Tuesday, 31 August 2010

Receiver, Examiner and Investors’ Attorney Announce

August 30, 2010
FROM: Peter Morgenstern, Esq. (pmorgenstern@mfbnyc.com), (212) 750-6776
John Little, Esq. (stanfordexaminer@lpf-law.com), (214) 573-2307
Ralph Janvey, Esq. (SFREMails@stanfordeagle.com)

On August 10, 2010 United States District Judge David Godbey approved the appointment of a seven-member official investors committee to represent the interests of all Stanford investors (the "Committee"). Since that time, the court-appointed Receiver, Examiner, and counsel for the investors who sought establishment of the Committee have conferred and considered expressions of interest from investors and their representatives who inquired about serving on the Committee. After considerable deliberation, taking into account the candidates’ experience and background and the objectives of the Committee, the following individuals have been asked and have agreed to serve on the Committee:

• John J. Little, the court-appointed Examiner;

• Peter D. Morgenstern, the attorney for the investors who sought appointment of the Committee and represents a diverse group of investors from around the world;

• Ed Snyder, an attorney who represents several hundred Mexican investors with combined losses in excess of $220 million;

• Ed Valdespino, an attorney who represents over two thousand Latin American investors, primarily from Venezuela, with combined losses in excess of $500 million;

• Dr. John Wade, an investor from Louisiana;

• Angela Shaw, an investor and the founder and director of the Stanford Victims Coalition; and

•Jaime Pinto Tabini, a Peruvian attorney who represents a substantial group of clients.

The Committee members represent a cross-section of the Stanford victims' community and will work together to fairly and effectively represent the interests of ALL investors, regardless of their nationality or geographic location. The specific responsibilities of the Committee are set forth in the Court’s Order, but simply put, the mission of the Committee is to assist in maximizing recoveries for all investors in the shortest time reasonably possible, and to provide Stanford investors with a direct voice on important issues related to the receivership proceedings. Undoubtedly, there are many besides the persons listed above who could serve well as Committee members, but because the Committee consists of only seven members, it is not possible to accommodate all who are qualified and willing to serve. We encourage ALL investors to communicate any concerns, questions or ideas to the Receiver, the Examiner or to any member of the Committee at any time and on any topic relating to these cases. We sincerely welcome your participation and input. The Committee intends to communicate regularly with you, primarily by means of a website to be established by the Committee, and through other means, including organizing a public forum in the coming months to provide investors with an opportunity to ask questions or raise issues of concern to them. Additionally, both the Receiver and Examiner will continue to provide information to the public on the Stanford matter through their respective websites and through formal reports to the Receivership Court.

Saturday, 28 August 2010

Yep, the defence is Blame it all on Davis

In testimony today, forensic accountant Alan Westheimer said fraud defendants Mark Kuhrt and Gil Lopez told their superior, James Davis, chief financial officer of the Stanford Financial Group, that the loans should spelled out in the company's 2006 annual report.

Kuhrt, former Stanford Financial global controller and Lopez, former accounting chief, hired Westheimer to interview them and help present their case because they have invoked their Fifth Amendment rights against self-incrimination.

In his testimony today, Westheimer described Kuhrt and Lopez as "mid-level accounting managers" who discharged their obligations by making the recommendation to Davis.

Davis has pleaded guilty to charges in the case and is cooperating with prosecutors.

The indictment alleges that investors were told the CDs were invested in liquid assets and easily could be converted to cash, when some of the investors' money actually went to Stanford and his ventures.

International law requires the bank to report such "related party transactions," Westheimer testified. Kuhrt and Lopez knew this and told Davis the information should be in the financials.

"They told me they had absolute faith in Mr. Davis," Westheimer said, and believed he was "carrying out is responsibilities appropriately."

More from AP: It's a wrap. Lets wait for her ruling.

U.S. District Judge Nancy Atlas on Friday wrapped up a four-day hearing in which she listened to testimony detailing Stanford's financial dealings at his now defunct companies.

Attorneys for the insurer, Lloyd's of London, argued that evidence, including the bank's annual statements and e-mails, showed that Stanford misused bank deposits for personal loans and two ex-executives helped hide this through false records, which violates the insurance policy's money laundering clause.

If Atlas determines Stanford and Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller, committed money laundering, one of the charges they face in a federal indictment, they might have to pay back the millions of dollars they have so far received for their legal bills. Atlas said she would issue her ruling at a later date.

"Mr. Kuhrt and Mr. Lopez conspired for years with ... Mr. Stanford to cook the books and rob investors of billions of dollars," Barry Chasnoff, an attorney for Lloyd's, said Friday during closing arguments in the hearing.

A fraud examiner hired by Lloyd's, testified this week that Stanford secretly used billions of dollars in bank deposits as loans, which prosecutors say helped pay for his lavish lifestyle, and that Stanford inflated the value of real estate holdings to hide the loans and make the bank appear profitable.

However, Stanford's attorneys argued the once flamboyant billionaire ran a legitimate business that helped develop Antigua. They acknowledged Stanford was not a "hands on guy" and didn't know all the inner workings of his more than 100 companies but contended he didn't misuse bank deposits as personal loans and that this money actually went to support other companies and investments.

"Maybe he was negligent, maybe he should have been a little more careful. But whatever he did does not rise to the level of criminality," said Bob Bennett, one of Stanford's attorneys. "Mr. Stanford was not at the center of anything illegal or wrong."

Attorneys for Kuhrt and Lopez said their clients were not aware of any fraud at the bank and informed others about concerns they had with the bank's operations.

"If there was a fraud committed here, it's a fraud we were totally unaware of and totally in no way did we participate in," said Richard Kuniansky, Kuhrt's attorney.

Lopez's attorney, Jack Zimmermann, said there was no proof his client knew bank records were false and that Lopez was duped just like the bank's investors.

Stanford, Kuhrt and Lopez, who all declined to testify, have alluded that the real culprit was James Davis, Stanford's former chief financial officer, who has pleaded guilty in the case and is cooperating with prosecutors.

In his plea agreement, Davis detailed how he, Stanford and others manufactured profits and that he and others artificially inflated the bank's assets to hide that Stanford was using bank deposits as personal loans.

Alan Westheimer, a fraud examiner hired by Kuhrt and Lopez, testified he found no proof the two ex-executives manipulated bank records to hide the alleged fraud.

The insurer's case mirrors the accusations made against Stanford and the two ex-executives by prosecutors in the criminal case in Houston and by the Securities and Exchange Commission in a lawsuit it filed in Dallas.

The hearing gave a preview of some of the defenses Stanford and the ex-executives might present at their criminal trials. Prosecutors and FBI agents working on the criminal case attended the hearing.

Thursday, 26 August 2010

Undisclosed Stanford Loans Prove Fraud, Examiner Says

Stanford International Bank Ltd.’s $1.7 billion in undisclosed loans to indicted financier R. Allen Stanford are proof the bank was involved in fraud, a examiner testified in a U.S. court trial in Houston.

“There’s a complete disconnect between what the bank is saying, that it has fully liquid, short-term, fully monetized assets, and the fact a third of these assets are loans to the shareholder,” fraud accountant Mark Berenblut said today.

Berenblut made the statement in his second day of testimony in a civil trial over whether directors’ and officers’ insurance sold to Stanford’s businesses by Lloyd’s of London is voided by alleged criminal conduct.

Investors bought more than $7 billion in certificates of deposit from the Antiguan bank, which Stanford controlled as sole shareholder until the U.S. Securities and Exchange Commission sued the financier in February 2009, and seized his businesses.

Stanford and three other company executives in June 2009 were indicted by a federal grand jury in Houston on charges they’d run a $7 billion fraud scheme centered on the sale of certificates of deposit by the Stanford bank.

Rejected Claims

Investors had been told the bank’s portfolio consisted of conservative, highly liquid investments that offered above- market returns.

Lloyd’s last year rejected the executives’ pleas for coverage under the $100 million worth of insurance bought by the business after Stanford Group Cos. Chief Financial Officer James M. Davis pleaded guilty to charges he aided in the scheme.

The case is Laura Pendergest-Holt v. Certain Underwriters at Lloyd’s of London, 4:09-cv-03712, U.S. District Court, Southern District of Texas (Houston).

The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas).

Manx link to Antigua corruption inquiry

• Criminal investigation looks at bank accounts
• HSBC 'accepted £2.3m for ousted PM's chief of staff'

The government of Antigua has begun criminal inquiries into large payments discovered in Isle of Man bank accounts controlled by Antiguan politicians.

Disclosure of these Caribbean corruption inquiries comes at an unwelcome time for the Isle of Man, described by the chancellor, Alastair Darling, as "a tax haven sitting in the Irish Sea". The island is under review by the UK government, which subsidises its low-tax regime.

According to documents seen by the Guardian, HSBC bank, in the Isle of Man, accepted $3.2m (£2.3m) on behalf of Asot Michael, once chief of staff to the former Antigua prime minister Lester Bird.

The Bank of Bermuda refused to handle a similar account and filed a "suspicious activity report" before the further account was opened on the Isle of Man, according to investigators' reports

Another $1.4m in total was paid into HSBC Manx accounts belonging to a former Antiguan high commissioner in London, Sir Ronald Sanders.

The cash under investigation came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.

The Manx role in the Caribbean island's affairs is laid out in a report following a prolonged investigation by a Canadian forensic accountant, Robert Lindquist. He was called in by the new Antiguan prime minister, Spencer Baldwin, in 2004 to investigate "questionable payments" by Bird's regime, ousted in a general election.

A civil lawsuit against Bird and his chief of staff accused them of corruption. A new general election is due tomorrow. Coincidentally or not, the Baldwin government announced that police had now been called in, and that Rappaport had agreed to hand back $12m in settlement of the civil lawsuit against him. There had been a "gigantic conspiracy" to rob local taxpayers, the Antiguan attorney general said last month. He said Antigua had been making inflated payments of $400,000 a month, supposedly to pay off a debt to a firm which built a desalination plant on the island. But paperwork unearthed revealed that only $200,000 a month was actually due. The extra cash was routed through a company controlled by Rappaport, and money was passed on to a Panama offshore entity called Bellwood.

Sanders, the former high commissioner, denied getting kickbacks. "I don't know what kickbacks there could be," he said. "I worked for Rappaport for a long time, and he paid me." His lawyers said: "He firmly denies that there has been any impropriety on his part in this matter."

Bird said that he had committed no crime and was the victim of a "witchhunt". Michael, his former chief of staff, has also denied wrongdoing, saying: "It is a red herring across the campaign trail."

HSBC said yesterday that it would publicly neither confirm nor deny information about individual Manx accounts.

"HSBC has robust anti-money laundering policies and clearly defined policies and procedures concerning politically exposed persons," it said. "Where HSBC identifies any concerns it reports as required to the relevant authorities."

Execs knew of woes at financier's bank

Executives who worked with Texas financier R. Allen Stanford were aware of problems at his now defunct Caribbean bank, including fabricated investment reports and that Stanford secretly used money from investors to fund loans to himself, two financial experts testified Wednesday.

The two accountants were questioned about Stanford's financial dealings during a court hearing in which a federal judge was to decide if Stanford and two executives — under indictment on charges they bilked investors out of $7 billion in a massive Ponzi scheme — will continue having their legal bills paid for by an insurance policy.

The insurer, Lloyd's of London, says the policy doesn't pay on charges of money laundering, one of the many counts Stanford and Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller, face in a federal indictment. Stanford and the ex-executives say they are not guilty and that Lloyd's should honor the policy, which so far has paid more than $15 million in legal fees to them in their criminal and civil cases.

The hearing before U.S. District Judge Nancy Atlas, which began Tuesday and will continue on Thursday, is providing a preview of the upcoming criminal trials in the case.

Stanford and the former executives are accused of orchestrating a colossal pyramid scheme by advising clients from 113 countries to invest more than $7 billion in certificates of deposit at the Stanford International Bank on the Caribbean island of Antigua, promising huge returns. Stanford's businesses were headquartered in Houston.

The two accountants are both certified fraud examiners. One, Mark Berenblut, was hired by Lloyd's to examine the bank's records, while the other, Alan Westheimer, was hired by attorneys for Kuhrt and Lopez. Both were called as witnesses for Lloyd's.

Berenblut testified that, in reviewing e-mails between Kuhrt and other company executives that contained copies of monthly investment reports, he found the figures used to show money being deposited by investors into the bank was being manipulated. Attorneys for Lloyd's, mirroring claims by prosecutors, say the bank's balance sheets were made up and the work of reverse engineering.

"My belief is these numbers are artificial. They have been set with a predetermined objective in mind," said Berenblut.

Attorneys for Kuhrt and Lopez contended Berenblut failed to prove the former executives had anything to do with alleged fraud at the bank or that they benefited from it.

Westheimer, earlier testified that Kuhrt and Lopez told him they knew money deposited into the bank was being used to fund personal loans to Stanford and that this wasn't being reported to investors. Prosecutors have accused Stanford of secretly diverting more than $1.6 billion in investor funds as personal loans to himself to pay for his lavish lifestyle.

Westheimer, who interviewed Kuhrt and Lopez, told attorneys for Lloyd's that the two men also told him Stanford had asked them to keep confidential a $63.5 million land purchase in 2008 that the financier had made in the Caribbean.

Prosecutors in the criminal case contend the value of the land purchase was later artificially inflated to $3.1 billion to boost the bank's revenues and hide financial losses. Stanford has contended the land purchase was legitimate and he had planned to use it to build a super exclusive resort in Antigua.

Giselle James, a former employee of the Stanford Financial Group who testified on behalf of Stanford, said she helped promote development of the resort, called the Islands Club Project.

James said the project, which had started to be built, proposed creating 30 estates on Guiana Island, a small island off the northeast coast of Antigua.
James, who is from Antigua but now lives in Houston, spoke highly of Stanford and said she loved working for him.

Kuhrt and Lopez have tried to put the blame for what happened at the bank on James Davis, Stanford's former chief financial officer, who has pleaded guilty in the case and is cooperating with prosecutors. Attorneys for Stanford have said the financier didn't have direct involvement in the daily workings of his companies and was sometimes out of the loop.

Westheimer said Kuhrt and Lopez told Davis about their concerns with the loans and that it was Davis' idea to inflate the value of the $63.5 million land purchase.
Stanford and the two former executives are not testifying at the hearing, asserting their Fifth Amendment right against self-incrimination.

Stanford's trial, being handled by another Houston federal judge, is set to begin Jan. 24. The others will be tried after that. Besides money laundering, Stanford and his one-time colleagues have also been indicted on charges of wire and mail fraud.
Copyright © 2010 The Associated Press. All rights reserved.

Witness questions Stanford bank loans

Over $3 billion in transactions not properly disclosed, he says

R. Allen Stanford's Caribbean island bank loaned more than $3 billion to Stanford and his companies without properly disclosing the loans, a witness for Lloyd's of London testified Wednesday in a hearing on whether Lloyd's should pay the jailed Stanford's legal fees.

Mark Berenblut, a forensic accountant with NERA Economic Consulting in Toronto, said international reporting standards require that banks report transactions with related entities. He said the Stanford International Bank in Antigua loaned $1.7 billion to Stanford personally and $1.8 billion to companies he controlled.

Berenblut also testified that he reviewed e-mails and financial transactions that showed the bank reverse engineered financial statements — adjusting the numbers to achieve desired results.

The bank is central to the government's criminal case against Allen Stanford and his co-defendants. Indictments allege that they lured investors into a $7 billion Ponzi scheme by offering above-average interest rates on certificates of deposit issued by the bank.

Stanford and two other former executives of Houston-based Stanford Financial Group want U.S. District Judge Nancy Atlas to order that Lloyd's continue paying their legal fees under an insurance policy that covered Stanford Financial's officers and directors. The hearing is expected to last through the week, and Atlas told the parties not to expect an immediate decision on the legal fees.

Lloyd's had been paying the fees but contends the policy doesn't cover defense against money laundering charges, which are among the accusations in indictments against Stanford, founder of Stanford Financial Group; its former accounting chief, Gil Lopez; its former global controller, Mark Kuhrt; and its former chief investment officer, Laura Holt.

Holt has settled with Lloyd's, Atlas said Tuesday.

All four say they are innocent of the charges against them. Stanford has been jailed for more than a year as a flight risk. The others are free on bail.

Stanford Financial Group's ex-finance chief, James M. Davis, was charged separately, pleaded guilty and is cooperating with prosecutors.

He figured in testimony Wednesday by Alan West-heimer of Houston, a forensic accountant hired by Lopez and Kuhrt. The two have invoked their Fifth Amendment rights against self-incrimination, but Westheimer testified about interviews he did with them.

He figured in testimony Wednesday by Alan West-heimer of Houston, a forensic accountant hired by Lopez and Kuhrt. The two have invoked their Fifth Amendment rights against self-incrimination, but Westheimer testified about interviews he did with them.

According to Westheimer's account, Stanford bought land on several Caribbean islands for $63.5 million in 2008. Giselle James, a former Stanford employee called as a witness by his lawyer, Robert S. Bennett, testified that Stanford planned a project called Islands Club containing 30 exclusive estates.

According to Westheimer's testimony, Davis told Kuhrt and Lopez to value the land at $3.74 billion on company books, saying he based that figure on recent comparable sales.

In their interview with Westheimer, "Lopez and Kuhrt were very clear about the red flag this raised," West-heimer testified.

They told Davis they would need a real estate appraisal and advice from outside legal counsel before they recorded the higher valuation in the company's financial records, and Davis told them he would take care of the matter, West-heimer said.

Wednesday, 25 August 2010

Court hearing on Stanford defense fees begins

Almost $2 billion in personal loans, cooked books and misrepresentations to investors are reasons Allen Stanford, accused of a $7 billion Ponzi scheme, should not be able to collect on an policy covering his defense fees, a lawyer for the insurer said on Tuesday.
Former billionaire Stanford and three other defendants in the government's case sued Lloyd's of London, arguing they are entitled to the legal fees from a directors and officers policy.

That policy has a money laundering exclusion, so it is up to the insurer to prove the plaintiffs committed that act in several days of hearings scheduled this week in federal court in Houston.

"These plaintiffs engaged in money laundering and there is no coverage on this policy," Barry Chasnoff, an attorney for Lloyd's said in his opening arguments after outlining an alleged scheme Stanford used to mislead investors.

The information Chasnoff spoke of is largely part of the U.S. government's case against Stanford and has previously been released in court documents and the criminal indictment.

Lloyd's has paid some claims under the policy, including $6 million for lawyers who represented Stanford. In March, a federal appeals court said Lloyd's could not refuse to pay the claims, but sent the case back to district court for additional arguments to determine if money laundering occurred.

U.S. District Judge Nancy Atlas is presiding over the hearings.


Before opening statements, Atlas said Laura Holt, Stanford's former chief investment officer, had settled with the insurer. No other details were provided.

Stanford, 60, is accused of leading the Ponzi scheme that used phony certificates of deposit issued by Stanford International Bank in Antigua to bilk investors around the world.

"The evidence will show there wasn't any Ponzi scheme," Robert Bennett," a Houston-based attorney representing Stanford, said at the hearing. "There wasn't any type of fraud committed. There wasn't any misrepresentation."

He described Stanford as a well-respected, legitimate businessman whose fortunes were ruined when the government swooped in and filed civil and criminal charges last year.

The series of hearings is seen by some to be a preview

of Stanford's criminal defense. Stanford is currently in jail, awaiting a January 2011 trial.

Stanford and accounting executives Mark Kuhrt and Gilbert Lopez, as well as Holt have pleaded not guilty to the charges.

Lawyers for Lopez and Kuhrt said in their opening arguments there will be no evidence at the hearing showing their clients profited from the alleged scheme.

"There aren't any smoking guns," Mark Kuniansky, Kuhrt's lawyer told Atlas. "Underwriters have the burden of proof and they will not meet that proof."

Stanford faces one count of conspiracy to commit money laundering as part of a 21-count June 2009 indictment. The charging document also accuses the Texas financier, who once owned luxury homes and automobiles and lavished money on sporting events, of wire fraud and conspiracy.

The hearings are expected to last up to four days.

The case is Laura Pendergest-Holt, R. Allen Stanford, Gilbert Lopez and Mark Kuhrt v Certain Underwriters at Lloyd's of London and Arch Specialty Insurance Co, U.S. District Court, Southern District of Texas, No. 09-3712.

Tuesday, 24 August 2010

Related News:Law .Lloyd's of London, Allen Stanford Civil Trial Begins on Insurance Claim

Lloyd’s of London underwriters are attempting to convince a U.S. judge that financier R. Allen Stanford conspired to steal money so they can avoid paying attorneys to defend him on criminal fraud charges.

U.S. District Judge Nancy Atlas today began hearing evidence in Houston federal court in a three-day civil trial conducted without a jury in Stanford’s lawsuit against the London-based insurers.

Stanford, charged with leading a $7 billion fraud scheme, and three former colleagues who are now co-defendants in his criminal case, claim they can’t afford defense lawyers without access to $100 million in liability insurance Lloyd’s sold to Stanford Financial Group. Lloyd’s has denied their claim, citing a guilty plea by Stanford’s former finance chief and reports by forensic accountants who’ve probed Stanford’s books.

“Basically, the underwriters sought to convict their own insureds,” Lee Shidlofsky, a lawyer for Stanford’s colleagues, said in an e-mail earlier this year. “And by doing so, underwriters undermined the very essence of the protections afforded by a directors’ and officers’ policy.”

Stanford and his co-defendants are charged with 21 criminal counts of deceiving investors about the security and oversight of $7 billion of certificates of deposit issued by Antigua-based Stanford International Bank Ltd.

Criminal Trial

In January, Stanford will be tried before a federal court jury in Houston. The other defendants will be tried together at a later time.

During the proceedings today, Dan Cogdell, a lawyer for co-defendant Laura Pendergest-Holt, said his client has reached a settlement with Lloyd’s. Pendergest-Holt was Stanford’s chief investment officer.

Outside the courtroom, Cogdell declined to disclose the terms of the accord.

In December 2008, Stanford International Bank’s financial statements showed the bank had $8.1 billion in total assets, Lloyd’s lawyer Barry Chasnoff told Atlas today. When the SEC seized the operation a few weeks later, the money was largely missing.

“In spite of herculean efforts, the receiver has recovered less than $1 billion of those assets,” Chasnoff said. “This case is the story of what happened to those billions.”

Broader Definition

Lloyd’s lawyers claim that what transpired fits the underwriters’ description of money laundering, defined in the policies as any attempt or conspiracy to misappropriate someone else’s money, a definition which is broader than that of the corresponding federal criminal statute.

“The facts fit money laundering whether he used that term or not,” Chasnoff said in court last year, referring to the plea agreement of ex-Stanford Chief Financial Officer James M. Davis.

Chasnoff said Lloyd’s policies are written so that any allegation of money laundering is enough to deny coverage of defense costs.

While prosecutors have not charged Stanford or the other defendants with money laundering, the underwriters claim Stanford and the other executives violated their version of it, voiding coverage.

Atlas asked the Lloyd’s lawyer where the unusual definition of money laundering had come from.


Chasnoff replied the clause had been in Stanford’s three previous directors’ and officers’ policies and was originally brought to the contract negotiation at Lloyd’s by Stanford’s insurance broker.

“All I can say is, it’s turning out not to be such a bargain,” Atlas remarked. She asked Lloyd’s to present a witness on the origin of the definition. Chasnoff said the underwriters hadn’t planned to offer one.

All the defendants had told Atlas they’re destitute. Their assets were seized in February 2009 after the U.S. Securities and Exchange Commission sued them for allegedly paying returns to early investors by taking funds from later investors.

When Lloyd’s denied their coverage in November, the former executives sued and won a temporary court order requiring the underwriters to pay for the defense lawyers until a judge can determine validity of the coverage.

Lloyd’s has already paid more than $15 million to attorneys representing the four criminal defendants and several lower- ranking employees also under investigation by prosecutors and securities regulators, according to court papers.

Standard of Proof

The civil proceeding in Atlas’s courtroom will provide a preview of evidence and testimony that prosecutors may seek to use in the criminal trials.

The biggest difference is Lloyd’s underwriters need only convince Atlas that Stanford is more likely guilty than not guilty, a lesser standard of proof than the beyond-a-reasonable- doubt certitude required of a criminal trial jury.

Neither Stanford nor his co-defendants are expected to testify, as anything they say can be used against them in the criminal case.

This trial pits Stanford’s stated need for the insurance proceeds against his right to avoid self-incrimination by testifying in the proceeding.

He can’t take the witness stand to obtain the former without risking the latter, lawyers for Stanford have said in court filings.

Defer Ruling

Atlas said today that she would defer a ruling on whether she’ll infer that the defendants are guilty if they assert their Fifth Amendment rights not to testify, as she is allowed to do under civil law.

“I’m just going to hold on that,” Atlas said. “I’d rather not get into it until I’ve heard the evidence.”

Lloyd’s is urging Atlas to make that inference, which she’d be forbidden to do in a criminal trial.

“This is not the criminal trial,” Atlas told lawyers today. She said the underwriters have established in court filings what Stanford and the other executives knew of the misconduct alleged by Lloyd’s and when they knew it.

“It is important,” Atlas said of her ruling in the case. “I recognize it is a decision you want promptly, with as much reasoning as possible. This is a matter than needs careful consideration.”

Stanford, who has been in jail without bond since he was indicted in June 2009, will attend each day’s court session in shackles. Atlas ruled he could have one hand free to ease handling of documents and communication with his lawyers.

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

Thursday, 19 August 2010

(Sir) R Allen Stanford – The World’s Biggest Bank Robber

By Ian Moncrief-Scott

When Verity (not her real name) retired she had simple dreams of living in the sun, caring for animals and putting something back into society.

R Allen Stanford, with his many active and passive accomplices, true fellow criminals, calculatingly shattered those dreams.

Indeed, Stanford created Verity’s worst nightmare, which has left her destitute, entirely reliant on family support and needing scraps from kind neighbours to feed her dog.

Pretending his innocence, Stanford languishes in an American prison with room TV, entertainment and exercise, hiring and firing attorneys, with three square meals a day, heat and light paid by the taxpayer.

Meanwhile, Verity desperately worries from where the next meal will come.

So who allowed this tragedy unfold?

As long ago as 2007, Verity, simply asked her bank to transfer her personal funds. These were for her retirement.

This was not an investment in Stanford’s fraudulent Certificates of Deposit but a straightforward, routine, everyday bank to bank SWIFT transfer.

Verity’s bank was Barclays Wealth "the UK's leading wealth manager in terms of assets under management and the largest retail multi-manager.”

The pensioner had worked hard all her life and wanted her savings to be conveniently placed in Stanford International Bank in Antigua, the country she had chosen for her retirement.

She trusted and relied upon Barclays Wealth to safely transfer her entire life savings.

Verity gave her clear instructions in writing as provided by Stanford International Bank.

Substantial monies were to be transferred to HSBC, London, using the SWIFT system - code MIDLGB22XXX for further credit to SIB in Antigua (Sort Code 40-05-15) etc.

However, the Sort Code 40-05-15 is not Stanford International Bank’s but HSBC International Bank London.

HSBC acts as an official correspondent bank for SIB, which is now in receivership.

According to Vantis, the Receiver appointed by the Government of Antigua, her money is not at Stanford International Bank in Antigua at all. It has simply disappeared from the SIB account at HSBC in London.

HSBC contends, in its own remarkable blaze of self-publicity, “We aspire to be one of the world's great specialist banking groups, driven by commitment to our core philosophies and values."

Much has been made of Stanford’s Ponzi Scheme but there has been little focus on the missing bank deposits in Antigua.

Antigua does not have a banking deposit protection scheme so any funds held in or associated with the country, are potentially vulnerable.

Antigua is also irrefutably well-known as a most dubious and corrupt place.

In 2001, with the formation of First Caribbean International Bank, Barclays effectively withdrew its own brand from the region.

Antigua has been the subject of two countrywide Treasury Advisories connected to Stanford and a US Senate report highlighting concerns about its links to correspondent banking.

Described at the time by the U.S. Department of Justice as "the largest case of non-drug-related money laundering every brought to justice", the case was significant enough to warrant inclusion in a report dated February 5, 2001, produced by the Minority Staff of the Permanent Subcommittee on Investigations, entitled Correspondent Banking: A Gateway to Money Laundering.

So why did Verity wait until 2009 before alerting Barclays that the funds were missing.

The reason for this was because Verity was told by Stanford International Bank that for cost saving purposes it did not issue written account statements but that a Stanford Financial Adviser would telephone her monthly to confirm her standing.

Each month she was assured by SIB Financial Advisers that her account was in good order, which she properly took to mean, held the expected level of funds following the transfer from Barclays Wealth.

During this time Verity had dealings with Kathy Belaziar and Yecella Mondez, at SIB Antigua.

Thus, using this method, the huge banking fraud at Stanford International Bank, Antigua remained concealed from March 2007 to December 2008, until Verity attempted to withdraw her funds.

Who has allowed this to happen?

Unlike the financial regulators, Verity knew nothing of Stanford’s reckless and criminal Ponzi Scheme.

She just needed a safe and convenient bank to hold her retirement savings and trusted the high profile name of Stanford, much endorsed by celebrities, international politicians and world leaders.

Verity, like any of us, relied upon the financial regulators in the United States of America, UK and Antigua.

Meanwhile, Leroy King, the former head of the financial regulatory authority in Antigua, is the subject of a US extradition warrant. This is is not in Antigua’s or, more correctly, certain Antiguan politicians’ interest, that this should ever be fulfilled.

Karyl Van Tassel, FTI Consulting, a forensic accountancy acting for Ralph Janvey, the Receiver appointed by the Court to unravel Stanford’s crimes has proved that billions of dollars destined for his dubious bank in woefully-regulated Antigua, never arrived.

Instead, on Stanford’s instructions billions of dollars (sterling/euros) were transferred from HSBC International London to Stanford’s corporate accounts at Toronto Dominion Bank in Canada, Trustmark National Bank in Mississippi and, mainly, the Bank of Houston.

The position of the victims of Stanford’s crimes suing HSBC and the other banks involved in a class action is even clearer.

They claim that “Upon information and belief, prior to and during their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.

Stanford provided members of the Class (sic the Stanford crime victims) with deposit instructions indicating that they could make deposits in Antigua-based SIBL by wiring funds to HSBC in London. HSBC was aware of these instructions that were provided to members of the Class, and expressly agreed with Stanford to receive wire deposits from members of the Class for further transfer to SIBL in Antigua.

After the establishment of the HSBC-Stanford correspondent bank relationship, members of the Class transferred funds to HSBC with the intent that such funds would be transferred to SIBL in Antigua for deposit there. Upon information and belief, all or substantially all of the funds that members of the class transferred to HSBC, with the intent that such funds would be transferred to SIBL in Antigua for deposit there, were redirected by HSBC, in concert with and/or at the direction of Stanford, to bank accounts in Houston, Texas, and elsewhere, after which such funds were distributed to other Stanford entities, “invested” in Allen Stanford’s private ventures, used to fund Allen Stanford’s lavish lifestyle, and reinvested in the criminal venture to keep the fraudulent scheme in operation.

Based upon the foregoing, and based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.”

However, this matter is far from just about Stanford.

The role of HSBC and the competence of the international payment agencies and regulators involved must now be questioned.

The question is a simple one:

How did a single shareholder institution with impossible multi-billion dollar yearly growth, with its base in ineptly regulated Antigua, having its accounts passed by a 73 year old from his a terraced house in Harrigey, satisfy the most basic due diligence tests expected by the Wolfsburg and Basel accords for correspondent banking relationships?

Meanwhile, as Verity and her dog go hungry, bankers, politicians, regulators and ombudsmen enjoy their inflation-proof pensions and well-compensated lifestyles.

Saturday, 14 August 2010


In February 2009 the Securities and Exchange Commission (SEC) closed down the Stanford Financial Group (SFG), based in Houston, Texas, and owned by R Allen Stanford (RAS) the flamboyant Texan banker, claimed by Forbes to be a multi-billionaire. SEC alleged it was a $7bn Ponzi scheme, based on fraudulent sales of Certificates of Deposit (CD’s) from the Stanford International Bank (SIB) domiciled in Antigua, a sovereign state in the West Indies.

Receivers were duly appointed; Ralph Janvey in the USA; and Vantis Plc in Antigua, who until the recent administration of Vantis’ themselves, fought for control of the assets of SFG and SIB in courtrooms both sides of the Atlantic.

Forensic accountants ascertained that 28,000 depositors worldwide transferred funds to SIB in Antigua to be invested in CD’s. None of those funds were ever received in Antigua, being covertly diverted to other Stanford controlled entities, with the contrivance of several high-profile correspondent-banks, where they were used to support SFG and fund RAS lavish lifestyle.

Contrary to popular media opinion, most of the depositors were not multi-millionaires seeking tax-avoidance, but ordinary people who have now lost their family retirement, medical care, and scholarship funds.

In May 2009, the acclaimed BBC television series, Panorama, aired an investigative documentary into RAS. This programme first broke the news that RAS had been a secret informant to the CIA/DEA, with links to drug cartels, and money laundering, and that RAS had been protected from prosecution by the SEC, even though they suspected the fraud as far back as 1999. There was further evidence of his close ties to the George W Bush family, and unanswered questions over the untimely death of Charlesworth Hewlett, the auditor of SIB, just weeks before the scandal broke. These claims were promptly buried and little further investigation seems to have been undertaken, until recently.

In June 2009, RAS his CEO James Davis, and Laura Prendergast Holt the CFO of SFG, were all arrested by the FBI and charged with running a massive fraud. Davis has subsequently pleaded guilty while Stanford remains in jail awaiting trial, set for January 2011. The long-anticipated second-tier of indictments has yet to materialise.

Leroy King, the head of the Financial Services Regulatory Council (FSRC), the regulator of SIB in Antigua, has been accused of accepting bribes from RAS to approve SIB’s audited accounts. His extradition process to the US has been delayed, and there are allegations the entire Antiguan cabinet, together with members of past Antiguan governments, may also have benefitted from the fraud. Successive governments in Antigua have a long-history of corruption; political malfeasance; expropriation of foreign-owned assets; and continue to be experts at soliciting aid and investment from gullible officers of willing foreign institutions, never for it to be repaid.

In July 2009, a New York law firm Morganstern and Blue, acting for the innocent victims of the fraud, filed two class-action lawsuits; one against the sovereign nation of Antigua for participating in and benefitting from the fraud; and another against the clearing banks - HSBC, Credit Suisse and Toronto Dominion amongst others - for complicity in the fraud and lack of due diligence.

In April 2010, a damning report was published by the new Inspector-General, into the failure of the SEC to act on whistle-blowing reports from former SFG employees going back more than 10 years. The former head of Enforcement at the SEC’s Fort Worth office, Spencer Barasch, quashed four separate investigations into SFG before moving-on and representing RAS in connection with a further SEC investigation. Unfortunately the SEC has immunity from prosecution; however Barasch has been referred to the Texas bar-association for misconduct. Pressure from another US agency was believed to be instrumental in closing the investigations.

In July 2010, a number of reports surfaced in the online press renewing the alleged conspiracy theories that RAS was a CIA informant, and further, that SIB became the new BCCI; the favoured conduit for CIA, MI6 and Mossad slush funds. So far none of these threads have been picked up by the popular press. In particular the deposit by the Libyan government of $500m into SIB shortly before the scandal broke has not been questioned, nor has their refusal to lodge a claim with the receivers.

Meanwhile the receivers continue to sell SFG’s assets, for deflated values that barely cover their mounting fees, leaving the innocent victims unlikely to ever see a cent from their pensions again, while members of the Antiguan Government believe they are above the law and continue to act with impunity.

For whatever reason this story is not being widely reported by the popular press, and there is suspicion that outside influences are seeking to bury it.

Stanford's Request for Temporary Release into the Custody of a U.S. Marshal for the Purposes of Assisting Legal Counsel

Stanford Request for Temporary Release

Texas Prison is Technology Vortex, Allen Stanford Says

Can we even remember life before computers? Robert Allen Stanford, accused of running a massive Ponzi scheme and held in federal prison in Texas, has been forced to do so, and he doesn’t like it.

Charged with complicated financial crimes and behind bars, Stanford claims to be residing in a technology vortex reminiscent of the 1970s - one he says makes it impossible to assist his lawyers by reviewing evidence.

Stanford complained in an Aug. 11 court filing that he does not have access to the Internet and various other databases he needs. He recently was allowed to use a computer brought in by his lawyers, albeit one without Internet access or external hard drives. In his filing, which is here, Stanford’s lawyers wrote:

Even with the ability for Stanford’s counsel to bring in computers, Stanford is limited to viewing the current 12+ million pages of discovery documents, to search for exculpatory information regarding his coverage case, a single page at a time, without any ability to word-search the documents.

Not an ideal work environment, to be sure. The italics, by the way, are Stanford’s.

In any event, he asked District Judge Nancy Atlas to allow him to be transported by U.S. marshals to his lawyers’ office daily, where he would be segregated in a special room to work. This all comes in a case separate from his criminal matter over his insurance coverage. A hearing is scheduled on Aug. 24 to decide whether the legal expenses for Stanford and three other Stanford Financial Group executives will be covered by their directors and officers insurance polices.

Judge Atlas, however, rejected Stanford’s motion, as detailed on Law.com here. In her ruling Wednesday, the judge said Stanford’s pre-trial detention matters must be handled by Judge David Hittner, who is overseeing the criminal case.

This is the same Allen Stanford, you may remember, who has gone through lawyers like water, as detailed by the WSJ here. Things haven’t gotten much smoother this summer, according to his court filing. Stanford says he was thrown in solitary confinement in July for allegedly disobeying an order from a prison guard and closing a door “insolently.” On another occasion, he alleges that eight bankers boxes of evidence that he had painstakingly organized were emptied in his cell and the contents thrown into garbage bags.

Stanford’s lawyers say that these incidents, along with “a brutal assault” he allegedly suffered, have pushed him “to the limits of his mental and physical abilities.” In addition, they wrote, “the psychotropic drugs that Stanford takes around 8 a.m. and 6 p.m. each day leave him in a less than fully coherent state of mind, creating yet another barrier to Stanford providing effective assistance to counsel.”

Thursday, 12 August 2010

Stanford Creditors Now Allowed to Sue

R Allen Stanford's creditors are celebrating a judge's ruling that will allow them to file suits against the embattled businessman. The US judge gave the OK for a committee to work in conjunction with receiver Ralph Janvey.

Angela Shaw, who represents the creditors, said in a statement, “This is a very important milestone for the victims because we will now have a voice in the recovery of our savings."

Investors have been trying for over a year to gain approval to act in their own interest.

Three investors had previously asked US District Judge David Godbey to lift the court order that blocked them from filing an involuntary bankruptcy petition against Stanford's companies.

The seven-member committee will now be able to look into the Stanford Group's financial position before the SEC filed suit and alleged a $7 billion Ponzi scheme.

The group will meet with Janvey at least once a month, and consult the receiver on division of responsibilities.

Allen Stanford loses bid to leave jail pretrial

Allen Stanford, accused of masterminding a $7 billion Ponzi scheme, has lost a bid to get out of jail to work on a separate trial seeking to hold Lloyd's of London responsible for his defense costs.

Stanford, who has been locked up for 14 months awaiting his criminal trial, sought to be freed into a U.S. marshal's custody so he could be transported to his lawyer's office to prepare for the Aug. 24 Lloyd's trial. [ID:nN15220064]

The disgraced Texas financier argued he needed to spend as much as 12 hours a day, seven days a week working with his lawyer.

He also sought to delay the Lloyd's trial to Oct. 25, complaining that his jail guards ruined most of his case files on Aug. 2. Stanford said they "maliciously dumped" his carefully organized documents into big trash bags on his bunk.

But U.S. District Judge Nancy Atlas in Houston, who is presiding over the insurance trial, rejected both requests.

She said the "unique circumstances" of the Lloyd's case meant there should be no delay and that Stanford should direct complaints about his detention to U.S. District Judge David Hittner, who is handling his criminal case.

Stanford faces a 21-count indictment focused on what prosecutors say is his Stanford Financial Group's fraudulent sale of certificates of deposit issued by his Antigua bank, Stanford International Bank. He also faces civil charges from the U.S. Securities and Exchange Commission.

Lloyd's at first agreed to advance Stanford's criminal and civil defense costs, but changed its mind, relying on a money-laundering policy exclusion, court records show.

Stanford is also appealing his third bail denial to the U.S. Fifth Circuit Court of Appeals, the same court that rejected his two prior bail requests. He argues his jailing has deprived him of his constitutional rights to due process and effective assistance of counsel.

In a court filing on Wednesday, Stanford's lawyers renewed their concern about the detention's effect on their 60-year-old client's health and mental state, saying Stanford is taking psychotropic drugs twice a day that "leave him in a less than fully coherent state of mind."

The criminal trial is scheduled to begin on Jan. 24, 2011.

Separately, U.S. District Judge David Godbey in Dallas has approved the appointment of a committee to represent Stanford victims, a spokeswoman for the clients said.

The committee is made up of six former Stanford clients and John Little, a court-appointed examiner for Stanford International Bank. It will work with Ralph Janvey, the court-appointed receiver for the bank, to recover assets for Stanford investors.

"We look forward to working cooperatively with the court-appointed receiver and examiner to identify and prosecute potential legal claims against third parties who assisted with Stanford's fraud," Peter Morgenstern, a lawyer for Stanford clients, said in a statement.

The Lloyd's case is Pendergest-Holt et al v. Certain Underwriters at Lloyd's of London et al, U.S. District Court, Southern District of Texas, No. 09-03712. The criminal case is U.S. v. Stanford in the same court, No. 09-cr-00342. The SEC case is SEC vs Stanford International Bank Ltd et al, U.S. District Court, Northern District of Texas, No. 09-298. (Reporting by Anna Driver in Houston and Jonathan Stempel in New York; editing by Martha Graybow editing by Andre Grenon)

Thursday, 5 August 2010

The CIA, Banking Scams, and R. Allen Stanford

In a scandal-plagued era such as ours, scarred by murderous wars, occupations and corruption that would make a Roman emperor blush, accused crooks have names; even juiced ones like R. Allen Stanford.

Last year, when a federal court in Texas handed down indictments charging Stanford International Bank (SIB) and its officers with "orchestrating a fraudulent, multibillion dollar investment scheme," I wondered: was there more to the story?

Indeed there was.

Once described by fawning media as a "flamboyant Texan" and "philanthropist," Stanford was founder and sole shareholder of a global banking empire once conservatively valued at $50 billion.

According to the federal indictment, "Sir Allen," as he was dubbed by a corrupt former minister of Antigua, ran a massive Ponzi scheme camouflaged as a bank that sold some $7 billion in self-styled "certificates of deposit" and $1.2 billion in mutual funds.

Operated from behind a façade of well-appointed offices and with a jet-set lifestyle to match, the Stanford grift may have been impressive but it was a scam from the get-go. Lured by "high rates that exceed those available through true certificates of deposits offered by traditional banks," thousands lost their shirts.

Those high rates were a lie and the bank's "unique investment strategy" about as legitimate as a penny-stock fraud or advance fee scam on the internet. Of the $8 billion hoovered up by the banker and his cronies, only about $500 million have been recovered.

Facing the prospect of years in prison, The Miami Herald reported that SIB's chief financial officer James Davis, once Stanford's college roommate and originally charged in the indictment, copped a plea to save his own neck.

Davis told the Justice Department that "his boss had been stealing from investors for decades while paying bribes to regulators and even performing blood oaths never to reveal his secrets."

Talk about a wise guy!

And with connections and generous pay-outs to U.S. politicians going back more than a decade, 65% of which went to Democrats including our "change" president, Allen Stanford was plugged-in.

Evidence also suggests he may have gotten an assist covering his tracks from regulators and U.S. secret state agencies, including the CIA.

SEC Stand Down

Allen Stanford did business the American way; he swindled depositors and then siphoned-off the proceeds into a spider's web of offshore accounts.

The indictment charges "it was part of the conspiracy that Stanford ... and others would cause the movement of millions of dollars of fraudulently obtained investors' funds from and among bank accounts located in the Southern District of Texas and elsewhere in the United States to various bank accounts located outside of the United States ... in order to exercise exclusive control over the investors' funds."

Auditors learned that funds were moved through Stanford-controlled accounts to offshore banks, including HSBC in London, Bank Julius Baer in Zurich and eight others; banks which have figured in past money laundering or tax-avoidance scandals. None have been charged with an offense in connection with the affair.

In all, 28 numbered accounts were listed by prosecutors, veritable black holes that escaped scrutiny; that is if regulators in Washington were minding the store, which they weren't.

Years earlier, SEC investigators at the commission's Ft. Worth office uncovered evidence of wrongdoing. According to an explosive report by the SEC's Office of the Inspector General, Ft. Worth examiners launched a series of probes in 1997, 1998, 2002 and 2004 exploring SIB practices but their diligence was sabotaged by high-level officials.

That report, Investigation of the SEC's Response to Concerns Regarding Robert Allen Stanford's Alleged Ponzi Scheme, Case No. OIG-526, March 31, 2010, paints a damning picture of the regulatory process.

The inspector general states: "While the Fort Worth Examination group made multiple efforts after each examination to convince the Fort Worth Enforcement program ('Enforcement') to open and conduct an investigation of Stanford, no meaningful effort was made by Enforcement to investigate the potential fraud or to bring an action to attempt to stop it until late 2005."

Last month, the Fort Worth Star-Telegram reported that staff members, who spoke on condition of anonymity because they feared management retaliation, told the newspaper that higher-ups wanted "tools to do away with people who have a dissenting opinion."

Senior managers called the probes a "goat screw" and ordered them killed.

The OIG investigation "found that the former head of Enforcement in Fort Worth, who played a significant role in multiple decisions over the years to quash investigations of Stanford, sought to represent Stanford on three separate occasions after he left the Commission, and in fact represented Stanford briefly in 2006 before he was informed by the SEC Ethics Office that it was improper to do so." (emphasis added)

In Florida, The Miami Herald revealed that state regulators did the SEC one better and gave the bank carte blanche to operate secretly, moving "vast amounts of money offshore--without reporting a penny to regulators."

The arrangement between the bank and the Florida Office of Financial Regulation was so brazen, that Stanford's company "was allowed to sell hundreds of millions in bank notes without allowing regulators to check for fraud."

And once those suspect instruments were sold, the Herald reported that "employees shredded records of the trust agreements and CD purchases once the original documents were sent to Antigua, state records show."

A sweet deal if you can get it, or have powerful friends who might wish to avoid messy inquiries touching upon sensitive matters.

The New York Times reported last year that current charges "stem from an inquiry opened in October 2006," that is, nearly a decade "after a routine exam of Stanford Group, according to Stephen J. Korotash, an associate regional director of enforcement with the agency's Fort Worth office."

Korotash told the Times that the SEC "stood down" its investigation "at the request of another federal agency, which he declined to name."

According to BusinessWeek, in 2006 the Bush administration "bestowed on his intelligence czar ... broad authority, in the name of national security" to excuse companies from "their normal accounting and securities-disclosure obligations" if such disclosures revealed "certain top-secret defense projects."

At the time, William McLucas, the Securities and Exchange Commission's former enforcement chief told the publication that the ability to conceal financial information from regulators under the rubric of "national security" could lead some companies "to play fast and loose with their numbers."

The former official said, "it could be that you have a bunch of books and records out there that no one knows about."

In response to media reports, congressman Dennis Kucinich (D-OH), wrote a letter to SEC Chair Mary Schapiro last year, demanding documents, and answers, why the SEC suspended investigations of the "Stanford Group under pressure from another unidentified federal agency."

The Ohio congressman said, "if this is true ... our subcommittee will demand that the SEC reveal the name of that agency which told it not to enforce federal laws which protect investors."

Neither documents nor answers were forthcoming.

Cynics might see something untoward here, but I think it's all just a coincidence, like drug planes bought with bundles of cash laundered through American banks.

Drug Probes Killed

In 1986 during the Iran-Contra period, Allen Stanford's Guardian International Bank set up shop on the sleepy Caribbean isle of Montserrat (pop. 5,870).

It didn't take long before the bank came under scrutiny. Guardian was the subject of a joint Scotland Yard-FBI investigation "into so-called 'brass-plate' banks," The Independent disclosed.

According to reporters David Connett and Stephen Foley, the bank "was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers."

During the Iran-Contra scandal, congressional investigators and journalists scrutinized links between Colombian drug traffickers and the CIA's Nicaraguan Contra army.

By 1986, evidence began to emerge that top Contra officials and the Agency enjoyed cosy ties with both Escobar and the Orejuela brothers. Under pressure from the Reagan administration however, both Congress and corporate media deep-sixed the story as the affair was covered-up.

A decade later, largely as a result of outrage generated by the late Gary Webb's Dark Alliance series, a memorandum of understanding between Reagan's Justice Department and the Agency entered the public record. That 1982 memo legally freed the CIA from reporting drug smuggling by their assets.

Former FBI agent Ross Gaffney who led the Guardian probe, told Connett and Foley that "we suspected that Stanford's bank was involved in money laundering." But before that investigation could be developed, Stanford suddenly pulled up stakes and "voluntarily surrendered his Montserrat banking licence and left the island."

Gaffney said that even after Guardian closed, the FBI "continued to take an interest in Stanford and set up a second inquiry into that bank after receiving intelligence that it continued to launder money for the Medellin and Cali cartels."

The former federal agent told The Independent, "We had hard intelligence about what he was doing and we began to develop it" but the investigation died or more likely, killed, by officials higher-up the food chain.

After leaving Montserrat, Stanford trained his sights on Antigua and Barbuda and developed a close relationship with former prime minister Lester Bird.

"Under the Bird family leadership" Connett and Foley reported, "the island was widely regarded as one of the most corrupt in the Caribbean, with well-documented links to arms and drug smuggling and money laundering."

According to The Independent, "in 1990, Israeli automatic weapons ordered by Mr Bird's brother Vere turned up in the hands of a notorious Colombian drug trafficker."

Despite suspicions, it appears that Stanford was golden as far as the feds were concerned; just another guy with an endless supply of "get-out-of-jail-free" cards.

One reason Stanford operated with impunity, the BBC informs us, is that he "may have been a US government informer."

DEA documents seen by BBC's investigative unit Panorama, suggest that "drug money [was] originally paid in to Stanford International Bank by agents acting for a feared Mexican drug lord known as the 'Lord of the Heavens'."

Confidential DEA sources believe that Stanford turned over "details of money-laundering from Latin American clients from Colombia, Mexico, Venezuela and Ecuador," thus "effectively guaranteeing himself a decade's worth of 'protection' from the authorities, especially the SEC."

"We were convinced that Stanford's bank attracted millions of narco-dollars," sources told Panorama, "but it was very difficult to get the evidence to nail him."

"The word is" BBC reported, "that Stanford has been a confidential informer for the DEA since '99."

Snitch or not, this raises intriguing questions.

Was Stanford's bank a black hole which U.S. intelligence agencies could exploit, in the interest of "national security" mind you, and therefore exempt from "normal disclosure obligations" as BusinessWeek averred?

If this were so, then even if Stanford were an informant he could have continued to launder drug money and profit nicely; such gentleman's agreements are not without precedent.

One need only glance at internal U.S. government documents released by the National Security Archive, documents which revealed the Cali cartel's close collaboration with corrupt Colombian police, neofascist paramilitaries and the CIA when Medellín drug lord Pablo Escobar was run to ground.

Pointedly, was Stanford's banking empire another in a long line of institutional channels that drug cartels and the CIA could both profit from?

Banks, Drugs and Covert Operations

Across the decades, historians, investigative journalists and researchers have uncovered strong evidence that various banks have served as virtual cut-outs for CIA covert operations.

Readers need only recall illegal activities by institutions as diverse as Paul Helliwell's Castle Bank and Trust in the Bahamas, Frank Nugan and Michael Hand's Nugan Hand Bank in Sydney and the Cayman Islands, or the far-flung empire of Agha Hasan Abedi's Bank and Credit and Commerce International.

Separated in time and geography, what all three banks had in common was their close proximity to international drug trafficking networks and the CIA, particularly in areas of acute interest to U.S. policy planners. Did Stanford International Bank have a similar arrangement with the Agency?

When the scandal finally broke, the Houston Chronicle reported that authorities had been "looking for ties to organized drug cartels and money laundering, going back at least a decade."

In the late 1990s, court documents revealed that "operatives of the Juarez cartel began opening accounts at Stanford's Antigua-based bank," laundering profits amassed by the Amado Carrillo Fuentes organization, the late "Lord of the Heavens" referred to in the BBC report.

The Chronicle notes that Fuentes' representatives "used Stanford International Bank to open 10 accounts and deposit $3 million." We should bear in mind however, these represent only known accounts. Were there others? Federal and state investigators have said that there were.

After authorities determined the accounts were held by a notorious drug cartel, Stanford turned over the $3 million. Yet despite hard evidence of criminal wrongdoing, federal officials told the Chronicle that "any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission's civil inquiry."

One might even say rather conveniently.

During the same period, Texas state securities regulators uncovered more evidence of money laundering by Stanford entities. But because it involved offshore banks, they "referred it" to the FBI and SEC.

Texas Securities Commissioner Denise Voigt Crawford told a Senate Finance Committee last year, "Why it took 10 years for the feds to move on it, I cannot answer."

Miffed by government foot-dragging, Crawford added, "We worked with the FBI and the SEC and basically gave them the case. We told them what we'd seen and they were going to run with it."

But that investigation died on the vine.

Echoing similar themes, The Observer disclosed an FBI source close to the investigation confirmed that the Bureau "was looking at links to international drug gangs as part of the huge investigation into Stanford's banking activities."

The Observer reported that Mexican authorities seized one of Stanford's private jets in connection with alleged links to the Gulf cartel and said that "cheques found inside the plane were linked to the cartel, which is one of the most violent criminal organisations in the world."

DEA sources told the London newspaper "there may well have been a trail connecting his Mexican affairs to narco-trafficking interests." However, a second DEA official told The Observer, "I think we'll find that any possible drug-related trail and SEC priorities are not all in the same frame."

A curious statement considering the billions of dollars in fraudulent activities alleged against the bank, some of which may have been derived from laundering drug money.

One would assume that evidence of serious wrongdoing would be motive enough to take a hard look at the allegations and not concoct a fairy tale that these charges lie "buried in the paperwork"!

A U.S. drug enforcement official told The Observer, "Any major US interest seeking to avoid fully disclosed investments would have to go to pretty careful lengths to avoid encountering cartel interests."

"Anyone seeking to conceal or launder money would find it in safe and lucrative hands were they to forge alliances with, rather than skirt, the cartels," The Observer noted, and would "find them accommodating in terms of remuneration." The official hastened to add, it's "nothing anyone will confirm for Stanford right now."

The question is: why?

A Full-Service Bank

One possible answer may revolve around charges that SIB's Venezuela branch was a conduit for laundered CIA funds.

If true, then the Agency would be dead set against trial disclosures that revealed the bank had been involved in laundering drug money, particularly if narcotics syndicates are playing a role in U.S. destabilization efforts there.

Months before Stanford's empire collapsed, Venezuela's socialist government launched a raid on SIB offices in Caracas.

The Daily Telegraph reported that "Sir Allen Stanford, the Texan billionaire ... is now at the centre of an international spying row."

The conservative British newspaper disclosed that "officials from Venezuelan military intelligence raided a branch of his offshore bank over claims that its employees were paid by the CIA to spy on the south American country."

Although corporate media in the U.S. dismissed Venezuelan allegations as propaganda, questions persist.

While on a charm offensive before his arrest last year, Stanford gave an interview to CNBC's Scott Cohn. When asked about claims that his bank may have been a cut-out for the Agency, this curious exchange took place:

Cohn: "You just by nature of your position and where you were got to know a lot of people in Latin America, in Africa, in Europe, around the world, and it strikes me that somebody in your position would be useful to the authorities in the US trying to find out what was going on there, what was going on in places like Venezuela. Can you tell me about any sort of role you played that way, were you helpful to the authorities in the US?"

Stanford: "Are you talking about the CIA?"

Cohn: "Well, you tell me."

Stanford: "I'm not going to talk about that."

Cohn: "Why not?"

Stanford: "I'm just not going to talk about that."

Cohn: "Well, I mean, am I--is my premise correct that someone in your position would be helpful to those who wanted to know what was going on?"

Stanford: "I really don't have anything to add to that that would be of any value."

Stanford's reticence is certainly understandable, considering Frank Hand's fate 30 years ago.

During a similar scandal when the CIA-linked Nugan Hand bank collapsed amid charges of fraud and drug money laundering, the chief executive turned up dead in his Mercedes with a shot to the head.

Despite evidence uncovered by investigations going back to the 1980s, drug money laundering charges or any reference to Agency activities will not figure in the Justice Department's case when Stanford goes on trial in January.

As ABC News delicately put it, SEC action against Stanford "may have complicated the federal drug case."

Underscoring the federal government's reluctance to explore this dark corner of Allen Stanford's career, it might do well to keep in mind what one airline executive told investigative journalist Daniel Hopsicker during his probe into the 9/11 attacks.

"Sometimes when things don't make business sense, its because they do make sense...just in some other way."

Wednesday, 4 August 2010

10-Cv-1394 001 Complaint Against Certain Former Stanford Employees Who Invested in SIBL CDs

Complaint Against Certain Former Stanford Employees Who Invested in SIBL CDs

Janvey Hits Ex-Stanford Workers With Suit

Court-appointed receiver Ralph Janvey now wants former Stanford employees who invested in CDs to repay the proceeds. In his suit, brought against Ronald Wieselbert et al, Janvey has produced a list of 77 former workers whom he alleges received over US$27 million.

The list includes what each employee allegedly received.

The return on the CDs ranged from US$52,000 to over US$3 M, according to Janvey. This, he is claiming, was unjustly derived from the 20,000 CD holders who were alleged duped into buying into a Ponzi scheme.

While the document did not include where the employees were based, Caribarena.com has learned that at least one former employee in Antigua has received a letter demanding the return of funds accrued.

Janvey alleges that "the former employee investors have been unjustly enriched by their receipt of CD Proceeds".

The letter to the former employees is reprinted below:

Monday, 2 August 2010

Stanford victims back bill

Some Baton Rouge-area residents are among thousands of investors supporting federal legislation that would provide partial relief from more than $7 billion in losses allegedly suffered at the hands of Texas financier Robert Allen Stanford.

“We’re super happy, but we’re really nervous at the same time,” Baton Rouge resident Blaine Smith said. “This is such a huge step in the right direction for us.”

Smith said Friday that he lost about $1 million in retirement savings in 2009, when Stanford was shut down by the Securities and Exchange Commission and indicted on federal fraud charges in Houston.

Early last year, thousands of other investors who lost billions to Bernard Madoff of New York recovered more than $500 million from the Securities Investor Protection Corp.

The SIPC is funded by the financial services industry. It provides partial restitution to victims of fraud committed by securities dealers who work for SIPC members.

Madoff, however, had pleaded guilty to federal charges and later was sent to prison for 150 years.

Stanford maintains that he is innocent. He remains in federal custody in Houston, where he is scheduled for trial in January.

Stanford’s chief financial officer, Mississippi resident James M. Davis, has pleaded guilty to felony charges, though. And Davis stated in court that he helped Stanford perpetrate massive frauds against his investors.

Against this backdrop last week, U.S. Rep. John Culberson, R-Houston, was able to move a proposed amendment to the Securities Investor Protection Act of 1970 through a subcommittee of the House Appropriations Committee.

That proposal is narrowly written to provide SIPC coverage for investors defrauded by an SIPC member whose assets were placed under a federal receivership after Jan. 1, 2009, and before March 1, 2009.

Stanford’s assets were placed under receivership in February 2009.

Angela Shaw, who founded the Stanford Victims Coalition in the Dallas area, said Thursday that SEC attorneys helped craft Culberson’s proposal.

That was a surprise because SEC Chairman Mary Schapiro had not yet announced a decision on a request by the Louisiana delegation and other members of Congress for SIPC coverage of Stanford victims.

SEC spokesmen were asked Friday for confirmation of SEC participation in the legislative proposal, but they did not respond.

“The SEC was clearly involved with this new development,” said John Wade, a St. Tammany Parish veterinarian and partner in a pet identification-chip business that lost more than $1 million in retirement funds to Stanford.

“So many people are clinging onto this hope,” Wade said of Culberson’s proposal.

U.S. Rep. Bill Cassidy, R-Baton Rouge, confirmed initial action on Culberson’s proposal, which he described as “encouraging news for Stanford victims who have sought help from the SEC for a year and a half.”

The proposal, however, will not become law unless it first passes the full Appropriations Committee and then is approved by both the House and Senate.

Old anger

The reported SEC support was welcomed by investors and legislators who were furious in April, when the SEC’s Office of Inspector General reported that the SEC’s enforcement division repeatedly ignored early recommendations for action against Stanford.

“The OIG investigation found that the SEC’s Fort Worth office was aware since 1997 that Robert Allen Stanford was likely operating a Ponzi scheme,” the OIG reported.

“We found that over the next 8 years, the SEC’s Fort Worth examination group conducted four examinations of Stanford’s operations, finding in each examination that (certificates of deposit) could not have been ‘legitimate,’ ” Inspector General H. David Kotz wrote.

A Ponzi is an illegal scheme in which no actual investments are made. Instead, money from new investors simply is used to pay earlier investors relatively small fake dividends or fake profits while the schemers convert much of the money to their own uses.

Stanford Group Co. poured much of its investors’ money into Stanford International Bank on the Caribbean island of Antigua, federal prosecutors and SEC attorneys allege in an indictment and civil suit against Robert Allen Stanford.

Those federal attorneys also allege that Stanford, in effect, used the Antiguan facility as his personal piggy bank.

During those important early years, Kotz reported in April, SEC enforcement action was thwarted by a Fort Worth enforcement chief who later attempted repeatedly to gain SEC permission to work for Stanford.

In addition, Kotz reported, the SEC’s own policies encouraged enforcement officers to concentrate on easy, simple cases and avoid complicated, difficult investigations.

Cassidy said the SEC’s “mission statement is to protect investors. They failed, and innocent Louisiana families paid the price.”

“The SEC Inspector General’s report paints a picture of an SEC that was asleep at the wheel and allowed innocent people to be robbed of their hard-earned savings,” said U.S. Sen. Mary Landrieu, D-La. “Congress must continue to press forward to ensure that the victims of this disgraceful Ponzi scheme get the relief they need.”

“The depth of the failure at the SEC in the Stanford investigation is unbelievable,” said U.S. Sen. David Vitter, R-La.

Vitter added that he is pushing for a Senate Banking Committee hearing on Kotz’ report in September because: “The one thing that is clear from the report is that the debt the SEC owes the Stanford victims is enormous.”

U.S. Rep. Charlie Melancon, D-Napoleonville, is one of Vitter’s re-election opponents. But he joined Vitter in seeking SIPC assistance for Stanford investors.

“I urge the SEC to act swiftly in correcting these wrongs, so these families whose retirement and savings were stolen as a result of greed and government failure can begin rebuilding their lives,” Melancon said.

In April, the SEC’s Schapiro said of Kotz’ findings: “We will carefully analyze the report and implement any additional reforms as necessary for effective investor protection.”

Bush's ambassador to eastern Caribbean protected Stanford operations

August , 2010 -- Bush's ambassador to eastern Caribbean protected Stanford operations

Antigua became the favorite playground for CIA money laundering during Bush administrations...



Mary K. Ourisman, the Texas-born socialite wife of Maryland car dealer Mandy Ourisman, helped provide diplomatic and legal cover for jailed former Stanford International Bank chief Allen Stanford, according to Stanford insiders who spoke to us. Mary Ourisman was George W. Bush's ambassador to Barbados and the Eastern Caribbean States, which include Antigua and Barbuda, the headquarters for Stanford's one-time global banking and financial services empire that collapsed in 2009 after it was discovered to be a Ponzi scheme.... Stanford is in prison in Texas and has been refused bail as a flight risk -- Stanford is also a citizen of Antigua and Barbuda. He is scheduled to go on trial in January 2011, conveniently two months after the congressional election in November. Stanford's campaign contributions fell into the coffers of congressional members of both Democrats and Republicans.

However, as we previously reported, Stanford International Bank, Bank Al-Madina in Lebanon and Billions of syphoned monies from the Iraq and Afghanistan campaigns, also became a replacement for the collapsed Bank of Credit and Commerce International (BCCI) as a vehicle for drug money laundering and other covert operations on behalf of the CIA and other intelligence agencies....

Mary Ourisman, a political fundraiser for Bush and other GOP candidates and a close friend of former First Lady Laura Bush, became U.S. ambassador to Barbados and the Eastern Caribbean States in 2006. In her job, Ourisman ensured that Stanford's financial operations in Antigua and Barbuda, as well as in two other Caribbean nations where she was credentialed as ambassador, St. Kitts-Nevis and St. Vincent and the Grenadines, were protected from federal regulators.

To provide even more protection for Stanford's money laundering and other covert operations, Stanford showered GOP and Democratic senators with large campaign contributions, including $83,000 for John Cornyn of Texas and $950,000 for the Democratic Senate Campaign Committee, and particularly, Bob Menendez of New Jersey. Menendez, who maintains close connections to the Cuban exile community in Florida and new Jersey and its CIA/MOSSAD veteran operatives, has refused to investigate the Stanford fraud on behalf of its victims and has tried to block any Senate investigation of Stanford's links to the CIA/MOSSAD and top government officials, Democratic and Republican.

It is also noteworthy that Texas was the only U.S. state to have entered into a financial regulatory agreement with Antigua. The Texas Department Banking and the Antigua and Barbuda International Financial Sector Regulatory authority signed the agreement on July 26, 2001. More amazingly, the agreement was signed while Antigua was subject to a U.S. Treasury advisory warning of potential fraud.

Ourisman sat idly in Bridgetown, Barbados as Antigua's Attorney General, Errol Cort, who had also been Stanford's personal attorney on the island, changed the island nation's money laundering laws to the benefit of Stanford and his CIA/MOSSAD overseers, without a peep from any of the regulatory agencies in Washington. Cort, who is now the National Security Minister of Antigua and has used his position to make things uncomfortable for Stanford fraud investigators traveling to the island, also served on the board of the Eastern Caribbean Central Bank, which took over Stanford's Bank of Antigua after Stanford empire collapsed in 2009. Stanford had become a political kingpin in Antigua, exercising influence over the previous Lester Bird government and its successor, the present Baldwin Spencer government -- without any interference from Ourisman in Barbados or the State Department of stooges of CIA....

Even today, Antigua's ambassador to the United States, Debra-Mae Lovell, the wife of Antigua's corruption-tainted Finance Minister Harold Lovell, spends most of her time in Washington acting as a public relations flack for Antigua and ridiculing the former Stanford investors who were defrauded by the Ponzi scheme -- a scheme facilitated by a corrupt Antiguan government. Secretary of State Hillary Clinton, more concerned about the continuation of U.S. military basing rights on Antigua, has warmly embraced Ambassador Lovell and members of her government and has lavished hundreds of millions of dollars of aid on Antigua.

The bodies have piled up among those who were most familiar with Stanford's operations. On February 25, 2009, we reported, "No one will ever know just how Charlesworth Shelley Hewlett, who ran CAS Hewlett & Company out of a small office sandwiched between fish and chips shops on South Bury Road in Enfield in north London, came to be the accountant for Allen Stanford's $50 billion financial empire that included Stanford International Bank (SIB). That is because Mr. Hewlett, known as a quiet gray-haired man to those who had offices in his north London office block, died 'peacefully'...with help from CIA goons, a few weeks before the Stanford scandal hit the front pages. Hewlett was 73 but no one knows the reason for Hewlett's death." Hewlett also maintained an office on St. John's Street, in St. John's, the capital of Antigua.

Stogniew, who headed a one-man company in Florida, Stogniew and Associates, provided risk analysis services for Stanford. Stogniew produced a flimsy three-page risk analysis report for Stanford in 2003. It mostly consisted of disclaimers. Gerry Stogniew, who founded his company in 1980 and resided in Seminole, Florida, died in July 2008.... The firm was taken over by Stogniew's daughter and CIA.... Oddly, the professional staff for Stogniew and Associates are only listed by their initials. Federal Election Commission records indicate Stogniew donated to the campaigns of George H. W. Bush in 1987 and Florida Republicans Bill McCollum in 1999 and Katherine Harris in 2005.

Allen Stanford and Mary Ourisman shared more than an interest in protecting Stanford International Bank from nosy regulators: they were both born in the small Texas town of Mexia, Ourisman in 1946 and Stanford in 1950. The town's other "famous" celebrity: the late Anna Nicole Smith, who died from a suspected lethal drug overdose in Hollywood, Florida in 2007.....

Stanford Case - Investers by Geographic Location

Allen Stanford’s Venture Capital Investments Revealed