From the Executive Summary of the SEC Inspector General’s Report of Investigation on the Allen Stanford debacle

Finally, the OIG investigation revealed that the former head of Enforcement in Fort Worth, who played a significant role in numerous decisions by the Fort Worth office to deny investigations of Stanford, sought to represent Stanford on three separate occasions after he left the SEC, and represented Stanford briefly in 2006 before he was informed by the SEC Ethics Office that it was improper to do so.

This former head of Enforcement in Fort Worth was responsible for: (1) in 1998, deciding to close a MUI opened regarding Stanford after the 1997 broker-dealer examination; (2) in 2002, deciding to forward the [redacted] complaint letter to the TSSB and deciding not respond to the [redacted] complaint or investigate the issues it raised; (3) in 2002, deciding not to act on the Examination staff’s referral of Stanford for investigation after its investment adviser examination; (4) in 2003, participation in a decision not to investigate Stanford after receiving [Confidential Source]’s complaint letter comparing Stanford’s operations to the [redacted] fraud; (5) in 2003, participating in a decision not to investigate Stanford after receiving the complaint letter from an anonymous insider alleging that Stanford was engaged in a “massive Ponzi scheme;” and (6) in 2005, informing senior Examination staff after a presentation was made on Stanford at a quarterly summit meeting that Stanford was not a matter they planned to investigate.

Yet, in June 2005, a mere two months after leaving the SEC, this former head of the Enforcement in Fort Worth e-mailed the SEC Ethics Office that he had been “approached about representing [Stanford] . . . in connection with (what appears to be) a preliminary inquiry by the Fort Worth office.” He further stated, “I am not aware of any conflicts and I do not remember any matters pending on Stanford while I was at the commission.”

After the SEC Ethics Office denied his request in June 2005, in September 2006, Stanford retained this former head of Enforcement in Fort Worth to assist with inquiries Stanford was receiving from regulatory authorities, including the SEC. He met with Stanford Financial Group’s General Counsel in Stanford’s Miami office and billed Stanford for his time. Following the meeting, he billed 6.5 hours to Stanford on October 4, 2006, for, inter alia, “review[ing] documentation received from company about SEC and NASD inquiries.” On October 12, 2006, he billed Stanford 0.7 hours for a “[t]elephone conference with [Stanford Financial Group’s General Counsel] regarding status of SEC and NASD matters.” In late November 2006, he called his former subordinate, the Assistant Director who was working on the Stanford matter in Fort Worth, who asked him during the conversation, “[C]an you work on this?” and who in fact told him, “I’m not sure you’re able to work on this.” Near the time of this call, he belatedly sought permission from the SEC’s Ethics Office to represent Stanford. The SEC Ethics office replied that he could not represent Stanford for the same reasons given a year earlier and he discontinued his representation.

In February 2009, immediately after the SEC sued Stanford, this same former head of Enforcement in Fort Worth contacted the SEC Ethics Office a third time about representing Stanford in connection with the SEC matter – this time to defend Stanford against the lawsuit filed by the SEC. An SEC Ethics official testified that he could not recall another occasion in which a former SEC employee contacted his office on three separate occasions trying to represent a client in the same matter. After the SEC Ethics Office informed him for a third time that he could not represent Stanford, the former head of Enforcement in Fort Worth became upset with the decision, arguing that the matter pending in 2009 “was new and was different and unrelated to the matter that had occurred before he left.” When asked why he was so insistent on representing Stanford, he replied, “Every lawyer in Texas and beyond is going to get rich over this case. Okay? And I hated being on the sidelines.”

The OIG investigation found that the former head of Enforcement in Fort Worth’s representation of Stanford appeared to violate state bar rules that prohibit a former government employee from working on matters in which that individual participated as a government employee. Accordingly, we are referring this Report of Investigation to the Commission’s Ethics Counsel for referral to the Office of Bar Counsel for the District of Columbia and the Chief Disciplinary Counsel for the State Bar of Texas, the states in which he is admitted to practice law.

US pressures Antigua over Stanford debacle

One motion is still awaiting a vote, but another resolution has been introduced in the US House of Representatives to pressure Antigua and Barbuda into co-operating with Allen Stanford’s jilted investors. Congressman Mike Coffman of Colorado piloted the resolution asking the United States Secretary of the Treasury to direct the International Monetary Fund and the World Bank to block funding to the Antigua and Barbuda government. This action comes on the heels of a similar Senate Resolution sponsored by eight US senators in December 2009, which is now pending a vote by the Senate Foreign Relations Committee. This latest resolution, however, also demands Antigua release to the US Receiver overseeing the liquidation of the Stanford estate the 49 properties it has taken actions to expropriate, and repay the loans made by Allen Stanford or any Stanford entity as well as “payments made to officials of the government of Antigua and Barbuda for the purpose of subverting regulatory oversight.”

It has been referred to the US House of Representatives Financial Services Committee for a vote. This latest action is part of the efforts by the Stanford Victims Coalition (SVC) to force the Baldwin Spencer administration into giving back to the investors what they lost in Stanford’s alleged multi-billion dollar Ponzi scheme. In addition to seeking the support of US politicians in their efforts, the group recently launched a campaign urging a boycott of tourism and investment in the twin-island nation. “When Antigua is ready to make things right and release the assets that were purchased with Stanford victims’ investments, the SVC will stop its efforts to expose Antigua for its corrupt actions,” said Angela Shaw, the SVC’s executive director and founder. “When the crime stops, so will we.

Until then, we will pursue every effort we possibly can to warn potential tourists, developers and investors about the dangers of Antigua.” “This is a very serious matter and in over a year since the Stanford fraud was exposed, the government of Antigua and Barbuda has not publicly acknowledged Stanford investors or shown any level of sympathy or remorse—or worse—its intention to address the devastation this crime has inflicted on innocent people from around the world,” Shaw added. The Antigua and Barbuda government has not offered a response to the latest resolution introduced in the US House of Representatives.