Stanford swayed regulators

By Terri Langford

An Antiguan banking official told jurors Monday that R. Allen Stanford used his influence to manipulate the island nation's regulators and insert himself into the regulatory process.

"This would be a classic case of the rat being put in charge of the cheese," said Marian Althea Crick, who is board chairman of Antigua's Financial Services Regulatory Commission.

Crick, 59, described a series of run-ins with Stanford and his financial empire, beginning in 1998 when she was hired to be executive director of the commission's predecessor agency - which once included Stanford as a board member.

Crick said she often raised concerns about his position.

"It's a conflict of interest, inappropriate," Crick testified.

Stanford - whose businesses and charities in Antigua gave him such prominence that the nation knighted him - eventually was removed from the commission but still influenced regulators, she said.

In 2001, when the Antiguan regulator announced it was scheduling a review of the bank, Stanford contacted the agency and said he didn't want a certain auditor included in the review.

Immediately, that auditor and Crick were sent on a hastily arranged fact-finding mission about financial operations in other Caribbean countries, Crick said.

By 2002, Crick anticipated she would be fired and resigned. Her successor, Leroy King, is one of four people charged in a separate indictment from the one against Stanford.

King, accused of taking bribes to keep regulatory heat off Stanford's operations, is fighting extradition from Antigua. The other three defendants in that indictment were Stanford Group executives.

Crick returned to the Antiguan regulatory agency in 2009 after the U.S. Securities and Exchange Commission sued to force Stanford's operations into receivership and freeze its assets.

Other testimony Monday, as Stanford's trial entered its second week, concerned billions of bank assets in a mysterious portfolio known as Tier III.

Mark Collinsworth, an executive in the Memphis, Tenn., office of Stanford's international financial network, described to jurors a three-tier structure for the bank's investments.

Prosecutors allege that Stanford customers were led to believe the CDs were invested conservatively, but that the money really went into Stanford's risky business ventures and jet-setting lifestyle.

Collinsworth said he understood that Tier III contained conservative investments such as bonds and blue chip stocks, but that he had no personal knowledge of the portfolio.

He said Tier III accounted for $5.5 billion of the bank's investments in 2008, compared with about $1.5 billion for Tiers I and II combined. Tier 1 contained cash and liquid assets, he said, and Tier II contained more aggressive investments.

Collinsworth said under questioning by Stanford lawyer Ali Fazel that Stanford himself had little involvement with the Memphis office, visiting only twice in the 10 years Collinsworth worked there.

Collinsworth testified that his Memphis-based supervisor, Stanford's chief investment officer, Laura Holt, did not discuss Tier III with subordinates.

According to testimony last week, Holt once said she managed Stanford's entire portfolio. But as investigators closed in on the operation, she told associates she had no knowledge of certain investments.

Holt is one of the three executives indicted separately from Stanford and set for trial later.

Stanford's former chief financial officer, James Davis, pleaded guilty to three felony counts and will testify for the prosecution.

Collinsworth said Holt and Davis hired friends and relatives with little financial background for key positions in the office.

They included a close Davis friend with no experience in the Middle East, hired as an analyst on that region, and a Russian analyst, hired by Holt, who had been born there but left as a child and wasn't familiar with Russia's most profitable companies.