Stanford Receiver Battles With State Politicians for Return of Millions in Campaign Contributions

Bruce Carton April 19, 2012 

The often-criticized efforts of the court-appointed receiver in the Allen Stanford case to recover all possible funds for victims has taken a quirky turn in Stanford's home state of Texas. The Houston Chronicle reports that prior to his arrest, Stanford was a major political donor in the state, who along with his employees gave nearly $2.4 million to politicians in both parties since 2001. The receiver wants the politicians to return these "ill-gotten" campaign contributions for the benefit of the victims of Stanford's Ponzi scheme, but is running into significant resistance.

The Chronicle reports that some of the recipients of these contributions such as Texas Republican Sens. Kay Bailey Hutchison and John Cornyn previously gave the contributions they received from Stanford to charity when they learned of the scandal. Kevin Sadler, a lawyer for the receiver, told the Chronicle that giving the money to charity was a "meaningless act"

that will not stop the receiver from trying to recoup those funds from the politicians. "The fact they gave money away to some other charity doesn't mean they're not in possession of money that doesn't belong to them," Sadler said.

To date, four Texas lawmakers have elected to return the contribution received from Stanford to the receiver as demanded. Many more have not complied, including "five national party committees, one Texas-based PAC, both Texas senators and six Texas representatives...." The receiver has now filed lawsuits against five political party committees demanding the return of the contributions. According to the Chronicle, a court ruled last year that the committees must repay the contributions, plus attorney's fees. The committees' appeal of the ruling will reportedly be argued on May 1.

Narco-Banker: The Allen Stanford Story

Posted on April 13, 2012 by Daniel Hopsicker

With his recent conviction on 13 counts of money laundering—ensuring that a man who once lived in a $57 million mansion with a moat will be doing his entertaining behind bars for a very long time—the Allen Stanford scandal would seem to be all but over. But Allen Stanford’s Ponzi scandal is ending before the most important question about the scandal has even been asked…

How did a gym owner filing bankruptcy in Texas happen to wake up a year later owning an offshore bank?

In 1982, Allen Stanford was the bankrupt owner of a bankrupt chain of athletic clubs in Waco Texas. In his personal bankruptcy filing he listed $13.6 million in debt against less than $200,000 in assets.

Paul Holt,  a businessman in Waco Texas, watched as Stanford’s sketchy business career was getting underway. “I knew about Stanford’s failed health club in Waco, Texas, because that’s where I live, and I was there when it happened,” Holt told Vanity Fair in 2010.

“Then one day I go online and out of the corner of my eye I see this headline: ‘Allen Stanford, Caribbean Banking King, in $8 billion Scandal.’”

“And I’m going, whoa! How does somebody go from bankrupting a Total Fitness Center to becoming a knight in the Caribbean?”

Whoa, indeed.

State-Sponsored Crime: Effective, Simple, Safe Allen Stanford’s startling transition from bankrupt Texas grifter to star money launderer is a vivid snapshot which authorities don’t want anyone examining too closely… a Polaroid capturing the collapse of the rule of law in the United States of America during the Iran Contra-inspired cocaine epidemic of the 1980’s.

According to news accounts, the government’s tepid response to Allen Stanford’s continuing criminal enterprise began in the late 1990’s.

Not so. Stanford was fingered as a criminal as far back as 1989, when George Bush the Elder was in the White House, "Back to the Future II" was in theatres, and tanks were rolling through Tiananmen Square. 

So the real villains in the scandal of Allen Stanford and his $8 billion Ponzi scheme are the people who prevented his prosecution for two full decades. And many of them have yet to be publicly named, let alone punished.

 The Stanford scandal produced the usual tepid admissions of wrongdoing by government Agencies charged with guarding America from crooks and drifters.Many saw criminal negligence in the government’s inaction.

The SEC knew all about Stanford’s criminal fraud back in 1996, for example, a full decade before taking even baby steps to end it.

This disclosure prompted some public handwringing, but not much else. And the results of the official investigations into Stanford’s big score were less than inconclusive…

In a civil proceeding, one former SEC administrator paid a $50,000 fine for crimes that would send an ordinary citizen to jail for a decade.

And the long-time head of the DEA in Miami—a Stanford “security” officials caught red-handed after Stanford’s indictment in an orgy of file-shredding that would have done Oliver North and Fawn Hall proud—was acquitted in an extraordinary extrajudicial move by a Federal judge who snatched the case

from the hands of a jury deliberating a verdict. 

In such cases, one wonders: why bother with the expense of a trial? Tea Party advocates should have been outraged.  But perhaps they were all on vacation.

Get out of jail passes all around!

A little history lesson offers some big clues.

The Caribbean island of Montserrat was ‘discovered’ by Christopher Columbus in 1493. A volcanic eruption in 2003 rendered the island all but uninhabitable.

Somewhere in between those two dates came Allen Stanford, who opened a bank on the island in 1985. It was his first.

Stanford’s bank was chartered by a fraudster from Beverly Hills named Jerome Schneider, author of an early entry in the booming field of helping the parasitic rich avoid paying  taxes. It was called “Hiding Your Money."

Schneider also hosted "offshore wealth summits" in places like Cancun, attended by congressmen and other public figures, according to the Los Angeles Times.

Schneider set up about 800 offshore banks in 15 years, and was a  “thorn in the side of federal banking authorities and the Internal Revenue Service for years,” according to the LA Times.

But if he was a thorn in their side, you couldn't tell. They never did anything about him. Nothing.

To anyone who has felt the full force of the government come down over unpaid parking tickets or a minor moving violation, this must seem strange.

What such people need to understand is that selective prosecution is not the exception in the U.S. It’s the rule.

Chase, Morgan, Stanford, DuPont

Frequently, the names of Schneider-chartered banks were similar to those of well-known domestic banks, with words like "Chase" or "Morgan" in their titles.

Schneider must have seen Stanford, already an inveterate liar, as manna from the gods. Soon he was boasting of his family ties with the founder of Stanford University in Palo Alto, Leland Stanford, a tie the University has taken pains to refute. 

Schneider’s most famous client before Stanford was a fraudster from La Jolla, a city which, given its small size turns out fraudsters with astonishing regularity, was a man named J David Dominelli.

Dominelli’s claim to fame, oddly enough, is that before Allen Stanford, Bernie Madoff and Art Nadel came along, he was America’s biggest Ponzi All-Star. When he went down, so did a number of Republican politicians in San Diego  like Roger Hedgecock, the city’s long-time mayor.

When the scandal grew too big to ignore, the island of Montserrat shut down most of the phony banks. One oft-cited closure featured the prestigious-sounding Zurich Overseas Bank, which operated out of a tavern in

the island’s capital, Plymouth.

“Almost every bank in Montserrat was operated illegally,” says David Marchant, editor of OffshoreAlert, a newsletter covering offshore banking.

“The fact that Stanford had a banking license in Montserrat is all you needed to know about his credibility. It wasn’t like most of the banks were good and you had a few bad eggs. The only reason you opened a bank in Montserrat was to commit fraud.”

Allen Stanford, lucky fellow, emerged unscathed, if not unnoticed. He moved his bank to Antigua, then a British Crown Colony.

They didn't call them the go-go 80's for nothing So, just what was going on in 1985 that made starting an American-owned no-questions-asked bank in the Caribbean such a sure thing?

The answer is obvious to everyone… except American authorities, who never asked the question… save for a few brave souls, quickly hounded out of the government or moved to jobs watering plants in the office.

 But someone from Scotland Yard was apparently paying attention,  detective Paul Marston, who in 1989 targeted Stanford’s bank, which had already grown into one of the Caribbean’s largest.

Where were all Stanford’s deposits coming from? Marston didn’t have to wonder long to find the answer.  Colombian drug money was flooding into banks across the region, and there were persistent rumours that this was the source of Stanford’s growth.

Marston called in an expert from the U.S. Government’s Office of the Comptroller of the Currency. “The O.C.C. guy went down there, stood across from the Stanford office for maybe several hours, came back and said, ‘Yep, that’s a money-laundering operation,’” recalled an agent involved in the operation.

“So Marston goes, ‘How can you tell from just standing across the street?’ And the guy goes, ‘I’m telling you, it is.’

“Then, a little later, we got fairly detailed intelligence that they were indeed laundering for major Colombian drug traffickers.”

"We own it. You can always count on Florida" Montserrat authorities finally revoked Stanford’s license, in May 1991.

This cut no ice with banking officials in Florida, however. Despite objections from the state's chief banking counsel, Florida regulators allowed Stanford to open a Miami office and transfer significant amounts of

money outside the US… with no government oversight.

This is one of countless pieces of damning evidence, clues, absolute indications, sure signs, tell-tale tip-offs, unmistakable signs, and, yes, smoking guns illustrating Allen Stanford’s favoured position as an

officially-sanctioned drug money launderer.

As, in other words, an American Drug Lord.

Anyone wanting to know why the US Government is roundly despised in so many places around the world need look no further:

Christopher Sandrolini, chargé d'affaires at the US Embassy in Barbados, recently lectured a meeting of Caribbean heads of state in Barbados on how they could become crime-busters—just  like us!— if only they tried hard enough.

“The Stanford case should serve as a warning to small societies in the Caribbean,” he said. “Given the region’s vulnerability to criminals, Caribbean nation’s cannot afford to relax their vigilance and laws.”

Lawyers to Attend Judge Godbey's Court on 13th OCT for what is described as "Status Conference"

I don't know what this is about, but Judge Godbey has sent out electronic notifications to hundreds of movants and lawyers to attend his court on 13th OCT. For what is described as "Status Conference". Here is a copy of the court docs. and which cases have been notified:



U.S. District Court
Northern District of Texas
Notice of Electronic Filing


The following transaction was entered on 9/28/2011 at 11:15 AM CDT and filed on 9/27/2011

Case Name: In RE: Stanford Entities Securities Litigation
Case Number: 3:09-md-02099-N

Filer:
Document Number: 21

Docket Text:
ORDER: The Court will hold a status conference for all parties to the Stanford MDL proceeding on 10/13/2011 10:30 AM in US Courthouse, Courtroom 1505, 1100 Commerce St., Dallas, TX 75242-1310 before Judge David C Godbey. (Ordered by Judge David C Godbey on 9/27/2011) (jkm)



Case Name: Securities and Exchange Commission v. Stanford International Bank Ltd et al
Case Number: 3:09-cv-00298-N

Filer:
Document Number: 1449



Case Name: Adams et al v. Stanford Group Company et al
Case Number: 3:09-cv-00334-N

Filer:
Document Number: 28



Case Name: Pre-War Art, Inc. et al v. Stanford Coins & Bullion, Inc. et al
Case Number: 3:09-cv-00559-N

Filer:
Document Number: 87





Case Name: Trustmark National Bank v. HP Financial Services Venezuela, C.C.A. et al
Case Number: 3:09-cv-00633-N

Filer:
Document Number: 18



Case Name: In re Stanford International Bank Ltd. Debtor in a Foreign Proceeding
Case Number: 3:09-cv-00721-N

Filer:
Document Number: 84



Case Name: Janvey v. Alguire et al
Case Number: 3:09-cv-00724-N

Filer:
Document Number: 769



Case Name: Troice et al v. Willis of Colorado, Inc. et al
Case Number: 3:09-cv-01274-N

Filer:
Document Number: 149



Case Name: Troice et al v. PROSKAUER ROSE LLP et al
Case Number: 3:09-cv-01600-N

Filer:
Document Number: 92



Case Name: Gonzalez et al v. Ralph S. Janvey et al
Case Number: 3:09-cv-01603-N

Filer:
Document Number: 45



Case Name: Certain Underwriters at Lloyd's London v. Ralph S Janvey
Case Number: 3:09-cv-01736-N

Filer:
Document Number: 25



Case Name: Allen v. Stanford Group Company et al
Case Number: 3:09-cv-02041-N

Filer:
Document Number: 12



Ranni v. Willis of Colorado Inc et al
Case Number: 3:09-cv-02042-N

Filer:
Document Number: 24



Case Name: Janvey v. Reeves
Case Number: 3:09-cv-02151-N

Filer:
Document Number: 37



Frank et al v. The Commonwealth of Antigua and Barbuda
Case Number: 3:09-cv-02165-N

Filer:
Document Number: 44



Case Name: Kyle v. Stanford International Bank Ltd. et al
Case Number: 3:09-cv-02166-N

Filer:
Document Number: 15



Case Name: Turk et al v. Pershing LLC
Case Number: 3:09-cv-02199-N

Filer:
Document Number: 68



Case Name: Certain Underwriters at Lloyd's London et al v. Stanford et al
Case Number: 3:09-cv-02206-N

Filer:
Document Number: 21



Case Name: In the Matter of the Tax Liabilities of John Does
Case Number: 3:09-cv-02290-N

Filer:
Document Number: 14



Case Name: Rotstain et al v. Trustmark National Bank et al
Case Number: 3:09-cv-02384-N

Filer:
Document Number: 86



Case Name: Queyrouze et al v. Bank of Antigua et al
Case Number: 3:10-cv-00304-N

Filer:
Document Number: 23



Case Name: MacArthur, et al v. Certain Underwriters/Names at Lloyd's of London, et al
Case Number: 3:10-cv-00313-N

Filer:
Document Number: 33



Case Name: Jackson et al v. Cox et al
Case Number: 3:10-cv-00328-N

Filer:
Document Number: 37



Case Name: Janvey v. Venger et al
Case Number: 3:10-cv-00366-N

Filer:
Document Number: 233



Case Name: Janvey v. Rodriguez Posada, et al
Case Number: 3:10-cv-00415-N

Filer:
Document Number: 67



Case Name: Janvey v. Wealth Management Services, Ltd.
Case Number: 3:10-cv-00477-N

Filer:
Document Number: 18



Case Name: Janvey v. Gilbe Corp.
Case Number: 3:10-cv-00478-N

Filer:
Document Number: 69



Case Name: Janvey v. Barnes et al
Case Number: 3:10-cv-00527-N

Filer:
Document Number: 23



Case Name: Janvey v. Buck's Bits Service, Inc.
Case Number: 3:10-cv-00528-N

Filer:
Document Number: 56



Case Name: Janvey v. Johnson
Case Number: 3:10-cv-00617-N

Filer:
Document Number: 46



Case Name: Janvey v. Barr
Case Number: 3:10-cv-00725-N

Filer:
Document Number: 41



Case Name: Rupert et al v. Winter
Case Number: 3:10-cv-00799-N

Filer:
Document Number: 76



Case Name: Janvey v. Interim Executive Management, Inc.
Case Number: 3:10-cv-00829-N

Filer:
Document Number: 15



Case Name: Janvey v. Indigo Trust
Case Number: 3:10-cv-00844-N

Filer:
Document Number: 46



Case Name: Janvey v. Dokken et al
Case Number: 3:10-cv-00931-N

Filer:
Document Number: 76



Case Name: Janvey v. Fernandez et al
Case Number: 3:10-cv-01002-N

Filer:
Document Number: 128



Case Name: Janvey v. Stoelker
Case Number: 3:10-cv-01272-N

Filer:
Document Number: 25



Case Name: Carter et al v. Mills et al
Case Number: 3:10-cv-01328-N

Filer:
Document Number: 13



Case Name: Janvey v. Wieselberg et al
Case Number: 3:10-cv-01394-N

Filer:
Document Number: 34



Case Name: Janvey v. Merge Healthcare, Inc.
Case Number: 3:10-cv-01465-N

Filer:
Document Number: 20



Case Name: Casanova et al v. Willis of Colorado Inc et al
Case Number: 3:10-cv-01862-N

Filer:
Document Number: 12



Case Name: Kneese et al v. Pershing, LLC
Case Number: 3:10-cv-01908-N

Filer:
Document Number: 17



Case Name: Janvey v. Tonarelli
Case Number: 3:10-cv-01955-N

Filer:
Document Number: 11



Case Name: Janvey v. Dillon Gage Inc. of Dallas et al
Case Number: 3:10-cv-01973-N

Filer:
Document Number: 25



Case Name: Janvey vs. Rodriguez-Tolentino et al
Case Number: 3:10-cv-02290-N

Filer:
Document Number: 8



Case Name: Janvey v. Stanford
Case Number: 3:10-cv-02322-N

Filer:
Document Number: 12



Case Name: Janvey v. Bogar et al
Case Number: 3:10-cv-02583-N

Filer:
Document Number: 16



Case Name: Janvey v. Alvarado
Case Number: 3:10-cv-02584-N

Filer:
Document Number: 7



Case Name: Janvey v. Stinson
Case Number: 3:10-cv-02586-N

Filer:
Document Number: 21



Case Name: Janvey et al v. Toms et al
Case Number: 3:11-cv-00018-N

Filer:
Document Number: 15



Godbey. (Ordered by Judge David C Godbey on 9/27/2011) (jkm)
Case Name: Janvey et al v. The University of Miami

Case Number: 3:11-cv-00041-N

Filer:
Document Number: 16



Case Name: Janvey et al v. The Inter-American Economic Council
Case Number: 3:11-cv-00044-N

Filer:
Document Number: 7



Case Name: Janvey et al v. IMG Worldwide, Inc.
Case Number: 3:11-cv-00117-N

Filer:
Document Number: 29



Case Name: Janvey et al v. Miami Heat Limited Partnership et al
Case Number: 3:11-cv-00158-N

Filer:
Document Number: 23



Case Name: Ralph S Janvey, et al. v. PGA Tour Inc
Case Number: 3:11-cv-00226-N

Filer:
Document Number: 17



Case Name: Janvey et al v. Allen
Case Number: 3:11-cv-00289-N

Filer:
Document Number: 6



Case Name: Janvey et al v. Arizaga
Case Number: 3:11-cv-00290-N

Filer:
Document Number: 6



Case Name: Janvey et al v. Vingerhoedt et al
Case Number: 3:11-cv-00291-N

Filer:
Document Number: 6



Case Name: Janvey et al v. Giusti et al
Case Number: 3:11-cv-00292-N

Filer:
Document Number: 10



Case Name: Janvey et al v. The Golf Channel, Inc.
Case Number: 3:11-cv-00294-N

Filer:
Document Number: 13



Case Name: Janvey et al v. ATP Tour Inc
Case Number: 3:11-cv-00295-N

Filer:
Document Number: 13



Case Name: Janvey et al v. Salgar
Case Number: 3:11-cv-00296-N

Filer:
Document Number: 7



Case Name: Janvey et al v. Romero
Case Number: 3:11-cv-00297-N

Filer:
Document Number: 22



Case Name: The Official Stanford Investors Committee v. Cort & Cort et al
Case Number: 3:11-cv-00298-N

Filer:
Document Number: 15



Case Name: Janvey et al v. Castaneda
Case Number: 3:11-cv-00299-N

Filer:
Document Number: 6



Case Name: Janvey et al v. Brown
Case Number: 3:11-cv-00301-N

Filer:
Document Number: 12



Case Name: Janvey et al v. Blackman
Case Number: 3:11-cv-00302-N

Filer:
Document Number: 8



Case Name: The Official Stanford Investors Committee v. American Lebanese Syrian Associated Charities, Inc. et al
Case Number: 3:11-cv-00303-N

Filer:
Document Number: 28



Case Name: Mendez et al v. Pershing, LLC et al
Case Number: 3:11-cv-00314-N

Filer:
Document Number: 11



Case Name: The Official Stanford Investors Committee et al v. Breazeale Sachse & Wilson LLP et al
Case Number: 3:11-cv-00329-N

Filer:
Document Number: 38



Case Name: Certain Underwriters at Lloyd's of London et al v. Tolentino et al
Case Number: 3:11-cv-00360-N

Filer:
Document Number: 11



Case Name: Robert Juan Dartez, LLC et al v. The United States of America
Case Number: 3:11-cv-00602-N

Filer:
Document Number: 23



Case Name: Janvey et al v. Chung Design, LLC.
Case Number: 3:11-cv-00738-N

Filer:
Document Number: 7



Case Name: Janvey v. Insideout Sports & Entertainment
Case Number: 3:11-cv-00760-N

Filer:
Document Number: 7



Case Name: Janvey et al v. Rocketball, Ltd. et al
Case Number: 3:11-cv-00770-N

Filer:
Document Number: 10



Case Name: Trustmark National Bank v. Carribean Sun Airlines, Inc. et al
Case Number: 3:11-cv-00924-N

Filer:
Document Number: 16



Case Name: Official Stanford Investors Committee v. Chamberlain, Hrdlicka, White, Williams & Martin, LLP.
Case Number: 3:11-cv-01025-N

Filer:
Document Number: 9



Case Name: Wilkinson et al v. BDO USA, LLP et al
Case Number: 3:11-cv-01115-N

Filer:
Document Number: 37



Case Name: Janvey v. Libyan Investment Authority et al
Case Number: 3:11-cv-01177-N

Filer:
Document Number: 22



Case Name: Janvey v. Stanford
Case Number: 3:11-cv-01199-N

Filer:
Document Number: 10



Case Name: Janvey v. Rincon
Case Number: 3:11-cv-01659-N

Filer:
Document Number: 5



Case Name: Janvey et al v. Texas A&M University
Case Number: 3:11-cv-01895-N

Filer:
Document Number: 5



Case Name: Rishmague et al v. Winter et al
Case Number: 3:11-cv-02024-N

Filer:
Document Number: 15



Docket Text:

ORDER: The Court will hold a status conference for all parties to the Stanford MDL proceeding on 10/13/2011 10:30 AM in US Courthouse, Courtroom 1505, 1100 Commerce St., Dallas, TX 75242-1310 before Judge David C Godbey. (Ordered by Judge David C Godbey on 9/27/2011) (jkm)

STANFORD FINANCIAL GROUP INVESTORS FROM LOUISIANA TEXAS AND FLORIDA HAVE HEARD THE CALL

The campaign is finally gaining momentum among the domestic US investors, with a substantial number of investors from Louisiana, Texas, and now Florida, having now having signed-up and submitting FTCA claims against the US Government Securities and Exchange Commission, for their negligence in failing to close down Allen Stanford sooner, knowing for 13 years he was likely operating a Ponzi scheme. Had they done so, many investors of the failed Stanford International Bank, a part of the Stanford Financial Group, now in receivership, may have been spared the loss of their life savings.

Allen Stanford is currently in detention in Houston, Texas, awaiting trial on 23 counts of fraud.

The deadline for FTCA claims against the US Securities and Exchange Commission is approaching fast. This is a real possibility for full recovery of losses sustained by all the Stanford investors, irrespective of nationality or place of residence. All valid claims must be submitted correctly and timely before the 16th February 2011 deadline when the Statute of Limitations expires.

Any investors who have not consulted an attorney to submit their claims should do so without delay. Although the forms look straightforward enough, there is a plethora of case-law awaiting the unwary.
Please ensure that the attorney you engage is willing to litigate your claim forward, should it be rejected or otherwise ineligible, and already has experience of submitting FTCA claims.

Please contact your attorney without delay, or the attorney hired by the Stanford International Victims Group: Kachroo Legal Services, Cambridge, Mass., who already have extensive experience of submitting FTCA claims for the Madoff investors. Email:info@kachroolegal.com

Should any Stanford investors wish for more detail of the campaign and the various arguments, please register for our free investors forum, which is available only to bona-fide investors in the failed Stanford Financial Group: http://svg.creatuforo.com/profile.php?mode=register

Ben Barnes Sued for $5 million by Stanford Receiver

Democratic lobbyist and former Texas Lieutenant Gov. Ben Barnes has been slapped with a $5 million lawsuit over lobbying and consulting services he provided to R. Allen Stanford, the indicted financier accused of running a multibillion-dollar Ponzi scheme.

The suit was filed on Mar. 15 by Ralph Janvey, the receiver appointed by the court to recoup the investors’ losses. It alleges that Barnes raked in millions doing consulting and lobbying work for Stanford’s fraudulent investment empire since 2005. Stanford is accused of bilking tens of thousands of investors out of nearly $8 billion, in one of the largest phony investment schemes of all time.

Barnes’s attorney, Jay Madrid, said that the lawsuit was baseless because his client was unaware that Stanford’s businesses were illegitimate at the time the services were provided. "This lawsuit is without merit and creates a dangerous precedent for service providers in all fields," said Madrid in a written statement. "This is particularly true of those who deal in good faith with entities that have all the characteristics of legitimate enterprises but who after-the-fact become subject to receiverships, bankruptcies or similar business failings."

But the lawyer for the court-appointed receiver said that that argument does not absolve Barnes of responsibility. "In a fraudulent transfer action, lack of knowledge of the fraud is not a defense," attorney Kevin Sadler told the NLPC over email. He said that Barnes must prove that he was both unaware of the fraud and that the services he provided to Stanford were equivalent in value to the fees he collected.

"Barnes will not be able to establish the affirmative defense of objective good faith and reasonably equivalent value. His services left creditors of the Stanford entities with nothing of value," wrote Sadler.

The lawsuit alleges that in many cases Barnes’s company "performed services [for Stanford] that simply furthered the Ponzi scheme." This work reportedly included consulting Stanford on how to reduce his personal federal income taxes through the Virgin Islands tax incentive laws and providing investment advice. The lawsuit also says that marketing work done by Barnes for Stanford’s businesses "had the unfortunate effect of attracting new victims to [Stanford’s] fraudulent investment scheme."

Barnes, a heavy-hitter in Democratic political circles, is no stranger to financial scandals. While serving as Texas Lt. Gov. the early 1970s, allegations that Barnes and other state politicians accepted bribes for political favors surfaced in an incident known as the Sharpstown scandal. Barnes was never charged, but the episode helped contribute to his exit from career politics.

Now a successful lobbyist, Barnes is still very much involved in the political arena. Last September, he hosted a Democratic Congressional Campaign Committee fundraiser for House Speaker Nancy Pelosi (D-CA) at his home in Austin, TX. Barnes and his wife have given $249,800 in political contributions in 2010, with 100 percent of those contributions going toward Democratic candidates, according to Open Secrets.

Click here to download a 14-page pdf of the Complaint.

Judge okays sales of Stanford property

LOS ANGELES (Reuters) - A U.S. judge on Tuesday approved the sale of real estate owned by corporations controlled by alleged swindler Allen Stanford.

Receiver Ralph Janvey, who is charged with recovering assets for Stanford investors, had asked the court to allow CB Richard Ellis to publicly auction the dozens of parcels of properties in the continental United States and U.S. Virgin Islands "in an efficient and cost-effective manner."

"Marketing efforts will begin immediately," Janvey said in a statement. "However, the timing of any sale will necessarily depend on ... relevant market conditions and debt obligations associated with each property."

U.S. District Judge David Godbey approved Janvey's plan but ordered him to notify the Stanford Condominium Owner's Association if he tries to sell property owned by the Stanford Development Corp, and give residents a chance to object.

Stanford, his former chief investment officer Laura Holt and former accounting executives Gilbert Lopez and Mark Kuhrt and an Antiguan regulator, face criminal and civil charges for defrauding investors in a $7 billion Ponzi scheme involving certificates of deposit.

Stanford, 59, is in jail awaiting a January 2011 trial. Stanford, Holt, Kuhrt and Lopez have denied any wrongdoing.

Although Stanford has yet to be tried, the court "has found good cause to believe that defendants violated federal securities laws," according to court documents.

The procedures call for the receiver to select a "stalking horse bidder" to set the floor for the public auction price, and to pay a break-up fee of 3 percent should that bidder not prevail, court documents showed.

Competing offers are to be submitted to the receiver at least five days prior to the auction, the documents showed.

Janvey will post a notice of the proposed sales on its website, here, and in at least one local newspaper for at least four weeks prior to the sale, the order said.

The properties to be auctioned are located in various counties in Texas, Michigan, Tennessee, North Carolina, and Mississippi and in the U.S. Virgin Islands.

Janvey also was granted permission to dispose of certain parcels through private sales, the court order showed.

Stanford victims ask why Texas didn't act sooner

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stanford in hospital with rapid heart beat

Allen Stanford, the accused swindler, was rushed to hospital from his prison cell in Texas at 5.50am, Dick DeGuerin, his lawyer, confirmed today.

The Texas-born financier and cricket impresario was taken to Conroe Regional Medical Center with a rapid heart rate of more than 300 beats a minute.

Mr Stanford, 59, faces charges, which he denies, of defrauding US investors out of $7 billion (£4.3 billion), and was recently denied bail on the ground that he represented a flight risk.

He has been sharing a cell with about ten inmates at a prison in Conroe, Texas, where he has complained of the "intolerable" conditions with temperatures reaching 38C (100F).

"They have almost non-existent medical care there. A fellow cellmate almost died with rapid heart beat several weeks ago," he said.

Mr DeGuerin was speaking on his way to a court hearing at 9am that was due to include Mr Stanford.

The lawyer is seeking to withdraw from the case because, among other reasons, he has yet to be paid.

"I don’t think the hearing can go ahead in Sir Allen’s absence," he said.

Meanwhile, James Davis, Mr Stanford's former finance director, pleaded guilty to fraud charges when he appeared in court today.

Allen Stanford Gets A Look Into His Future

Sir Allen is having a little trouble acclimating to his surroundings. Stanford's attempts to reminisce about how much fun it was to be a billionaire have been interrupted recently by episodes of profuse sweating due to the Texas heat. The knight's lawyer, Dick DeGuerin, is outraged that a member of royalty is being treated to the indignity of residing in a cell with 8 to 10 peasants without air conditioning (in addition to other insufferable conditions) and is demanding a room upgrade for his client.

"For part of the time last week, they were in total darkness," DeGuerin wrote. "The cell has been without air conditioning for at least a week. There are no windows for light or ventilation and the conditions are intolerable."

It looks like the guy who said,"I'll die and go to hell if it's a Ponzi scheme" is getting a sneak preview of what's to come.