Obama, politicians decline to return Stanford money

By Murray Waas
Mon Feb 13, 2012 6:40pm EST

(Reuters) - National fundraising committees for the Democratic and
Republican parties, President Barack Obama, and other major politicians have declined to return campaign donations totaling $1.8 million from Houston financier R. Allen Stanford, now on trial for allegedly masterminding a $7 billion Ponzi scheme.

The court-appointed receiver charged with returning money to Stanford
investors obtained a federal court order last June against five Democratic
and Republican campaigns. But they haven't returned the money. The
Democratic Senatorial Campaign Committee received $950,500; the National
Republican Congressional Committee (NRCC), $238,500; the Democratic
Congressional Campaign Committee, $200,000; the Republican National
Committee $128,500, and the National Republican Senatorial Committee (NRSC)
$83,345.

The contributions to the campaign committees and candidates were given by
Stanford himself, Stanford executives, and a political action committee
associated with the financier.

The receiver, Ralph Janvey, is also trying to claw back money Stanford
donated to individual politicians. The list of his recipients reads like a
who's who of Washington, including President Obama - who received $4,600
from Stanford in his 2008 election campaign - Rep. Pete Sessions (R-Texas),
the chairman of the NRCC, and Sen. John Cornyn (R-Texas), the chairman of
the National Republican Senatorial Campaign Committee. Janvey is seeking
these funds informally, and has not filed lawsuits.

Money has already been returned by House Speaker John Boehner, Senate
Majority Leader Harry Reid and Sen. John McCain, among others. But the
roughly $154,000 recovered from elected officials is a fraction of the $1.8
million still outstanding.

The $4,600 Janvey is seeking from the Obama campaign reflects only direct
contributions from Allen Stanford himself. The total may be as high $31,000
when Stanford's contributions to Obama's other campaign committees are
included, along with money from senior Stanford executives, and the Stanford Financial Group's now defunct PAC, according to campaign finance records and an analysis by the Center for Responsive Politics.

"ROBS THE STORE"

The Obama campaign donated the $4,600 contribution to charity on February
18, 2009, just days after Stanford's alleged fraud came to light. The Obama
campaign officially has no comment on the matter, but a source familiar with the campaign's thinking told Reuters that it does not intend to return the money to the receiver or Stanford investors.

Kevin Sadler, lead counsel for the Stanford receivership, condemned the
failure by the Obama campaign to turn over the contributions to the
receiver. He said "the money was never theirs to begin with," so they have
no more right to the money than an ordinary person who was given it from "a
guy who goes into a Seven Eleven and robs the store."

Stanford is on trial for allegedly bilking $7 billion from investors, the
second-largest Ponzi scheme in the nation's history. He has denied any
wrongdoing or taking money from investors.

In his opening statement, assistant U.S. attorney Greg Costa, alleged: "Some people trusted Mr. Stanford with their entire life savings... He stole from them so he could live the lavish lifestyle of a billionaire."

Stanford's attorney Robert Scardino, in his opening, acknowledged that
billions of dollars from Stanford's bank had gone missing, but said that
Stanford knew nothing about it, and the money had been taken by a Stanford
deputy.

The receiver first wrote to the Obama campaign five days after it gave the
money to charity in 2009, asking that it instead be returned to investors.

"If you have already donated such amounts to charity, we request you
consider donating an equal amount to the Receivership," Janvey wrote back on February 23, 2009. "By returning such amounts to the Receivership Estate, you will help reduce the losses suffered by victims of the alleged fraud."

The national campaign committees are working though the court system. They
have appealed a federal judge's order to return the money to a higher court, which has not yet decided whether to consider the matter.

There is scant legal precedent when it comes to clawing back such campaign
contributions. That's because it is often difficult to prove in court that a campaign committee took money that was clearly illicit and therefore must
return it to the victims of an alleged fraud, according to Meredith McGehee, the policy director for the non-profit Campaign Legal Center.

"If there is a clear trail, they can be forced to give the money back," she
said, noting that in cases like Stanford -- where yachts, homes and other
assets have been successfully claimed by the receiver - donations could be
fair game as well. That contrasts with a case like the 2002 telecom
accounting scandal at WorldCom, where there was fraud but also legitimate
business that can cloud the source of campaign donations.

Aside from the courts, McGehee said, another check on the system is that
candidates have to face "the court of public opinion if they are given and
then keep stolen money."

This is not the first Obama campaign contribution to have recently come into question. Last Monday, Obama's reelection campaign returned more than
$200,000 in campaign contributions it had received from the American
brothers of a Mexican casino magnate who has been in trouble with the law.
Juan Jose Rojas Cardona jumped bail in the U.S. in 1994 after being charged
with drug trafficking and fraud, according to the New York Times. The
campaign said it did not know the background of the Cardona brothers when it accepted the contribution.

Stanford spent considerable sums on lobbying and on donating to members of
Congress. According to former U.S. State Department and federal law
enforcement officials, the goal was to prevent passage of legislation and
enactment of regulations that would have strengthened money laundering laws
relating to offshore banking, which would have hampered his ability to
conduct his own allegedly illicit offshore business haven on the Caribbean
island of Antigua, where the Stanford International Bank was headquartered.

As a U.S. Senator from Illinois, Obama was one of three senators who in
February 2007, along with Sen. Carl Levin (D-Mich.) and then Sen. Norm
Coleman (R-Minn.), sponsored their own version of offshore banking
legislation.

A senior official of the NRSC, which raised funds for Republican house
members and candidates, said that the committee had attempted to settle the
receiver's demands but its offer was rejected.

According to this person, who declined to be identified, the NRSC offered to return the entire $83,345 Stanford donated and about seventy percent of the receiver's legal fees. However, the receiver was adamant that the
reimbursement should include 100 percent of his legal fees.

After that demand, the NRSC appealed the lower court's decision. Repeated
calls and emails to the other committees were not returned.

The receiver hasn't sued individual politicians for reimbursement, but has
been trying to persuade them to refund donations voluntarily, with mixed
success.

Sessions received $10,000 in campaign contributions from Stanford, the
largest amount among members of Congress who have yet to refund
contributions to the Stanford receiver. Sessions received an additional
$31,000 from other Stanford executives and the Stanford Financial Group's
Political Action Committee, according to the Center for Responsive Politics.


Torrie Miller, a spokesperson for Sessions, said in an email that Sessions
would not give $10,000 to the Stanford receiver, because Sessions had
already "donated to charity" the dollar amount of all contributions from
individuals charged in the case.

Stanford gave widely to members of Congress from Texas, his home state and
the location of many of his brokerage offices. According to the receiver's
report, Cornyn, who is chairman of the NRSC, received $6,000 from Stanford - money that Cornyn has not yet returned to the receiver.

TRIP TO ANTIGUA

In late 2004, Stanford paid for a three-day "financial services industry
fact-finding" trip for Cornyn and his wife to Antigua and Barbuda, according to congressional financial disclosure statements.

A spokesman for Cornyn, Mark Gosnell, said in a statement: "Sen. Cornyn
donated $4,000 received from Allen Stanford to Big Brothers Big Sisters of
America," a 100 year-old national children's charity.

A number of the individual campaign committees of current and former members of Congress received about $154,000 in contributions from Stanford that have yet to be returned, based on the receiver's last accounting in January, information provided to Reuters by the receiver and from interviews with members of congress and their staffs.

Among those who have turned over money to the receiver are Boehner, who
received $5,000 from Stanford; Reid, who received $8,000; and McCain's
presidential campaign committee, which was given $2,300.

Of those who have paid the receiver, former Democratic Senator Chris Dodd's
presidential campaign and senatorial campaign received and returned the
highest amount of funds-- $27,500. Sen. Richard Shelby (R-Alabama), gave
back the second largest amount, $14,000. Calls to Boehner, Reid, Dodd,
McCain and Shelby were not returned.

Federal District Court Judge David Godbey, who ruled in favor of the
receiver in June, said the campaign committees "will endure no greater
hardship than that suffered by other innocent victims of the Stanford
Defendants' Ponzi scheme who must do the same." He added that while they may be innocent beneficiaries of Stanford's largesse, "they are not entitled to special treatment."

Many of Stanford's alleged American victims were middle class-retirees, like Stan Kaufman, a retired Philadelphia school teacher, and his wife, Linda, who lost their entire half million dollar retirement fund. Stan Kaufman recalled in an interview that he was lured to invest by a salesman who assured him that Stanford's bank was heavily regulated and all of his
deposits assured.

"They stole everything," said Kaufman. "We worked hard our whole lives. Even while teaching a full day, I always worked a second job. We now have to watch every penny. We have taken thriftiness to a new level."

It is unclear that there is much money left over for the allegedly bilked
investors. Last Monday, prosecutors introduced evidence that Stanford in
late 2008 assured his most successful brokers that they had nothing to worry about because the Stanford International Bank "was sitting on $5.1 billion."
A top aide, however, emailed him around the same time to say that they only
had about $173 million on hand.

Davis, Stanford's former deputy and the bank's former chief financial
officer, has testified that by December 2008, the bank's reserves were a
mere $88 million.

BE CAREFUL WHO YOU SEND MONEY TO!

It has been brought to my attention - again - that there are people (non professional people) who are using what has happened to us as an excuse to solicit money from the victims.

I would urge all members of this forum NOT to send money to people who profess to be helping you while begging for contributions from you, unless they are professionals (such as lawyers), doing a professional job.

There are several people who work non stop on trying to help each and every victim of the Stanford fraud on a daily basis. David Brent, Patron1, Was Cool Calm Investor, Wendyanne, plus several more that work behind the scenes, and we do it without asking or accepting a penny from any victim. Our costs are the use of a computer and perhaps a few phone calls - basically it costs us nothing. We get information out to as many victims as possible, offer help and advice, keep everyone informed via the forum and the blog, get publicity and news to as many people as possible, speak to reporters, write to MP's and Senators, write to the Committee and the lawyers and we have never asked - or would accept a cent from victims who have already lost so much.

Unfortunately this is not the case with everyone that professes to be "helping" the victims and certain people have and still are asking for contributions from you all. This has to stop. You, the victims have to ask yourself why they are asking for money and exactly what they are doing with your hard earned cash? It is disgraceful that some people see this tragedy as an opportunity to exploit and cash in on what has happened to us all.

I urge all of you to throw any letters or emails asking for money that you receive from anyone on the forum (or from anywhere else) in the trash. There is no need for you to pay people who are genuine in their desire to help and there is no need for you to be paying for someone to set up a home business living off of your donations while basically doing and achieving nothing. All those who have sent money in the past need to be asking the question "what has my money been spent on, what has this person done to help me, what has this person EVER achieved that has not been done for free through the forum and the blog?

I hope you will all listen to me. If the donations stop then these leeches will disappear and you will then know who is truly helping you and who is using you for their own personal gain.

A Washington Tale As Feds Closed In, Stanford Boosted Efforts To Buy Influence TPMMuckraker

As the federal government closed in on Allen Stanford in 2008, he began desperately pulling out all the stops in a bid to stay one step ahead. The Texas banker launched his own in-house lobbying shop, run by a former top aide to a powerful congressman. And he hired a former Clinton administration PR specialist to aggressively deflect reporters looking into his financial empire.

The Stanford story, of course, is primarily about how a high-living tycoon used a Caribbean tax shelter to allegedly orchestrate a multi-billion dollar Ponzi scheme. But it's also an object lesson in how Washington works: How wealthy and powerful people can buy a level of influence and access that allows them to play by a different set of rules. In Stanford's case, that only worked for so long. But it's not hard to see how he could have thought playing the Beltway influence game might be his salvation.

For at least a decade, Stanford had understood that in order to keep his operation running, he needed some juice in the capital. Starting in 2000, he spent millions on high-priced lobbyists, and used hefty campaign donations and lavish trips to the Caribbean to curry favor with lawmakers -- a subject now reportedly being investigated by the Justice Department.

But he seems to have felt that wasn't enough. In 2008, the FBI and SEC probes that would eventually lead to his downfall appeared to be heating up. That year, Stanford opened his own in-house Washington lobbying operation, headquartered on New York Avenue.

To run it, he hired two men with ideal backgrounds for pressing his agenda: James Conzelman, a former chief of staff to Michael Oxley, the Republican congressman who had chaired the House Ways and Means committee, which oversees our tax laws; and Lionel Johnson, a former top Treasury Department official during the Clinton administration, specializing in international development. Conzelman was even given the title of Senior Vice President of Stanford Financial. That year, Stanford spent $2.2 million on lobbying on "general tax" issues, records show -- far more than he had spent in previous years.

According to Jack Blum, a former congressional investigator and an expert on money laundering, it's not surprising that Stanford stepped up his lobbying operation when he did. "There were a lot of people closing in on him," Blum told TPMmuckraker. "So his natural response was: 'I'm gonna reach out and get all the people I can to cover me.'"

Referring to Stanford's work with Florida regulators in the late 1990s, Blum added: "He had spent a lot of time and money in the past to buy his way out of scrutiny."

The lobbying effort was all in vain though, of course. "He threw away a potful of money," said Blum. "He was a target, he stayed a target. No good came of it."

Blum also was a colleague of Conzelman at Baker Hostetler, the powerhouse law and lobbying firm that Conzelman joined after leaving Capitol Hill. He described Conzelman as "a nice guy, a smart guy," but said he was "really disappointed" when he learned that Conzelman had gone to work for Stanford. "I thought, Oh my God, this guy has no clue about what he's walked into."

Conzelman, now the president of the Ripon Society, an organization of moderate Republicans, told TPMmuckraker he did not immediately have time to talk. Johnson, who's now at the PR firm Fleishman Hillard, did not respond to a request for comment.

A stepped-up lobbying presence wasn't the end of it though. We told you that for much of the decade, Stanford used his "chief of staff," Yolanda Suarez, to play hardball with investigative journalists who were digging into his operation. But Suarez left his company in 2008, and that year Stanford hired Lula Rodriguez as Managing Director of Global Communications and Corporate Affairs. Rodriguez was a top State Department communications official during the Clinton administration, according to her online bio, and later was a managing director at Citigroup, focusing on Latin America and the Caribbean.

She appears to have been tenacious in fighting off journalists who were on Stanford's trail. "This was a very very professional and aggressive PR operation," one reporter who engaged with her that year told TPMmuckraker. Rodriguez, said the reporter, was "utterly relentless" in arguing that Stanford was a legitimate businessman, even sending the reporter a link to the CNBC interview in which Stanford admits that it's fun to be a billionaire.

"She was bragging about all her connections," the reporter added. [She was saying:] I wouldn't possibly be involved with someone who's a total crook."
Rodriguez also bragged about her access to Stanford, said the reporter. "She implied that she was his best pal. That she could pick up the phone, and he would be on the phone." But when the reporter followed up and tried to set up a meeting with Stanford, Rodriguez never got back to him.

Efforts to reach Rodriguez were not successful.

Of course, Stanford's high-powered lobbying and PR help couldn't keep the Feds off his trail forever. It says something about the way Washington operates, though, that Stanford even thought he could try.

Judge refuses to release Stanford

Texas investment promoter Robert Allen Stanford tried just before Christmas to persuade a federal judge to release him from prison pending his $7 billion fraud trial in January 2011.

It was the second such attempt by Stanford, 59, who is alleged to have wrecked the retirement dreams of 30,000 investors from Baton Rouge to Brazil and other points around the world.

U.S. District Judge David Hittner needed just a single word to rule on the request: “Denied.”

Stanford’s defense team — Houston attorneys Kent A. Schaffer and George McCall Secrest Jr. — did not return calls Monday.

They argued in their pre-Christmas filing with Hittner that Stanford’s health has deteriorated during the six months that he has been in custody since his June indictment.

The defense attorneys added that a prison beating Stanford suffered in September contributed to his decline.

Schaffer and Secrest also argued the millions of documents involved in Stanford’s criminal case make it impossible for him to meaningfully participate in the planning of his defense while he remains at the federal detention center in Houston.

Another key point in their argument referred to confessed swindler Bernard Madoff of New York, who was allowed to remain free on bond before he pleaded guilty to felony charges that netted him a prison term of 150 years.

Madoff, whose frauds totaled more than $50 billon, and several other recently convicted white-collar criminals did not flee prior to their convictions, Schaffer and Secrest noted.

Stanford appealed Hittner’s initial refusal to permit him release on bond to the 5th U.S. Circuit Court of Appeals in New Orleans.

Circuit judges Edith Brown Clement, Priscilla Owen and Emilio Garza upheld Hittner’s decision in August, ruling that “Stanford’s arguments are without merit.”

The 5th Circuit panel also said in August: “Stanford has the means, the motive and the money to flee.”

In Baton Rouge on Monday, attorney Winston G. Decuir Jr. said Stanford’s new argument concerning the pre-trial release of Madoff and other white-collar criminals might justify another appeal to the 5th Circuit. Decuir is not involved with the Stanford case.

Decuir, who regularly practices in federal courts, said Stanford’s argument for pre-trial release does not carry a high chance of success.

“It wouldn’t surprise me to see federal prosecutors use the Bernie Madoff case the other way,” Decuir said, noting that Madoff received a prison term of 150 years.

“No one expected Bernie Madoff to get that kind of time,” Decuir said.

Younger people convicted of massive white-collar crimes might not run from a 10-year prison term, Decuir said.

Many people might be tempted to run from possible prison terms in excess of a century. And prosecutors probably would use that argument in any debate over Stanford’s requested release, Decuir added.

The 5th Circuit also may not be impressed by Stanford’s argument that he needs release from prison to help his attorneys sift through millions of documents, Decuir said.

“Today, you can put a million pages on a CD-ROM, slap it in a laptop and meet with your client in prison,” Decuir noted.

Stanford has developed heart problems since his arrest and undergone surgery for an aneurysm, his attorneys told Hittner last week.

When Stanford was beaten at a detention center near Conroe, Texas, his attorneys told the judge, he suffered a broken nose and fractures near his right eye that required reconstructive surgery.

The attorneys added that Stanford has lost 40 pounds and sometimes coughs up blood.

Decuir said, however, that reports of deteriorating health often are not “sufficient to persuade a judge to change his or her mind.”

Approximately $1 billion of the Stanford losses occurred in the Baton Rouge, Lafayette and Covington areas, state Rep. Bodi White, R-Central, and Baton Rouge lawyer Phillip W. Preis estimated earlier this year.

Stanford victims ask why Texas didn't act sooner

In the aftermath of the R. Allen Stanford case, some local investors are asking: Where was the State of Texas?

Investors who lost money in the Houston financier's alleged Ponzi scheme now say the state's financial oversight was too lax.

"We have the right to know what the (Texas State Securities Board) knew and when they knew it, details of their past investigations, and why they didn't disclose anything to the citizens of Texas all these years," Austin investor Annalisa Mendez said.

In fact, the state looked into Stanford's dealings years ago.

The Securities Board wrote a memo in the mid-1990s, expressing concern "that the high return rates and commissions for CDs made it difficult for the Stanford bank to make a legitimate profit on the CDs," according to a September Financial Industry Regulatory Authority report on the aftermath of both the Bernard Madoff and Stanford cases.

FINRA is a private corporation that provides regulatory oversight of all securities firms nationwide.

Texas Securities Commissioner Denise Voigt Crawford mentioned the securities board's involvement with the Stanford case in Feb. 20 testimony to the state Senate Committee on Finance, just after the scandal broke.

"We looked at him about 10 years ago, because there was evidence of potential money-laundering," Crawford said in response to a question from state Sen. Steve Ogden, R-Bryan.

The FBI and the Securities and Exchange Commission took the case, "which is what should have happened," she said. "But why it took 10 years for the feds to move on it, I could not answer."

The SEC has been criticized by investors who say the agency didn't do enough, quickly enough, to stop Stanford.

In 2003, some Stanford employees told the SEC they suspected fraud at the company.

In 2005, the SEC's Fort Worth office started an informal investigation into the sale of certificates of deposit by Stanford International Bank, which is based in Antigua.

But it was not until this past February that the SEC sued Stanford, alleging he was running a "massive Ponzi scheme" based on fraudulent CDs.

The SEC's inspector general concluded in a report that the agency had fulfilled its duty to check out accusations against Stanford.

The report found that the agency's inquiry was "hampered by a lack of cooperation" from Stanford and his attorneys, as well as by jurisdictional obstacles and obstruction by regulators in Antigua.

Stanford's attorney, Kent Schaffer, denied that his client had operated a Ponzi scheme, saying that money from the CD program was invested in a "wide range of investments."

What caused the losses were the government's lawsuit and fraud investigation, which prompted a run on the bank, he said.

Allen Stanford Scandal Forces Restructuring In Antigua

The alleged Ponzi scheme perpetrated by American turned Antiguan citizen, R. Allen Stanford, will force a restructuring of the country`s financial system.

Antigua and Barbuda`s Governor General, Dame Louise Lake-Tack, on Monday said the country`s financial laws will be amended to ensure adequate monitoring and strict compliance with anti-money laundering requirements.

Lake-Tack made the comments during her annual speech to Parliament laying out the government`s agenda. `The Financial Services Regulatory Commission will be seeking amendments wherever necessary to the legislative and regulatory frameworks that buttress our off-shore financial regime,` said the GG.

Amendments will be made to the International Business Act, The Money Laundering (Prevention) Act, and The Proceeds of Crime Act.

She also used her speech to accuse Stanford of compromising Antigua`s regulatory integrity.

Stanford is awaiting trial in a Houston jail on charges that he allegedly defrauded some 28,000 investors out of $7 billion by selling them what U.S. authorities say were bogus certificates of deposits from the Antigua-based Stanford bank.

Antigua`s National Honors Committee recently voted unanimously to revoke Stanford`s title for embarrassing the nation.