I have heard (but cannot confirm) that Stanford is due before the judge on 15th of this month for assessment, let's keep our fingers crossed that the judge can see through his tricks and deceit and this time the trial goes ahead in January.
Here is the latest report:
Source: By Laurel Brubaker Calkins
R. Allen Stanford, the indicted Texas financier, was transferred out of a prison hospital where he spent almost nine months being treated for a drug dependency acquired in jail and lingering effects from an inmate beating.
Stanford, 61, has been imprisoned as a flight risk since his June 2009 indictment on charges that he defrauded investors through an alleged Ponzi scheme built on sales of certificates of deposit sold by his Antigua-based Stanford International Bank.
U.S. District Judge David Hittner in Houston ordered Stanford into a prison rehabilitation program for treatment of a dependence on anxiety drugs prescribed to him in prison and for evaluation of effects from a head injury he received in a jailhouse assault in September 2009.
Stanford was treated at the hospital unit at the Federal Detention Center in Butner, North Carolina, since February. He is now in the federal prison transfer facility in Oklahoma City, according to the bureau’s website. He is being moved within days to the federal facility in Houston where he was previously locked up, according to a person familiar with the matter who declined to be identified because the judge barred people involved in the case from discussing it publicly.
His trial, which was originally scheduled for January 2011, hasn’t yet been rescheduled.
Stanford’s criminal-defense attorney, Ali Fazel, declined to comment on his client’s current location or mental state, citing Hittner’s order against publicly discussing some aspects of the case.
‘Back in Houston’
“Once he’s back in Houston, the next thing would be either a hearing or some sort of agreement between the parties that he is competent to stand trial,” Fazel said in a phone interview yesterday. “The judge has to find him competent” before a trial date can be set, Fazel said.
A lawyer representing Stanford in a related civil suit brought by the U.S. Securities and Exchange Commission had said Stanford should remain in the North Carolina facility through at least the end of January.
“Mr. Stanford still suffers from long-term and short-term memory loss as a result of his medical treatment,” Stephen Cochell, the civil attorney, said in a Sept. 27 filing in federal court in Dallas.
Cochell, in a phone interview yesterday, said he wasn’t notified of Stanford’s transfer from the North Carolina hospital unit or given access to the most recent reports by the prison’s doctors.
“I assume his doctors have submitted a supplemental report,” Cochell said. “I’ll get a chance to talk to him when he comes back.”
Thursday, 10 November 2011
Wednesday, 9 November 2011
Allen Stanford Completes Drug Treatment?
Source: Scott Cohn (CNBC)
Accused Ponzi schemer Allen Stanford has been moved from the Bureau of Prisons medical center in North Carolina where he has been undergoing drug rehabilitation treatment since early this year, CNBC has learned.
That could be a signal that Stanford has completed his treatment, and may be ready to stand trial. Stanford, 61, faces 14 criminal counts in an alleged $7 billion Ponzi scheme. He has been held without bail since his indictment in 2009, but his trial was delayed after he became addicted to prescription drugs while in custody, and was ruled incompetent to stand trial.
His trial is currently scheduled for January, but it is unclear whether he would be ready for a trial by then. Stanford’s court-appointed attorney, Ali Fazel, was not immediately available for comment. Earlier this week, Fazel declined to discuss the timing of a trial, citing a court-imposed gag order in the case.
Accused Ponzi schemer Allen Stanford has been moved from the Bureau of Prisons medical center in North Carolina where he has been undergoing drug rehabilitation treatment since early this year, CNBC has learned.
That could be a signal that Stanford has completed his treatment, and may be ready to stand trial. Stanford, 61, faces 14 criminal counts in an alleged $7 billion Ponzi scheme. He has been held without bail since his indictment in 2009, but his trial was delayed after he became addicted to prescription drugs while in custody, and was ruled incompetent to stand trial.
His trial is currently scheduled for January, but it is unclear whether he would be ready for a trial by then. Stanford’s court-appointed attorney, Ali Fazel, was not immediately available for comment. Earlier this week, Fazel declined to discuss the timing of a trial, citing a court-imposed gag order in the case.
Covering Their Tracks: Firm Linked To Ponzi Scheme Erases Tagg Romney From Website
Source: Lee Fang (Think Progess)
Yesterday, ThinkProgress released our investigation of the Romney family’s investment firms, including Solamere Advisors and its parent company, Solamere Capital, which is run by Mitt Romney’s son Tagg. The report found that Tagg founded his firm using $10 million of Mitt’s money, and later partnered with a group of brokers who allegedly helped perpetrate one of the largest Ponzi schemes in modern history, the $8.5 billion Stanford Financial Group.
After our report, the Romney campaign released a statement to ABC News and the National Journal simply attacking ThinkProgress as a “a left-wing blog with a highly partisan agenda.” Despite calling our story “false material,” the Romney spokesperson did not directly dispute any of our assertions. The Romney campaign has not explained why, for instance, Tagg Romney falsely claimed that his Solamere Advisors partners were “cleared” of wrongdoing in connection to the Stanford Financial Group Ponzi scheme.
Now, it appears that one of the firms is trying to cover up its tracks. Sometime last night, Solamere Advisors, the firm run by brokers who allegedly took part in the Stanford Ponzi Scheme, deleted the section of their website that lists Tagg Romney and Spencer Zwick, the Romney for President lead fundraiser. View a screen shot of the current web address, which shows a “404 File or directory not found” error message:
Fortunately, ThinkProgress captured screen shots of the Romney family investment firm websites before we published our story. View a screen shot of the Solamere Advisors directors page before the deletion (click to enlarge the website image):
Solamere Advisors directors, including Tagg Romney, Spencer Zwick, and several brokers who allegedly perpetrated the Stanford Ponzi scheme
In an interview last month, Tagg Romney told ThinkProgress that his partners were “cleared” from the Stanford Ponzi scheme lawsuit to retrieve what prosecutors believe are the fraudulent gains made by his partners, Tim Bambauer, Deems May, and Brandon Phillips. He also suggested that his former Stanford employee partners were the true victims since they had been promised bonuses that they had never received. In fact, in court documents obtained by ThinkProgress, none of the men have been cleared, and a court-appointed audit found that they made about $1.6 million in participating in the Stanford Ponzi scheme.
Yesterday, ThinkProgress released our investigation of the Romney family’s investment firms, including Solamere Advisors and its parent company, Solamere Capital, which is run by Mitt Romney’s son Tagg. The report found that Tagg founded his firm using $10 million of Mitt’s money, and later partnered with a group of brokers who allegedly helped perpetrate one of the largest Ponzi schemes in modern history, the $8.5 billion Stanford Financial Group.
After our report, the Romney campaign released a statement to ABC News and the National Journal simply attacking ThinkProgress as a “a left-wing blog with a highly partisan agenda.” Despite calling our story “false material,” the Romney spokesperson did not directly dispute any of our assertions. The Romney campaign has not explained why, for instance, Tagg Romney falsely claimed that his Solamere Advisors partners were “cleared” of wrongdoing in connection to the Stanford Financial Group Ponzi scheme.
Now, it appears that one of the firms is trying to cover up its tracks. Sometime last night, Solamere Advisors, the firm run by brokers who allegedly took part in the Stanford Ponzi Scheme, deleted the section of their website that lists Tagg Romney and Spencer Zwick, the Romney for President lead fundraiser. View a screen shot of the current web address, which shows a “404 File or directory not found” error message:
Fortunately, ThinkProgress captured screen shots of the Romney family investment firm websites before we published our story. View a screen shot of the Solamere Advisors directors page before the deletion (click to enlarge the website image):
Solamere Advisors directors, including Tagg Romney, Spencer Zwick, and several brokers who allegedly perpetrated the Stanford Ponzi scheme
In an interview last month, Tagg Romney told ThinkProgress that his partners were “cleared” from the Stanford Ponzi scheme lawsuit to retrieve what prosecutors believe are the fraudulent gains made by his partners, Tim Bambauer, Deems May, and Brandon Phillips. He also suggested that his former Stanford employee partners were the true victims since they had been promised bonuses that they had never received. In fact, in court documents obtained by ThinkProgress, none of the men have been cleared, and a court-appointed audit found that they made about $1.6 million in participating in the Stanford Ponzi scheme.
Wednesday, 2 November 2011
MF Global liquidation pours more salt in Stanford victims’ wounds
Source: Loren Steffy (Chron.com)
MF Global, the international commodities trading firm run by former Goldman Sachs executive and New Jersey Gov. Jon Corzine, filed for bankruptcy Monday after a series of bad bets on European bonds. Within hours, the Securities Investor Protection Corp. swooped in, filing an application in federal court to appoint a trustee and calling for the firm to be liquidated to protect investors.
In making the filing, SIPC chairman Orlan Johnson said:
When the customers of a failed SIPC member brokerage firm have left their securities in the custody of that firm, SIPC acts as quickly as possible to protect those customers. In this case, SIPC initiated the liquidation proceeding within hours of being notified by the [Securities and Exchange Commission] that a SIPC case was necessary to protect the investing public.
Which all sounds very speedy and efficient, and which is no doubt welcomed by MF Global’s customers. But the speed and efficiency with which SIPC responded to MF Global’s demise stands in stark contrast to its handling of the Stanford Financial case.
As I’ve written before, customers of Stanford’s SIPC-insured brokerage waited more than two years for the SEC to notify SIPC of the need to protect investors, and since that notification this summer, SIPC’s board has been dragging its feet. While it considered the issue at a September board meeting, there’s been no word since then, and Stanford’s U.S. brokerage customers remain in the dark.
The Stanford case was, of course, more difficult. The money investors lost was in the form of certificates of deposit backed by Stanford’s offshore bank that the brokerage peddled to its customers. But neither the SEC nor SIPC has acted “as quickly as possible.” As we approach the third anniversary of Stanford’s demise, it’s way past time for SIPC to make good on its obligations to Stanford’s victims.
MF Global, the international commodities trading firm run by former Goldman Sachs executive and New Jersey Gov. Jon Corzine, filed for bankruptcy Monday after a series of bad bets on European bonds. Within hours, the Securities Investor Protection Corp. swooped in, filing an application in federal court to appoint a trustee and calling for the firm to be liquidated to protect investors.
In making the filing, SIPC chairman Orlan Johnson said:
When the customers of a failed SIPC member brokerage firm have left their securities in the custody of that firm, SIPC acts as quickly as possible to protect those customers. In this case, SIPC initiated the liquidation proceeding within hours of being notified by the [Securities and Exchange Commission] that a SIPC case was necessary to protect the investing public.
Which all sounds very speedy and efficient, and which is no doubt welcomed by MF Global’s customers. But the speed and efficiency with which SIPC responded to MF Global’s demise stands in stark contrast to its handling of the Stanford Financial case.
As I’ve written before, customers of Stanford’s SIPC-insured brokerage waited more than two years for the SEC to notify SIPC of the need to protect investors, and since that notification this summer, SIPC’s board has been dragging its feet. While it considered the issue at a September board meeting, there’s been no word since then, and Stanford’s U.S. brokerage customers remain in the dark.
The Stanford case was, of course, more difficult. The money investors lost was in the form of certificates of deposit backed by Stanford’s offshore bank that the brokerage peddled to its customers. But neither the SEC nor SIPC has acted “as quickly as possible.” As we approach the third anniversary of Stanford’s demise, it’s way past time for SIPC to make good on its obligations to Stanford’s victims.
Tuesday, 1 November 2011
Romney Family Investment Group Partnered With Alleged Perpetrators Of $8 Billion Ponzi Scheme
By Lee Fang (Think Progress)
Mitt Romney, his son Tagg, and Romney’s chief fundraiser, Spencer Zwick, have extensive financial and political ties to three men who allegedly participated in an $8.5 billion Ponzi scheme. A few months after the Ponzi scheme collapsed, a firm financed by Mitt Romney and run by his son and chief fundraiser partnered with the three men and created a new “wealth management business” as a subsidiary.
In an exclusive interview with ThinkProgress, Tagg Romney confirmed their business relationship, but falsely claimed that the men were cleared of any wrongdoing associated with the Ponzi scheme. Tagg Romney told ThinkProgress that his three partners collected about $15,000 from their involvement in the Ponzi scheme. Court documents obtained by ThinkProgress show that the legal proceedings are ongoing and the men made over $1.6 million selling fraudulent CDs to investors.
The Ponzi Scheme
In 2009, prosecutors announced charges against the Stanford Financial Group, which managed a portfolio of $8.5 billion, for running a “massive, ongoing fraud” against its investors. The Ponzi scheme bust was one of the largest in recent history, second only to Bernie Madoff, who perpetrated a fraud estimated to be around $17 billion. The Stanford Ponzi scheme wiped out the savings of thousands, including many American retirees across the country. In Texas, 1290 people lost their retirement savings because of the Stanford Ponzi scheme; in Louisiana, several hundred reportedly suffered the same fate.
The Romney Business Connection
Solamere Capital, the investment company founded by Tagg Romney with seed money from his father, Mitt Romney and other investors.
Launched in 2008 by Romney’s son Tagg and a few others, including Mitt Romney’s chief fundraiser Spencer Zwick, Solamere Capital is a “fund of funds,” meaning that it primarily invests in other investment companies, like private equity groups.
Mitt Romney himself made a $10 million initial seed investment in Solamere Capital and his personal financial disclosure forms reveal that he has received between $100,000 and $1 million in returns from his stake in Solamere. Romney has come under fire for refusing to release his tax returns, which would likely reveal additional details about his financial relationship with Solamere Capital.
After news of the Ponzi scheme precipitated the collapse of Stanford in 2009, Tagg partnered with several of Stanford’s North Carolina executives to start a firm called Solamere Advisors. At least three prominent brokers who had worked for Stanford — Tim Bambauer, Deems May, and Brandon Phillips — joined Tagg to help run Solamere Advisors, a wealth management business located in Charlotte, North Carolina. “We are excited to be associated with such a highly capable group of financial advisors with a proven track record of meeting the needs of their clients throughout the Southeast,” said Tagg in a press release announcing Solamere Advisors, which borrows its the name from its parent company, Solamere Capital.
The Romney Campaign Connection
The Romney campaign and the Romney family investment company are deeply entwined. A recent Boston Globe investigation found that top donors to the Romney campaign have invested into Tagg’s firm, and that Romney’s star campaign fundraiser, Spencer Zwick, doubles as a managing partner for Solamere Capital. The Romney campaign has paid Zwick’s firm, SJZ LLC, over $2 million in fees this year alone. Mitt Romney’s brother Scott Romney is listed as a senior advisor to Solamere Capital.
Tagg Defends Partners, Falsely Claims They Were Cleared Of Wrongdoing
In an interview with ThinkProgress after the CNN debate in Las Vegas, Tagg said he was proud of his investment with Solamere Advisors, the wealth management firm now run by Stanford’s former executives. “They’re friends of ours, they use the [Solamere] name, we own a piece of them,” he said. “We helped them get started.” Romney’s son said he owns a minority stake in Solamere Advisors, but noted that they operate with some level of independence. “We don’t control them at all, we just own them,” he explained.
The Solamere Advisors website lists Bambauer, May, and Tagg Romney among the directors of the firm (Eric Scheuermann, a managing partner for Solamere Capital, is also a director of Solamere Advisors). The Solamere name comes from “a private community in Deer Valley, Utah, where [Mitt] Romney owned a ski mansion,” reports Globe writers Michael Kranish and Donovan Slack.
“Did you know that some of those guys were in with, there were allegations that some of those guys were involved with the Allen Stanford Ponzi scheme?” ThinkProgress asked. “Before we invested in them, they were in that. But they were cleared of that before we made our investment,” replied Tagg, who spoke to ThinkProgress for a few minutes while walking around the Venetian hotel after the debate.
ThinkProgress also asked about the allegedly fraudulent profits made by his partners in helping orchestrate the Stanford Ponzi scheme and the current effort by Stanford’s victims to retrieve their money. In response, Tagg claimed that his colleagues are also victims: “They probably made, their pay there was like $15,000 total. Those guys got totally screwed by the whole thing. It almost ended their whole careers because they moved all their clients over [to the Stanford Financial Group], and then the place was shut down two months after they moved their clients over. They hadn’t made any money yet. They had bonuses and everything promised to them, but they didn’t make any of their money. So they made no money.”
Tagg’s assertions, that his Solamere Advisors partners who were employed in the Stanford Ponzi scheme didn’t make “any money,” and that they their involvement in the Ponzi scheme has been “cleared,” contrasts with court documents obtained by ThinkProgress. According to documents reviewed by ThinkProgess using the Pacer search engine, charges against Tim Bambauer, Deems May, and Brandon Phillips have not been dropped. A recent court filing shows May requesting the court for arbitration instead of going to trial. ThinkProgress also spoke to the deputy clerk for the federal District Court in Dallas, and confirmed that the three men are still defendants in the lawsuit to recover the Ponzi scheme money.
Moreover, a court-appointed audit of the Stanford Financial Group found that several of the former Stanford brokers made far more than what Tagg claimed:
– Solamere Advisors managing partner Tim Bambauer made $1,143,392 in incentive pay selling fraudulent CDs to investors.
– Solamere Advisors partner Deems May made $465,000 in incentive pay selling fraudulent CDs to investors.
– Solamere Advisors operations manager made Brandon Phillips $70,000 in incentive pay selling fraudulent CDs to investors.
The lawsuit filed by the Securities and Exchange Commission claims the Stanford Financial Group built its Ponzi scheme by incentivizing brokers to sell fraudulent CDs with an array of bonuses. A document filed in the District Court of North Texas says that Stanford “used an elaborate and sophisticated incentive program” to encourage brokers, like Bambauer and others, to lure investors into the Ponzi scheme. A suit to recover money for Stanford’s victims declares that Stanford’s former brokers are not entitled to their performance pay because those funds were made in “furtherance of the Ponzi scheme.”
Despite Tagg’s assertion that his partners were innocent and had no idea what was going on, representatives for Stanford’s victims differ. San Antonio attorney Edward C. Snyder, an attorney representing Stanford’s investor victims, scoffed at the notion that Stanford’s brokers did not know what they were getting into. They were “making outrageous fees and commissions from selling and promoting CDs,” said Snyder in an interview with ThinkProgress, adding, “no one makes that kind of money doing that.” As the litigation continues, Synder said he is confident that all of Stanford’s brokers that received performance pay selling CDs “are going to give the money back.” Snyder told us that many of Stanford’s brokers have made the argument that they had no idea what was going on, but he isn’t buying it. “Anyone that was selling a related-company offshore bank CD to his clients, and making such a large percent of commission, should have their license revoked,” wrote Snyder in an e-mail.
Bambauer, hired by Tagg in July 2009 as the managing partner for Solamere Advisors, left the firm two months ago, according to Deems May, who spoke to ThinkProgress last week. Bambauer was a higher level executive at the Stanford Financial Group. The Solamere Advisors website still lists Bambauer as a director of the firm along with Tagg. A message left with the Bambauer household has not been returned.
Asked about the current effort by the court-appointed receiver to retrieve the commissions received in selling Stanford Ponzi scheme CDs, May said he “can’t comment on anything like that.” Tagg told ThinkProgress that he now only owns a 5 percent stake in Solamere Advisors, but May said to check with Eric Scheuermann, Tagg’s business partner, about the extent of Solamere Capital’s ownership holding in Solamere Advisors. Mays also referred ThinkProgress’ other questions to Solamere Capital, but the firm has not responded to ThinkProgress’ request for comment.
ThinkProgress compiled a chart illustrating the financial connections between Mitt Romney, the Romney for President campaign, Tagg Romney, and the alleged Ponzi scheme brokers:
Despite Ponzi Business Connection, Romney Promises To Repeal New Investor Protection Laws
The revelation about Romney’s ties to the Stanford ponzi scheme unmask the risks associated with removing new investor protections. The Dodd-Frank Wall Street Reform law, a reform Romney says he will repeal if he wins the presidency, attempts to address future Ponzi schemes by enacting new protections for whistleblowers to alert authorities when they find evidence of fraud. The law also creates a new Investor Advocate and Investor Advisory Committee within the Securities and Exchange Commission to detect and investigate future Ponzi schemes.
Mike Hudson, a reporter with iWatch News and author of a new book about how predatory Wall Street practices created the financial crisis, told ThinkProgress that Dodd-Frank “could be a game changer that helps the SEC identify and shut down Ponzis and Ponzi-like schemes.” But on the campaign trail, Romney, a fierce critic of efforts to reign in Wall Street practices, has called new investor protections like Dodd-Frank “extraordinarily burdensome.”
When ThinkProgress spoke to Tagg in Las Vegas, the last question about the Stanford Ponzi scheme was this: “How do you prevent a Ponzi scheme like that?” “Hey guys, we’re done,” Tagg said before taking off.
[Update]In an e-mail to National Journal’s Chris Frates, the Romney campaign attacks ThinkProgress as “a left-wing blog with a highly partisan agenda.” The Romney campaign did not directly dispute any of our assertions. Rather, the Romney spokesperson called our story “false material.” The Romney campaign has not backed up Tagg Romney’s assertion that his Solamere Advisors partners were “cleared” of wrongdoing in connection to the Stanford Financial Group Ponzi scheme. We stand by our reporting.
Mitt Romney, his son Tagg, and Romney’s chief fundraiser, Spencer Zwick, have extensive financial and political ties to three men who allegedly participated in an $8.5 billion Ponzi scheme. A few months after the Ponzi scheme collapsed, a firm financed by Mitt Romney and run by his son and chief fundraiser partnered with the three men and created a new “wealth management business” as a subsidiary.
In an exclusive interview with ThinkProgress, Tagg Romney confirmed their business relationship, but falsely claimed that the men were cleared of any wrongdoing associated with the Ponzi scheme. Tagg Romney told ThinkProgress that his three partners collected about $15,000 from their involvement in the Ponzi scheme. Court documents obtained by ThinkProgress show that the legal proceedings are ongoing and the men made over $1.6 million selling fraudulent CDs to investors.
The Ponzi Scheme
In 2009, prosecutors announced charges against the Stanford Financial Group, which managed a portfolio of $8.5 billion, for running a “massive, ongoing fraud” against its investors. The Ponzi scheme bust was one of the largest in recent history, second only to Bernie Madoff, who perpetrated a fraud estimated to be around $17 billion. The Stanford Ponzi scheme wiped out the savings of thousands, including many American retirees across the country. In Texas, 1290 people lost their retirement savings because of the Stanford Ponzi scheme; in Louisiana, several hundred reportedly suffered the same fate.
The Romney Business Connection
Solamere Capital, the investment company founded by Tagg Romney with seed money from his father, Mitt Romney and other investors.
Launched in 2008 by Romney’s son Tagg and a few others, including Mitt Romney’s chief fundraiser Spencer Zwick, Solamere Capital is a “fund of funds,” meaning that it primarily invests in other investment companies, like private equity groups.
Mitt Romney himself made a $10 million initial seed investment in Solamere Capital and his personal financial disclosure forms reveal that he has received between $100,000 and $1 million in returns from his stake in Solamere. Romney has come under fire for refusing to release his tax returns, which would likely reveal additional details about his financial relationship with Solamere Capital.
After news of the Ponzi scheme precipitated the collapse of Stanford in 2009, Tagg partnered with several of Stanford’s North Carolina executives to start a firm called Solamere Advisors. At least three prominent brokers who had worked for Stanford — Tim Bambauer, Deems May, and Brandon Phillips — joined Tagg to help run Solamere Advisors, a wealth management business located in Charlotte, North Carolina. “We are excited to be associated with such a highly capable group of financial advisors with a proven track record of meeting the needs of their clients throughout the Southeast,” said Tagg in a press release announcing Solamere Advisors, which borrows its the name from its parent company, Solamere Capital.
The Romney Campaign Connection
The Romney campaign and the Romney family investment company are deeply entwined. A recent Boston Globe investigation found that top donors to the Romney campaign have invested into Tagg’s firm, and that Romney’s star campaign fundraiser, Spencer Zwick, doubles as a managing partner for Solamere Capital. The Romney campaign has paid Zwick’s firm, SJZ LLC, over $2 million in fees this year alone. Mitt Romney’s brother Scott Romney is listed as a senior advisor to Solamere Capital.
Tagg Defends Partners, Falsely Claims They Were Cleared Of Wrongdoing
In an interview with ThinkProgress after the CNN debate in Las Vegas, Tagg said he was proud of his investment with Solamere Advisors, the wealth management firm now run by Stanford’s former executives. “They’re friends of ours, they use the [Solamere] name, we own a piece of them,” he said. “We helped them get started.” Romney’s son said he owns a minority stake in Solamere Advisors, but noted that they operate with some level of independence. “We don’t control them at all, we just own them,” he explained.
The Solamere Advisors website lists Bambauer, May, and Tagg Romney among the directors of the firm (Eric Scheuermann, a managing partner for Solamere Capital, is also a director of Solamere Advisors). The Solamere name comes from “a private community in Deer Valley, Utah, where [Mitt] Romney owned a ski mansion,” reports Globe writers Michael Kranish and Donovan Slack.
“Did you know that some of those guys were in with, there were allegations that some of those guys were involved with the Allen Stanford Ponzi scheme?” ThinkProgress asked. “Before we invested in them, they were in that. But they were cleared of that before we made our investment,” replied Tagg, who spoke to ThinkProgress for a few minutes while walking around the Venetian hotel after the debate.
ThinkProgress also asked about the allegedly fraudulent profits made by his partners in helping orchestrate the Stanford Ponzi scheme and the current effort by Stanford’s victims to retrieve their money. In response, Tagg claimed that his colleagues are also victims: “They probably made, their pay there was like $15,000 total. Those guys got totally screwed by the whole thing. It almost ended their whole careers because they moved all their clients over [to the Stanford Financial Group], and then the place was shut down two months after they moved their clients over. They hadn’t made any money yet. They had bonuses and everything promised to them, but they didn’t make any of their money. So they made no money.”
Tagg’s assertions, that his Solamere Advisors partners who were employed in the Stanford Ponzi scheme didn’t make “any money,” and that they their involvement in the Ponzi scheme has been “cleared,” contrasts with court documents obtained by ThinkProgress. According to documents reviewed by ThinkProgess using the Pacer search engine, charges against Tim Bambauer, Deems May, and Brandon Phillips have not been dropped. A recent court filing shows May requesting the court for arbitration instead of going to trial. ThinkProgress also spoke to the deputy clerk for the federal District Court in Dallas, and confirmed that the three men are still defendants in the lawsuit to recover the Ponzi scheme money.
Moreover, a court-appointed audit of the Stanford Financial Group found that several of the former Stanford brokers made far more than what Tagg claimed:
– Solamere Advisors managing partner Tim Bambauer made $1,143,392 in incentive pay selling fraudulent CDs to investors.
– Solamere Advisors partner Deems May made $465,000 in incentive pay selling fraudulent CDs to investors.
– Solamere Advisors operations manager made Brandon Phillips $70,000 in incentive pay selling fraudulent CDs to investors.
The lawsuit filed by the Securities and Exchange Commission claims the Stanford Financial Group built its Ponzi scheme by incentivizing brokers to sell fraudulent CDs with an array of bonuses. A document filed in the District Court of North Texas says that Stanford “used an elaborate and sophisticated incentive program” to encourage brokers, like Bambauer and others, to lure investors into the Ponzi scheme. A suit to recover money for Stanford’s victims declares that Stanford’s former brokers are not entitled to their performance pay because those funds were made in “furtherance of the Ponzi scheme.”
Despite Tagg’s assertion that his partners were innocent and had no idea what was going on, representatives for Stanford’s victims differ. San Antonio attorney Edward C. Snyder, an attorney representing Stanford’s investor victims, scoffed at the notion that Stanford’s brokers did not know what they were getting into. They were “making outrageous fees and commissions from selling and promoting CDs,” said Snyder in an interview with ThinkProgress, adding, “no one makes that kind of money doing that.” As the litigation continues, Synder said he is confident that all of Stanford’s brokers that received performance pay selling CDs “are going to give the money back.” Snyder told us that many of Stanford’s brokers have made the argument that they had no idea what was going on, but he isn’t buying it. “Anyone that was selling a related-company offshore bank CD to his clients, and making such a large percent of commission, should have their license revoked,” wrote Snyder in an e-mail.
Bambauer, hired by Tagg in July 2009 as the managing partner for Solamere Advisors, left the firm two months ago, according to Deems May, who spoke to ThinkProgress last week. Bambauer was a higher level executive at the Stanford Financial Group. The Solamere Advisors website still lists Bambauer as a director of the firm along with Tagg. A message left with the Bambauer household has not been returned.
Asked about the current effort by the court-appointed receiver to retrieve the commissions received in selling Stanford Ponzi scheme CDs, May said he “can’t comment on anything like that.” Tagg told ThinkProgress that he now only owns a 5 percent stake in Solamere Advisors, but May said to check with Eric Scheuermann, Tagg’s business partner, about the extent of Solamere Capital’s ownership holding in Solamere Advisors. Mays also referred ThinkProgress’ other questions to Solamere Capital, but the firm has not responded to ThinkProgress’ request for comment.
ThinkProgress compiled a chart illustrating the financial connections between Mitt Romney, the Romney for President campaign, Tagg Romney, and the alleged Ponzi scheme brokers:
Despite Ponzi Business Connection, Romney Promises To Repeal New Investor Protection Laws
The revelation about Romney’s ties to the Stanford ponzi scheme unmask the risks associated with removing new investor protections. The Dodd-Frank Wall Street Reform law, a reform Romney says he will repeal if he wins the presidency, attempts to address future Ponzi schemes by enacting new protections for whistleblowers to alert authorities when they find evidence of fraud. The law also creates a new Investor Advocate and Investor Advisory Committee within the Securities and Exchange Commission to detect and investigate future Ponzi schemes.
Mike Hudson, a reporter with iWatch News and author of a new book about how predatory Wall Street practices created the financial crisis, told ThinkProgress that Dodd-Frank “could be a game changer that helps the SEC identify and shut down Ponzis and Ponzi-like schemes.” But on the campaign trail, Romney, a fierce critic of efforts to reign in Wall Street practices, has called new investor protections like Dodd-Frank “extraordinarily burdensome.”
When ThinkProgress spoke to Tagg in Las Vegas, the last question about the Stanford Ponzi scheme was this: “How do you prevent a Ponzi scheme like that?” “Hey guys, we’re done,” Tagg said before taking off.
[Update]In an e-mail to National Journal’s Chris Frates, the Romney campaign attacks ThinkProgress as “a left-wing blog with a highly partisan agenda.” The Romney campaign did not directly dispute any of our assertions. Rather, the Romney spokesperson called our story “false material.” The Romney campaign has not backed up Tagg Romney’s assertion that his Solamere Advisors partners were “cleared” of wrongdoing in connection to the Stanford Financial Group Ponzi scheme. We stand by our reporting.