Investors in the failed Stanford International Bank, a part of the Stanford Financial Group, in receivership since the arrest of Allen Stanford, who is currently in detention in Houston awaiting trial on fraud charges, face a dilemma.
The various investor groups appear to have been split, deciding whether to pin their hopes of recovery on the political efforts of the Stanford Victims Coalition, who have been lobbying for SIPC coverage, eligible only to investors of the registered broker-dealer, Stanford Group Company, comprising mostly domestic US investors. After almost two years, there are still few signs of any successful resolution.
The other groups, headed by the Stanford International investors, have engaged an attorney to submit administrative claims under the Federal Tort Claims Act against the SEC, for their negligence in failing to act against Stanford sooner, despite knowing for 13 years, it was likely a Ponzi scheme. They claim the action against the SEC will not prejudice any SIPC recovery efforts, and is open to all the Stanford investors, irrespective of nationality.
The deadline for claims is fast approaching. Unless claims are submitted correctly and timely before the two year Statute of Limitations expires next month on the 16th February 2011, Stanford investors will be denied any recovery from the US government, forever.
Any Stanford investors who have not yet decided which is best for them, should contact their attorney at their earliest opportunity, or the attorney submitting the FTCA claims on behalf the Stanford International investors: Kachroo Legal Services of Cambridge, Mass: info@kachroolegal.com who are already experienced in submitted claims on behalf of the Madoff investors.
Showing posts with label Stanford receivership. Show all posts
Showing posts with label Stanford receivership. Show all posts
Wednesday, 12 January 2011
Statement from Kachroo Legal Services
KLS --- KACHROO LEGAL SERVICES, P.C.
January 11, 2011
Dear Stanford Investors and Attorneys:
It has come to our attention that certain misleading rumors may be circulating concerning the sharing of commissions and referral fees with non-attorneys relating to the filings of SEC administrative claims in the Stanford matter. Please note the following information carefully:
The Model Rules of Professional Conduct Rule 5.4 generally prohibit a lawyer or law firm from sharing fees with any non-lawyer. [See also, Mass. Code of Prof. Resp. 7.2(c), New York Lawyer’s Code of Prof. Resp. Rules DR-2-103(D) and DR-10107 and the Texas Disciplinary Code of Prof. Resp. 7.03(b).] Among other reasons, the American Bar Association has said that the rule is important to prevent problems of professional independence that can arise when non-lawyers assume a position in which they can interfere in a lawyer’s practice. (ABA Formal Ethics Op. 95-392.)
Additionally, any person circulating such rumors may be liable for defamation in making such statements to a third person. Anyone who suggests that Kachroo Legal Services, P.C. is paying a fee to a non-lawyer in the Stanford case would by falsely implying that the law firm is violating the rules of professional conduct. Kachroo Legal Services, P.C. has never and would never engage in such a practice. This is an issue of public concern and damages our reputation. Kachroo Legal Services, P.C. requests that anyone who has made such statements halt immediately and apologize publicly.
- Dr. Gaytri D. Kachroo, Kachroo Legal Services, P.C.
January 11, 2011
Dear Stanford Investors and Attorneys:
It has come to our attention that certain misleading rumors may be circulating concerning the sharing of commissions and referral fees with non-attorneys relating to the filings of SEC administrative claims in the Stanford matter. Please note the following information carefully:
The Model Rules of Professional Conduct Rule 5.4 generally prohibit a lawyer or law firm from sharing fees with any non-lawyer. [See also, Mass. Code of Prof. Resp. 7.2(c), New York Lawyer’s Code of Prof. Resp. Rules DR-2-103(D) and DR-10107 and the Texas Disciplinary Code of Prof. Resp. 7.03(b).] Among other reasons, the American Bar Association has said that the rule is important to prevent problems of professional independence that can arise when non-lawyers assume a position in which they can interfere in a lawyer’s practice. (ABA Formal Ethics Op. 95-392.)
Additionally, any person circulating such rumors may be liable for defamation in making such statements to a third person. Anyone who suggests that Kachroo Legal Services, P.C. is paying a fee to a non-lawyer in the Stanford case would by falsely implying that the law firm is violating the rules of professional conduct. Kachroo Legal Services, P.C. has never and would never engage in such a practice. This is an issue of public concern and damages our reputation. Kachroo Legal Services, P.C. requests that anyone who has made such statements halt immediately and apologize publicly.
- Dr. Gaytri D. Kachroo, Kachroo Legal Services, P.C.
Suspected CIA Banker Allen Stanford's Trial Indefinitely Delayed
Source: Pacific Free Press (Tom Burghardt)
The strange case of accused swindler and suspected CIA banker R. Allen Stanford became a whole lot stranger last week.
During a preliminary hearing in Houston, U.S. District Judge David Hittner ruled that Stanford, charged with orchestrating an $8 billion dollar Ponzi scheme that defrauded thousands of investors, cannot be tried until he undergoes detoxification for a drug addiction acquired after his incarceration in a federal detention facility.
Talk about a convenient turn of events!
"Nothing can be done until the medical aspect is cleared up," Hittner told defense lawyers and prosecutors during an all-day hearing that examined Stanford's mental competence to stand trial, Bloomberg News reported.
The banker's court-appointed defense team is seeking a two-year delay, citing the mountain of evidence, some two million pages at last count, they must review before the trial can proceed. Stanford's apparent inability to participate in his own defense would certainly complicate matters.
With a net worth once estimated at $2 billion, the accused fraudster was declared indigent last fall after his assets were seized and (known) accounts frozen following his 2009 arrest and indictment.
In October, U.S. District Judge Nancy Atlas ruled that Stanford and codefendants Laura Pendergest-Holt, Gilberto Lopez, Mark Kuhurt and Leroy King, the former chief regulator of the Bank of Antigua, cannot tap a $100 million Lloyds of London insurance policy to pay attorney fees.
According to the ruling, "lawyers for Lloyds had proven at a trial in August that it was likely that Stanford had committed money laundering." The court declared "that the policy's money laundering exclusion applies to justify underwriters' denial of insurance coverage at this time," Reuters reported.
Indicted eighteen months ago on 21 civil and criminal counts, including mail, wire, securities fraud and money laundering, Stanford is also suspected of running another in a long line of "full service banks" for American secret state agencies, including the CIA.
Interestingly enough, one of Stanford's early defense teams was led by none other than Robert S. Bennett, the high-powered attorney who successfully fought off prosecution for his client, Jose A. Rodriguez, the former head of the CIA's clandestine division, accused of destroying 92 torture videotapes of prisoners held at Agency "black sites."
This latest twist in the sleazy affair raise uncomfortable questions for prosecutors: just how does one become drug addicted while in federal custody?
According to Bloomberg, "three psychiatrists, one working for the government and two working for the defense, testified that Stanford's dependency on prescription anti-anxiety medication and the after-effects of a head injury he sustained in a jailhouse beating left him unfit for the trial" which was slated to begin later this month.
Victor Scarano, a defense psychiatrist testified that the banker's dependency on the anti-anxiety drug clonazepam, along with the powerful anti-depressant mirtazapine, was the result of "overmedication" by his jailers.
Scarano testified that for more than a year Stanford "has been taking 3 milligrams a day of the anti-anxiety drug clonazepam, and that a normal dose is up to 1 milligram a day for no longer than two weeks," the Houston Chronicle disclosed.
The psychiatrist told the court that "he is unable to work effectively and rationally with his attorneys in his defense against the charges."
"He is unable to focus, he's unable to keep a train of thought," Scarano testified.
A second psychiatrist, Steven Rosenblatt, hired by the government, "testified that Stanford is suffering from delirium, likely brought on by the medication."
During Thursday's hearing, Stanford's attorney Ali Fazel, told the court that his client had been assaulted while in federal custody, severely beaten and that it was prison physicians who prescribed the medications to which the accused swindler is now addicted. "It's the government that caused the problem," Fazel said.
The Independent averred this will raise "fresh and disturbing questions about the deterioration of Stanford's mental and physical health in the 18 months he has already spent behind bars."
Among the questions likely to be raised is why, for some unknown and still unexplained reason prison doctors dispensed triple the normal dose of a suite of drugs known to produce untoward side effects.
According to Wikipedia, clonazepam is used to treat epilepsy, anxiety disorder and panic disorder, and in combination with lithium and haloperidol, it is also used for the initial treatment of mania or acute psychosis.
This is certainly a curious choice for long-term treatment of a concussion. While Stanford may be a notorious huckster who believed he could do no wrong, even as he allegedly robbed investors blind, there is no evidence he suffered a psychotic break with reality. In fact, the evidence suggests quite the opposite.
Clonazepam is characterized by its "fast onset of action and high effectiveness rate and low toxicity in overdose but has drawbacks due to adverse reactions including paradoxical effects, drowsiness, and cognitive impairment."
According to scholarly literature cited by Wikipedia, "cognitive impairments can persist for at least 6 months after withdrawal of clonazepam; it is unclear whether full recovery of memory functions occurs. Other long-term effects of benzodiazepines include tolerance, a benzodiazepine dependence as well as a benzodiazepine withdrawal syndrome occurs in a third of people treated with clonazepam for longer than 4 weeks."
Common side effects include drowsiness, interference with cognitive and motor performance, irritability and aggression, psychomotor agitation, lack of motivation, loss of libido, hallucinations, short-term memory loss, and what are described as "anterograde amnesia (common with higher doses)" or, the "loss of the ability to create new memories ... leading to a partial or complete inability to recall the recent past."
The second drug dispensed to Stanford, the anti-depressant mirtazapine, is used in the treatment of depression, anxiety, obsessive-compulsive disorders and is said to "exacerbate some patients' depression or anxiety or cause suicidal ideation," Wikipedia informs us.
While "the potential for dangerous drug interactions with mirtazapine is considered to be very low," the drug may "increase the effects of ... benzodiazepines," e.g. clonazepam, the apparent drug of choice deployed by Stanford's jailers as part of his "treatment."
Attorneys and psychiatrists told the court that the accused swindler was treated for more than a year with triple the "normal dose" of a drug known for producing "paradoxical effects" including "a partial or complete inability to recall the recent past."
The question is why?
While Stanford's "overmedication" may have an innocent explanation, we cannot dismiss the possibility that someone or some entity perhaps, say an intelligence agency with decades of pharmacological knowledge derived from illicit human experiments might be interested in inducing permanent "cognitive impairment" in the dodgy banker.
A simpler explanation however, such as gross negligence on the part of his jailers cannot be ruled out. It is even quite possible, as assistant U.S. attorney Gregg Costa asserted, that Stanford "could have been faking the delirium in order to be let out of jail before facing trial" as The New York Times reported.
And given the wretched conditions that exist in American gulags, where control of prison populations through overmedication is the norm not the exception, this could also be a mitigating factor in Stanford's case. As Human Rights Watch points out, prisoners adjudged mentally ill often receive "inappropriate kinds or amounts of psychotropic medication that further impairs their ability to function."
On the other hand, Allen Stanford's high-profile, his close proximity to drug-fueled intelligence operations, decades of hastily-closed investigations into alleged security frauds and a "stand down" by the SEC "at the request of another federal agency" as The New York Times disclosed, coupled with drugs investigations that "lie buried in the paperwork" gathered by the SEC as the Houston Chronicle averred, however one cares to slice it, a drug addiction acquired in federal custody does open a new, and highly suspicious, chapter in the Stanford drama.
The maddeningly complex character of Allen Stanford's operations as the Financial Times revealed, and what role other giant banks including Bank Julius Baer, Credit Suisse and HSBC, which acted as SIB's correspondent bank for all European deposits played in the affair, may never be unraveled if he cannot stand trial.
In this respect, a permanent "inability to recall the recent past" induced by federal prison authorities may be just what the doctor ordered.
The strange case of accused swindler and suspected CIA banker R. Allen Stanford became a whole lot stranger last week.
During a preliminary hearing in Houston, U.S. District Judge David Hittner ruled that Stanford, charged with orchestrating an $8 billion dollar Ponzi scheme that defrauded thousands of investors, cannot be tried until he undergoes detoxification for a drug addiction acquired after his incarceration in a federal detention facility.
Talk about a convenient turn of events!
"Nothing can be done until the medical aspect is cleared up," Hittner told defense lawyers and prosecutors during an all-day hearing that examined Stanford's mental competence to stand trial, Bloomberg News reported.
The banker's court-appointed defense team is seeking a two-year delay, citing the mountain of evidence, some two million pages at last count, they must review before the trial can proceed. Stanford's apparent inability to participate in his own defense would certainly complicate matters.
With a net worth once estimated at $2 billion, the accused fraudster was declared indigent last fall after his assets were seized and (known) accounts frozen following his 2009 arrest and indictment.
In October, U.S. District Judge Nancy Atlas ruled that Stanford and codefendants Laura Pendergest-Holt, Gilberto Lopez, Mark Kuhurt and Leroy King, the former chief regulator of the Bank of Antigua, cannot tap a $100 million Lloyds of London insurance policy to pay attorney fees.
According to the ruling, "lawyers for Lloyds had proven at a trial in August that it was likely that Stanford had committed money laundering." The court declared "that the policy's money laundering exclusion applies to justify underwriters' denial of insurance coverage at this time," Reuters reported.
Indicted eighteen months ago on 21 civil and criminal counts, including mail, wire, securities fraud and money laundering, Stanford is also suspected of running another in a long line of "full service banks" for American secret state agencies, including the CIA.
Interestingly enough, one of Stanford's early defense teams was led by none other than Robert S. Bennett, the high-powered attorney who successfully fought off prosecution for his client, Jose A. Rodriguez, the former head of the CIA's clandestine division, accused of destroying 92 torture videotapes of prisoners held at Agency "black sites."
This latest twist in the sleazy affair raise uncomfortable questions for prosecutors: just how does one become drug addicted while in federal custody?
According to Bloomberg, "three psychiatrists, one working for the government and two working for the defense, testified that Stanford's dependency on prescription anti-anxiety medication and the after-effects of a head injury he sustained in a jailhouse beating left him unfit for the trial" which was slated to begin later this month.
Victor Scarano, a defense psychiatrist testified that the banker's dependency on the anti-anxiety drug clonazepam, along with the powerful anti-depressant mirtazapine, was the result of "overmedication" by his jailers.
Scarano testified that for more than a year Stanford "has been taking 3 milligrams a day of the anti-anxiety drug clonazepam, and that a normal dose is up to 1 milligram a day for no longer than two weeks," the Houston Chronicle disclosed.
The psychiatrist told the court that "he is unable to work effectively and rationally with his attorneys in his defense against the charges."
"He is unable to focus, he's unable to keep a train of thought," Scarano testified.
A second psychiatrist, Steven Rosenblatt, hired by the government, "testified that Stanford is suffering from delirium, likely brought on by the medication."
During Thursday's hearing, Stanford's attorney Ali Fazel, told the court that his client had been assaulted while in federal custody, severely beaten and that it was prison physicians who prescribed the medications to which the accused swindler is now addicted. "It's the government that caused the problem," Fazel said.
The Independent averred this will raise "fresh and disturbing questions about the deterioration of Stanford's mental and physical health in the 18 months he has already spent behind bars."
Among the questions likely to be raised is why, for some unknown and still unexplained reason prison doctors dispensed triple the normal dose of a suite of drugs known to produce untoward side effects.
According to Wikipedia, clonazepam is used to treat epilepsy, anxiety disorder and panic disorder, and in combination with lithium and haloperidol, it is also used for the initial treatment of mania or acute psychosis.
This is certainly a curious choice for long-term treatment of a concussion. While Stanford may be a notorious huckster who believed he could do no wrong, even as he allegedly robbed investors blind, there is no evidence he suffered a psychotic break with reality. In fact, the evidence suggests quite the opposite.
Clonazepam is characterized by its "fast onset of action and high effectiveness rate and low toxicity in overdose but has drawbacks due to adverse reactions including paradoxical effects, drowsiness, and cognitive impairment."
According to scholarly literature cited by Wikipedia, "cognitive impairments can persist for at least 6 months after withdrawal of clonazepam; it is unclear whether full recovery of memory functions occurs. Other long-term effects of benzodiazepines include tolerance, a benzodiazepine dependence as well as a benzodiazepine withdrawal syndrome occurs in a third of people treated with clonazepam for longer than 4 weeks."
Common side effects include drowsiness, interference with cognitive and motor performance, irritability and aggression, psychomotor agitation, lack of motivation, loss of libido, hallucinations, short-term memory loss, and what are described as "anterograde amnesia (common with higher doses)" or, the "loss of the ability to create new memories ... leading to a partial or complete inability to recall the recent past."
The second drug dispensed to Stanford, the anti-depressant mirtazapine, is used in the treatment of depression, anxiety, obsessive-compulsive disorders and is said to "exacerbate some patients' depression or anxiety or cause suicidal ideation," Wikipedia informs us.
While "the potential for dangerous drug interactions with mirtazapine is considered to be very low," the drug may "increase the effects of ... benzodiazepines," e.g. clonazepam, the apparent drug of choice deployed by Stanford's jailers as part of his "treatment."
Attorneys and psychiatrists told the court that the accused swindler was treated for more than a year with triple the "normal dose" of a drug known for producing "paradoxical effects" including "a partial or complete inability to recall the recent past."
The question is why?
While Stanford's "overmedication" may have an innocent explanation, we cannot dismiss the possibility that someone or some entity perhaps, say an intelligence agency with decades of pharmacological knowledge derived from illicit human experiments might be interested in inducing permanent "cognitive impairment" in the dodgy banker.
A simpler explanation however, such as gross negligence on the part of his jailers cannot be ruled out. It is even quite possible, as assistant U.S. attorney Gregg Costa asserted, that Stanford "could have been faking the delirium in order to be let out of jail before facing trial" as The New York Times reported.
And given the wretched conditions that exist in American gulags, where control of prison populations through overmedication is the norm not the exception, this could also be a mitigating factor in Stanford's case. As Human Rights Watch points out, prisoners adjudged mentally ill often receive "inappropriate kinds or amounts of psychotropic medication that further impairs their ability to function."
On the other hand, Allen Stanford's high-profile, his close proximity to drug-fueled intelligence operations, decades of hastily-closed investigations into alleged security frauds and a "stand down" by the SEC "at the request of another federal agency" as The New York Times disclosed, coupled with drugs investigations that "lie buried in the paperwork" gathered by the SEC as the Houston Chronicle averred, however one cares to slice it, a drug addiction acquired in federal custody does open a new, and highly suspicious, chapter in the Stanford drama.
The maddeningly complex character of Allen Stanford's operations as the Financial Times revealed, and what role other giant banks including Bank Julius Baer, Credit Suisse and HSBC, which acted as SIB's correspondent bank for all European deposits played in the affair, may never be unraveled if he cannot stand trial.
In this respect, a permanent "inability to recall the recent past" induced by federal prison authorities may be just what the doctor ordered.
U.S. Embassy Turned a Blind Eye as Suspected CIA Banker Allen Stanford Bilked Investors, Secret Cables Reveal
Soure: Inteldaily (Tom Burghardt)
While R. Allen Stanford was happily ensconced on the Caribbean island of Antigua, allegedly bribing officials there as he expanded his banking empire, secret cables released by the whistleblowing web site WikiLeaks revealed that U.S. Embassy officials held themselves at arm’s length even as they provided the accused fraudster with political cover.
As Antifascist Calling reported last summer, Stanford International Bank (SIB) and Stanford Financial Group (SFG), once conservatively valued at $50 billion, were no more legitimate than penny stock frauds or advance fee scams on the internet. To make matters worse, for years federal regulators turned a blind eye towards the bank’s reckless practices.
As it turns out, so too did the U.S. Embassy.
Cablegate file 06BRIDGETOWN755, “Cricket Breakfast Serves Up First Encounter with Allen Stanford,” dated 03 May 2006, revealed that “Ambassador Kramer met controversial Texan billionaire Allen Stanford for the first time at an April 21 ‘Legends of Cricket’ breakfast in Barbados.”
The confidential embassy cable reported that “Stanford bent the Ambassador’s ear concerning his significant new tourism and property investments in Antigua and plans for his Caribbean Star and Caribbean Sun airlines.”
The occasion for the meeting, an inadvertent encounter if the embassy’s account is to be believed, was an April 21, 2006 breakfast at the Barbados Hilton.
Stanford, who went on to donate some $20 million to the England and Wales Cricket Board, attended the lavish affair in the company of Barbados Prime Minister Owen Arthur, U.S. Ambassador Mary E. Kramer, assorted sports stars and local luminaries.
The cable averred that “Allen Stanford is a controversial Texan billionaire who has made significant investments in offshore finance, aviation, and property development in Antigua and throughout the region. His companies are rumored to engage in bribery, money laundering, and political manipulation.”
Rumored by whom, one might reasonably ask? An important point since this was certainly not general knowledge at the time, particularly amongst those who were being fleeced.
But rather than blowing the whistle when it could have mattered most to investors and Antiguan citizens, the Bush-appointed official took cover. “Embassy officers do not reach out to Stanford” we read, “because of the allegations of bribery and money laundering. The Ambassador managed to stay out of any one-on-one photos with Stanford during the breakfast.”
Why would Kramer have done otherwise? After all, as Secretary of State Hillary Clinton piously intoned last month denouncing WikiLeaks, “this is the role our diplomats play in serving America.”
A “Unique Investment Strategy”
When “Sir Allen” was arrested in 2009, the federal indictment charged that the high-flying Texan had sold more than $7 billion in fraudulent certificates of deposit and some $1.2 billion in mutual funds.
The centerpiece of SIB’s “unique investment strategy” were financial instruments that were claimed to be safe, liquid and redeemable at a moment’s notice.
According to a blurb on the “Sir Allen Stanford” web site, the Stanford Financial Group “provides private and institutional investors with global expertise in asset allocation strategies, investment advisory services, equity research, international private banking and trust administration, commercial banking, investment banking, merchant banking, institutional sales and trading, real estate investment and insurance.”
The reality was far different, however. In fact, the majority of Group “assets” were in very illiquid real estate holdings and private accounts managed by just two individuals, Allen Stanford and his college roommate, James M. Davis, the bank’s chief financial officer.
According to federal prosecutors, accounts were divided into three tiers, I, II and III with Tier III accounts representing “more than 80% of the purported total value of SIBL’s investments.”
“STANFORD and DAVIS” the charge sheet reads, “directed, managed, and monitored … the Tier III investments. According to internal SIBL documents, as of June 30, 2008, these Tier III investments comprised the majority of the purported value of SIBL’s investment portfolio. Approximately 50% of the purported value of Tier III (approximately $3.2 billion) included investments in artificially valued real estate and approximately 30% of the purported value of Tier III (approximately $1.6 billion) included notes on personal loans to STANFORD. STANFORD, DAVIS and others did not disclose to, and actively concealed from, investors, SGC and SIBL employees, and others the fact that approximately $4.8 billion in purported Tier III investments consisted of such artificially valued real estate and notes on personal loans to STANFORD.”
A sweet deal if you’re in on the fix.
Lured by “high rates that exceed those available through true certificates of deposits offered by traditional banks,” thousands of investors were indelicately relieved of their life savings. Of the more than $8 billion hoovered up by the banker and his cronies, only about $500 million has been recovered.
This raises the question: where did all that money go? Did it just simply vanish into thin air, secret Stanford accounts, or perhaps, was it diverted elsewhere by the banker’s silent partners in a certain three-lettered agency?
When asked during a 2009 interview by CNBC’s Scott Cohn whether he had been “helpful” to U.S. authorities in Latin America, Stanford replied, “Are you talking about the CIA?” Cohn: “Well, you tell me?” Stanford: “I’m just not going to talk about that.”
Stanford’s reticence to discuss possible Agency connections are certainly understandable.
We do know however, that like many dubious banking ventures before it, Stanford Financial Group had powerful friends in high places, in the White House, Congress, amongst regulatory agencies and, plausibly, the CIA; all of whom tripped over themselves furnishing Stanford’s “family” of companies with a watertight “roof.”
The More Things “Change”
According to available evidence, why would the banker have believed his shady empire was on the brink of collapse in 2009, or that well-connected friends wouldn’t come to the rescue? After all, it happened before.
Last year The New York Times disclosed that Stephen J. Korotash, an associate regional director of enforcement at the Ft. Worth, Texas office of the Securities and Exchange Commission (SEC) said the regulatory agency “stood down” their investigation “at the request of another federal agency, which he declined to name.”
A curious admission all the more damning for regulators considering that suspicions, and hastily-closed investigations, have dogged the bank for the better part of two decades.
Damning perhaps, but not surprising.
Nearly a quarter century before charges were laid against Allen Stanford, the late investigative reporter Penny Lernoux recounted in her still-timely book, In Banks We Trust, a fraudulent scheme by Citibank (now Citigroup) to evade paying taxes while cooking the books and dodging “legal requirements on bank reserves, liquidity, and lending limits.” And, similar to the Stanford grift, the SEC did worse than nothing.
Lernoux averred that even after a whistleblower and former bank vice president proved “conclusively” that Citibank had “systematically” violated the law, “the SEC’s enforcement staff refused to take any action against the bank on the ground that its pursuit of unlawful profits accorded with ‘reasonable and standard business judgement’.”
Here’s the kicker. Lernoux wrote that the “SEC also concluded that Citibank’s management had no duty to disclose improper actions since the bank had never claimed its top officers possessed ‘honesty and integrity’.” Sound familiar?
Fast forward to the era of the Bush crime family and we learn that in 2006, BusinessWeek revealed that the president “bestowed on his intelligence czar … broad authority, in the name of national security” to excuse companies from “their normal accounting and securities-disclosure obligations” if they revealed “certain top-secret defense projects.”
Would such “broad authority” also cover financial institutions accused of laundering drug money for select “War on Terror” allies?
Interestingly enough, Bush’s “intelligence czar” at the time, John D. Negroponte, was U.S. Ambassador in Honduras during the 1980s at the height of the Reagan administration’s anticommunist jihad in Central America.
In addition to covering for the CIA as the Agency stood-up death squads in Honduras, Negroponte, as The Baltimore Sun revealed in 1995, turned a blind eye as America’s “freedom fighters,” the Nicaraguan Contras, financed their terrorist insurgency against the leftist Sandinista government by importing billions of dollars of cocaine into the United States with a major assist from their ideological soul-mates, the Medellín and Cali drug cartels.
Recall that during this period of intensified U.S. covert operations, the Reagan Justice Department signed a Memorandum of Understanding with the CIA. That 1982 memo, brokered between U.S. Attorney General William French Smith and CIA Director William Casey, absolved the Agency from reporting drug smuggling by their assets, the Nicaraguan Contras and Afghan mujahideen.
Leveraging their anticommunist bona fides to import massive quantities of drugs into the United States, and laundering the proceeds through a spider’s web of U.S. and offshore banks including, as several investigative reports have alleged, a Stanford bank, one can only wonder whether similar cosy arrangements are in force today.
Recall also that illegal activities by institutions as diverse as Paul Helliwell’s Castle Bank and Trust in the Bahamas, Frank Nugan and Michael Hand’s Nugan Hand Bank in Sydney, Saudi Arabia and the Cayman Islands, or the far-flung, crooked empire of Agha Hasan Abedi’s Bank of Credit and Commerce International, were all financial black holes where organized crime, drug-fueled intelligence operations and geopolitical intrigue freely intermixed.
Separated in time and geography, what all three banks had in common was their close proximity to international drug trafficking networks and the CIA, particularly in areas of acute interest to U.S. policy planners. Did Stanford International Bank have an analogous relationship with the Agency?
After all the Stanford bank, like Castle, Nugan Hand and BCCI before it had been focal points of unseemly financial practices for years. Indeed, nearly thirty years ago investigative journalist Nancy Grodin reported in CovertAction (Number 16, March 1982), that like SIB, Nugan Hand enticed prospective investors “with offers of private banking services, high interest rates (higher than anywhere else in the region), tax-free deposits and complete secrecy.”
Across the decades, investigations revealed that leading figures in Castle, Nugan Hand and BCCI had actively conspired with drug traffickers to import narcotics into the United States.
Top bank officials Helliwell, Nugan, Hand and Abedi worked alongside organized crime figures and former intelligence and Pentagon officials, including a past director of the CIA. And when the chips were down, all managed to evade being held to account for the most serious charges: drug trafficking, money laundering, arms smuggling, murder, terrorism, even nuclear proliferation, precisely because such exposure would have revealed “sensitive intelligence operations.”
While some might argue that in the broad scheme of things considering the depth of capitalism’s economic meltdown, Stanford’s alleged grift was mere chump change compared to the trillions of dollars plundered by even bigger fish.
From a parapolitical perspective however, the multiple obfuscations, smokescreens and outright falsehoods surrounding the scandal indicate this is no simple case of greed or another tawdry example of “elite deviance.”
Rather, as researcher Peter Dale Scott has assiduously documented over the years, the vicissitudes of “L’affaire Stanford” may be emblematic of “continuous U.S. involvement in the global drug connection,” a “global financial complex of hot money uniting prominent business … and government as well as underworld figures” for purposes of “achieving and maintaining global American dominance.”
Drug Links Covered-Up
While Ambassador Kramer may have avoided having her photo snapped with the accused fraudster, her rather pedestrian concerns pale in comparison to the fact that Stanford has been the subject of multiple drugs investigations over a 20-year period that have all been scrupulously covered-up.
Indeed, years before the federal government ran SIB to ground, earlier probes, including those investigating drug-money laundering during the Iran-Contra period were killed.
Stanford’s Montserrat-based Guardian International Bank, a suspected conduit for Contra drug funds, short-circuited investigators when it pulled-up stakes, surrendered its banking license and left the island.
By 1986, evidence emerged that top Contra officials and the Agency enjoyed cosy ties with both Pablo Escobar and the Orejuela brothers, respective kingpins of the Medellín and Cali drug cartels.
Under pressure from the Reagan administration however, Congress and corporate media buried the drug angle to the investigation, as Consortium News journalist Robert Parry has documented in a series of groundbreaking reports.
After his departure from Montserrat under a cloud, the banker trained his sights on Antigua and Barbuda where he developed a close relationship with former prime minister Lester Bird.
The Independent reported that during the course of a joint Scotland Yard-FBI investigation, the bank “was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers.”
“Under the Bird family leadership” The Independent disclosed, “the island was widely regarded as one of the most corrupt in the Caribbean, with well-documented links to arms and drug smuggling and money laundering.”
The former FBI agent who led the Guardian probe, Ross Gaffney, told The Independent “we suspected that Stanford’s bank was involved in money laundering.” Gaffney said that even after Guardian closed, the FBI “continued to take an interest in Stanford and set up a second inquiry into that bank after receiving intelligence that it continued to launder money for the Medellin and Cali cartels.”
The former federal agent said, “We had hard intelligence about what he was doing and we began to develop it” but that investigation died or more likely, was deep-sixed, by officials higher-up the food chain.
According to The Observer, a second FBI source “confirmed the agency was looking at links to international drug gangs as part of the huge investigation into Stanford’s banking activities.”
Other sources “in the US Drug Enforcement Administration” The Observer reported, “also confirmed that while the investigations into Stanford’s affairs were ‘with the FBI and Securities Exchange Commission, there may well have been a trail connecting his Mexican affairs to narco-trafficking interests’.”
But even after the stench of Iran-Contra faded from the headlines, drug probes targeting the bank continued well into the 1990s. The Houston Chronicle reported that according to court documents “operatives of the Juarez cartel began opening accounts at Stanford’s Antigua-based bank in an effort to launder money amassed under one of Mexico’s most vicious drug lords, Amado Carrillo Fuentes.”
“Together,” the Chronicle disclosed, “they used Stanford International Bank to open 10 accounts and deposit $3 million–a small sliver of the cartel’s fortunes but enough to pique authorities’ interest.”
Despite long-running investigations, federal sources told the Chronicle, “any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission’s civil inquiry.”
Federal officials claimed, despite probes that resulted in stiff fines for illicit practices by other U.S. banks including, most recently, Wachovia, as Bloomberg Markets magazine reported, that tracing drug profits laundered through offshore banks like Stanford’s “is difficult to document.”
That is, acutely “difficult” if investigators are ordered to look away, and evidence suggests they were. How else would one interpret the statement by The Observer’s DEA source who told the British newspaper, “I think we’ll find that any possible drug-related trail and SEC priorities are not all in the same frame.”
When the scandal broke, Cablegate file 09BRIDGETOWN114, 18 February 2009, “Antigua: Upheaval on the Eve of Elections,” informs us that the 17 February announcement of new parliamentary elections “was almost immediately overshadowed by an announcement by the Securities and Exchange Commission of action being taken against U.S.-Antiguan citizen Sir Allen Stanford for ‘massive, on-going fraud’.”
The Embassy informed the State Department that “local fears over Stanford indictment have led to a run on the Stanford Financial Group’s subsidiary the Bank of Antigua, with depositors lining up for an hour or more to withdrawal their money.”
As reported above, through a series of maneuvers and what were alleged to be illicit payments to former Antiguan Prime Minister Lester Bird, Stanford set up shop on the Caribbean island in 1990, and gobbled up prime real estate, acquired dual citizenship and a knighthood, and eventually took control of the Bank of Antigua in a highly-dubious “reorganization.”
The ripples from the indictment spread like a rogue wave across Antigua and the Eastern Caribbean. Antiguan officials, and the U.S. Embassy, were concerned that once the depth of the fraud sank in, “unrest” would follow in its wake.
Shortly after that 2009 embassy cable, The Guardian, reported that an investigation by the Antiguan government uncovered “large payments … in Isle of Man bank accounts controlled by Antiguan politicians.”
According “to documents seen by The Guardian, HSBC bank, in the Isle of Man, accepted $3.2m (£2.3m) on behalf of Asot Michael, once chief of staff to the former Antigua prime minister Lester Bird.”
“The cash under investigation” the British newspaper disclosed, “came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.”
HSBC denied all wrongdoing and “would publicly neither confirm nor deny information about individual Manx accounts,” saying the bank “has robust anti-money laundering policies and clearly defined policies and procedures concerning politically exposed persons.”
“It is unclear” the Embassy averred, “if either party will try hard to use the Stanford indictment as an election issue–Stanford amassed his fortune under an ALP [Antiguan Labor Party] government, and was knighted by a UPP [United Progressive Party] government, so all hands are likely equally dirty.”
“Many worry that these issues [crime, fraud and violence] could not only spell disaster for the UPP, but for the country’s economy as a whole, leading to a severe economic depression and intolerable unemployment creating more violence and a cycle of less tourism, more unemployment and more crime.”
Curiously, while corporate media have focused on Stanford’s lavish lifestyle, girlfriends and upscale island properties, nary a word has been whispered about the banker’s alleged links to notorious drug cartels or to some of the CIA’s dirtiest operations.
Even at this late date, it appears that the dodgy banker has well-connected friends who want to bury this angle of a scandal that has defrauded thousands and wrecked entire economies.
The question is, why?
Follow the Money, but Where?
Investors in the Stanford Ponzi scheme have lost their shirts, and its likely they’ll never recover even a fraction of their losses.
“In the past two years” the Houston Chronicle reported, “Stanford himself has ceased to be the story. The most amazing aspect of the Stanford saga is how little money has been recovered. As the court-appointed receiver has chased assets around the globe, he’s found Stanford’s accounts stunningly empty.”
During the investigation that led to the indictments, auditors learned that that funds were moved through Stanford-controlled accounts to offshore banks, including HSBC London; Bank Julius Baer, Zurich; Credit Suisse, United Kingdom; SG Private Banking, Geneva; Banque Franck Galland & Cie S.A., Geneva; RBS Coutts, Zurich; Coutts Bank Von Ernst, Geneva and Toronto Dominion Bank, Canada; banks which have figured in past money laundering or tax-avoidance scandals. In all, 28 numbered accounts were listed by prosecutors, veritable black holes that escaped regulatory scrutiny.
Nearly a decade ago, investigative journalist Stephen Bender wrote in Z Magazine that “an understanding of the drug trade’s machinations is incomplete without an analysis of the crucial role transnational banks play in the laundering of drug proceeds.”
The House Permanent Subcommittee on Investigations reported back in 2000: “Despite increasing international attention and stronger anti-money laundering controls, some current estimates are that $500 billion to $1 trillion in criminal proceeds are laundered through banks worldwide each year, with about half of that amount moved through United States banks.”
Recall that at the height of capitalism’s current global economic meltdown, Antonio Maria Costa, the director of the United Nations Office on Drugs and Crime told The Observer that “drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis.”
Costa told the British newspaper he saw substantial evidence that that proceeds from the illicit trade were “the only liquid investment capital” available to some banks on the brink of collapse last year and that “a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.”
The UN drugs chief said that in “many instances, the money from drugs was the only liquid investment capital.” And with markets tanking and major bank failures a near daily occurrence, “liquidity was the banking system’s main problem and hence liquid capital became an important factor.”
If only a tiny portion of these illegal proceeds were siphoned-off by secret state agencies, including the CIA, funds available for covert operations and other dubious purposes, such as suborning treason amongst foreign officials to spy on their own governments, as WikiLeaks diplomatic cables revealed, the amounts would be staggering.
Bender informed us that one conduit for laundering drug profits is the private banking system.
“U.S.-based private banks” Bender wrote, “operate in a regulatory twilight zone enabling the laundering of drug profits as confirmed by the GAO. Private banks are ‘not subject to the Bank Secrecy Act,’ thus exempting banks from complying with ‘specific anti-money-laundering provisions…such as the one requiring that suspicious transactions be reported to U.S. authorities’.”
And with “international private banking” a prominent selling-point of the Stanford firm’s dark web, one might reasonably surmise that drug traffickers would also view this regulatory black hole in the most favourable light.
Indeed, this “twilight zone” was precisely where Allen Stanford operated. As The Miami Herald reported, state and federal regulators allowed SIB to move “vast amounts of money offshore–without reporting a penny to regulators.”
SIB’s arrangements with the Florida Office of Financial Regulation were so lax that the company “was allowed to sell hundreds of millions in bank notes without allowing regulators to check for fraud.” Indeed, Florida regulators granted Stanford’s bank “sweeping powers never given to a private company.”
But what if that “private company” were handed an exemption from “their normal accounting and securities-disclosure obligations” as BusinessWeek reported, on grounds of “national security,” and investigations into that firm were squashed “at the request of another federal agency,” wouldn’t this also suggest that Stanford’s Ponzi scheme may have also been a cover for ongoing U.S. intelligence operations?
And once the scope of the fraud became too large to ignore, it wouldn’t be a stretch to conclude that the Agency decided to cut their losses and “move on”?
As investigative reporters Jonathan Beaty and S.C. Gwynne uncovered in their stunning exposé, The Outlaw Bank, it wouldn’t be the first time.
For years the CIA had concealed their close involvement with the crooked Bank of Credit and Commerce International (BCCI), tied to everything from drug trafficking to money laundering and from nuclear proliferation to the financing of terrorist groups, including those that morphed into Al-Qaeda.
And when they “came clean” to Treasury Department officials in a report that remains classified to this day, “suddenly, and for no apparent reason,” Beaty and Gwynne wrote, Treasury “lost all interest in BCCI.”
Perhaps for similar reasons too, in the years ahead we’ll find that “any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission’s civil inquiry,” where its likely to stay buried.
While R. Allen Stanford was happily ensconced on the Caribbean island of Antigua, allegedly bribing officials there as he expanded his banking empire, secret cables released by the whistleblowing web site WikiLeaks revealed that U.S. Embassy officials held themselves at arm’s length even as they provided the accused fraudster with political cover.
As Antifascist Calling reported last summer, Stanford International Bank (SIB) and Stanford Financial Group (SFG), once conservatively valued at $50 billion, were no more legitimate than penny stock frauds or advance fee scams on the internet. To make matters worse, for years federal regulators turned a blind eye towards the bank’s reckless practices.
As it turns out, so too did the U.S. Embassy.
Cablegate file 06BRIDGETOWN755, “Cricket Breakfast Serves Up First Encounter with Allen Stanford,” dated 03 May 2006, revealed that “Ambassador Kramer met controversial Texan billionaire Allen Stanford for the first time at an April 21 ‘Legends of Cricket’ breakfast in Barbados.”
The confidential embassy cable reported that “Stanford bent the Ambassador’s ear concerning his significant new tourism and property investments in Antigua and plans for his Caribbean Star and Caribbean Sun airlines.”
The occasion for the meeting, an inadvertent encounter if the embassy’s account is to be believed, was an April 21, 2006 breakfast at the Barbados Hilton.
Stanford, who went on to donate some $20 million to the England and Wales Cricket Board, attended the lavish affair in the company of Barbados Prime Minister Owen Arthur, U.S. Ambassador Mary E. Kramer, assorted sports stars and local luminaries.
The cable averred that “Allen Stanford is a controversial Texan billionaire who has made significant investments in offshore finance, aviation, and property development in Antigua and throughout the region. His companies are rumored to engage in bribery, money laundering, and political manipulation.”
Rumored by whom, one might reasonably ask? An important point since this was certainly not general knowledge at the time, particularly amongst those who were being fleeced.
But rather than blowing the whistle when it could have mattered most to investors and Antiguan citizens, the Bush-appointed official took cover. “Embassy officers do not reach out to Stanford” we read, “because of the allegations of bribery and money laundering. The Ambassador managed to stay out of any one-on-one photos with Stanford during the breakfast.”
Why would Kramer have done otherwise? After all, as Secretary of State Hillary Clinton piously intoned last month denouncing WikiLeaks, “this is the role our diplomats play in serving America.”
A “Unique Investment Strategy”
When “Sir Allen” was arrested in 2009, the federal indictment charged that the high-flying Texan had sold more than $7 billion in fraudulent certificates of deposit and some $1.2 billion in mutual funds.
The centerpiece of SIB’s “unique investment strategy” were financial instruments that were claimed to be safe, liquid and redeemable at a moment’s notice.
According to a blurb on the “Sir Allen Stanford” web site, the Stanford Financial Group “provides private and institutional investors with global expertise in asset allocation strategies, investment advisory services, equity research, international private banking and trust administration, commercial banking, investment banking, merchant banking, institutional sales and trading, real estate investment and insurance.”
The reality was far different, however. In fact, the majority of Group “assets” were in very illiquid real estate holdings and private accounts managed by just two individuals, Allen Stanford and his college roommate, James M. Davis, the bank’s chief financial officer.
According to federal prosecutors, accounts were divided into three tiers, I, II and III with Tier III accounts representing “more than 80% of the purported total value of SIBL’s investments.”
“STANFORD and DAVIS” the charge sheet reads, “directed, managed, and monitored … the Tier III investments. According to internal SIBL documents, as of June 30, 2008, these Tier III investments comprised the majority of the purported value of SIBL’s investment portfolio. Approximately 50% of the purported value of Tier III (approximately $3.2 billion) included investments in artificially valued real estate and approximately 30% of the purported value of Tier III (approximately $1.6 billion) included notes on personal loans to STANFORD. STANFORD, DAVIS and others did not disclose to, and actively concealed from, investors, SGC and SIBL employees, and others the fact that approximately $4.8 billion in purported Tier III investments consisted of such artificially valued real estate and notes on personal loans to STANFORD.”
A sweet deal if you’re in on the fix.
Lured by “high rates that exceed those available through true certificates of deposits offered by traditional banks,” thousands of investors were indelicately relieved of their life savings. Of the more than $8 billion hoovered up by the banker and his cronies, only about $500 million has been recovered.
This raises the question: where did all that money go? Did it just simply vanish into thin air, secret Stanford accounts, or perhaps, was it diverted elsewhere by the banker’s silent partners in a certain three-lettered agency?
When asked during a 2009 interview by CNBC’s Scott Cohn whether he had been “helpful” to U.S. authorities in Latin America, Stanford replied, “Are you talking about the CIA?” Cohn: “Well, you tell me?” Stanford: “I’m just not going to talk about that.”
Stanford’s reticence to discuss possible Agency connections are certainly understandable.
We do know however, that like many dubious banking ventures before it, Stanford Financial Group had powerful friends in high places, in the White House, Congress, amongst regulatory agencies and, plausibly, the CIA; all of whom tripped over themselves furnishing Stanford’s “family” of companies with a watertight “roof.”
The More Things “Change”
According to available evidence, why would the banker have believed his shady empire was on the brink of collapse in 2009, or that well-connected friends wouldn’t come to the rescue? After all, it happened before.
Last year The New York Times disclosed that Stephen J. Korotash, an associate regional director of enforcement at the Ft. Worth, Texas office of the Securities and Exchange Commission (SEC) said the regulatory agency “stood down” their investigation “at the request of another federal agency, which he declined to name.”
A curious admission all the more damning for regulators considering that suspicions, and hastily-closed investigations, have dogged the bank for the better part of two decades.
Damning perhaps, but not surprising.
Nearly a quarter century before charges were laid against Allen Stanford, the late investigative reporter Penny Lernoux recounted in her still-timely book, In Banks We Trust, a fraudulent scheme by Citibank (now Citigroup) to evade paying taxes while cooking the books and dodging “legal requirements on bank reserves, liquidity, and lending limits.” And, similar to the Stanford grift, the SEC did worse than nothing.
Lernoux averred that even after a whistleblower and former bank vice president proved “conclusively” that Citibank had “systematically” violated the law, “the SEC’s enforcement staff refused to take any action against the bank on the ground that its pursuit of unlawful profits accorded with ‘reasonable and standard business judgement’.”
Here’s the kicker. Lernoux wrote that the “SEC also concluded that Citibank’s management had no duty to disclose improper actions since the bank had never claimed its top officers possessed ‘honesty and integrity’.” Sound familiar?
Fast forward to the era of the Bush crime family and we learn that in 2006, BusinessWeek revealed that the president “bestowed on his intelligence czar … broad authority, in the name of national security” to excuse companies from “their normal accounting and securities-disclosure obligations” if they revealed “certain top-secret defense projects.”
Would such “broad authority” also cover financial institutions accused of laundering drug money for select “War on Terror” allies?
Interestingly enough, Bush’s “intelligence czar” at the time, John D. Negroponte, was U.S. Ambassador in Honduras during the 1980s at the height of the Reagan administration’s anticommunist jihad in Central America.
In addition to covering for the CIA as the Agency stood-up death squads in Honduras, Negroponte, as The Baltimore Sun revealed in 1995, turned a blind eye as America’s “freedom fighters,” the Nicaraguan Contras, financed their terrorist insurgency against the leftist Sandinista government by importing billions of dollars of cocaine into the United States with a major assist from their ideological soul-mates, the Medellín and Cali drug cartels.
Recall that during this period of intensified U.S. covert operations, the Reagan Justice Department signed a Memorandum of Understanding with the CIA. That 1982 memo, brokered between U.S. Attorney General William French Smith and CIA Director William Casey, absolved the Agency from reporting drug smuggling by their assets, the Nicaraguan Contras and Afghan mujahideen.
Leveraging their anticommunist bona fides to import massive quantities of drugs into the United States, and laundering the proceeds through a spider’s web of U.S. and offshore banks including, as several investigative reports have alleged, a Stanford bank, one can only wonder whether similar cosy arrangements are in force today.
Recall also that illegal activities by institutions as diverse as Paul Helliwell’s Castle Bank and Trust in the Bahamas, Frank Nugan and Michael Hand’s Nugan Hand Bank in Sydney, Saudi Arabia and the Cayman Islands, or the far-flung, crooked empire of Agha Hasan Abedi’s Bank of Credit and Commerce International, were all financial black holes where organized crime, drug-fueled intelligence operations and geopolitical intrigue freely intermixed.
Separated in time and geography, what all three banks had in common was their close proximity to international drug trafficking networks and the CIA, particularly in areas of acute interest to U.S. policy planners. Did Stanford International Bank have an analogous relationship with the Agency?
After all the Stanford bank, like Castle, Nugan Hand and BCCI before it had been focal points of unseemly financial practices for years. Indeed, nearly thirty years ago investigative journalist Nancy Grodin reported in CovertAction (Number 16, March 1982), that like SIB, Nugan Hand enticed prospective investors “with offers of private banking services, high interest rates (higher than anywhere else in the region), tax-free deposits and complete secrecy.”
Across the decades, investigations revealed that leading figures in Castle, Nugan Hand and BCCI had actively conspired with drug traffickers to import narcotics into the United States.
Top bank officials Helliwell, Nugan, Hand and Abedi worked alongside organized crime figures and former intelligence and Pentagon officials, including a past director of the CIA. And when the chips were down, all managed to evade being held to account for the most serious charges: drug trafficking, money laundering, arms smuggling, murder, terrorism, even nuclear proliferation, precisely because such exposure would have revealed “sensitive intelligence operations.”
While some might argue that in the broad scheme of things considering the depth of capitalism’s economic meltdown, Stanford’s alleged grift was mere chump change compared to the trillions of dollars plundered by even bigger fish.
From a parapolitical perspective however, the multiple obfuscations, smokescreens and outright falsehoods surrounding the scandal indicate this is no simple case of greed or another tawdry example of “elite deviance.”
Rather, as researcher Peter Dale Scott has assiduously documented over the years, the vicissitudes of “L’affaire Stanford” may be emblematic of “continuous U.S. involvement in the global drug connection,” a “global financial complex of hot money uniting prominent business … and government as well as underworld figures” for purposes of “achieving and maintaining global American dominance.”
Drug Links Covered-Up
While Ambassador Kramer may have avoided having her photo snapped with the accused fraudster, her rather pedestrian concerns pale in comparison to the fact that Stanford has been the subject of multiple drugs investigations over a 20-year period that have all been scrupulously covered-up.
Indeed, years before the federal government ran SIB to ground, earlier probes, including those investigating drug-money laundering during the Iran-Contra period were killed.
Stanford’s Montserrat-based Guardian International Bank, a suspected conduit for Contra drug funds, short-circuited investigators when it pulled-up stakes, surrendered its banking license and left the island.
By 1986, evidence emerged that top Contra officials and the Agency enjoyed cosy ties with both Pablo Escobar and the Orejuela brothers, respective kingpins of the Medellín and Cali drug cartels.
Under pressure from the Reagan administration however, Congress and corporate media buried the drug angle to the investigation, as Consortium News journalist Robert Parry has documented in a series of groundbreaking reports.
After his departure from Montserrat under a cloud, the banker trained his sights on Antigua and Barbuda where he developed a close relationship with former prime minister Lester Bird.
The Independent reported that during the course of a joint Scotland Yard-FBI investigation, the bank “was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers.”
“Under the Bird family leadership” The Independent disclosed, “the island was widely regarded as one of the most corrupt in the Caribbean, with well-documented links to arms and drug smuggling and money laundering.”
The former FBI agent who led the Guardian probe, Ross Gaffney, told The Independent “we suspected that Stanford’s bank was involved in money laundering.” Gaffney said that even after Guardian closed, the FBI “continued to take an interest in Stanford and set up a second inquiry into that bank after receiving intelligence that it continued to launder money for the Medellin and Cali cartels.”
The former federal agent said, “We had hard intelligence about what he was doing and we began to develop it” but that investigation died or more likely, was deep-sixed, by officials higher-up the food chain.
According to The Observer, a second FBI source “confirmed the agency was looking at links to international drug gangs as part of the huge investigation into Stanford’s banking activities.”
Other sources “in the US Drug Enforcement Administration” The Observer reported, “also confirmed that while the investigations into Stanford’s affairs were ‘with the FBI and Securities Exchange Commission, there may well have been a trail connecting his Mexican affairs to narco-trafficking interests’.”
But even after the stench of Iran-Contra faded from the headlines, drug probes targeting the bank continued well into the 1990s. The Houston Chronicle reported that according to court documents “operatives of the Juarez cartel began opening accounts at Stanford’s Antigua-based bank in an effort to launder money amassed under one of Mexico’s most vicious drug lords, Amado Carrillo Fuentes.”
“Together,” the Chronicle disclosed, “they used Stanford International Bank to open 10 accounts and deposit $3 million–a small sliver of the cartel’s fortunes but enough to pique authorities’ interest.”
Despite long-running investigations, federal sources told the Chronicle, “any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission’s civil inquiry.”
Federal officials claimed, despite probes that resulted in stiff fines for illicit practices by other U.S. banks including, most recently, Wachovia, as Bloomberg Markets magazine reported, that tracing drug profits laundered through offshore banks like Stanford’s “is difficult to document.”
That is, acutely “difficult” if investigators are ordered to look away, and evidence suggests they were. How else would one interpret the statement by The Observer’s DEA source who told the British newspaper, “I think we’ll find that any possible drug-related trail and SEC priorities are not all in the same frame.”
When the scandal broke, Cablegate file 09BRIDGETOWN114, 18 February 2009, “Antigua: Upheaval on the Eve of Elections,” informs us that the 17 February announcement of new parliamentary elections “was almost immediately overshadowed by an announcement by the Securities and Exchange Commission of action being taken against U.S.-Antiguan citizen Sir Allen Stanford for ‘massive, on-going fraud’.”
The Embassy informed the State Department that “local fears over Stanford indictment have led to a run on the Stanford Financial Group’s subsidiary the Bank of Antigua, with depositors lining up for an hour or more to withdrawal their money.”
As reported above, through a series of maneuvers and what were alleged to be illicit payments to former Antiguan Prime Minister Lester Bird, Stanford set up shop on the Caribbean island in 1990, and gobbled up prime real estate, acquired dual citizenship and a knighthood, and eventually took control of the Bank of Antigua in a highly-dubious “reorganization.”
The ripples from the indictment spread like a rogue wave across Antigua and the Eastern Caribbean. Antiguan officials, and the U.S. Embassy, were concerned that once the depth of the fraud sank in, “unrest” would follow in its wake.
Shortly after that 2009 embassy cable, The Guardian, reported that an investigation by the Antiguan government uncovered “large payments … in Isle of Man bank accounts controlled by Antiguan politicians.”
According “to documents seen by The Guardian, HSBC bank, in the Isle of Man, accepted $3.2m (£2.3m) on behalf of Asot Michael, once chief of staff to the former Antigua prime minister Lester Bird.”
“The cash under investigation” the British newspaper disclosed, “came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.”
HSBC denied all wrongdoing and “would publicly neither confirm nor deny information about individual Manx accounts,” saying the bank “has robust anti-money laundering policies and clearly defined policies and procedures concerning politically exposed persons.”
“It is unclear” the Embassy averred, “if either party will try hard to use the Stanford indictment as an election issue–Stanford amassed his fortune under an ALP [Antiguan Labor Party] government, and was knighted by a UPP [United Progressive Party] government, so all hands are likely equally dirty.”
“Many worry that these issues [crime, fraud and violence] could not only spell disaster for the UPP, but for the country’s economy as a whole, leading to a severe economic depression and intolerable unemployment creating more violence and a cycle of less tourism, more unemployment and more crime.”
Curiously, while corporate media have focused on Stanford’s lavish lifestyle, girlfriends and upscale island properties, nary a word has been whispered about the banker’s alleged links to notorious drug cartels or to some of the CIA’s dirtiest operations.
Even at this late date, it appears that the dodgy banker has well-connected friends who want to bury this angle of a scandal that has defrauded thousands and wrecked entire economies.
The question is, why?
Follow the Money, but Where?
Investors in the Stanford Ponzi scheme have lost their shirts, and its likely they’ll never recover even a fraction of their losses.
“In the past two years” the Houston Chronicle reported, “Stanford himself has ceased to be the story. The most amazing aspect of the Stanford saga is how little money has been recovered. As the court-appointed receiver has chased assets around the globe, he’s found Stanford’s accounts stunningly empty.”
During the investigation that led to the indictments, auditors learned that that funds were moved through Stanford-controlled accounts to offshore banks, including HSBC London; Bank Julius Baer, Zurich; Credit Suisse, United Kingdom; SG Private Banking, Geneva; Banque Franck Galland & Cie S.A., Geneva; RBS Coutts, Zurich; Coutts Bank Von Ernst, Geneva and Toronto Dominion Bank, Canada; banks which have figured in past money laundering or tax-avoidance scandals. In all, 28 numbered accounts were listed by prosecutors, veritable black holes that escaped regulatory scrutiny.
Nearly a decade ago, investigative journalist Stephen Bender wrote in Z Magazine that “an understanding of the drug trade’s machinations is incomplete without an analysis of the crucial role transnational banks play in the laundering of drug proceeds.”
The House Permanent Subcommittee on Investigations reported back in 2000: “Despite increasing international attention and stronger anti-money laundering controls, some current estimates are that $500 billion to $1 trillion in criminal proceeds are laundered through banks worldwide each year, with about half of that amount moved through United States banks.”
Recall that at the height of capitalism’s current global economic meltdown, Antonio Maria Costa, the director of the United Nations Office on Drugs and Crime told The Observer that “drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis.”
Costa told the British newspaper he saw substantial evidence that that proceeds from the illicit trade were “the only liquid investment capital” available to some banks on the brink of collapse last year and that “a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.”
The UN drugs chief said that in “many instances, the money from drugs was the only liquid investment capital.” And with markets tanking and major bank failures a near daily occurrence, “liquidity was the banking system’s main problem and hence liquid capital became an important factor.”
If only a tiny portion of these illegal proceeds were siphoned-off by secret state agencies, including the CIA, funds available for covert operations and other dubious purposes, such as suborning treason amongst foreign officials to spy on their own governments, as WikiLeaks diplomatic cables revealed, the amounts would be staggering.
Bender informed us that one conduit for laundering drug profits is the private banking system.
“U.S.-based private banks” Bender wrote, “operate in a regulatory twilight zone enabling the laundering of drug profits as confirmed by the GAO. Private banks are ‘not subject to the Bank Secrecy Act,’ thus exempting banks from complying with ‘specific anti-money-laundering provisions…such as the one requiring that suspicious transactions be reported to U.S. authorities’.”
And with “international private banking” a prominent selling-point of the Stanford firm’s dark web, one might reasonably surmise that drug traffickers would also view this regulatory black hole in the most favourable light.
Indeed, this “twilight zone” was precisely where Allen Stanford operated. As The Miami Herald reported, state and federal regulators allowed SIB to move “vast amounts of money offshore–without reporting a penny to regulators.”
SIB’s arrangements with the Florida Office of Financial Regulation were so lax that the company “was allowed to sell hundreds of millions in bank notes without allowing regulators to check for fraud.” Indeed, Florida regulators granted Stanford’s bank “sweeping powers never given to a private company.”
But what if that “private company” were handed an exemption from “their normal accounting and securities-disclosure obligations” as BusinessWeek reported, on grounds of “national security,” and investigations into that firm were squashed “at the request of another federal agency,” wouldn’t this also suggest that Stanford’s Ponzi scheme may have also been a cover for ongoing U.S. intelligence operations?
And once the scope of the fraud became too large to ignore, it wouldn’t be a stretch to conclude that the Agency decided to cut their losses and “move on”?
As investigative reporters Jonathan Beaty and S.C. Gwynne uncovered in their stunning exposé, The Outlaw Bank, it wouldn’t be the first time.
For years the CIA had concealed their close involvement with the crooked Bank of Credit and Commerce International (BCCI), tied to everything from drug trafficking to money laundering and from nuclear proliferation to the financing of terrorist groups, including those that morphed into Al-Qaeda.
And when they “came clean” to Treasury Department officials in a report that remains classified to this day, “suddenly, and for no apparent reason,” Beaty and Gwynne wrote, Treasury “lost all interest in BCCI.”
Perhaps for similar reasons too, in the years ahead we’ll find that “any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission’s civil inquiry,” where its likely to stay buried.
Monday, 10 January 2011
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.
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.
Attorney inundated with claims from Stanford Investors
A few days ago Dr Gaytri Kachroo, principal of Kachroo Legal Services, stated that she has been inundated with interest, inquiries and solicitations from Stanford investors to file administrative claims against the SEC before the deadline of February 16th 2011, after which investors will be prevented from reclaiming their losses under the FTCA by the Statute of Limitations.
This is a means of recovery open to all the Stanford investors irrespective of where they live, or where they deposited funds into the failed Stanford Financial Group.
For anyone who has not yet registered, please contact Kachroo Legal Services now before it is too late. Email: info@kachroolegal.com
This is a means of recovery open to all the Stanford investors irrespective of where they live, or where they deposited funds into the failed Stanford Financial Group.
For anyone who has not yet registered, please contact Kachroo Legal Services now before it is too late. Email: info@kachroolegal.com
Sunday, 9 January 2011
Allen Stanford's Trial Indefinitely Delayed. Suspected CIA Banker Became "Drug Dependent" -- in Federal Custody
The strange case of accused swindler and suspected CIA banker R. Allen Stanford became a whole lot stranger last week.
During a preliminary hearing in Houston, U.S. District Judge David Hittner ruled that Stanford, charged with orchestrating an $8 billion dollar Ponzi scheme that defrauded thousands of investors, cannot be tried until he undergoes detoxification for a drug addiction acquired after his incarceration in a federal detention facility.
Talk about a convenient turn of events!
"Nothing can be done until the medical aspect is cleared up," Hittner told defense lawyers and prosecutors during an all-day hearing that examined Stanford's mental competence to stand trial, Bloomberg News reported.
The banker's court-appointed defense team is seeking a two-year delay, citing the mountain of evidence, some two million pages at last count, they must review before the trial can proceed. Stanford's apparent inability to participate in his own defense would certainly complicate matters.
With a net worth once estimated at $2 billion, the accused fraudster was declared indigent last fall after his assets were seized and (known) accounts frozen following his 2009 arrest and indictment.
In October, U.S. District Judge Nancy Atlas ruled that Stanford and codefendants Laura Pendergest-Holt, Gilberto Lopez, Mark Kuhurt and Leroy King, the former chief regulator of the Bank of Antigua, cannot tap a $100 million Lloyds of London insurance policy to pay attorney fees.
According to the ruling, "lawyers for Lloyds had proven at a trial in August that it was likely that Stanford had committed money laundering." The court declared "that the policy's money laundering exclusion applies to justify underwriters' denial of insurance coverage at this time," Reuters reported.
Indicted eighteen months ago on 21 civil and criminal counts, including mail, wire, securities fraud and money laundering, Stanford is also suspected of running another in a long line of "full service banks" for American secret state agencies, including the CIA.
Interestingly enough, one of Stanford's early defense teams was led by none other than Robert S. Bennett, the high-powered attorney who successfully fought off prosecution for his client, Jose A. Rodriguez, the former head of the CIA's clandestine division, accused of destroying 92 torture videotapes of prisoners held at Agency "black sites."
This latest twist in the sleazy affair raise uncomfortable questions for prosecutors: just how does one become drug addicted while in federal custody?
According to Bloomberg, "three psychiatrists, one working for the government and two working for the defense, testified that Stanford's dependency on prescription anti-anxiety medication and the after-effects of a head injury he sustained in a jailhouse beating left him unfit for the trial" which was slated to begin later this month.
Victor Scarano, a defense psychiatrist testified that the banker's dependency on the anti-anxiety drug clonazepam, along with the powerful anti-depressant mirtazapine, was the result of "overmedication" by his jailers.
Scarano testified that for more than a year Stanford "has been taking 3 milligrams a day of the anti-anxiety drug clonazepam, and that a normal dose is up to 1 milligram a day for no longer than two weeks," the Houston Chronicle disclosed.
The psychiatrist told the court that "he is unable to work effectively and rationally with his attorneys in his defense against the charges."
"He is unable to focus, he's unable to keep a train of thought," Scarano testified.
A second psychiatrist, Steven Rosenblatt, hired by the government, "testified that Stanford is suffering from delirium, likely brought on by the medication."
During Thursday's hearing, Stanford's attorney Ali Fazel, told the court that his client had been assaulted while in federal custody, severely beaten and that it was prison physicians who prescribed the medications to which the accused swindler is now addicted. "It's the government that caused the problem," Fazel said.
The Independent averred this will raise "fresh and disturbing questions about the deterioration of Stanford's mental and physical health in the 18 months he has already spent behind bars."
Among the questions likely to be raised is why, for some unknown and still unexplained reason prison doctors dispensed triple the normal dose of a suite of drugs known to produce untoward side effects.
According to Wikipedia, clonazepam is used to treat epilepsy, anxiety disorder and panic disorder, and in combination with lithium and haloperidol, it is also used for the initial treatment of mania or acute psychosis.
This is certainly a curious choice for long-term treatment of a concussion. While Stanford may be a notorious huckster who believed he could do no wrong, even as he allegedly robbed investors blind, there is no evidence he suffered a psychotic break with reality. In fact, the evidence suggests quite the opposite.
Clonazepam is characterized by its "fast onset of action and high effectiveness rate and low toxicity in overdose but has drawbacks due to adverse reactions including paradoxical effects, drowsiness, and cognitive impairment."
According to scholarly literature cited by Wikipedia, "cognitive impairments can persist for at least 6 months after withdrawal of clonazepam; it is unclear whether full recovery of memory functions occurs. Other long-term effects of benzodiazepines include tolerance, a benzodiazepine dependence as well as a benzodiazepine withdrawal syndrome occurs in a third of people treated with clonazepam for longer than 4 weeks."
Common side effects include drowsiness, interference with cognitive and motor performance, irritability and aggression, psychomotor agitation, lack of motivation, loss of libido, hallucinations, short-term memory loss, and what are described as "anterograde amnesia (common with higher doses)" or, the "loss of the ability to create new memories ... leading to a partial or complete inability to recall the recent past."
The second drug dispensed to Stanford, the anti-depressant mirtazapine, is used in the treatment of depression, anxiety, obsessive-compulsive disorders and is said to "exacerbate some patients' depression or anxiety or cause suicidal ideation," Wikipedia informs us.
While "the potential for dangerous drug interactions with mirtazapine is considered to be very low," the drug may "increase the effects of ... benzodiazepines," e.g. clonazepam, the apparent drug of choice deployed by Stanford's jailers as part of his "treatment."
Attorneys and psychiatrists told the court that the accused swindler was treated for more than a year with triple the "normal dose" of a drug known for producing "paradoxical effects" including "a partial or complete inability to recall the recent past."
The question is why?
While Stanford's "overmedication" may have an innocent explanation, we cannot dismiss the possibility that someone or some entity perhaps, say an intelligence agency with decades of pharmacological knowledge derived from illicit human experiments might be interested in inducing permanent "cognitive impairment" in the dodgy banker.
A simpler explanation however, such as gross negligence on the part of his jailers cannot be ruled out. It is even quite possible, as assistant U.S. attorney Gregg Costa asserted, that Stanford "could have been faking the delirium in order to be let out of jail before facing trial" as The New York Times reported.
And given the wretched conditions that exist in American gulags, where control of prison populations through overmedication is the norm not the exception, this could also be a mitigating factor in Stanford's case. As Human Rights Watch points out, prisoners adjudged mentally ill often receive "inappropriate kinds or amounts of psychotropic medication that further impairs their ability to function."
On the other hand, Allen Stanford's high-profile, his close proximity to drug-fueled intelligence operations, decades of hastily-closed investigations into alleged security frauds and a "stand down" by the SEC "at the request of another federal agency" as The New York Times disclosed, coupled with drugs investigations that "lie buried in the paperwork" gathered by the SEC as the Houston Chronicle averred, however one cares to slice it, a drug addiction acquired in federal custody does open a new, and highly suspicious, chapter in the Stanford drama.
The maddeningly complex character of Allen Stanford's operations as the Financial Times revealed, and what role other giant banks including Bank Julius Baer, Credit Suisse and HSBC, which acted as SIB's correspondent bank for all European deposits played in the affair, may never be unraveled if he cannot stand trial.
In this respect, a permanent "inability to recall the recent past" induced by federal prison authorities may be just what the doctor ordered.
During a preliminary hearing in Houston, U.S. District Judge David Hittner ruled that Stanford, charged with orchestrating an $8 billion dollar Ponzi scheme that defrauded thousands of investors, cannot be tried until he undergoes detoxification for a drug addiction acquired after his incarceration in a federal detention facility.
Talk about a convenient turn of events!
"Nothing can be done until the medical aspect is cleared up," Hittner told defense lawyers and prosecutors during an all-day hearing that examined Stanford's mental competence to stand trial, Bloomberg News reported.
The banker's court-appointed defense team is seeking a two-year delay, citing the mountain of evidence, some two million pages at last count, they must review before the trial can proceed. Stanford's apparent inability to participate in his own defense would certainly complicate matters.
With a net worth once estimated at $2 billion, the accused fraudster was declared indigent last fall after his assets were seized and (known) accounts frozen following his 2009 arrest and indictment.
In October, U.S. District Judge Nancy Atlas ruled that Stanford and codefendants Laura Pendergest-Holt, Gilberto Lopez, Mark Kuhurt and Leroy King, the former chief regulator of the Bank of Antigua, cannot tap a $100 million Lloyds of London insurance policy to pay attorney fees.
According to the ruling, "lawyers for Lloyds had proven at a trial in August that it was likely that Stanford had committed money laundering." The court declared "that the policy's money laundering exclusion applies to justify underwriters' denial of insurance coverage at this time," Reuters reported.
Indicted eighteen months ago on 21 civil and criminal counts, including mail, wire, securities fraud and money laundering, Stanford is also suspected of running another in a long line of "full service banks" for American secret state agencies, including the CIA.
Interestingly enough, one of Stanford's early defense teams was led by none other than Robert S. Bennett, the high-powered attorney who successfully fought off prosecution for his client, Jose A. Rodriguez, the former head of the CIA's clandestine division, accused of destroying 92 torture videotapes of prisoners held at Agency "black sites."
This latest twist in the sleazy affair raise uncomfortable questions for prosecutors: just how does one become drug addicted while in federal custody?
According to Bloomberg, "three psychiatrists, one working for the government and two working for the defense, testified that Stanford's dependency on prescription anti-anxiety medication and the after-effects of a head injury he sustained in a jailhouse beating left him unfit for the trial" which was slated to begin later this month.
Victor Scarano, a defense psychiatrist testified that the banker's dependency on the anti-anxiety drug clonazepam, along with the powerful anti-depressant mirtazapine, was the result of "overmedication" by his jailers.
Scarano testified that for more than a year Stanford "has been taking 3 milligrams a day of the anti-anxiety drug clonazepam, and that a normal dose is up to 1 milligram a day for no longer than two weeks," the Houston Chronicle disclosed.
The psychiatrist told the court that "he is unable to work effectively and rationally with his attorneys in his defense against the charges."
"He is unable to focus, he's unable to keep a train of thought," Scarano testified.
A second psychiatrist, Steven Rosenblatt, hired by the government, "testified that Stanford is suffering from delirium, likely brought on by the medication."
During Thursday's hearing, Stanford's attorney Ali Fazel, told the court that his client had been assaulted while in federal custody, severely beaten and that it was prison physicians who prescribed the medications to which the accused swindler is now addicted. "It's the government that caused the problem," Fazel said.
The Independent averred this will raise "fresh and disturbing questions about the deterioration of Stanford's mental and physical health in the 18 months he has already spent behind bars."
Among the questions likely to be raised is why, for some unknown and still unexplained reason prison doctors dispensed triple the normal dose of a suite of drugs known to produce untoward side effects.
According to Wikipedia, clonazepam is used to treat epilepsy, anxiety disorder and panic disorder, and in combination with lithium and haloperidol, it is also used for the initial treatment of mania or acute psychosis.
This is certainly a curious choice for long-term treatment of a concussion. While Stanford may be a notorious huckster who believed he could do no wrong, even as he allegedly robbed investors blind, there is no evidence he suffered a psychotic break with reality. In fact, the evidence suggests quite the opposite.
Clonazepam is characterized by its "fast onset of action and high effectiveness rate and low toxicity in overdose but has drawbacks due to adverse reactions including paradoxical effects, drowsiness, and cognitive impairment."
According to scholarly literature cited by Wikipedia, "cognitive impairments can persist for at least 6 months after withdrawal of clonazepam; it is unclear whether full recovery of memory functions occurs. Other long-term effects of benzodiazepines include tolerance, a benzodiazepine dependence as well as a benzodiazepine withdrawal syndrome occurs in a third of people treated with clonazepam for longer than 4 weeks."
Common side effects include drowsiness, interference with cognitive and motor performance, irritability and aggression, psychomotor agitation, lack of motivation, loss of libido, hallucinations, short-term memory loss, and what are described as "anterograde amnesia (common with higher doses)" or, the "loss of the ability to create new memories ... leading to a partial or complete inability to recall the recent past."
The second drug dispensed to Stanford, the anti-depressant mirtazapine, is used in the treatment of depression, anxiety, obsessive-compulsive disorders and is said to "exacerbate some patients' depression or anxiety or cause suicidal ideation," Wikipedia informs us.
While "the potential for dangerous drug interactions with mirtazapine is considered to be very low," the drug may "increase the effects of ... benzodiazepines," e.g. clonazepam, the apparent drug of choice deployed by Stanford's jailers as part of his "treatment."
Attorneys and psychiatrists told the court that the accused swindler was treated for more than a year with triple the "normal dose" of a drug known for producing "paradoxical effects" including "a partial or complete inability to recall the recent past."
The question is why?
While Stanford's "overmedication" may have an innocent explanation, we cannot dismiss the possibility that someone or some entity perhaps, say an intelligence agency with decades of pharmacological knowledge derived from illicit human experiments might be interested in inducing permanent "cognitive impairment" in the dodgy banker.
A simpler explanation however, such as gross negligence on the part of his jailers cannot be ruled out. It is even quite possible, as assistant U.S. attorney Gregg Costa asserted, that Stanford "could have been faking the delirium in order to be let out of jail before facing trial" as The New York Times reported.
And given the wretched conditions that exist in American gulags, where control of prison populations through overmedication is the norm not the exception, this could also be a mitigating factor in Stanford's case. As Human Rights Watch points out, prisoners adjudged mentally ill often receive "inappropriate kinds or amounts of psychotropic medication that further impairs their ability to function."
On the other hand, Allen Stanford's high-profile, his close proximity to drug-fueled intelligence operations, decades of hastily-closed investigations into alleged security frauds and a "stand down" by the SEC "at the request of another federal agency" as The New York Times disclosed, coupled with drugs investigations that "lie buried in the paperwork" gathered by the SEC as the Houston Chronicle averred, however one cares to slice it, a drug addiction acquired in federal custody does open a new, and highly suspicious, chapter in the Stanford drama.
The maddeningly complex character of Allen Stanford's operations as the Financial Times revealed, and what role other giant banks including Bank Julius Baer, Credit Suisse and HSBC, which acted as SIB's correspondent bank for all European deposits played in the affair, may never be unraveled if he cannot stand trial.
In this respect, a permanent "inability to recall the recent past" induced by federal prison authorities may be just what the doctor ordered.