King wants review of PM's extradition warrant

By Martina Johnson - Wednesday, April 4th, 2012.

ST JOHN'S, Antigua - Prime Minister Baldwin Spencer has issued a warrant
ordering the extradition of the former Financial Services Regulatory
Commission (FSRC) boss Leroy King to face trial in the US on several charges related to the Allen Stanford US $7 billion Ponzi scheme.

However, King's lawyer has filed a constitutional motion in the High Court,
seeking a declaration that certain aspects of the Extradition Act are
discriminatory and asking for judicial review of the Prime Minister's
decision, among other things.

The parties named in the motion are Attorney General Justin Simon, QC and
Spencer.

In the latest challenge, the lawyer noted that sections 12 and 13 of the Act deprive King of the opportunity to appeal a High Court ruling which ordered his committal to be delivered to the US.

About two weeks ago, the Court of Appeal struck down an application to
appeal the order. The decision of the appeal justices hinged on the
aforementioned sections of the Act.

Another point made in the motion is that any warrant issued by the PM should have been deemed "invalid and unlawful and of no effect so far as it
violates King's right to the protection of the law."

King's lawyer has asked the court to give an ear to the claim for constitutional redress simultaneously with his application for judicial
review of the prime minister's decision.

Lastly, the attorney will be seeking, "a conservatory order staying all
extradition proceedings in respect of (King) until the determination of
(the) motion ."

Should King succeed in his legal challenges, he wants to be awarded legal
costs.

This is King's fourth attempt to bar his extradition since he first appeared in the magistrates' court three years ago.

The US government indicted King on over 20 charges alleging wire, mail and
securities fraud and conspiracy to commit money laundering, among others.

However, the local courts committed him for trial on 11 of those counts.

The Allen Stanford Story Doesn't End With The Guilty Verdict

Thursday, March 15, 2012 Chattanoogan.com

Prominent local attorney, Lee Davis, offered several interesting comments on the Allen Stanford trial and the recent "guilty" verdicts handed down on 13 of 14 charges of criminal conduct. This sordid story does not end with these verdicts, not hardly.

A mere piker compared to Madoff,s roughly $68 billion Ponzi scheme, Stanford and his cronies fleeced investors around the globe for approximately $7 billion.

But far more damage lies beneath the surface of this oil spill of greed and avarice. Where were the federal regulators? Missing in action? Where were the Antiguan authorites? Bought and sold? Numerous complaints and reports given to various federal agencies, the SEC, FINRA and NASD, fell upon blind eyes and deaf ears. In fact, one of FINRA's district directors, Bernerd Young, became managing director of Compliance for the Stanford firm. Leroy King, former director of Antigua's Financial Regulatory Commission, stands indicted on many related charges, but has yet to be extradited.

Many doubt that Baldwin Spencer, Antigua's Prime Minister, will sign the extradition order. His vocal pledges of cooperation are at odds with his inability to act on the matter. As with the Madoff aftermath, various federal agencies are feuding and finger pointing, the victims are struggling to recover lost funds and wondering who, if anyone, cares about their rights and losses. This ain't cricket.

PM: King extradition a work in progress

ST JOHN'S, Antigua - Prime Minister Baldwin Spencer, who also holds the External Affairs portfolio, is awaiting a response from Leroy King to determine how he will proceed with an extradition request from the United States government.

The United States Securities and Exchange Commission charged King, former head of the Financial Services and Regulatory Commission (FSRC), with 21 counts relating to wire, mail and securities fraud and conspiracy to commit money laundering.

The charges relate to an alleged $7 billion Ponzi scheme said to have been masterminded by R Allen Stanford.

High Court judge Mario Michel, last week, upheld a 2009 committal order for King to be extradited.

The ruling placed the matter in Spencer's hands, under his external affairs mandate.

Spencer said he has followed the steps in the Extradition Act by writing to King.

OBSERVER understands this was done last Friday. The law gives King 15 days to respond.

"There are some preliminary steps that have to be taken in that regard. The individual has to be written to, informing him that the courts have ruled in a particular way and that he should be given some time to respond to that.

"He may have reasons that he wishes to advance as to why he probably should not be extradited. According to the law that process has to take place.

"I have done the initial thing - that is to write to him indicating certain things and to request of him to respond. It's at that point I will have the opportunity to make the final determination," Spencer said.

The prime minister declined to comment on the Stanford trial, which began on January 24 and which has already heard testimony from witnesses, at home and abroad, about how the Texan exerted influence on those who should have been the gatekeepers.

Spencer was cautious, saying that he, like the rest of the world, is waiting to "see how things unfold."

"I am not in a position to make any judgment or assessment of the situation," he said.

Stanford, once the largest private sector employee in Antigua, was charged with 21 federal criminal counts. He pleaded not guilty to a revised 14-count indictment and said that if his company was involved in any illegal activity, it was the fault of his former chief financial officer, James Davis.

Davis, the prosecution's star witness, has pleaded guilty to three counts:
conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct an SEC investigation.

All Eyes on King

Tuesday, 07 February 2012 02:30 caribarena news Antigua News - police

Antigua St John's - Former head of the Financial Services Regulatory Commission (FSRC) Leroy King is awaiting the final decision from the minister of External Affairs on whether he will stand trial in the United States for mail, wire, and securities fraud, among other offences.

High Court judge Justice Mario Michel dismissed King's judicial review application on Monday and upheld former chief magistrate Ivan Walters'
decision to commit King to be extradited.

The court also denied King's application to have the former chief magistrate's committal order quashed.

King was jointly charged with four others in 2009, including investor R Allen Stanford, and indicted by a US grand jury in Texas.

Michel, during his hour-and-a-half long judgment, said there had been ample evidence before the former chief magistrate to establish a prima facie case for wire fraud.

He pointed to the evidence of former Stanford business partner and associate James Davis, US district attorney Greg Costa, and other documentary evidence.

The judge disagreed with submissions by King's attorney, Dane Hamilton QC, that the case against the former head of the FSRC was unsupported hearsay.

Michel instead agreed with arguments from Director of Public Prosecutions
(DPP) Anthony Armstrong that there was independent evidence detailing King's participation in the alleged fraud.

King's involvement in the matter was evident, according to Michel, by King's own actions and words, in that he defended Stanford International Bank Limited (SIBL) in the face of mounting concerns from the Securities and Exchange Commission (SEC).

Hamilton's claim that the US offences with which King is charged do not have similar offences in Antigua & Barbuda was also dismissed by the court.

Michel said wire fraud is equivalent to obtaining money by false pretence, and added that it is not the offence, but the conduct, that is equivalent.
He said the former chief magistrate did not err in finding that wire fraud and obtaining money by false pretence were extradition crimes.

Conspiracy to pervert the court of justice, as with the US charge, he said, is equivalent to perverting the course of justice in Antigua & Barbuda. Both offences have the same genus and have extra territorial application, Michel ruled. He said Walters' decision on these grounds could not be faulted.

Hamilton made application for bail on King's behalf on Monday, and his client was released on $500,000, with two sureties and a cash deposit of $110,000 required.

King has to report daily to the St John's Police Station, and must not leave his Marina Bay home unless he is accompanied by one of his two sureties.

These were the same terms originally set down by Walters when King first appeared before the court in June 2009.

King is to abide by these conditions until his surrender to US authorities, or further notice.

Prime Minister Baldwin Spencer, as minister of External Affairs, will have the final say in relation to King being sent to the US to stand trial.

Grant Thornton Press Release Regarding Sale of land at Airport

SALE OF LAND PARCELS COULD BE WIN-WIN SITUATION FOR GOVERNMENT AND STANFORD CREDITORS

Stanford Development Company’s sale of land could benefit creditors of Allen Stanford’s alleged Ponzi scheme

ANTIGUA-January XX, 2012-- The Government of Antigua would like to acquire two parcels of land which adjoin the airport as part of its redevelopment program.  These parcels are part of the property of Stanford Development Company (SDC).  Currently, the Joint Liquidators of Stanford International Bank (SIB) placed a freeze over all SDC lands. 

Prior to the Stanford International Bank and its creditors benefitting from the value of the frozen assets, the Joint Liquidators recognize that legitimate creditors of SDC will have to be paid.

Therefore, provided that SDC gets fair value for the land and that value reduces the creditor claims, either through a cash payment or set-off, there is no harm to SIB and its creditors in this sale taking place.  Joint Liquidator, Marcus Wide of Grant Thornton said, “Under the court’s freeze order, our consent, or approval from the court will be required for any such sale.”  SDC is obliged to advise the Joint Liquidators when a sale is agreed, and provide evidence that the price is at fair value.  If the Joint Liquidators disagree, they can object to the transaction which will then go before the Court for adjudication. 

FOR MORE INFORMATION CONTACT:

Elizabeth C. Ortega

ECO Strategic Communications

305.213.8798

eco@ecostrats.com

www.ecostrats.com

Or

Kristen P. Dettbarn

ECO Strategic Communication

305-546-6386

kpd@ecostrats.com

www.ecostrats.com

APUA involved in Stanford land negotiations

Spencer and the UPP Government sink to New Low

By Observer News

The government of Antigua & Barbuda might not have to cough up a large sum of money to reacquire two parcels of Stanford-owned land near VC Bird International Airport.

The Daily OBSERVER understands from reliable government sources that the cash-strapped administration has agreed in principle with the Stanford Development Company (SDC) to take over its debt to APUA in exchange for immediate title ownership of the six acres in question.

Assurances also came from government sources that the reacquisition process is not currently delaying the construction of the new airport terminal.

Chairman of the Antigua Public Utilities Authority (APUA) Clarvis Joseph also gave assurances that the statutory corporation would cooperate with attempts to reacquire the lands.

“Bearing in mind that both of the parties have difficulty finding money right now, we will accommodate it because it’s the airport building and if that is going to hold up the airport construction by who has and who doesn’t have money, then (we will) facilitate it,” Joseph said.

He noted the statutory corporation has a court order against SDC that requires the Stanford-owned company to settle a debt of close to $2.4 million by February 6, 2012.

“SDC was sued by APUA for monies that they owed. We have a judgement on that and there is a proposal that they sell the lands to the government and they have said they would like the proceeds of any sale to accrue to APUA,” Joseph said.

“APUA is not indisposed to accommodate that. The question is whether the government and Stanford can agree on that,” Joseph added.

According to the APUA chairman, order is tied to the same two SDC-owned lands that the government wishes to acquire. And he said should SDC fail to settle the debt by the deadline, APUA would be in a position to acquire the lands in order to settle the debt.

The government and SDC are hoping to seal an agreement that would see the government take over the debt in exchange for the land before the February deadline. The first step for the government though would be agreeing on a valuation of the land with SDC.

“If the value of the lands that they arrive at is lower than the debt they owe to APUA, then they would have to pay us the additional amount direct. If the value is more than, then the government would have to pay them the difference. APUA has no problem with that proposition,” Joseph said.

Prime Minister Baldwin Spencer said in his New Year’s address that he has instructed Acting Chairman of the Airport Authority Gatesworth James to negotiate on a price of the land. However James refused to comment on the situation. Meanwhile attempts to contact SDC’s legal representative Hugh Marshall Jr proved unsuccessful.

Grant Thorntons Response to Baldwin Spencer Re Land Purchase at airport

"The Joint Liquidators are aware that the Government of Antigua would like to buy two small parcels of land for the airport redevelopment from SDC.

Under the Court's freeze order our consent or approval from the Court will be required for any such sale. As yet we have not been asked to provide our consent to any transactions.

Proceeds from any sale may only be used for the ordinary day to day operations of SDC or to payout its creditors."

Antigua Government moves to buy back airport lands

By OBSERVER News

Prime Minister Baldwin Spencer has revealed that the government is trying to buy back two parcels of land at the VC Bird International Airport from a development company owned by jailed Texan financier, R Allen Stanford.

In his New Year’s address, the nation’s leader said the land is needed for the construction of the new airport terminal, which had its groundbreaking ceremony back in early November last year.

Spencer said the government aims to have construction for the two-year project begin this month. However, he said the project “necessitates the utilisation of two parcels of land currently owned by Stanford Development Company Limited: the small parcel (.64 of an acre) to the east which was used by the taxis as a parking area, and the former government car park parcel of 5.42 acres,” Spencer said.

Stanford had in February 2003 purchased from the government 25.59 acres around the airport compound, including these parcels at a concessionary price of EC $1.10 per square foot, according to Spencer.

The prime minister said he hopes to have an agreement reached that would allow the government to take control of the land immediately.

“I have instructed the Airport Authority to hold discussions with the company officials early next week towards arriving at a reasonable sale price of the two parcels of land back to government and on terms that will allow for immediate occupation,” Spencer said.

There is no indication on whether the company plans to comply with the request but Spencer said he is anticipating full co-operation and a quick resolution.

“Given the national interest at stake and the imminent commencement of construction works, I expect that the necessary co-operation and good faith on both sides will allow a settlement of this matter in the shortest possible time,” Spencer said.

Stanford Investors Granted Discovery In Cort Lawsuit

Source: Caribarena

Antigua St John's - US District Court Judge David Godbey has granted the Official Stanford Investors Committee’s motion to conduct jurisdictional discovery for Cort & Cort and Cort & Associates,

in connection with the February lawsuit alleging the law firms received more than $1.1 M in fraudulently transferred Stanford International Bank (“SIB”) customer funds.

Judge Godbey said in the order that the Investors Committee has made a “preliminary showing for jurisdiction” for the allegations, and granted a four-month period for discovery.

“Dr Errol Cort’s deposition will be a critical component of the discovery Judge Godbey authorized today,” said Peter D Morgenstern, a lawyer serving on the Committee who also filed a class-action lawsuit against the government of Antigua & Barbuda in the same District Court in 2009.

He said, “Dr Cort’s law firm was literally on Stanford’s payroll for an extensive period of time, and the firm also served as the official agent for Stanford International Bank, while Dr Cort was the nation’s minister of Finance.

We are very pleased with Judge Godbey’s decision.”

Records Show Meeks Sought Favours for Pal from "Ponzi" Tycoon

By ISABEL VINCENT and MELISSA KLEIN

The e-mail was flagged “Importance: High.” A top executive at the Stanford Financial Group wanted an answer.

“Have we an update on Antigua?” demanded Lionel C. Johnson, a senior VP.

“Greg Meeks and Ed Ahmad have both called again this afternoon inquiring about the status of Ahmad’s VIP-box invitations.”

The Feb. 19, 2008, e-mail, obtained by The Post, was addressed to Yolanda Suarez, chief counsel for the company run by now-disgraced billionaire banker Allen Stanford. It and other insistent messages during that period show Queens Rep. Gregory Meeks was determined to get his pal, Edul Ahmad, invited to a Caribbean cricket match so he could meet another Meeks buddy, Stanford.

The urgent pleas were made a year after Ahmad handed Meeks $40,000.

Stanford would also throw cash at the congressman a few months later -- hosting a lavish fund-raiser in St. Croix in July 2008, complete with Cristal champagne and caviar, that raised at least $13,800 for Meeks’ campaign committee.

Now the circle of friends threatens to become a circle of felons.

Stanford, 61, is awaiting trial on charges he engineered a $7 billion Ponzi scheme. Ahmad, 43, was indicted this summer in New York, accused of falsifying $50 million in loan applications. And Meeks, 57, is under investigation by the House Committee on Standards of Official Conduct for the $40,000 Ahmad payment and is at the center of a separate federal probe for his role in a Queens nonprofit that allegedly stiffed Hurricane Katrina victims.

Meeks, an eight-term congressman, has a penchant for hobnobbing with shady characters and had few qualms about accepting their cash -- or doing them favors.

Stanford, a flamboyant businessman from Texas who once ran a bodybuilding gym in Waco, took over the family financial business. He also started his own bank in 1985 on the island of Montserrat and later moved his operations to Antigua. Forbes ranked him as the 205th-richest American in 2008, with an estimated worth of $2.2 billion.

Meeks’ relationship with Stanford dates back to at least 2003, when the congressman and his wife traveled to Antigua and Barbados on a junket sponsored by the Inter-American Economic Council, a Washington, DC, nonprofit backed by Stanford. It would be the first of many trips to sunny climes that Meeks and his wife, Simone-Marie, would take on the nonprofit’s dime.

Meeks sits on both the House’s Financial Services and Foreign Affairs committees and belonged to the Caribbean Caucus, an informal group of lawmakers Stanford sought to woo.

The economic development of the Caribbean, and the US Virgin Islands in particular, has been Congressman Meeks’ focus for over a decade,” Johnson, an executive in charge of government affairs at Stanford Group, wrote in an e-mail exhorting company employees to attend the July 2008 fund-raiser. Ticket prices began at $1,000 for the soirée at Stanford’s hilltop compound in St. Croix.

Eighty guests dined on lobster, caviar and foie gras and sipped Cristal and Mondavi Opus 1, a Napa Valley red that retails for $200 a bottle. An organizer of the party said the cost of the catering alone topped $25,000.

But, records show, the Meeks campaign reimbursed Stanford for only $3,591.

Stanford company employees donated $7,200, and Stanford himself gave $4,600. The company’s PAC kicked in another $2,000. The total take for the fund-raiser appears to be $34,000, according to campaign finance records.

The Texas receiver for the victims of Stanford’s alleged Ponzi scheme is seeking to claw back the $6,600 donated by Stanford and the company’s PAC, along with money Stanford gave to other pols, including Harlem Rep. Charles Rangel.

“Representative Meeks has not returned any of the money requested. The receiver asked Representative Meeks to join the dozens of other politicians and political committees who have returned their Stanford-related contributions,” said Kevin Sadler, the attorney for the receiver.

Sadler said he is in talks with Rangel’s lawyer to return the money, which included $8,300 to the Rangel campaign and $2,500 to his National Leadership PAC. Both Meeks and Rangel have said in the past that they gave the donations to charity.

In 2006, Stanford called in a chit for his generosity, asking Meeks to use his influence with Venezuelan President Hugo Chavez. The billionaire wanted Meeks to tell Chavez to begin a criminal investigation into a whistleblower at Stanford’s Venezuelan bank.

Meeks allegedly was heard on a speakerphone telling Stanford he would intervene with Chavez, according to the Miami Herald.

Meeks was soon in Venezuela visiting Chavez, ostensibly to thank him for providing cheap home heating oil to Americans. A year later, the whistleblower was arrested.

While Meeks was meeting with Chavez, there were already grave concerns among US government officials about Stanford’s reputation. The US ambassador to Barbados attended a “Legends of Cricket” breakfast along with Stanford in Bridgetown and tried to avoid being photographed in public with him.

“His companies are rumored to engage in bribery, money-laundering and political manipulation,” read a May 2006 diplomatic cable about the breakfast meeting, released last month by WikiLeaks.

When Stanford was knighted in Antigua in 2006, the title was so controversial that the country’s prime minister called the honor “most unfortunate.”

Stanford was indicted in June 2009 on charges of perpetrating a $7 billion fraud by selling certificates of deposit that promised inflated rates of return. He is currently being held at a medical center in the feds’ Butner, NC, prison, the same lockup holding Ponzi king Bernie Madoff. Stanford was declared incompetent to stand trial in January because of an addiction to prescription medication, but he is expected to be re-evaluated.

Meeks refused to answer any questions about his relationship with Stanford, or why he agreed to introduce Ahmad to the billionaire.

Both men have an interest in cricket. Stanford owned a cricket team and stadium, and Ahmad sponsored his own cricket competition in New York.

Meeks and Ahmad are longtime friends. The congressman held after-hours meetings with the real-estate broker at his Queens district office, and Ahmad boasted that he had his own personal political representation.

Meeks claims the $40,000 he pocketed from Ahmad was a loan, but a House ethics panel said it appeared to be a gift. Meeks paid back the money in 2010, but only after federal investigators questioned Ahmad about it.

Like Stanford, Ahmad’s businesses were long dogged by allegations of scandal, including predatory lending and forged documentation. State authorities launched five probes into his real-estate operations between 2006 and 2008.

Ahmad, who is currently out on $2.5 million bail and prohibited from traveling to his native Guyana, faces up to 30 years in prison. The government has said that additional charges or more defendants are likely in his case.

Kings of Queens

Allen Stanford

Texas billionaire in jail awaiting trial on charges he ran an $7 billion Ponzi scheme. Accused of selling certificates of deposit promising improbably high interest rates. Big-time political donor, whose nonprofit Inter-American Economic Council hosted Caribbean junkets for members of Congress, including Meeks. Held a 2008 St. Croix fund-raiser for Meeks.

Congressman Gregory Meeks

An eight-term Democratic congressman representing Queens, Meeks is the subject of a House ethics probe for accepting a $40,000 payment from Queens businessman Edul Ahmad in 2007. Also under federal investigation for his role in a Queens charity. Arranged for Ahmad to meet banker Allen Stanford, for whom Meeks did favors, including personally lobbying Venezuelan President Hugo Chavez.

Edul Ahmad

Queens real-estate broker and catering hall owner indicted on charges of mortgage fraud. Accused of falsifying $50 million in loan applications. Currently out on $2.5 million bail. Denied permission by the feds to travel to his native Guyana. Longtime friend of Meeks. Sought introduction Stanford through Meeks.

Stanford's Victims Still Waiting For SEC Decision on SIPC COver

Scott Cohn
Senior Correspondent, CNBC

The Securities Investor Protection Corporation, the agency that insures U.S. brokerage accounts, said it is still deciding whether to reverse an earlier decision to deny coverage to tens of thousands of investors in Allen Stanford's alleged $7 billion Ponzi scheme.

SIPC had promised a decision this week, after the Securities and Exchange Commission earlier this year threatened a lawsuit if SIPC continued to deny the coverage.

The SIPC board has been meeting since Thursday, but in a statement Friday, Chairman Orlan Johnson said the board "is continuing its careful review of the many and complex issues in the Stanford case."

As a result, some 30,000 investors remain in limbo. A court-appointed receiver who has been rounding up assets since Stanford's financial empire was shut down in early 2009 has so far recovered just pennies on the dollar. For many investors, the SIPC coverage represents their only hope of recovering much of anything.

"It is very disappointing to have even further delays in recovering the life savings of thousands of middle class retirees after waiting more than two and a half years for the protections Congress intended for SIPC to provide," said Angela Shaw of the Stanford Victims Coalition in a statement e-mailed to CNBC.

The agency initially refused to cover the Stanford accounts because the certificates of deposit at the heart of the alleged scam were drawn on Stanford's offshore bank in Antigua. But the investors, and eventually the SEC, argued the CDs were sold by Stanford's registered broker-dealer in the U.S.

In June, the SEC, under heavy pressure from investors and members of Congress, called on the SIPC board to reverse its decision, and threatened to sue SIPC in federal court if it refused.

"Credible evidence shows that Stanford structured the various entities in his financial empire...for the principal, if not the sole, purpose of carrying out a single fraudulent Ponzi scheme," SEC staffers wrote, meaning there was no distinction between Stanford's Indian bank and his U.S. broker dealer.

In response, SIPC promised its board would decide at its September 15 meeting whether to reverse itself.

In today's statement, SIPC chairman said, "We fully appreciate the gravity of this matter and remain committed to reviewing it thoroughly and with all deliberate speed."

An SIPC spokesperson would not say how soon a decision would be made.

Allen Stanford’s Amnesia: Haven’t We Seen This Soap Opera Before?

By Shira Ovide

We read with interest our colleague Michael Rothfeld’s story about the amnesia suffered by convicted Ponzi schemer R. Allen Stanford. He now claims he can’t remember anything that happened prior to his 2009 arrest.

It’s been nagging us. We couldn’t quite remember: Where had we seen this before? (Pause for the joke to set in. Theeere you go.)

Yes, the ol’ “I cannot recall, Senator” line has been held out by troubled defendants before, and not just in the plot lines of daytime soap operas.

In 1990, former Guinness chairman and CEO Ernest Saunders was convicted with three others for a scheme to prop up the company’s stock price during a 1986 takeover battle for liquor company Distillers Co. –maker of Tanqueray gins and Johnnie Walker Scotch.

But shortly after his five-year conviction was set, the 55-year-old Saunders said he was in the early stages of dementia. Saunders was freed on parole after serving just 10 months.

After he was released, however, Saunders recovered enough to return to the business world. He said his memory problems and other symptoms were caused by anti-depressants he took in jail.

The British press referred to the Saunders affair as the “alcoholic Dallas.” Given Allen Stanford’s penchant for cricket, maybe we’ll call his sudden memory deficiency the “forgetful wicket.”

Appendix B to JLs First Report

AIB - Appendix B to JLs First Report

SEC Missing Stanford Fraud Not Excused by Law, Investors Say

The U.S. Securities and Exchange Commission’s delay in cracking down on R. Allen Stanford’s alleged Ponzi scheme isn’t excused by a law that protects regulators’ discretionary decisions, Stanford’s investors claim.

While U.S. law may shield the agency from poor policy choices, it doesn’t protect against allegations of official misconduct and abuse of office, lawyers for the investors said today in a court filing in federal court in Dallas.

Eight Stanford investors sued the SEC in March on claims that Spencer Barasch -- the former head of the SEC’s Fort Worth- Dallas office -- allowed Stanford’s alleged fraud to flourish for years by repeatedly blocking investigations into the financier’s operations.

This case “is about misconduct, and has nothing to do with disgruntled citizens second-guessing SEC ‘policy judgments,’’’ Edward Gonzales, the investors’ lawyer, said in today’s filing. “It is discretion that may be abused, not one’s office.’’

The SEC seized Stanford’s operations in February 2009 on suspicion of fraud. Four months later, prosecutors indicted Stanford and three of his top officers for running what they claim was a $7 billion Ponzi scheme built on bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

Stanford Denies Wrongdoing

Stanford, who denies all wrongdoing, has been imprisoned as a flight risk until he can be tried.

Last month, the government asked a Dallas judge to throw out the investors’ lawsuit, which seeks to force the SEC to cover their losses on Stanford CDs.

The investors based much of their complaint on a 2010 report by the SEC’s inspector general, who faulted Barasch for declining to act on agency recommendations to investigate Stanford for years. The report also criticized Barasch for trying to act as Stanford’s lawyer after he left the agency in 2005.

“The unethical conduct of Spencer Barasch and negligent supervision by his superiors both make the government liable here,’’ Gonzales said in the filing.

Barasch, who isn’t personally sued by the investors, has denied acting improperly before or after leaving the SEC. Ashley Nelly, a spokeswoman for Andrews Kurth LLP, the law firm where Barasch now works, didn’t immediately return a call seeking comment on today’s filing.

Kevin Callahan, SEC spokesman, didn’t immediately return a call or e-mail after regular business hours.

The case is Robert Juan Dartez LLC v. United States, 3:11- cv-0602, U.S. District Court, Northern District of Texas (Dallas).

The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).

Weston Calls for FSRC

This is an interesting article from the Caribarena. Note the highlighted sections where the minister is asking about the report into the FSRC!

Antigua St John's - Opposition Senator Lennox Weston spoke at length on Monday against the need for additional board members to be added to the Financial Regulatory Services Commission (FSRC), and called for the release of the controversial report into the Commission ordered following the R Allen Stanford debacle.

Weston told the Upper House, "The government is our government. It is our money that the government is spending, and the prime minister gave an undertaking to Parliament and to the nation that he would review the sector, and he would table the results, and let the chips fall where they may."

He said it now seemed that the UPP administration intends to keep the contents of the review away from the public.

"Now it seems as if, what is before us is indicating that the government intends to keep its review a secret. Whatever the review says... that we hear that is very bad, it intends to keep it a secret from the people of Antigua & Barbuda, although we are faced with all these pending charges, and all kinds of lawsuits against us ..."


Weston noted, however, that with Stanford investors intent on suing Antigua & Barbuda for its perceived role in the financier's workings, the government was leaving the door open for these investors to reveal information "piece by piece" in the American press, with Antigua & Barbuda lacking the means to defend its reputation.

"The Americans always say, get ahead of the news," Weston noted. "Get it out early, and move on. ... This is not a time when we can hide information. ... We can't control information by tabooing it. And this has been going on for way too long."

Weston, along with other opposition senators, cried down the government's proposal to increase the FSRC board from four members to seven, saying the bill did not adequately explain the need for this.

Subsequent government senators, including Joanne Massiah and Dr Edmond Mansoor, posited that this was a necessary move to allow the FSRC to handle its additional responsibility to regulate non-banking financial institutions including the credit unions.

Stanford "Pirate of the Caribbean"

In 1985, when Stanford first became interested in the Caribbean, the hottest new home for offshore banks was the tiny island of Montserrat, a British colony with a smoking volcano (that, in 1995, obliterated half the island) and barely 12,000 jittery residents. A notorious Beverly Hills broker named Jerome Schneider later convicted of fraud had discovered the colony's porous financial regulations and begun selling banking licenses; of Montserrat's 350 so-called instabanks, at least 200 arrived via Schneider.

By most accounts, it was a stunningly sleazy climate in which to operate. The vast majority of the Montserrat instabanks existed only on paper; their owners scarcely if ever visited the island. Scores of these banks would later be probed by British and U.S. authorities. One, Zurich Overseas Bank, whose owners would be indicted for fraud in Detroit, operated out of the Chez Nous tavern in the Montserrat town of Plymouth. Almost every bank in Montserrat was operated illegally, says David Marchant, editor of OffshoreAlert, a newsletter that covers offshore banking. They were all shell banks, and they were all pretty much involved in fraud. They were all the same: certificate-of-deposit frauds, money-laundering. The fact that Stanford had a banking license in Montserrat is all you needed to know about his credibility. It wasn't like most of the banks were good and you had a few bad eggs. The only reason you opened a bank in Montserrat was to commit fraud.

Stanford's new Guardian International Bank, however, was sharply different from other Montserrat banks. Rather than avoid the island itself, Stanford actually opened a bank building and hired local women to staff it. (The building and all its contents, alas, were destroyed by Hurricane Hugo in 1989.) The island facilities were augmented by a sales office in Miami and another in Houston, where Stanford worked with a small group including his college roommate James Davis, who would go on to become Stanford Financial's C.F.O. But what also distinguished Guardian from other Montserrat banks was how Stanford constructed a mythos to establish his credibility. He began telling customers the company had been founded by his grandfather Lodis B. Stanford (a barber turned insurance agent) in Mexia in 1932 and, once he renamed the bank Stanford International, he hung a photo of the gray-haired old man in the lobby.

From the beginning, little about Stanford International was what it seemed. A rare glimpse of its early years comes from one of the bank's first employees, a person I'll call Maria, whose job in Houston included assembling its first marketing brochures. I remember the bank in Montserrat, Maria says. It had two stories, with three or four African-American ladies and one white lady, this really pretty girl, maybe 17 or 18. They had all these computers, but the power was not even switched on. The computers didn't even work.

In those early days on Montserrat, Stanford attracted depositors, as he would throughout his career, by placing advertisements, some featuring attractive young women, in Latin-American newspapers. Far more alluring than the women, however, were the interest rates Stanford promised: two percentage points above American bank rates. That was what Allen always said, Two points more, Maria says. He told me, It is unbelievable. People are so stupid, they will risk all their money, give it to someone they don't even know, for two points. One day he grabbed the calculator on my desk, ran the numbers for two points on a million dollars: it was $20,000 a year. He said it was just unbelievable what people would do for just two points more.

By 1988, Stanford had acquired his first three run-down Houston apartment complexes possibly using depositors' money as the bank's deposits began to skyrocket. By the end of 1989, Stanford claimed an astounding $55.5 million in accounts. By November 1990 the number hit $100 million. Even inside the bank, this kind of growth raised eyebrows. Nobody knew if the numbers were true, Maria says. If you asked Allen how he [managed to pay higher interest rates], he always said exactly the same thing he says now: It's only two points; our organization is very lean. We don't pay taxes in Montserrat. Nobody believed that. But he paid very well. So the questions stopped.

I was suspicious when we did the first annual report, Maria continues. We used to do the work at night, when everybody was already gone. It was weird. You could see they were playing with the numbers and changing them right there in front of me. Jim [Davis] would come back to my office and look at the numbers, then go back to Allen, who would come in and say, Fine, let's just put this number down. They were just making things up. Personally, I was hoping we could make enough money to cover up everything. But it just got worse and worse. Stanford, however, seemed without a care. He and his wife moved into a pink hacienda-style house in the northern suburb of Kingwood.

Then came trouble. According to David Marchant, it all began when an American computer programmer, hired to update another Montserrat bank's systems, complained to local authorities that his boss appeared to be transferring deposits into his personal account. A Scotland Yard man named Dick Marston was summoned to investigate; Marston brought in the F.B.I. A probe Marston expected to take a few weeks turned into a massive investigation that lasted years. By 1989 more than a hundred banks were under scrutiny by British and American agents for every conceivable financial crime.

Stanford's operation, by then one of the larger Montserrat banks, quickly became a target. Where, Marston wondered, were all those deposits coming from? Colombian drug money was flooding into banks across the region, and there were persistent rumors that this was the source of Stanford's growth. Marston called in an expert from the Office of the Comptroller of the Currency. As a onetime F.B.I. agent involved in the Montserrat probe recalls, The O.C.C. guy went down there, stood across from the Stanford office for maybe several hours, came back and said, Yep, that's a money-laundering operation. Marston goes, How can you tell from just standing across the street? The guy goes, I'm telling you, it is. Then, a little later, we got fairly detailed intelligence that they were indeed laundering for major Colombian drug traffickers. I remember very clearly that, when the governor [of Montserrat] heard this, we had to literally peel the guy off the ceiling. The Montserrat authorities were already tossing dozens of shady banks out of the colony when the government revoked Stanford's license, in May 1991.

It was a crushing blow. Allen disappeared for six or eight months after that, Maria says. For a long period nobody saw him. He would call in at one in the morning, and he always said he was working on this big deal, it would save everything. For once, Stanford was true to his word. In time he found a new home for Stanford Financial, one where fungible banking regulations would prove ideal for his ambitions:
Antigua.

Island Hopping

An American vacationer who wants only to sip rum punches on its legendary pink-sand beaches may not realize or care that Antigua was long host to one of the Caribbean's most corrupt governments, under the two Bird administrations. A militant trade unionist with little formal education, Vere Bird led Antigua to independence in 1981 and for years ran the two-island country officially named Antigua and Barbuda as a personal fiefdom amid constant allegations of criminal activities. One of his sons was behind a scheme to sell Israeli weapons to Colombian drug traffickers. Another was arrested at V. C. Bird International Airport with 25 pounds of cocaine in his luggage. Another son, Lester Bird, eventually took control of the government, in 1994, as the U.S. began voicing concerns that the island was becoming not only a money-laundering center but also a haven for Russian organized crime.

Such was the Antiguan milieu when Allen Stanford introduced himself to the Birds, around 1990. He wanted to buy the local Bank of Antigua, on the verge of bankruptcy, and the Birds were happy to broker its sale to him. Soon after, Stanford opened a second Antiguan bank, a new incarnation of Stanford Financial, which he operated much as before, opening a bank building, hiring locals to staff it, and advertising high interest rates in Latin-American newspapers. From the outset Stanford worked diligently to forge a partnership with the Birds. He provided the money to build cricket fields and a hospital, a vast multicolored complex overlooking the capital of Saint John's. In 1995, Stanford went a step further, loaning the government several million dollars to cover salaries and pension contributions. The loans grew over the years. By the late 1990s, Stanford owned the Antigua Sun, one of the island's two daily newspapers, and when two editors protested Stanford's suppression of an article criticizing Lester Bird during the 1999 elections, he fired them. (Both sued successfully.)

Stanford became Lester's go-to guy, says Winston Derrick, publisher of the competing Daily Observer. When Lester needed a hospital, he turned to Stanford. When Lester needed anything, he turned to Stanford.

Stanford Financial boomed in its new home. By 1994 it claimed $350 million in assets, enough for Stanford, in the following years, to buy a Venezuelan bank and start a conventional broker-dealer operation in Houston; he eventually opened a corporate headquarters near Houston's Galleria mall. Later, branches were added in Panama, Peru, Ecuador, and Mexico.

From the outset, U.S. authorities kept tabs on Stanford. The Internal Revenue Service sued Stanford and his wife for failing to file their 1990 return, and sought more than $420,000 in back taxes; 19 years later, the I.R.S. is claiming they owe over $226 million for returns from 1999 to 2003. After the money-laundering allegations on Montserrat, the F.B.I. too has kept a keen eye on Stanford, more or less nonstop, for more than 20 years.

In terms of his notoriety, once that kind of information started coming in, he was known to a lot of folks in law enforcement, says a former F.B.I. agent who investigated Stanford. He stayed very prominently on the radar for years still is. There was a series of investigations. Obviously none of them ever ended in indictments. But we're talking various F.B.I. field divisions, with multiple agents, then multiple agencies, over 10 to 12 years.

Throughout Stanford's first decade on Antigua, the focus of U.S. investigators remained largely, perhaps exclusively, money-laundering. Questions of whether the bank was swindling investors wouldn't arise for years. If you were in the metaphoric bushes outside Stanford anytime in the last 20 years, notes one U.S. security consultant, you would literally have been bumping into team after team of U.S. government agencies, shouting at each other to get out of the way, you know, Be quiet, Stanford will hear you. Those agencies would include the F.B.I., [U.S.] Customs, and the S.E.C. From everything I hear, there was endless interagency conflict over what to do and how serious this guy was.

The authorities' inability to mount a criminal case against Stanford not to mention everyone's inability to sniff out fraud has left many, inside and outside the government, outraged. Clients would come to us and go, Oh, this guy is offering such great rates, he's never been in trouble, should we go with him? says the C.E.O. of one private-security firm. And then you reach into your sources and they say, Stop, run, avoid this guy like the plague. He's hot hot with the government. Well Jesus, we're just private investigators, and we knew the guy was bad. Where was the government? Why didn't anyone hang a sign on this guy?

Catch Me If You Can

One reason was Stanford's defenses. He became known for suing anyone, even journalists, who suggested Stanford Financial was anything but legitimate. In 1996, when a writer for Caribbean Week portrayed the company as a money-launderer, Stanford sued and won a front-page retraction. No critic was too small to ignore. He once sued a Catholic-school principal in New York after the man, active in Antiguan politics, termed him a neo-colonialist.

Behind the scenes, Stanford was even more aggressive. As the company grew, he became renowned within law-enforcement circles for aggressive counter-intelligence. Stanford's security chief was a former head of the F.B.I.'s Miami office. But his greatest asset may have been a top security firm, Kroll Associates, whose Miami office worked with Stanford for years. Stanford was spending millions of dollars a year trying to figure out who was looking at him, and aggressively combating whoever it was, recalls the former F.B.I. agent. Kroll was essentially running a propaganda campaign in defense of Stanford's good name. They beat on me many times: Hey, you got this all wrong, he's not a money-launderer, he's a great guy, leave him alone.

Kroll's role in defending Stanford's reputation, in both law-enforcement circles and the wider banking community, was an example of a controversial practice known within the private-security world as reputational self due diligence, that is, vouching for a client's good name. It is, by all accounts, an exceedingly lucrative business. What Kroll would do, says a former Kroll executive, was put together a very detailed description of the bank, what it does, look over its balance sheet, the origin of the deposits, and produce this really thick report that says, This bank complies with the [U.S.] guidelines for combating money-laundering, and you, Bank A, should feel free to work with them. It is controversial, even inside the firm. Kroll is considered how to say this nicely well, they're willing to take more controversial clients for this type of service.

Kroll can confirm that it has provided routine professional services to various businesses related to Allen Stanford, the company said in a statement issued to VANITY FAIR. All such work was provided consistent with Kroll's reputation, internal controls, and its history of working with law enforcement. Suggestions to the contrary are incorrect. Confidentiality restrictions prevent any further comment on those assignments.

Kroll's work for Stanford dates back at least a decade, to the moment when U.S. concerns about the company finally burst into the open. That happened in 1999, when a Drug Enforcement Administration probe revealed that members of Mexico's vicious Jurez cartel had deposited more than $3 million in accounts at Stanford. The bank froze the accounts, while the Bird government announced formation of a committee to rewrite its anti-money-laundering laws. To the U.S. government's dismay, Stanford himself was named to the committee. Another member was Thomas Cash, a former D.E.A. chief for Florida and the Caribbean who headed Kroll's Miami office and, former associates say, was long Kroll's liaison with Stanford. The committee produced a set of new regulations that appeared to weaken Antigua's banking laws rather than strengthen them.

The State Department howled, complaining that the Antiguan government has effectively ceded oversight of its offshore section to an offshore banker and his minions. When the Bird government shrugged, the U.S. Treasury officially designated Antigua a money-laundering risk, just the second such warning ever issued against a sovereign country.

Under intense pressure, the Bird administration backed off and, after negotiations with U.S. authorities, tightened the island's laws. At the same time, according to a State Department cable obtained by The Philadelphia Inquirer, unnamed Stanford allies seized a sheaf of Antiguan banking records. It appears that the U.S. offshore banker [Stanford] is taking advantage of loopholes & to seize the initiative and protect himself from any future inquiries or investigations, noted the cable, which labeled the incident Filegate, Antiguan style. The high-powered legal and investigative guns from the U.S. are likely being tasked with cleansing the files to make sure there is nothing in them that could damage or implicate the American offshore banker.

Having survived his first dustup with U.S. authorities, Stanford apparently realized he could use friends in Washington. Some of these new friends may have been inside the D.E.A.; a BBC broadcast in May claimed that Stanford became a D.E.A. informant. But his best friends were in politics. His political giving began about the time that a sweeping anti-money-laundering bill was introduced to Congress, around 2000. Stanford began donating large sums to a number of senators, including Minority Leader Tom Daschle, in an apparent effort to block it; in a later study, the public-interest group Public Citizen judged that Stanford's donations were probably crucial to the bill's eventual defeat in the Senate. Stanford's giving grew from there.

In 2002, his company gave $800,000 to the Democratic Senatorial Campaign Committee, the vice-chairman of which was Florida senator Bill Nelson, who received $45,900. In all, Stanford spent nearly $5 million lobbying Congress between 1999 and 2008 and dished out $2.4 million to federal candidates. He also sponsored dozens of free fact-finding trips to Antigua and other Caribbean islands for politicians and their staffs on his fleet of jets. Former Republican House majority leader Tom DeLay, of Texas, among the largest recipients of Stanford's largesse, flew 11 times on Stanford's jets, according to The Dallas Morning News.

Empire Building

What remains of Stanford's Antiguan empire today is a series of mostly empty buildings that line the periphery of the island's airport; in fact, the first half-dozen structures a visitor encounters, even the airport parking lot, are Stanford's.

Turn right at the airport traffic circle and you see the offices of his newspaper, the Antigua Sun. To the left is the Stanford Cricket Ground, an expanse of grass lined with grandstands, video screens, and Stanford's restaurant, the Sticky Wicket, guarded by a statue of a cricket player. Looming over the traffic circle is Stanford International Bank itself, an immense building, engulfed in colorful tropical gardens; people working for a court-appointed receiver can be seen wandering in and out of its great mahogany front doors. Next door is another Stanford restaurant, the Pavilion, which features an 8,000-bottle wine cellar. Just up the street, past the observation tower and the botanical gardens, is a long, low plantation-style building, Stanford Trust. Across the way is the Bank of Antigua. The entire development has the just-built look and feel of a middle-class Miami subdivision.

By the early 2000s, Stanford's wealth, power, and visibility were all on the rise. As his company grew, Stanford became a distant, sometimes mercurial executive, a figure most employees saw only at official functions. You would wait for hours to see him, recalls an executive, one of 15 who reported directly to the boss. If you got called for a 10-o'clock-in-the-morning meeting, it might be 1 o'clock in the morning by the time you got to see him. Time didn't matter. He demanded respect too. [Every meeting was] basically a table of yes-men. His wish was our command.

In Antigua, Stanford had become a polarizing figure. Many on the island, citing the gifts and money he had given the government, adored him. But others viewed him as a sharp-elbowed Yankee imperialist, a view propagated by opposition politicians during the hard-fought 2004 election in which Lester Bird was tossed out of office; Bird's replacement, Baldwin Spencer, termed Stanford haughty, arrogant, and obnoxious.

Yet Stanford's power endured, in large part because of the financial hammerlock he held on the government. By 2004 its debt to Stanford had grown to $87 million nearly half its annual tax revenues. And in return for being allowed to put up the new buildings of an airport complex and purchase 19-acre Maiden Island (where he planned to build a new home), plus another islet, he supplied money to build a new national library and an education complex.

As his fortune grew, however, he began spending more time in South Florida he seldom visited the Houston headquarters, former employees say where in October 2003 he paid $10.5 million for a 57-room mansion, called Tyecliffe Castle, on the Coral Gables waterfront. It was there that, according to the Daily Mail investigation and various court filings, Stanford secreted one of the women some inside his company began calling the outside wives.

By most accounts, there were at least three of them. The first was apparently a woman with the same name as his wife, Susan, whom he had dated in Houston. She lives today in a Dallas suburb with her and Stanford's 17-year-old son. A second woman, Beki Reeves-Stanford, lives in South Florida with their two teenage children. The third is Louise Sage, who lives in Kent, England. Stanford has two younger children with her. Their relationship became public when she sued for financial support.

With his wife, Stanford has a daughter, now in her 20s. According to reports, he and his wife separated in 1999; Susan filed for divorce in 2007. The case is pending. Stanford's current girlfriend is a former cocktail waitress, at one of his Antiguan restaurants.

Stanford Financial, meanwhile, remained nearly as productive as its founder, topping $3 billion in deposits in 2004. Over time the company grew into a high-pressure marketing powerhouse in which employees worked in groups with colorful names such as Money Machine, Superstars, and the Deal Hunters. Stanford offered several financial products, but its mainstay remained the high-rate C.D.'s sold out of its Antiguan bank. According to The Wall Street Journal, Stanford salesmen earned commissions of 1 percent for every dollar they brought in, a rate so rich some brokers called it bank crack it was that addictive. Top producers might also win a luxury BMW sedan.

He sort of burned through countries, notes an investigator working for Stanford's court-appointed receiver. If you look at the internals, early on the money was coming from Brazil and Venezuela. Billions from Venezuela. Then Peru, Ecuador. You know, you can only get so many investors in one country to put in so much money before people start asking questions. So from there he moved to trying to capture money in Panama, then the U.S., which was difficult, and then Mexico. That's where he was at the very end.

Stanford Financial's drive to capture American depositors shifted into high gear in 2004. Between 2004 and 2007, the bank expanded its U.S. branches from 6 to more than 25, opening offices in Denver, San Francisco, and Boston, as well as in southern cities, such as Little Rock and Baton Rouge; a second headquarters of sorts was established, in Memphis, close to the northern-Mississippi home of Stanford's chief financial officer, Jim Davis. Prospective investors were often ushered through the hushed mahogany-and-marble corridors at the Houston headquarters, where they were led into the Lodis Room named for Stanford's barber grandfather for a promotional film, then plied with champagne and cigars in the executive dining room. The wealthiest prospects might be flown to Antigua aboard one of Stanford's six private jets, put up for a few nights at the luxurious Jumby Bay resort, and, if they were lucky, get to meet Stanford himself.

Bit by bit, Stanford Financial emerged from its shadowy Caribbean origins. To popularize the brand, Stanford began throwing money into the usual kinds of corporate philanthropy and naming opportunities. He sponsored the pro golfer Vijay Singh, along with two tournaments. There were Stanford banners in the Miami Heat's arena, a Stanford Field at the International Polo Club Palm Beach, plus millions given to hospitals, theaters, and museums, mostly in Memphis, Miami, and Houston. When it came to sports marketing, though, Stanford's passion was cricket, especially a fast-moving new version of the game called Twenty20 that can be played in hours instead of days.

In 2005, after completing his Antiguan cricket ground, Stanford announced a pan-Caribbean tournament. The hidebound cricket world, centered in England and India, snickered, but Stanford would not be deterred. He unveiled his own team, the Superstars, and, in a 2008 media event whose Texas-style audacity stunned the cricket community, challenged the English team to a match by landing a black Stanford Financial helicopter on London's most hallowed field, Lord's. He jumped out, promptly chest-bumped a British official, and thrust forward a Plexiglas box containing the match's prize: $20 million in cash. Stanford's Superstars won the big match, but the affair did little to ingratiate the Texan with the cricket establishment.

What kept attracting depositors, though, wasn't Stanford's publicity stunts. It was his profits. The first serious questions about Stanford's performance came as it began to hire dozens of veteran American brokers to staff its new American offices. One of those with suspicions was Lawrence DeMaria, a former New York Times reporter who, after enduring a six-hour grilling by an investigator from Kroll Associates, had been hired to supervise internal publications and write speeches for Stanford himself. DeMaria's bullshit antennae, as he terms it, rose not long after he joined the company.

I kept getting vibes throughout the company that nobody knew where the money was coming from or where it was going, he says today. When I would ask about how the company made its money, not just the principals but the investment-banking divisions, the research department, I would get no answers. [Everyone] said they didn't know.... When I asked the investment people, they said, We can't tell you, but believe us we have computers. & Eventually DeMaria was fired. He sued and settled.

DeMaria's concerns were hardly unique. The executive who reported directly to Stanford recalls a talk with another executive in charge of the Antiguan bank: I remember once having a conversation about how they make such great money. He said, You know, good investments, things like that. He told me right away it was not drug money. That it once had been drug money. But, you know, Oh they found out about it, paid a penalty, they would never do that again, right? [And he] told me it was not a Ponzi scheme. Everything was legit.

Still, the rumors persisted, especially among the new American hires. In Miami, a broker named Charles Hazlett asked too many pointed questions, including several of Stanford's 31-year-old chief investment officer, Laura Pendergest-Holt, and found himself dismissed; he too sued and won a settlement. In Houston, a pair of new Stanford brokers, Charles Rawl and Mark Tidwell, asked still more questions, and resigned just as they were dismissed. They eventually sued; their complaint reportedly triggered interest within the S.E.C.'s Fort Worth office, but for some reason the investigation went nowhere.

But it wasn't just U.S. brokers who raised questions. The most senior whistle-blower may have been Gonzalo Tirado, the longtime head of Stanford's Venezuelan bank, the company's largest outpost. After Tirado resigned, in 2005, he and the bank engaged in a hail of litigation, much of it centered on compensation matters. An investigator in Miami told me Tirado came to believe Stanford was engaged in criminal acts and alerted regulators in Venezuela and the U.S. In an e-mail exchange, Tirado confirms this, but declines to elaborate, noting, I had more than three years telling the authorities in Venezuela and USA about his lack of loyalty and ethics.

Stanford Financial, however, easily weathered what few financial investigations it confronted. The S.E.C. and another agency began probes in 2005 and identified several technical infractions, but the probes neither received much attention in the press nor did anything to slow Stanford's growth. Buoyed by the U.S. economic boom, its assets roughly doubled between 2004 and 2008, to $8 billion.

In 2008 a magazine called World Finance named Stanford its Man of the Year. He was added to the University of Houston business school's Circle of Honor and spoke to a commencement class on the importance of ethics. So, CNBC correspondent Carl Quintanilla asked Stanford in May 2008, is it fun being a billionaire?

Well, uh, yes, he replied. Yes, I have to say it is fun.

The fun, alas, was almost over.

Overdue Diligence

One day last October, a 48-year-old independent financial analyst, Alex Dalmady, sitting in his office in South Florida, took a call from a friend. The friend, whom Dalmady refers to as Roberto, had much of his savings invested in Stanford C.D.'s, and in the wake of the financial meltdown, he asked Dalmady, as a favor, to examine the bank's financials and see if his money was safe. So when I went over to the bank's Web site, I was stunned, Dalmady recalls in a blog item. First, it looked so simple, so unsophisticated. The language used wasn't quite right. The explanation Stanford offered for its returns, Dalmady felt, made no sense; no one could achieve market returns like that year after year, and no reputable commercial bank would try. It was far too risky. As he later described it on his blog, Dalmady immediately called his friend and said, Roberto, take your money out YESTERDAY!

Once his friend was safe, Dalmady found himself returning to the Stanford Web site. In the interim, the Madoff scandal had hit, and his curiosity soon turned to suspicion. It became obvious, Dalmady wrote. No one was looking at stuff like this. The S.E.C. had its head up its butt. So I dug deeper and put some numbers on a spreadsheet took me about 30 minutes. It just got worse. Where was the portfolio? What were they invested in? [Twenty percent plus] returns on their hedge funds? No way. Outperforming the S&P in stocks? No way. With 30 percent deposit growth [i.e., money constantly coming in]? No way.

Stanford Financial, Dalmady judged, had to be a fraud. He decided to write up his conclusions in an article and offered it to an old friend who edited a Venezuelan financial magazine called Veneconomy, which published it at the end of January. At first, the piece caused little stir. Titled Duck Tales, it was front-loaded with complex financial analysis; Stanford Financial wasn't even mentioned until page 4. But on February 9, a financial blog called the Devil's Excrement republished it, at which point it was picked up by a popular Latin-American blog, the snarky Inca Kola News. The Inca Kola item, in turn, immediately became the focus of intense interest.

So far today, a post on the blog read, this humble blog has had several visits from major newswires, three visits from the US Federal Reserve and one from the SEC, all using [the terms] Alex Dalmady, Stanford, Madoff etc as keyword entries. Not to mention all those people from an island called Antigua and plenty from a company called Stanford Eagle in Houston. Hi guys, having a nice day?

Subpoenas were already on the way. As an e-mail from a Stanford lawyer, included in court materials, explained, the agency wanted to confirm that the bank is real, the CDs are real, that the money is actually invested as described in our documents, and that client funds in the CDs are safe and secure. Both Stanford andJim Davis declined to be interviewed by the S.E.C. Instead, they sent in their chief investment officer, tall, willowy Pendergest-Holt, a Davis protge he had met at his rural Mississippi church. She would testify together with a team from Stanford International Bank.

At a prep meeting of Stanford executives, on February 4, according to materials filed in a Dallas federal court, Pendergest-Holt sat down in a Miami conference room to explain to one of the firm's outside attorneys just how Stanford operated. Its assets, she said, were divided into three tiers. Tier I, about 10 percent of assets, was held in cash. Tier II, another 10 percent, was invested in mutual funds managed by outside firms; these holdings, Pendergest-Holt said, had fallen to $350 million from $850 million since just last June.

But it was the super-secret Tier III that most interested the S.E.C. Tier III held about 80 percent of Stanford Financial's assets, roughly $7 billion; its contents and day-to-day management appear to have been handled only by Stanford, Davis, and Pendergest-Holt. At the Miami meeting, Davis, who was also present, handed Pendergest-Holt a data drive that broke down Tier III's contents in detail. She showed it to the group. According to these numbers, Tier III at that moment was composed of $3 billion in real estate, a $1.6 billion loan to shareholder Allen Stanford and nothing else.

The shortfall came to nearly $2.5 billion. The bank executives in the room, who had never peered inside Tier III, were aghast. When the meeting reconvened the next day, Stanford appeared. Two of the bank executives said they had no choice but to report this new information to the S.E.C. According to court materials, Stanford flew into a rage and pounded on the conference table.

The assets are there! he shouted.

On the third day things got stranger yet. Before Pendergest-Holt could even begin talking, another executive started to cry. If you are going to go through more information I didn't know, he sniffed, I don't want to be here, and I'm going to the authorities. One of the lawyers suggested they pray. Stanford, however, was unmoved. He insisted the bank still had $850 million more in assets than liabilities. For the first time, though, the group in the room could see their emperor had no clothes. A few hours later, the outside attorney walked into a Stanford man's office and said, The party is over.

On February 10, Pendergest-Holt began giving sworn testimony to attorneys in the S.E.C.'s Fort Worth office. She played dumb. Asked whom she consulted with to prepare, she failed to mention either Davis or Stanford. I have been to Antigua, she said. I have reviewed statements and looked through, gosh, other issues. Time and again she insisted she knew nothing about Tier III. I can state it as many ways as you would like me to, she said. I don't know about Tier III, other than what I've already shared with you in about 20 different ways. There was a second interview a week later. If I knew anything about Tier III, I'd tell you, she said. God's honest truth.

Within hours there were runs on the Stanford branches in Antigua and Venezuela, and throughout Latin America long lines of worried people sweated in the tropical heat. Most will probably never see their money again; one investigator told me he believes maybe $1 billion out of Stanford's $8 billion in assets might eventually be recovered.

If Stanford Financial was in fact a Ponzi scheme, it is strikingly similar to Bernie Madoff's. As with Madoff's operation, only a handful of people appear to have known what was going on. Stanford's auditor, like Madoff's, was tiny, in this case a 14-person accounting firm in Antigua; its owner has recently died. Stanford's seven-member board was composed entirely of insiders, including Stanford's father and one of his elderly chums, disabled by a stroke. That such a scheme could grow so enormous, and last for so many years, is a devastating indictment of worldwide banking regulation. It took Alex Dalmady maybe two hours on the Internet to glean the amazing truth. It's not clear anyone in Washington ever seriously tried.

Allen Stanford declined to be interviewed for this article. But in an April publicity blitz clearly designed to head off his looming indictment, he told a number of interviewers, including ABC's Brian Ross, that his company was never a Ponzi scheme. If any money was missing, Stanford insisted, it was all Jim Davis's fault. (Davis is cooperating with the S.E.C. investigation and plans to enter in plea talks with government officials.) When Ross asked about comparisons to Madoff, Stanford began to tear up.

Bullshit, that's bullshit, he said. It makes me madder than hell and touches the core of my soul.

Stanford, who remains in seclusion in Houston, didn't display the first bit of guilt or remorse. Instead, he said he felt persecuted. I'm the maverick rich Texan that they can put the moose head on the wall and that's the only reason they went after me, Stanford told Ross. I'm fighting for my survival and for my integrity. It's a fight, one suspects, that Allen Stanford should, and almost certainly will, lose.

Stanford Victims Dismiss PM's Statement, Asks US to Help

FOR IMMEDIATE RELEASE

Contact: Angela Shaw
Director, Stanford Victims Coalition

STANFORD VICTIMS SAY ANTIGUAN GOVERNMENT RESPONSE FAILS TO ADDRESS LAWSUIT’S ALLEGATIONS, HEAD TO WASHINGTON TO ASK U.S. TO STEP IN

March 31, 2010 (WASHINGTON, D.C.) One week after Antigua and Barbuda Prime Minister Baldwin Spencer responded to allegations of the government’s involvement in the $7.2 billion Stanford Financial Group Ponzi scheme and its subsequent unlawful actions to seize assets belonging to the Stanford estate, the Stanford Victims Coalition met with representatives of the U.S. government in Washington, D.C. to discuss Antigua’s outright failure to address the core arguments of the class-action lawsuit filed against the island nation and how the U.S. can step in to help.

“Prime Minister Spencer’s statement didn’t even begin to acknowledge the central allegations of the victims’ lawsuit,” said attorney Peter Morgenstern, who filed the class-action lawsuit against the Commonwealth of Antigua and Barbuda in July 2009 on behalf of 28,000 defrauded investors from 113 countries. “Nowhere in the statement did Antigua address how and whether it intends to repay the more than $230 million in loans that even its former Finance Minister acknowledged the government owes to various Stanford entities, nor did it discuss the fate of the 49 properties it illegally expropriated shortly after the commencement of the SEC’s civil proceedings in the United States last year and referred to as a ‘bargaining chip’ to be used in negotiations with the Receiver appointed by the U.S. District Court.”

“Prime Minster Spencer’s statement clearly avoided the issues at hand and it was apparent we had to ask the U.S. government to step in to help force Antigua to address this escalating issue,” said Angela Shaw, the director and founder of the Stanford Victims Coalition (SVC), an international advocacy group representing the Stanford International Bank depositors, many of whom lost their entire life’s savings under Antigua’s regulatory watch.

“Not only did Antigua fail to do its job to uphold its banking laws with a bank in their sole jurisdiction, which ultimately cost us $7.2 billion, but then the government added insult to injury when it seized without compensation assets that were purchased with our stolen deposits,” said Shaw. “Based on Prime Minister Spencer’s statement issued last week and its actions over the past year, it is quite apparent Antigua will not do the right thing on its own accord, and we’ve asked the U.S. to take action to help us compel them to do so. U.S. law clearly protects its citizens from expropriation of property by foreign governments.”

In addition to not acknowledging the properties that have been seized or Antigua’s outstanding loans, the SVC noted the government’s statement did not mention the results of Antigua’s investigation into the culpability of Leroy King, the former head of Antigua’s Financial Services Regulatory Commission, who has been indicted on criminal charges in the U.S., or the role played by other Antiguan government officials in the Stanford fraud. Additionally, the Antiguan government has not fully cooperated with the U.S. Department of Justice to extradite Leroy King to the U.S., and has delayed or postponed his extradition hearing multiple times.

“It is remarkable that Antigua denies any liability to the victims of this multi-billion dollar fraud, even after its senior banking regulator was indicted for bribery in the United States,” Morgenstern said. “The Antiguan court’s lack of urgency to hold King’s extradition hearing appears to be another stall tactic to prevent further exposure of other Antiguan government officials. When King is extradited to the U.S., he will be subject to questioning by U.S. officials and additional Antiguan government officials could be implicated if King reveals the real story behind Stanford’s and Antigua’s partnership.”

The SVC said that instead of addressing serious allegations outlined in the lawsuit against Antigua, Prime Minster Spencer’s statement attempts to shift blame for the Stanford fraud to the U.S. government and its own opposing political party. Vantis, the liquidation firm appointed by the Antiguan government to oversee the winding down process of Stanford International Bank has spent many months making the case in multiple international courts that Stanford’s operations were all centered around its offshore bank in Antigua and that no other country had jurisdiction over Stanford International Bank.

“Prime Minster Spencer’s statement in many ways directly contradicts what the liquidator it appointed has spent 13 months and millions of dollars arguing,” said Shaw. “Antigua can’t have it both ways. Vantis is acting as an extension of the Antiguan government and has worked diligently to attempt to prove the Stanford Ponzi scheme’s ‘Center of Main Interest’ was Antigua – meaning the majority of the responsibility to detect the fraud would have rested clearly on Antigua’s shoulders”

Prime Minister Spencer’s allegations that the government’s predecessors in power, who “sold crown lands to Stanford, received loans from Stanford or was a beneficiary of any largesse of Stanford,” is irrelevant, said Shaw. “Our lawsuit is against the government of Antigua – not the United Progressive Party.” The SVC also noted that Stanford International Bank’s staggering growth as well as the expropriation of the properties occurred under the current administration.

Representatives of the SVC made multiple requests for an appointment with the Antiguan Ambassador in Washington, who would not agree to a meeting.

“Antigua has ignored our repeated offers to attempt to resolve our disputes in a consensual manner, and as a result, the SVC will continue with its ‘Anti-Crime, Anti-Antigua’ campaign until we receive a legitimate response in a court of law,“ said Shaw. The Anti-Antigua campaign, which was announced on the one-year anniversary of the U.S. SEC lawsuit against Stanford, calls for a boycott of, travel to, and investment in, Antigua.

“Instead of hiding behind false statements that don’t address the specific allegations in our complaint and blaming the innocent victims who continue to suffer as a result of Antigua’s and Allen Stanford’s criminal actions, Antigua must address this case head on,” Morgenstern said. “We invite Antigua to stop avoiding service of our complaint, come out of hiding, and join us in seeking a verdict from a court, after a full and fair presentation of arguments by both sides.”

The European Branch of the Stanford Victims Coalition to Join Anti-Crime, Anti-Antigua Campaign

Following the recent Campaign led by the American branch of the Stanford Victims Coalition (SVC) and recently supported by the Latin American Branch of the SVC, the European Branch of the SVC are now adding their support to the campaign and intend to target Travel Agencies, Holiday Forums, Cruise Lines, Travel Shows and Hotels in seeking support for a total boycott on Antigua as a holiday destination.

The campaign will be conducted throughout the whole of Europe and through its members will include The United Kingdom, Germany, France, Spain, Italy and all other European Countries; thus with the support of the American & Latin American SVC making this a global campaign against Antigua and its corrupt government.

This is a sad day for the people of Antigua brought about by the ineptitude and dishonesty of its government. The repercussions of this action will resound throughout the whole of the island and will affect every person living there.

The Government of Antigua have been given every opportunity to deal with this matter and correct their error in judgement when they seized the Stanford lands and property. Property that was bought and paid for by the victims of Stanford International Bank and has to be returned to them, together with repayment of the $230 million dollar loan the government of Antigua owes to SIB.

For over one year the government of Antigua have steadfastly refused to enter into any debate or contact with the SVC, despite repeated letters and requests for them to do so. They have buried their heads in the sand in the hope the victims of SIB would ignore the criminal activities they have perpetrated against them. The Baldwin Spencer government have continuously tried to blame everyone else for the situation that has arisen regarding SIB, including the previous government, the United States and the victims themselves. At no time have they acknowledged the part played by the Antiguan government, the FSRC and Leroy King and the fact that Leroy King was being overseen by a Government Minister Mr Errol Cort. This has resulted in the SVC being forced to bring legal actions and now engage in the Anti-Crime, Anti-Antigua Campaign.

The European Branch of the SVC would like the Prime Minister and his government to invoke Articles 4, 5 and 6 of the treaty that was co-signed by Antigua and the United Kingdom and also Germany “For the Promotion and Protection of Investments”.
Article 4 of the Treaty addresses the Compensation for losses, Article 5 addresses Expropriation of land and assets by governments, and Article 6 addresses the Repatriation of Investment and Returns.

The government has had every opportunity to end this situation but have instead preferred to ignore all attempts to engage in talks about how to resolve the issue. The Prime Minister of Antigua has not made a single statement regarding this matter and what he intends to do about it. The Prime Minister and his elected government are content to sit idly by and watch the lives of the very people it was elected to protect once again reduced to “eating cockles and widdy widdy bush”. Meanwhile they continue to sit in their ivory towers enjoying their luxurious homes, trips abroad and expensive lifestyles oblivious to the suffering of its people caused by their lack of action.

The European Branch of the SVC insists the Prime Minister and his government take this opportunity to turn the situation around and find a resolution to make good the losses SIB victims have suffered. We demand they honour the treaty “For the Promotion and Protection of Investments”, return the lands and assets “expropriated”, make good the loans of around $230 million dollars they acquired from Stanford and begin talks with the government leaders of Great Britain, Germany, France, the United States and all other countries involved.

This will send a clear signal to the rest of the world that Antigua takes its obligations seriously and intends to clean up its international reputation. It will also show their talk about being a government that wishes to change the image of Antigua from a corrupt and dishonest country led by thieves was not just political speak, but a genuine concern that they wish to address and rectify.

Prime Minister Baldwin Spencer has two choices here, he will either continue to ignore the situation and watch as the people of Antigua suffer. Or, he will show that he is a man of integrity, a true leader and someone who will help resolve this situation.


The SVC hope that he will avoid any more conflict and do the job he was elected to do.

Signed on behalf of all the European Stanford Victims

Pressure mounts on Antiguan government over Stanford fiasco

Source - Antigua Sun

Congressman Mike Coffman of Colorado has introduced a resolution in the US House of Representatives seeking to pressure Antigua and Barbuda over the alleged multi-billion dollar Ponzi scheme involving disgraced Texan financier, Sir Allen Stanford.

The four-page resolution which was introduced last Friday has been referred to the US House of Representatives Financial Services Committee and is now awaiting a vote.

It calls on US Executive Directors to the International Monetary Fund (IMF) and the World Bank to ensure that any loan provided to Antigua and Barbuda should have conditions attached.

Coffman wants the Baldwin Spencer administration to release to the US receiver all of Sir Allen properties that were compulsorily acquired and that the country makes several monetary contributions for the benefit of investors who lost money in the alleged scheme that US regulators said amounted to US$ 7 billion.

Specifically, it asks that the government be pressed to give the US receivership estate being managed by Ralph Janvey the same amount of money provided to Antigua and Barbuda by Sir Allen or any Stanford-affiliated entity.

A similar Senate resolution sponsored by eight US Senators in December 2009 is now pending a vote by the Senate Foreign Relations Committee.

The Baldwin Spencer government has in the past criticised the moves to blacklist the country over the affair and has described as “unbelievable” a class action lawsuit filed in the United States by a group of disgruntled investors against the Eastern Caribbean Central Bank (ECCB) and the government.

The so-called Stanford Victims Coalition, which filed the action in a New York court claims its 28,000 members fell prey to Sir Allen, who is alleged to have conducted the scheme through his Antigua-based Stanford International Bank.

Antigua Prepared To Fight Action From Stanford Investors

Finance Minister Harold Lovell

It was one week but there were two different tones from members of the Baldwin Spencer administration concerning a move by legislators in the United States to block Antigua & Barbuda from accessing a loan from the International Monetary Fund (IMF) and to a pending lawsuit from investors burned by R Allen Stanford. Where the minister of finance was defiant, the attorney general seemed contrite .

A group of senators are alleging that the twin-island state shares some culpability in the US $8 million Ponzi scheme Stanford allegedly ran, bilking investors out of their money. They say the US should oppose any new international loans to the country until the government compensates victims. This attempt to exert pressure comes after investors have said they will sue the country.

Speaking on Voice of the People on Thursday, Minister of Finance Harold Lovell declared that the country would fight tooth and nail against the victims’ coalition, which claims that the country owes them up to $24 billion in damages.

“Antigua is a small country so they (are) going pick on us, and (Senior Republican on the Banking Committee Richard Shelby of Alabama) apparently, he has some of his country club constituents who have invested money, so he is now trying to bully-rag us into paying these persons what they say they have lost. But let me tell you, we will fight that tooth and nail; there’s no way we are going to accept that we are liable in any way,” Lovell said.

In what could be classified as the strongest local response on the matter to date, Lovell added, “The persons invested their money in the Untied States. Procedures should have been in place in the United States also to prevent that, and let us look at Madoff … how come the Madoff victims aren’t calling on the US government to compensate them for whatever losses they have incurred?”

The reference was to Bernard Madoff, who is serving a 150-year prison sentence after pleading guilty to running a $65 billion Ponzi scheme.

Stanford’s trial date has been set for January 2011, and as prosecutors prepare for the case, fingers keep pointing back to Antigua, which was the headquarters for Stanford International Bank (SIB).

Among the allegations are that the government benefitted from his largess when he occupied the throne as the single largest investor and that the head of the Financial Services and Regulatory Commission (FSRC), Leroy King, was in collusion with Stanford to bilk investors.

King, who has been charged by the US Securities and Exchange Commission on multiple counts of conspiracy, remains under house arrest here, as the extradition process meanders through adjournments.

But Lovell, addressing the victims’ claim of culpability, is adamant that any arrangement between government and Stanford were legitimate commercial transactions.

“Even if Allen Stanford is guilty, how does that make Antigua & Barbuda guilty? Is it by association or what? And we say, categorically, that in no way did we have knowledge of whatever he is alleged to have done or were we involved in any way.

“We had a commercial relationship with Mr Stanford. If we got money from Mr Stanford, it was on commercial terms. He had a bank and during the course of the last 15 or so years, monies were borrowed … This administration didn’t borrow any money from Mr Stanford, but the previous administration did borrow (and) they say government is continuous, so, these are liabilities on the books of the Government of Antigua & Barbuda, but we have to pay it back at interest rates that are commercial interest rates,” Lovell said.

But Attorney General Justin Simon, in an interview with FOX Business, was less strident. In fact, he expressed disappointment with allegations of the country’s uncooperativeness and the US and Antigua & Barbuda are close to signing an evidence-sharing agreement that should facilitate the former’s preparations for trial.

“I also note with a certain amount of disappointment the allegations that have been made that Antigua & Barbuda are not cooperating with the authorities, and I’m not sure where they got that information from.

“We have certainly been co-operating. I of myself, have gone off to Miami. I have had meetings with the US prosecutors in terms of exchange of information, and, any day now, I’m expecting an MLAT (Mutual Legal Assistance Treaty) application from the US in respect of the matter, so we have been working very closely,” the AG said.

He referenced co-operation in King’s extradition process to illustrate that Antigua & Barbuda is on board with the US.

The AG also told FOX Business reporter Adam Shapiro that Antigua & Barbuda is cognizant of the victims’ loss.

“They ought to know that we, here in Antigua, are certainly very conscious that a number of investors … have suffered,” he said. “It is our intention to assist as much as possible but we have to do it within the framework of the law.”