflict between the receiver and the SEC," said Kelly Crawford, a securities lawyer who four times has been a court-appointed receiver. "The SEC remains a watchdog for investors even after the receiver appointment, and if the SEC believes he is not acting in the best interests of investors by charging exorbitant fees ... they are going to step in."
SEC officials declined to publicly discuss their displeasure with Janvey. Rose Romero, the agency's regional director in Fort Worth, said only that the SEC's job is to "look out for the interests of the investors. As with all cases, we are aggressively carrying out this mission in the Stanford case."
For his part, Janvey replied in court papers that "skilled professional services are inherently costly." He said he and the firms he hired are working at a 20-percent discount.
At a recent court hearing, he said this was the first time in his career that he has been in a dispute with the SEC. He also pointed out that he does work for the SEC, but answers to the court.
Janvey's lawyer did not return a message left by the Associated Press. Through his PR firm, for which the receiver requested $165,000 in fees and expenses, Janvey pointed to court documents in which SEC attorney Kevin Edmundson discussed an inability to work out areas of disagreement, but added that "We still want the receiver. We still support the receiver."
One of the impasses is over whether Janvey is targeting innocent investors by going after their original investments in CDs at Stanford's bank in Antigua, as the SEC believes. Janvey has filed lawsuits for $925 million that he is trying to recover from 650 investors and former financial advisers — a move known as a "clawback." The SEC said many of those investors are innocent victims.
Janvey said he is trying to increase the pot of money and make everyone share equally in the losses.
But securities lawyers and the SEC say such a tactic victimizes investors a second time. Last month, Godbey ruled against Janvey, who has taken the issue of whether he can claw back principal to a federal appeals court. Experts in securities law said Janvey's strategy is unusual and unfair.
"To go after principal is just enlarging the number of victims unnecessarily and unwisely," Crawford said.
In addition to the civil case against Stanford in Dallas, he and four executives of his now defunct Stanford Financial Group are accused of orchestrating the massive Ponzi scheme in a criminal indictment in Houston. Investigators said Stanford secretly diverted more than $1.6 billion in investor funds as personal loans to himself.
Stanford and executives Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt pleaded not guilty to various criminal charges in Houston, including wire and mail fraud, in a 21-count indictment issued June 18. The three Stanford executives are free on bond while Stanford himself remains jailed in the Houston area.
James Davis, ex-chief financial officer for Stanford's business empire, has been cooperating with prosecutors and is free on bond.
Friday 14 August 2009
Stanford Receiver Faults Home Sale by Financier’s Ex-Girlfriend
R. Allen Stanford’s court-appointed receiver asked a judge to sanction a Florida woman, who uses the Texas financier’s name and has two out-of-wedlock children by him, for selling a mansion the receiver hoped to seize to repay investors.
Stanford receiver Ralph Janvey said he wants U.S. District Judge David Godbey to find Rebecca Reeves-Stanford and her Florida attorneys in contempt for selling a $3 million house in May, after she learned Stanford’s assets were being sought to repay investors allegedly swindled in a $7 billion Ponzi scheme.
Reeves-Stanford, a resident of Key Biscayne, near Miami, is “one of several ‘outside wives’ with whom Stanford had an ongoing relationship” for “nearly two decades,” Kevin Sadler, Janvey’s attorney, said in court papers filed yesterday in federal court in Dallas.
Reeves-Stanford’s newest lawyer, Bradford M. Cohen of Fort Lauderdale, Florida, said Janvey won’t succeed in having his client or her previous attorneys found in contempt.
“The freeze order affects third parties who received something without consideration, and Rebecca Reeves-Stanford never received anything without consideration,” Cohen said in a phone interview. “She has two children by Allen Stanford.”
Cohen also said the house was in Reeves-Stanford’s name before she sold it.
2005 Purchase
Sadler said Reeves-Stanford’s attorney confirmed that Stanford paid $1.4 million of the Florida property’s 2005 purchase price.
“Indeed, the amount is likely far higher as Reeves- Stanford has no other apparent means of support beyond the ill- gotten funds Stanford lavished on her,” Sadler said in the filing. He also claimed Reeves-Stanford transferred the sale proceeds to an offshore account in the Cook Islands, in an attempt to keep the money out of Janvey’s hands.
Janvey, a Dallas securities lawyer, has been marshalling Stanford’s corporate and personal assets since the U.S. Securities and Exchange Commission sued the financier on Feb. 17. The SEC accuses Stanford of diverting as much as $1.6 billion from bogus certificates of deposit sold by Antigua- based Stanford International Bank Ltd. to fund a lifestyle that included multiple homes, a fleet of jets, a yacht and a private Caribbean island.
205th-Richest American
Stanford, who was ranked the 205th-richest American in 2008 by Forbes magazine, denies all wrongdoing and has been in jail without bond since he was arrested at the home of his fiancée, Andrea Stoelker, on June 18. He faces 21 criminal counts that mirror the SEC claims and may spend the rest of his life in prison if convicted of the most serious charges.
Stanford and Stoelker moved into a rented high-rise condominium in Houston’s museum district in April, after they were locked out of his apartments in Houston, Miami, Antigua and St. Croix by the February court order freezing his assets. A friend prepaid the $36,000 annual rent on the unit, which is located near the offices of Stanford’s Houston lawyer.
The receiver also has made property claims against Stanford’s estranged wife, Susan.
This month, Janvey asked Godbey to find Susan Stanford and the couple’s 26-year-old daughter, Randi, in contempt for refusing to cooperate with efforts to sell the $1.3 million Houston condominium that has been the daughter’s residence for several years. Janvey asked Godbey’s permission to evict the women immediately, although he had previously offered to let them live in the 2,803-square-foot unit in Houston’s River Oaks neighborhood until it was sold.
Randi Stanford
Randi Stanford’s lawyer yesterday submitted a copy of the initial check for $20,000 she claims to have used to buy the condominium in 2006, as part of a filing urging the judge to reject Janvey’s request to evict her.
Janvey also listed Susan Stanford’s residence, a $2.4 million, 7,000-square-foot Mediterranean-style mansion in Houston’s Tanglewood neighborhood, as one of the properties he hopes to sell to repay defrauded investors.
Susan Stanford, Allen’s wife of more than 33 years, began divorce proceedings in November 2007. The couple has been separated for 10 years, according to Bucky Allshouse, Stanford’s Texas divorce lawyer. She has offered to testify against him in the SEC case, and in February filed court papers indicating the former billionaire was already $250,000 in arrears on her $100,000 monthly court-ordered support payments.
Six Children
Allen Stanford told Bloomberg News in April that he has six children, ranging in age from 12 to 26 years old. At least four of these children, accompanied by their mothers, attended his June 25 arraignment in Houston federal court.
Stanford’s extended family crowded into two rows at the front of the courtroom gallery that day, where Stanford occasionally flashed the children a smile or a thumbs-up gesture. The ex-girlfriends greeted one another cordially, and the children exchanged hugs with one another and with Stanford’s 31-year-old fiancée, Andrea.
Louise Sage-Stanford, who said in a March 2008 Florida paternity filing that Allen Stanford paid more than $850,000 a year in housing, food and education costs for their two children, was among the extended family members attending his June arraignment. Sage-Stanford and her two children have since moved to Houston, where they’ve rented a condominium in the same building as Stanford and his fiancée, according to court papers.
Two Previous Lawyers
Janvey is asking that Reeves-Stanford’s two previous lawyers -- Melida Viera and John Priovolos, both of Miami -- be held in contempt for allegedly facilitating her sale of the property and movement of the proceeds to an offshore account. Priovolos declined to comment. Viera couldn’t be reached for comment after regular business hours yesterday.
Kevin Callahan, an SEC spokesman, and Stanford’s criminal- defense lawyer, Dick DeGuerin, declined to comment on Janvey’s filing.
The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston).
Stanford receiver Ralph Janvey said he wants U.S. District Judge David Godbey to find Rebecca Reeves-Stanford and her Florida attorneys in contempt for selling a $3 million house in May, after she learned Stanford’s assets were being sought to repay investors allegedly swindled in a $7 billion Ponzi scheme.
Reeves-Stanford, a resident of Key Biscayne, near Miami, is “one of several ‘outside wives’ with whom Stanford had an ongoing relationship” for “nearly two decades,” Kevin Sadler, Janvey’s attorney, said in court papers filed yesterday in federal court in Dallas.
Reeves-Stanford’s newest lawyer, Bradford M. Cohen of Fort Lauderdale, Florida, said Janvey won’t succeed in having his client or her previous attorneys found in contempt.
“The freeze order affects third parties who received something without consideration, and Rebecca Reeves-Stanford never received anything without consideration,” Cohen said in a phone interview. “She has two children by Allen Stanford.”
Cohen also said the house was in Reeves-Stanford’s name before she sold it.
2005 Purchase
Sadler said Reeves-Stanford’s attorney confirmed that Stanford paid $1.4 million of the Florida property’s 2005 purchase price.
“Indeed, the amount is likely far higher as Reeves- Stanford has no other apparent means of support beyond the ill- gotten funds Stanford lavished on her,” Sadler said in the filing. He also claimed Reeves-Stanford transferred the sale proceeds to an offshore account in the Cook Islands, in an attempt to keep the money out of Janvey’s hands.
Janvey, a Dallas securities lawyer, has been marshalling Stanford’s corporate and personal assets since the U.S. Securities and Exchange Commission sued the financier on Feb. 17. The SEC accuses Stanford of diverting as much as $1.6 billion from bogus certificates of deposit sold by Antigua- based Stanford International Bank Ltd. to fund a lifestyle that included multiple homes, a fleet of jets, a yacht and a private Caribbean island.
205th-Richest American
Stanford, who was ranked the 205th-richest American in 2008 by Forbes magazine, denies all wrongdoing and has been in jail without bond since he was arrested at the home of his fiancée, Andrea Stoelker, on June 18. He faces 21 criminal counts that mirror the SEC claims and may spend the rest of his life in prison if convicted of the most serious charges.
Stanford and Stoelker moved into a rented high-rise condominium in Houston’s museum district in April, after they were locked out of his apartments in Houston, Miami, Antigua and St. Croix by the February court order freezing his assets. A friend prepaid the $36,000 annual rent on the unit, which is located near the offices of Stanford’s Houston lawyer.
The receiver also has made property claims against Stanford’s estranged wife, Susan.
This month, Janvey asked Godbey to find Susan Stanford and the couple’s 26-year-old daughter, Randi, in contempt for refusing to cooperate with efforts to sell the $1.3 million Houston condominium that has been the daughter’s residence for several years. Janvey asked Godbey’s permission to evict the women immediately, although he had previously offered to let them live in the 2,803-square-foot unit in Houston’s River Oaks neighborhood until it was sold.
Randi Stanford
Randi Stanford’s lawyer yesterday submitted a copy of the initial check for $20,000 she claims to have used to buy the condominium in 2006, as part of a filing urging the judge to reject Janvey’s request to evict her.
Janvey also listed Susan Stanford’s residence, a $2.4 million, 7,000-square-foot Mediterranean-style mansion in Houston’s Tanglewood neighborhood, as one of the properties he hopes to sell to repay defrauded investors.
Susan Stanford, Allen’s wife of more than 33 years, began divorce proceedings in November 2007. The couple has been separated for 10 years, according to Bucky Allshouse, Stanford’s Texas divorce lawyer. She has offered to testify against him in the SEC case, and in February filed court papers indicating the former billionaire was already $250,000 in arrears on her $100,000 monthly court-ordered support payments.
Six Children
Allen Stanford told Bloomberg News in April that he has six children, ranging in age from 12 to 26 years old. At least four of these children, accompanied by their mothers, attended his June 25 arraignment in Houston federal court.
Stanford’s extended family crowded into two rows at the front of the courtroom gallery that day, where Stanford occasionally flashed the children a smile or a thumbs-up gesture. The ex-girlfriends greeted one another cordially, and the children exchanged hugs with one another and with Stanford’s 31-year-old fiancée, Andrea.
Louise Sage-Stanford, who said in a March 2008 Florida paternity filing that Allen Stanford paid more than $850,000 a year in housing, food and education costs for their two children, was among the extended family members attending his June arraignment. Sage-Stanford and her two children have since moved to Houston, where they’ve rented a condominium in the same building as Stanford and his fiancée, according to court papers.
Two Previous Lawyers
Janvey is asking that Reeves-Stanford’s two previous lawyers -- Melida Viera and John Priovolos, both of Miami -- be held in contempt for allegedly facilitating her sale of the property and movement of the proceeds to an offshore account. Priovolos declined to comment. Viera couldn’t be reached for comment after regular business hours yesterday.
Kevin Callahan, an SEC spokesman, and Stanford’s criminal- defense lawyer, Dick DeGuerin, declined to comment on Janvey’s filing.
The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston).
Monday 10 August 2009
Stanford Political Contributions Trickle Back In
Sir Allen Stanford during his heyday, splashed out at least $5 million on lobbying expenditures and campaign contributions to several U.S. lawmakers. But so far, only $87,800 of that contribution has been returned.
Stanford gave $95,000 alone to the 527 groups of then-Senate Majority Leader Tom Daschle, then-House Democratic Caucus Chairman Martin Frost, and then-Senate Minority Leader Trent Lott ($5,000). Stanford also gave an additional $100,000 to the Bush Inaugural Committee - as the new administration prepared its own money laundering strategy. He also donated thousands to the Republican National Committee.
DeLay was among the largest recipients of Stanford's largesse. DeLay's committees paid for flights on Stanford's jets at least 16 times since 2003, including on Oct. 20, the day the former House majority leader was booked in a Houston courthouse on money-laundering charges,` according to Bloomberg News.
But so far a listing of funds returned as disclosed by receiver Ralph Janvey, shows that Senator Chris Dodd was among the biggest returnees of funds.
He returned over $27,000 received by `Friends For Chris Dodd,` and `Chris Dodd For President.`
The second largest returnee was ` Shelby for US Senate,` at $14,000 and Friends of Jay Rockefeller and Friends of John Boehner, at $5,000 each.
Stanford, accused by the US Securities and Exchange Commission (SEC) of a multi-billion fraud, continued to give money to scores of members of Congress, as well as the Obama presidential campaign. He is now awaiting trial in a Texas jail as the receiver tries to obtain all monies spent in order to somehow pay back investors allegedly scammed.
Stanford gave $95,000 alone to the 527 groups of then-Senate Majority Leader Tom Daschle, then-House Democratic Caucus Chairman Martin Frost, and then-Senate Minority Leader Trent Lott ($5,000). Stanford also gave an additional $100,000 to the Bush Inaugural Committee - as the new administration prepared its own money laundering strategy. He also donated thousands to the Republican National Committee.
DeLay was among the largest recipients of Stanford's largesse. DeLay's committees paid for flights on Stanford's jets at least 16 times since 2003, including on Oct. 20, the day the former House majority leader was booked in a Houston courthouse on money-laundering charges,` according to Bloomberg News.
But so far a listing of funds returned as disclosed by receiver Ralph Janvey, shows that Senator Chris Dodd was among the biggest returnees of funds.
He returned over $27,000 received by `Friends For Chris Dodd,` and `Chris Dodd For President.`
The second largest returnee was ` Shelby for US Senate,` at $14,000 and Friends of Jay Rockefeller and Friends of John Boehner, at $5,000 each.
Stanford, accused by the US Securities and Exchange Commission (SEC) of a multi-billion fraud, continued to give money to scores of members of Congress, as well as the Obama presidential campaign. He is now awaiting trial in a Texas jail as the receiver tries to obtain all monies spent in order to somehow pay back investors allegedly scammed.
Sunday 9 August 2009
Florida regulators failed to stop Stanford's Miami operation
As Ecuadorean officials investigated questionable dealings from Allen Stanford's Miami office, Florida officials took no action.
Desperate to prop up Allen Stanford's financial empire, his Miami brokers jetted to South America with a sales pitch they said would deliver gold to investors: Invest in the Miami bank and reap spectacular returns.
There was just one catch: Stanford didn't have a bank in Miami.
When regulators in Ecuador caught wind of the scheme in 2005, they banned Stanford's employees from selling their prime investments and threatened legal action.
But in Florida, where Stanford's operation was rooted, regulators weren't even watching.
Florida investigators, in fact, were among the slowest in responding to the massive fraud that prosecutors say fleeced $7 billion from investors around the world -- most of the money now missing.
The crisis in Ecuador revealed major breakdowns in Florida's enforcement system at a time the Miami office was generating hundreds of millions a year for Stanford's questionable ventures, The Miami Herald found.
It exposed the office's heated campaign to recruit new clients -- and raise millions -- while breaking state banking laws.
And it shook the foundation of Stanford's financial network years before it was shut down by federal agents.
For years, brokers from the Miami office flew to Ecuador, cutting deals and sending the money to Stanford's Antiguan bank -- the records later shredded at the Miami office.
``They were breaking our laws,'' said Diego Garcés, a lead agent for the Ecuador agency that investigated the case.
The Miami center opened under a special arrangement with Florida regulators in 1998 as a foreign trust representative office -- the only one of its kind.
Because the unit was allowed to operate without any regulation -- including fraud checks -- there was no crackdown in Florida, records show.
By the time the criminal case broke open this year -- including Stanford's arrest in June -- the Miami office had generated nearly $1 billion.
Like many of Stanford's offices, the Miami center excelled in the sale of Stanford Group Company's key investment: certificates of deposit.
But to maintain the lucrative returns promised on the CDs, as much as 2 percent over competitors, Stanford needed a constant stream of money from new investors to pay off the earlier ones.
In 2005, he turned to the Miami office -- a luxury highrise adorned with expensive artwork -- to target new markets in South America.
Stanford had brokerages in South America, but there was an advantage with the Miami office: Agents promised customers the security of investing with a U.S. business.
Because Miami operated without oversight, employees were free to move in and out of countries to sell CDs without disclosing anything to regulators.
``They could do whatever they wanted to do,'' said Gonzalo Tirado, 39, president of Stanford's Venezuelan office. ``There was an astounding lack of controls.''
The sales blitz sparked cut-throat competition among the Stanford offices, prompting a flurry of angry phone calls between office managers.
``They terrorized customers,'' Tirado said. ``They told them, `Look, if you have your money in Venezuela, the government is going to know about it. If you have it in Miami, that's not going to happen.' ''
Miami brokers swept into Ecuador at least a dozen times in 2005, said Norta Llana, the Miami office administrator.
The battle with regulators in Ecuador started when officials got hold of one of Stanford's mailings. The letter not only boasted of the glowing returns on Stanford's CDs, but claimed the Miami office was a bank.
``They went crazy,'' said Steven Riger, 63, a vice president at the Miami office.
The letter said Stanford was the second largest bank in Ecuador -- a totally false claim.
Ecuador eventually banned Stanford brokers from selling CDs -- the main source of Stanford's income -- and expansion plans in Peru and Colombia were halted.
Word began to spread among regulators in other South American countries about Stanford's problems, Tirado said.
In the ensuing investigation, agents found the mailing was not only misleading, but Miami employees jetting to Ecuador were routinely breaking the law by taking deposits and leaving the country without reporting anything.
The probe sparked tense negotiations between Stanford's advisors and Ecuadorean regulators.
Riger, the former Stanford Miami executive, said several of Stanford's top brokers pleaded with him to find a way to keep the Ecuadorean business afloat.
``They were really shook up about this,'' Riger said. ``They were trying to save a book of business in Ecuador.''
While Ecuador's banking agency investigated Stanford, a second agency found the existing brokerages in Ecuador were reaping illegal commissions.
In December 2005, that agency imposed a $2,628 fine and declared most of Stanford's business practices illegal.
Garcés, the Ecuadorean agent, said Stanford's lawyers appealed the decision by the Superintendencia de Companias, but the order was upheld.
Despite the ban on CD sales, the Miami office continued to bombard residents with mailings and e-mails pushing the sales, said Santiago Noboa, a regulator who investigated Stanford.
``We couldn't stop the letters,'' he said.
In addition, the mailings -- sent to other South American countries -- spurred outrage in Stanford's foreign offices.
Tirado, who was dismissed by Stanford in a bitter employment dispute in late 2005, said he was alarmed because Miami brokers were not checking the backgrounds of customers.
He described a heated conversation with Miami office director Nelson Ramirez: ``I called Nelson and told him, `Don't do that, grow only by referral. You don't know who you're sending mail to. Be careful. If you open an account for a politically exposed person or money launderer, you will get in trouble.' ''
Ramirez did not respond to repeated requests for an interview.
Eventually, regulators let Stanford resume his business in Ecuador without further sanctions while Colombia let Stanford open his brokerage the following year.
Throughout the crisis, the company dodged U.S. regulators.
Under federal law, firms that get into trouble selling securities overseas must report the problems on their regulatory records. But Stanford's brokerage failed to disclose the crackdown, and the Miami office -- running without any regulatory controls -- did not have to file anything. ``It was a black hole,'' said Mark Raymond, a Miami lawyer representing investors.
Several securities lawyers said such disclosures often spark investigations by regulators in this country.
But nothing happened in Florida.
Linda Charity, acting commissioner of Florida's Office of Financial Regulation, said the state's authority was restricted by the agreement it struck with Stanford a decade ago. ``We really couldn't do anything,'' she said.
But under the law, state agents are empowered to probe any company they believe is violating banking and securities statutes.
During a key visit by Florida examiners in 2005 -- while Stanford was under investigation in Ecuador -- agents found employees shipping checks to Antigua, marked as deposits, and shredding the records left behind. No investigations were launched.
Under Florida statute 655, only licensed companies can take deposits, and anyone violating the law is subject to a felony charge.
``The state had the right to go in there,'' Raymond said. ``As soon as it saw what was going on, it should have issued a subpoena.''
Charity said the state began probing the office after a 2007 visit turned up ``red flags,'' but her agency took no enforcement action. She declined to give details of the visit.
Jonathan Winer, a former U.S. deputy assistant secretary of state, said the breakdowns began when Florida struck the deal with Stanford in 1998.
Once in charge of money laundering investigations in the Caribbean, Winer said he remembers when the agreement was reached.
``At the time, I was totally perplexed. I wasn't in the business of questioning state regulators. I presumed they knew what they were doing,'' he said. ``I am disgusted that the state of Florida let this happen.''
Raymond said the events in Ecuador offer a stark contrast in regulatory actions. ``Their regulators did what we didn't do,'' he said. ``We supposedly are the gem of banking regulatory systems, but in the end, we dropped the ball.''
Desperate to prop up Allen Stanford's financial empire, his Miami brokers jetted to South America with a sales pitch they said would deliver gold to investors: Invest in the Miami bank and reap spectacular returns.
There was just one catch: Stanford didn't have a bank in Miami.
When regulators in Ecuador caught wind of the scheme in 2005, they banned Stanford's employees from selling their prime investments and threatened legal action.
But in Florida, where Stanford's operation was rooted, regulators weren't even watching.
Florida investigators, in fact, were among the slowest in responding to the massive fraud that prosecutors say fleeced $7 billion from investors around the world -- most of the money now missing.
The crisis in Ecuador revealed major breakdowns in Florida's enforcement system at a time the Miami office was generating hundreds of millions a year for Stanford's questionable ventures, The Miami Herald found.
It exposed the office's heated campaign to recruit new clients -- and raise millions -- while breaking state banking laws.
And it shook the foundation of Stanford's financial network years before it was shut down by federal agents.
For years, brokers from the Miami office flew to Ecuador, cutting deals and sending the money to Stanford's Antiguan bank -- the records later shredded at the Miami office.
``They were breaking our laws,'' said Diego Garcés, a lead agent for the Ecuador agency that investigated the case.
The Miami center opened under a special arrangement with Florida regulators in 1998 as a foreign trust representative office -- the only one of its kind.
Because the unit was allowed to operate without any regulation -- including fraud checks -- there was no crackdown in Florida, records show.
By the time the criminal case broke open this year -- including Stanford's arrest in June -- the Miami office had generated nearly $1 billion.
Like many of Stanford's offices, the Miami center excelled in the sale of Stanford Group Company's key investment: certificates of deposit.
But to maintain the lucrative returns promised on the CDs, as much as 2 percent over competitors, Stanford needed a constant stream of money from new investors to pay off the earlier ones.
In 2005, he turned to the Miami office -- a luxury highrise adorned with expensive artwork -- to target new markets in South America.
Stanford had brokerages in South America, but there was an advantage with the Miami office: Agents promised customers the security of investing with a U.S. business.
Because Miami operated without oversight, employees were free to move in and out of countries to sell CDs without disclosing anything to regulators.
``They could do whatever they wanted to do,'' said Gonzalo Tirado, 39, president of Stanford's Venezuelan office. ``There was an astounding lack of controls.''
The sales blitz sparked cut-throat competition among the Stanford offices, prompting a flurry of angry phone calls between office managers.
``They terrorized customers,'' Tirado said. ``They told them, `Look, if you have your money in Venezuela, the government is going to know about it. If you have it in Miami, that's not going to happen.' ''
Miami brokers swept into Ecuador at least a dozen times in 2005, said Norta Llana, the Miami office administrator.
The battle with regulators in Ecuador started when officials got hold of one of Stanford's mailings. The letter not only boasted of the glowing returns on Stanford's CDs, but claimed the Miami office was a bank.
``They went crazy,'' said Steven Riger, 63, a vice president at the Miami office.
The letter said Stanford was the second largest bank in Ecuador -- a totally false claim.
Ecuador eventually banned Stanford brokers from selling CDs -- the main source of Stanford's income -- and expansion plans in Peru and Colombia were halted.
Word began to spread among regulators in other South American countries about Stanford's problems, Tirado said.
In the ensuing investigation, agents found the mailing was not only misleading, but Miami employees jetting to Ecuador were routinely breaking the law by taking deposits and leaving the country without reporting anything.
The probe sparked tense negotiations between Stanford's advisors and Ecuadorean regulators.
Riger, the former Stanford Miami executive, said several of Stanford's top brokers pleaded with him to find a way to keep the Ecuadorean business afloat.
``They were really shook up about this,'' Riger said. ``They were trying to save a book of business in Ecuador.''
While Ecuador's banking agency investigated Stanford, a second agency found the existing brokerages in Ecuador were reaping illegal commissions.
In December 2005, that agency imposed a $2,628 fine and declared most of Stanford's business practices illegal.
Garcés, the Ecuadorean agent, said Stanford's lawyers appealed the decision by the Superintendencia de Companias, but the order was upheld.
Despite the ban on CD sales, the Miami office continued to bombard residents with mailings and e-mails pushing the sales, said Santiago Noboa, a regulator who investigated Stanford.
``We couldn't stop the letters,'' he said.
In addition, the mailings -- sent to other South American countries -- spurred outrage in Stanford's foreign offices.
Tirado, who was dismissed by Stanford in a bitter employment dispute in late 2005, said he was alarmed because Miami brokers were not checking the backgrounds of customers.
He described a heated conversation with Miami office director Nelson Ramirez: ``I called Nelson and told him, `Don't do that, grow only by referral. You don't know who you're sending mail to. Be careful. If you open an account for a politically exposed person or money launderer, you will get in trouble.' ''
Ramirez did not respond to repeated requests for an interview.
Eventually, regulators let Stanford resume his business in Ecuador without further sanctions while Colombia let Stanford open his brokerage the following year.
Throughout the crisis, the company dodged U.S. regulators.
Under federal law, firms that get into trouble selling securities overseas must report the problems on their regulatory records. But Stanford's brokerage failed to disclose the crackdown, and the Miami office -- running without any regulatory controls -- did not have to file anything. ``It was a black hole,'' said Mark Raymond, a Miami lawyer representing investors.
Several securities lawyers said such disclosures often spark investigations by regulators in this country.
But nothing happened in Florida.
Linda Charity, acting commissioner of Florida's Office of Financial Regulation, said the state's authority was restricted by the agreement it struck with Stanford a decade ago. ``We really couldn't do anything,'' she said.
But under the law, state agents are empowered to probe any company they believe is violating banking and securities statutes.
During a key visit by Florida examiners in 2005 -- while Stanford was under investigation in Ecuador -- agents found employees shipping checks to Antigua, marked as deposits, and shredding the records left behind. No investigations were launched.
Under Florida statute 655, only licensed companies can take deposits, and anyone violating the law is subject to a felony charge.
``The state had the right to go in there,'' Raymond said. ``As soon as it saw what was going on, it should have issued a subpoena.''
Charity said the state began probing the office after a 2007 visit turned up ``red flags,'' but her agency took no enforcement action. She declined to give details of the visit.
Jonathan Winer, a former U.S. deputy assistant secretary of state, said the breakdowns began when Florida struck the deal with Stanford in 1998.
Once in charge of money laundering investigations in the Caribbean, Winer said he remembers when the agreement was reached.
``At the time, I was totally perplexed. I wasn't in the business of questioning state regulators. I presumed they knew what they were doing,'' he said. ``I am disgusted that the state of Florida let this happen.''
Raymond said the events in Ecuador offer a stark contrast in regulatory actions. ``Their regulators did what we didn't do,'' he said. ``We supposedly are the gem of banking regulatory systems, but in the end, we dropped the ball.''
Friday 7 August 2009
McChesney Emanuel's Letter to Hillary Clinton in December 2003 regarding Stanfords Illegal Practices in Antigua
Antigua and Barbuda Justice Movement
C/O McChesney Emanuel
P.O. Box 377
Bronx, NY 10466
Principal of St. Pius V Elementary School
413 East 144th Street,
Bronx, NY 10454
Pbone: 718-665-5075 Cell: 914-469-2612
Email: b257@adnschools.org
Email: macbritney@optionline.net
Senator Hillary Clinton
476 Russell Senate Office Building
Washington D.C. 20510-3204
December 18, 2003
Re: Antigua & Barbuda - Request for Inquiry of Violation of the Foreign Corrupt Practices Act by a US-Based Company.
Dear Senator Clinton:
I am writing to let you know that I appreciate the work you are doing on behalf of the people of New York. You doing a superior job in the US Senate is merely a continuation of the superior job you did when you were First Lady. You can rest assured that this constituent stands ready to help you in what ever way I can so that you can continue to work in the US Senate on behalf of this State in general and on behalf of this District in particular.
The other purpose of this communication is to bring to your attention a matter that has national and international implications. It is a personal issue for me because although I have been a US citizen for nearly 20 years, the matter touches and concerns the place of my birth - the tiny Island Nation of Antigua & Barbuda. I am requesting that your office make an urgent and appropriate inquiry to determine whether there bas been a violation of the Foreign Corrupt Practices Act of 1977 (“FCP A") by a US-based business operating in Antigua & Barbuda, and determine whether or not enforcement action is warranted by the US Department of Justice.
Antigua & Barbuda is a twin-island nation with the seat of government in Antigua. The matters referred to herein relate to events in the Island of Antigua only. The people of Antigua, including expatriates like myself, are in an uproar over widespread reports that certain Antigua government officials are soliciting and accepting large sums of money in bribery payments from a Texas businessman named R. Allen Stanford in order to allow Mr. Stanford to obtain and retain business in Antigua on behalf of Stanford Financial Group ("SFG") of Houston, Texas.
SFG, operates an international network of financial entities in the US, Antigua, Aruba, Ecuador, Mexico, Switzerland and Venezuela. It is an international banking concern that as of April 2003 has $17 billion under management. At least four of SFG's enterprises are located in Antigua:
1. Stanford Trust Company: Through “trust arrangements" this entity offers private banking~ financial planning, brokerage services and insurance to its clients.
2. Stanford International Bank Ltd.: This entity has its "head office" in Antigua. Presumably because Antigua has strict .laws protecting private financial information; and it employs a "sophisticated internal security system" to protect electronic data.
3. Bank of Antigua Ltd.: This entity is classified as a leading commercial. bank in the Eastern Caribbean that caters primarily to international business people and visitors to Antigua arriving by cruise ships.
4. Stanford Development Company, Ltd. This entity apparently is involved in real estate development.
All four of these entities are located adjacent to the International Airport in Antigua (aka, V.C. Bird International airport). You should note that an international businessperson wanting to do business with any of these entities is able to fly nonstop from Antigua to New York, London, Miami, Toronto, Zurich, Caracas, Newark, Frankfurt and San Juan.
As an aside: You should also note that in 2001 the US State Department described Antigua as one of the “Primary Concern" jurisdictions for money laundering. (See Excerpts from State Department's 2001 report “Money Laundering and Financial Crimes"). While I am not accusing Mr. Stanford of engaging in monney laundering in view of Antigua's history with this activity, there is concern as to whether or not such activity could be effectively monitored given Antigua’s strict" privacy laws for financial transactions which is One of the selling-points used by Stanford International Bank Ltd, in its advertisements.
In the past few years, there have been a number of transactions between the government of Antigua and Mr. Stanford that are of questionable legality. In addition to the local media, independent news agencies such as the Wall Street Journal and the BBC have widely reported on corruption by public officials and the widespread disaffection of the people of Antigua. However, the most recent uproar came about when in October 2003 Mr. Stanford paid two government officials ED$100,000.00 each while they were negotiating a multi-million dollar land exchange deal with Mr. Stanford on behalf of the government of Antigua. The two government officials, Messrs. Gaston Brown and Molwyn Joseph, happen to be ministers of the Antigua & Barbuda Parliament. As such they exert substantial influence over the government and the enactment of Parliament. Mr. Stanford also paid EC$500,000.00 to the ruling Antigua Labor Party (ALP) headed by Mr. Lester Bird at about the same time. In addition, despite public condemnation, Mr. Stanford gave Messrs. Brown and Joseph an additional bribe of $400,000.00 dollars November 26, 2003. The land exchange deal involved the acquisition of land upon which the Antigua General Post Office is located. This piece of real estate just happens to be located near where the cruise ships dock in St. Johns, the capital city; and it is land upon which Mr. Stanford intends to erect a financial center.
Mr. Stanford's conduct appears to be in violation of the FCP A. Under the FCP A it is unlawful to bribe a foreign government official to obtain or retain business. The anti-bribery provisions of the Act make it unlawful for a firm, or an officer, employee or agent of the firm, to offer, pay, promise to pay any foreign official for the purpose of obtaining or retaining business for or with or directing business to any person. In this instance it appears that the payment to members of the Antigua Parliament with whom Mr. Stanford was negotiating was a bribe for their vote in favor of the land exchange. Mr. Stanford became a citizen of Antigua in 1999. However, questions have been raised about the validity of his citizenship and whether he has actually renounced his US citizenship, a pre-requisite for Antigua & Barbuda citizenship. As I understand the act, Mr. Stanford’s Antigua-Barbuda citizenship does not provide any immunity from prosecution under the FCPA. Mr Stanford is the chief executive officer of SFG, an entity based in the US.
This is a brief overview of what I believe is illegal conduct by a United States-based business in a foreign jurisdiction and it is conduct that warrants the attention of the United States government. I have a particular interest in Antigua because it is my ancestral home. Its government is being purchased by Mr. Stanford, with the active participation of corrupt government officials, in order to assure that SFG's business entities obtain and retain business in Antigua. Indeed, according to the Wall Street Journal of March 5, 200l Antigua is the "personal fief of R. Allen Stanford, a Texas developer and international banker." There is an abundance of published information about Mr. Stanford's relationship to the tiny Island Nation and the corrupt activities by certain members of the ruling ALP. However, I believe that Mr. Stanford should not be allowed to continue violating the FCPA.
Right now there is both a political and an economic crisis in Antigua and Barbuda. News reports suggest that things are at a boiling point because the people are angry and they resent the fact that Mr. Stanford is using money to bribe government officials and to exert a corrupting influence over the government of Antigua and Barbuda in order to maintain and retain business in this nation for himself and for SFG. The US Congress has shown, by its enactment of FCPA and the various amendments to the Act, that it takes this issue of bribery and corruption seriously. Indeed the amendments of 1988 and 1998 were designed to bring the Act in compliance with the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "Convention}. As you know, the Convention was signed by the twenty-nine countries, including the United States, that are members of the Organization for Economic Cooperation and Development (the "OECD") and five non-members collectively referred to as the "OECD Convention.” That Convention was ratified by the Congress and signed by President Clinton in 1998. (See S.237SJ Pub. L. 105-366 (November 10,1999).
Antigua & Barbuda is a tiny nation (Population 70,000). It appears that by paying bribes to the government officials, the County is being used as a convenient place for a US-based business with huge amounts of resources to conduct international business and escape the scrutiny of the FCPA. I will appreciate any help your office can provide in exposing this matter. If warranted, the Department of Justice should be asked to take appropriate action to enjoin SFG and Mr. Stanford from further violations of the FCP A. I believe meaningful action on the part of the Department of Justice pursuant to the enactment of Congress will discourage other businesses from violating the Act.
I will be happy to meet with you or your staff to discuss this matter in greater detail. I will also be willing to make appropriate arrangements for your office to confer with persons from Antigua who are familiar with the facts and will be able to provide additional information about this matter. Because of the nature of this issue, I am forwarding a courtesy copy of this letter to the entire New York delegation.
Please feel free to call me if you have any questions. Thanks for your assistance in this matter, and please keep up the good work.
Sincerely,
McChesney E.manuel
Cc: Rep. Tim Bishop
Rep. Steve Israel
Rep. Peter King
Rep. Carolyn McCarthy
Rep- Gary Ackerman
Rep. Gregory Meeks
Rep. Joseph Crowley
Rep. Jerrold Nadler
Rep. Anthony Weiner
Rep. Edolphus Towns
Rep. Major Owens
Rep. Nydia Velazquez
Rep. Vito FosseUa
Rep. Carolyn Maloney
Rep- Charles Rangel
Rep. Jose Serrano
Rep. Eliot Engel
Rep. Nita Lowey
Rep. Sue Kelly
Rep. John Sweeney
Rep. Michael McNulty
Rep. Maurice Hinchey
Rep. John McHugh
Rep. Sherwood Boehlert
Rep- James Walsh
Rep. Thomas Reynolds
Rep. Jack Quinn
Rep. Louise McIntosh Slaughter
Rep. Amory Houghton
===================================================================================
Follow up Letter January 16th 2004
From: Mr. McChesney Emanuel
Please note that a copy of this letter was sent to Congressman Meeks and Mr. Meeks is aware of the investigation of Mr. Allan Stanford, yet be has decided to accept a free: trip from Mr. Stanford to Antigua.
The Antigua and Barbuda Justice Movement will ask the Congressional Committee to take a look at Mr. Meeks action.
McChesney Emanuel 1/16/04
C/O McChesney Emanuel
P.O. Box 377
Bronx, NY 10466
Principal of St. Pius V Elementary School
413 East 144th Street,
Bronx, NY 10454
Pbone: 718-665-5075 Cell: 914-469-2612
Email: b257@adnschools.org
Email: macbritney@optionline.net
Senator Hillary Clinton
476 Russell Senate Office Building
Washington D.C. 20510-3204
December 18, 2003
Re: Antigua & Barbuda - Request for Inquiry of Violation of the Foreign Corrupt Practices Act by a US-Based Company.
Dear Senator Clinton:
I am writing to let you know that I appreciate the work you are doing on behalf of the people of New York. You doing a superior job in the US Senate is merely a continuation of the superior job you did when you were First Lady. You can rest assured that this constituent stands ready to help you in what ever way I can so that you can continue to work in the US Senate on behalf of this State in general and on behalf of this District in particular.
The other purpose of this communication is to bring to your attention a matter that has national and international implications. It is a personal issue for me because although I have been a US citizen for nearly 20 years, the matter touches and concerns the place of my birth - the tiny Island Nation of Antigua & Barbuda. I am requesting that your office make an urgent and appropriate inquiry to determine whether there bas been a violation of the Foreign Corrupt Practices Act of 1977 (“FCP A") by a US-based business operating in Antigua & Barbuda, and determine whether or not enforcement action is warranted by the US Department of Justice.
Antigua & Barbuda is a twin-island nation with the seat of government in Antigua. The matters referred to herein relate to events in the Island of Antigua only. The people of Antigua, including expatriates like myself, are in an uproar over widespread reports that certain Antigua government officials are soliciting and accepting large sums of money in bribery payments from a Texas businessman named R. Allen Stanford in order to allow Mr. Stanford to obtain and retain business in Antigua on behalf of Stanford Financial Group ("SFG") of Houston, Texas.
SFG, operates an international network of financial entities in the US, Antigua, Aruba, Ecuador, Mexico, Switzerland and Venezuela. It is an international banking concern that as of April 2003 has $17 billion under management. At least four of SFG's enterprises are located in Antigua:
1. Stanford Trust Company: Through “trust arrangements" this entity offers private banking~ financial planning, brokerage services and insurance to its clients.
2. Stanford International Bank Ltd.: This entity has its "head office" in Antigua. Presumably because Antigua has strict .laws protecting private financial information; and it employs a "sophisticated internal security system" to protect electronic data.
3. Bank of Antigua Ltd.: This entity is classified as a leading commercial. bank in the Eastern Caribbean that caters primarily to international business people and visitors to Antigua arriving by cruise ships.
4. Stanford Development Company, Ltd. This entity apparently is involved in real estate development.
All four of these entities are located adjacent to the International Airport in Antigua (aka, V.C. Bird International airport). You should note that an international businessperson wanting to do business with any of these entities is able to fly nonstop from Antigua to New York, London, Miami, Toronto, Zurich, Caracas, Newark, Frankfurt and San Juan.
As an aside: You should also note that in 2001 the US State Department described Antigua as one of the “Primary Concern" jurisdictions for money laundering. (See Excerpts from State Department's 2001 report “Money Laundering and Financial Crimes"). While I am not accusing Mr. Stanford of engaging in monney laundering in view of Antigua's history with this activity, there is concern as to whether or not such activity could be effectively monitored given Antigua’s strict" privacy laws for financial transactions which is One of the selling-points used by Stanford International Bank Ltd, in its advertisements.
In the past few years, there have been a number of transactions between the government of Antigua and Mr. Stanford that are of questionable legality. In addition to the local media, independent news agencies such as the Wall Street Journal and the BBC have widely reported on corruption by public officials and the widespread disaffection of the people of Antigua. However, the most recent uproar came about when in October 2003 Mr. Stanford paid two government officials ED$100,000.00 each while they were negotiating a multi-million dollar land exchange deal with Mr. Stanford on behalf of the government of Antigua. The two government officials, Messrs. Gaston Brown and Molwyn Joseph, happen to be ministers of the Antigua & Barbuda Parliament. As such they exert substantial influence over the government and the enactment of Parliament. Mr. Stanford also paid EC$500,000.00 to the ruling Antigua Labor Party (ALP) headed by Mr. Lester Bird at about the same time. In addition, despite public condemnation, Mr. Stanford gave Messrs. Brown and Joseph an additional bribe of $400,000.00 dollars November 26, 2003. The land exchange deal involved the acquisition of land upon which the Antigua General Post Office is located. This piece of real estate just happens to be located near where the cruise ships dock in St. Johns, the capital city; and it is land upon which Mr. Stanford intends to erect a financial center.
Mr. Stanford's conduct appears to be in violation of the FCP A. Under the FCP A it is unlawful to bribe a foreign government official to obtain or retain business. The anti-bribery provisions of the Act make it unlawful for a firm, or an officer, employee or agent of the firm, to offer, pay, promise to pay any foreign official for the purpose of obtaining or retaining business for or with or directing business to any person. In this instance it appears that the payment to members of the Antigua Parliament with whom Mr. Stanford was negotiating was a bribe for their vote in favor of the land exchange. Mr. Stanford became a citizen of Antigua in 1999. However, questions have been raised about the validity of his citizenship and whether he has actually renounced his US citizenship, a pre-requisite for Antigua & Barbuda citizenship. As I understand the act, Mr. Stanford’s Antigua-Barbuda citizenship does not provide any immunity from prosecution under the FCPA. Mr Stanford is the chief executive officer of SFG, an entity based in the US.
This is a brief overview of what I believe is illegal conduct by a United States-based business in a foreign jurisdiction and it is conduct that warrants the attention of the United States government. I have a particular interest in Antigua because it is my ancestral home. Its government is being purchased by Mr. Stanford, with the active participation of corrupt government officials, in order to assure that SFG's business entities obtain and retain business in Antigua. Indeed, according to the Wall Street Journal of March 5, 200l Antigua is the "personal fief of R. Allen Stanford, a Texas developer and international banker." There is an abundance of published information about Mr. Stanford's relationship to the tiny Island Nation and the corrupt activities by certain members of the ruling ALP. However, I believe that Mr. Stanford should not be allowed to continue violating the FCPA.
Right now there is both a political and an economic crisis in Antigua and Barbuda. News reports suggest that things are at a boiling point because the people are angry and they resent the fact that Mr. Stanford is using money to bribe government officials and to exert a corrupting influence over the government of Antigua and Barbuda in order to maintain and retain business in this nation for himself and for SFG. The US Congress has shown, by its enactment of FCPA and the various amendments to the Act, that it takes this issue of bribery and corruption seriously. Indeed the amendments of 1988 and 1998 were designed to bring the Act in compliance with the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the "Convention}. As you know, the Convention was signed by the twenty-nine countries, including the United States, that are members of the Organization for Economic Cooperation and Development (the "OECD") and five non-members collectively referred to as the "OECD Convention.” That Convention was ratified by the Congress and signed by President Clinton in 1998. (See S.237SJ Pub. L. 105-366 (November 10,1999).
Antigua & Barbuda is a tiny nation (Population 70,000). It appears that by paying bribes to the government officials, the County is being used as a convenient place for a US-based business with huge amounts of resources to conduct international business and escape the scrutiny of the FCPA. I will appreciate any help your office can provide in exposing this matter. If warranted, the Department of Justice should be asked to take appropriate action to enjoin SFG and Mr. Stanford from further violations of the FCP A. I believe meaningful action on the part of the Department of Justice pursuant to the enactment of Congress will discourage other businesses from violating the Act.
I will be happy to meet with you or your staff to discuss this matter in greater detail. I will also be willing to make appropriate arrangements for your office to confer with persons from Antigua who are familiar with the facts and will be able to provide additional information about this matter. Because of the nature of this issue, I am forwarding a courtesy copy of this letter to the entire New York delegation.
Please feel free to call me if you have any questions. Thanks for your assistance in this matter, and please keep up the good work.
Sincerely,
McChesney E.manuel
Cc: Rep. Tim Bishop
Rep. Steve Israel
Rep. Peter King
Rep. Carolyn McCarthy
Rep- Gary Ackerman
Rep. Gregory Meeks
Rep. Joseph Crowley
Rep. Jerrold Nadler
Rep. Anthony Weiner
Rep. Edolphus Towns
Rep. Major Owens
Rep. Nydia Velazquez
Rep. Vito FosseUa
Rep. Carolyn Maloney
Rep- Charles Rangel
Rep. Jose Serrano
Rep. Eliot Engel
Rep. Nita Lowey
Rep. Sue Kelly
Rep. John Sweeney
Rep. Michael McNulty
Rep. Maurice Hinchey
Rep. John McHugh
Rep. Sherwood Boehlert
Rep- James Walsh
Rep. Thomas Reynolds
Rep. Jack Quinn
Rep. Louise McIntosh Slaughter
Rep. Amory Houghton
===================================================================================
Follow up Letter January 16th 2004
From: Mr. McChesney Emanuel
Please note that a copy of this letter was sent to Congressman Meeks and Mr. Meeks is aware of the investigation of Mr. Allan Stanford, yet be has decided to accept a free: trip from Mr. Stanford to Antigua.
The Antigua and Barbuda Justice Movement will ask the Congressional Committee to take a look at Mr. Meeks action.
McChesney Emanuel 1/16/04