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Saturday, 30 January 2010

Stanford's daughter agrees to vacate $1.3M condo

The daughter of jailed Texas businessman R. Allen Stanford has dropped her fight to stay in a $1.3 million Houston condominium, her attorney said Thursday.

Randi Stanford's decision came hours before she was to appear in federal district court to show why she should not be held in contempt for refusing to cooperate with government efforts to sell the 2,800-square-foot home. She will move out by March 31.

The condo was a gift from her father, who is accused of leading a $7 billion Ponzi scheme — allegations that he denies. Court-appointed receiver Ralph Janvey plans to sell the condo and direct the proceeds to allegedly defrauded investors.

On Wednesday, Janvey filed a declaration from a forensic accountant detailing that most of the $1.3 million purchase price came from the elder Stanford's personal bank account in Antigua, which is tied to his alleged wrongdoing.

Joe Kendall, Randi Stanford's attorney, said his client put up $20,000 for the condo and that her mother, Susan, put up $50,000. But the deed to the home is held by a limited liability company; its only member is R. Allen Stanford.

"That would make selling the property by Randi Stanford very problematic under the current circumstances," Kendall said.

He added that Randi Stanford is working three jobs to support herself.

Janvey notified Randi Stanford in March 2009 that he intended to sell her condo. He offered to allow her to continue living there rent-free so long as she maintained it in good order. He also offered to provide three hours notice before showing the unit to prospective buyers and 30 days notice for her to remove her possessions when it was sold.

Instead, she declined to cooperate and argued that Janvey's authority did not extend to the condo.

Randi Stanford said she spent more than $113,000 for upkeep since she moved in three years ago. She has not waived her claim to a share of the proceeds from the sale proportionate to her investment in the property, Kendall said.

Her father is the subject of a Securities and Exchange Commission lawsuit accusing him of promising inflated returns to about 28,000 investors on certificates of deposit at his Antiguan bank. The SEC also accuses him of skimming more than $1 billion to fund his lavish lifestyle.

Stanford is jailed in the Houston area on similar criminal charges.

Judge Puts 2 Insurers on the Hook for Defense Costs for Stanford, 3 Execs

Senior U.S. District Judge David Hittner of Houston on Tuesday issued a preliminary injunction that orders two insurance companies to advance defense costs to Stanford Financial Group executives facing criminal charges and civil litigation. In a 42-page order, Hittner ruled that Certain Underwriters at Lloyd's of London and Arch Specialty Insurance Cos. are prohibited from withholding "all 'costs, charges and expenses'" already incurred by the defendants and that will be incurred in the future in United States v. Robert Allen Stanford, et al., a criminal case pending in Hittner's court, and in Securities and Exchange Commission v. Stanford International Bank Ltd., et al., a civil case which is pending before U.S. District Judge David Godbey of the Northern District of Texas. Hittner gave the insurance companies 10 days to pay all invoices already submitted by defense attorneys for the criminal case in his court and the SEC civil suit in Godbey's court.

Allen Stanford and three other Stanford Financial Group defendants -- Laura Pendergest-Holt, Gilberto Lopez Jr. and Mark Kuhrt -- filed the coverage suit after the underwriters in November 2009 issued denial letters that retroactively denied them coverage under directors and officers' policies.

In the order, Hittner found the Stanford plaintiffs "met their burden of persuasion with respect to all four prerequisites of a preliminary injunction."

Lee Shidlofsky, a partner in Visser Shidlofsky who represents the Stanford plaintiffs in the coverage suit, Laura Pendergest-Holt, et al, v. Certain Underwriters at Lloyd's of London, et al., says "this is what we wanted." He notes, however, that defense attorneys for the insurers told him they will appeal the order to the 5th U.S. Circuit Court of Appeals.

Neal Lane, a partner in Akin Gump Strauss Hauer & Feld in San Antonio who represents the insurance company defendants, did not immediately return a telephone message seeking comment.

Stanford, who is in custody, and the other three defendants, who are out on bond, have each pleaded not guilty to the criminal charges against them and have denied the allegations in the civil suit. The executives were indicted in June on fraud and obstruction charges in connection with an alleged conspiracy to defraud investors who bought about $7 billion in certificates of deposit sold through the Stanford International Bank Ltd. They pleaded not guilty to the charges in June, and Hittner set the trial for January 2011.

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.

Wednesday, 27 January 2010

DPP makes submissions in King case

Written by Tahna Weston (Antigua Sun)

The former head of the Financial Services Regulatory Commission (FSRC), Leroy King, allegedly sought advice from Sir Allen Stanford’s legal counsel pertaining to questions being raised by the Eastern Caribbean Central Bank (ECCB).

Director of Public Prosecutions (DPP) Anthony Armstrong made mention of the matter while making submissions in the extradition matter before Chief Magistrate Ivan Walters on Monday (25 Jan).

King has been charged by the Securities and Exchange Commission (SEC) with taking hundreds of thousands of dollars in bribes to ignore wrongs in relation to the alleged Sir Allen Stanford $8 billion Ponzi scheme. He is facing ten counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to obstruct the SEC, and conspiracy to launder illegal proceeds.

The SEC’s complaint alleges that King facilitated the Ponzi scheme by ensuring that the FSRC conducted sham audits and examinations of Stanford International Bank Limited’s (SIBL’s) books and records. They also allege that in exchange for bribes paid to him over several years, King made sure that the FSRC did not examine SIBL’s investment portfolio.

Armstrong said that King faxed letters which were in his handwriting to Maurice Alvarado, Stanford’s Financial Company’s (SFC) general legal counsel. The letters were faxed to Alvarado at the SFC Houston office. The correspondences sent to the legal counsel were letters from the Eastern Caribbean Central Bank (ECCB) addressed to King regarding affiliate companies of the Bank of Antigua (BOA), which speaks to the supervision of SIBL and Stanford Trust Company Limited STCL).
Armstrong said that in one of the hand-written letters King writes, “My good friend" (referring to Alvarez.)

In another letter written to the attorney, he (King) again writes, “To America’s best and greatest attorney. Maurice, I am sending you two versions – one short and one long with a little more knockout punch. I prefer the shorter version, a little more subtle and diplomatic.” It was further quoted in that letter by King to Alvarez, “Any other idea? Must conclude tomorrow. Will send you a package to include the annual report for SIBL and STCL.

"I am sending a message to these guys that the institutions concerned are not run of the mill, they are great quality institutions and the numbers speak for themselves. Please do not bill me (laugh) Thanks a million, Lee (short for Leroy.)”

The DPP asked the court why King would be sending these letters from the ECCB concerning SIBL and STCL to his “good friend Maurice Alvarado” when he is refusing to disclose any information to the US regulatory body (the SEC).

On 23 Feb., 2007, King wrote to James Davis seeking further guidance as to how to respond to the ECCB’s request.

Armstrong also revealed that King wrote a letter to Davis under the header “Private and confidential” in which he asked “How can we fix this?”

The DPP told the court that Davis admitted to seeing certain monies being passed and when he (Davis) inquired about the sums, he was told that these were monies to be paid to King. Davis said the payments to King were done by cash.

Armstrong told the court that there are questions about cash deposits which were made to King’s account at Bank of America and JP Morgan Chase. The DPP pointed out that there is evidence to support the claim made by Davis that Stanford would provide regular bribe payments to King in exchange of him turning a blind eye to the alleged Ponzi operation. According to Armstrong, this is evident from the cash deposits which were made to King’s accounts in Atlanta, Georgia at the two banks.

He said that between 2 Feb. 2005, to 2 Feb., 2009, there were regular cash deposits made to the Bank of America account from as much as US$15,000 to as little as US$1,800, whilst at his account at JP Morgan Chase there were similar regular cash deposits made from 9 Jan., 2003, to 4 Feb., 2009, from as high as US$9,700 to US$2,000.

The DPP told the court that an independent auditor conducted investigations into SIBL’s financial statements among other documents and determined that the large investments being alleged did not exist.

However, Armstrong said that King reported to the SEC officials that SIBL was solvent and a good quality institution which was fully compliant with the requisite offshore banking regulations.



The DPP quoted from the report of the auditor, senior managing partner Karyl Vancassel of FTI Consulting Incorporated. In it Vancassel outlined, “In its monthly report issued in Dec., 2008, SIBL claimed to have had 8.6 billion in total assets and spent 8.4 billion in investment portfolios. FTI’s analysis to date reveals that the value of all virtual non-cash assets listed on 31 Dec., 2008, SIBL’s balance sheet was substantially overstated.”

The auditors concluded that any third-party analysis of SIBL’s actual internal records, similar to the type that FTI conducted, would have indicated the vast majority of investments (listed in SIBL’s report) did not exist or were grossly overstated as of 30 Sept., 2008.

Armstrong also referred to the evidence of James Davis in which he stated that in the third week of January last year (2009) he (Davis) met Leroy King in Antigua and that he (King) appeared very stressed. Davis said at that time SIBL was facing increasing scrutiny from the SEC, and added that he (Davis), Sir Allen and Laura Pendgast had received subpoenas from the SEC.

According to Armstrong, King told Davis that he (King) had been contacted by the SEC and asked him (Davis) if “We are going to make it", to which Davis said he understood what King asked to mean whether the fraud that they had been engaged in was going to be exposed. Davis said he told King he thought they were going to be alright.

The DPP invited the court to consider that if King was not part of the conspiracy to defraud potential investors, then “who is he referring to as we and why would he be concerned if we are going to make it.” Davis said that King and Stanford were close friends.

Armstrong revealed that Stanford had handed to King an $8,000 Super Bowl ticket, which he said was part and parcel of the bribes. He added that was the comfort of being an active participant of the alleged Ponzi scheme.

King had a trading account with Charles Schwab and he later closed the account and withdrew the funds of $410,000 and $150,000.

Armstrong said that there was no written statement to support reasons why King took the money from trading account.
He admitted, though, the United States (US) government is not claiming that those proceeds are from any illegal activity.

Armstrong said that the monies, however, would have been subjected to forfeiture proceedings. He said King was given “notice of forfeiture” on the indictments that were filed in June, last year.

King’s attorney, Dane Hamilton QC, objected at this stage and told the court that there were no indictments (filed against King) at the time (when the monies were withdrawn).

Armstrong responded that King would have tried to minimise such consequence (forfeiture) in light of what was going on in Jan., 2009. He said an offence can be committed by an act of commission or omission.

According to Armstrong on 21 June, 2005, a correspondence was sent by King to Elizabeth Jacobs, deputy director of Securities and Exchange Commission (SEC), notifying her that any further investigations into SIBL was “totally unwarranted.”

“Why would he (King) say so if he was not investigating SIBL?” Armstrong inquired.

Judge tells Lloyd's of London to pay for Stanford lawyers now

By MARY FLOOD HOUSTON CHRONICLE
Jan. 26, 2010, 2:46PM

A federal judge today ordered Lloyd's of London to pay for the criminal defense lawyers for R. Allen Stanford and other officers of his company indicted for allegedly operating a $7 billion Ponzi scheme.

Senior U.S. District Judge David Hittner issued a preliminary injunction and ordered the Lloyd's insurers to pay the lawyers for Stanford and two codefendants within 10 days for work already billed and to keep paying them under a company policy to pay legal costs for directors and officers.

Lloyd's has refused to pay for criminal defense past August, when the company's former chief financial officer, James M. Davis, pleaded guilty to a role in the scheme. Lloyd's insurers determined that the accused defendants participated in money laundering and thus it need not pay. But Davis did not plead guilty to money laundering, and no court has found that anyone involved in the case laundered money.

Lloyd's lawyers argued that since Stanford and codefendants Laura Holt and Gilbert Lopez refused to testify in their own defense in a hearing about these payments, that it should be taken as proof they are guilty even though they have pleaded not guilty to criminal charges.

“(Lloyd's) position is absurd because these circumstances are precisely why corporations procure D&O insurance on behalf of their directors and officers,” Hittner wrote in his 42-page opionion. “Indeed it would contravene the very purpose of the policies—as well as the language itself—to require (the accused) to prove their innocence before being entitled to fund for their defense.”

In granting the injunction the judge found Stanford and the others were likely to prevail in the future on this demand for insurance coverage and would be irreparably harmed if they did not receive money to pay their lawyers now. He also noted since all Stanford's and Holt's assets are frozen, the alternative is for the taxpayers to pay for lawyers, which is an undesirable outcome.

Stanford, a native Texan, has been in federal detention since he was indicted in July. He has been repeatedly denied bail as a flight risk. The others are free on bond.

The trial of the charges is set for January 2011. Kent Schaffer, Stanford's criminal defense lawyer, has said Stanford is eager to get to trial, but the defense needs time to prepare because the case already includes 7 million pages of documents.

Founder and chairman of Stanford Financial Group, Stanford faces 21 charges of conspiracy, fraud and obstruction of justice. Holt, Lopez and and Mark Kuhrt, who was not covered by the officer and director insurance policy and already has a court-appointed lawyer, face fewer charges each.

Tuesday, 26 January 2010

Feds investigating Stanford ties to lawmakers

MIAMI - U.S. federal authorities are investigating millions of dollars contributed by fraud suspect Allen Stanford and his staff to U.S. lawmakers in the past decade, the Miami Herald reported on Sunday.

The newspaper said the Justice Department investigation aimed to determine whether the banker received special favors from politicians while he was operating his alleged $7 billion Ponzi scheme centered on fraudulent certificates of deposit issued by his offshore bank in Antigua and Barbuda.

The U.S. Department of Justice said it had no comment on the Herald report.
The newspaper said an e-mail sent to Stanford by Texas Republican Representative Pete Sessions on the day authorities announced fraud charges against the billionaire financier, as well as $2.3 million in contributions he made to Sessions and other U.S. lawmakers, were "part of the government's inquiry."

It said Stanford, who has pleaded not guilty and is awaiting a trial set for January 2011, also spent $5 million on lobbying since 2001. It said he successfully lobbied in 2001 to kill a bill that would have exposed the flow of millions into his secretive offshore bank on the Caribbean island of Antigua.

The following year he helped block legislation that would have led to more government scrutiny of his now disgraced Antigua bank, the Miami Herald said.

Stanford, 59, has been in custody since June 19, when he was indicted on 21 criminal charges related to his alleged fraud. His global banking and securities business was shut down in February when the U.S. Securities and Exchange Commission filed civil charges that he and others had committed fraud.

The Miami Herald said that on the day federal agents raided Stanford's offices in the United States, February 17, the financier received an e-mail message from Sessions, the chairman of the National Republican Congressional Committee.

The newspaper said the message was found on Stanford's computer servers and reads: "I love you and believe in you.
"If you want my ear/voice -- e-mail," the Miami Herald quoted the message as saying, adding it was signed "Pete."

Sessions did not respond to requests for interviews and his press secretary said she had not seen the e-mail and so could not comment on it, the newspaper said.

It said Stanford also funded Caribbean trips for a group of U.S. lawmakers known as the Caribbean Caucus, including Sessions and Democrats Gregory Meeks of New York and Donald Payne of New Jersey.

The newspaper said most of the members of Congress it contacted about their ties to Stanford declined to discuss them, other than to say they had returned the contributions.

Prosecutors say Stanford paid tens of thousands of dollars in bribes for years to a top financial regulator in Antigua and Barbuda to shield his Ponzi scheme from U.S. investigators.

King to know extradition fate on March 25

By Observer News - Tuesday, January 26th, 2010

The former head of the Financial Services Regulatory Commission (FSRC) will know in two months if a magistrate will order his extradition.

If extradited, Leroy King will travel to the United States to face charges for his alleged involvement in a US $7 billion Ponzi scheme believed to have been orchestrated by investor Sir Allen Stanford.

King is accused of 10 counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to launder illegal proceeds and conspiracy to obstruct the Securities and Exchange Commission (SEC).

Yesterday, Chief Magistrate Ivan Walters heard submissions from Director of Pubic Prosecution Anthony Armstrong and King’s lawyer, Dane Hamilton, QC, before saying he would announce his decision on March 25.

Hamilton spent over an hour outlining his position to the court. He said his client should not be held accountable for the alleged fraud, as the Stanford International Bank Ltd (SIBL) “operated in an environment in which the laws were lax on how an offshore bank should operate.”

The attorney said King, as the FSRC administrator, did not have a direct hand in scrutinising the reports and balance sheets of the various offshore banks.

“He had never been the Supervisor of Banking,” Hamilton said. “He was never responsible for any examination of any account.”

The senior attorney also added that King was not involved in any cover-up with Stanford, as the charges suggest.

“It cannot be said and should not be said that Leroy King did not cooperate with the SEC (Securities and Exchange Commission),” Hamilton said, as he explained that his client offered to host a meeting between SIBL officials and American regulators after receiving correspondence from the SEC.

“Leroy King had gone beyond the remit of his office to cooperate with the SEC,” he added.

However Director of Public Prosecutions (DPP) Anthony Armstrong disagreed. He contended that King was, in fact, responsible for regulating the offshore banks.

He pushed his case, arguing that the timing in which King proceeded to withdraw funds from his US accounts was cause for concern. According to Armstrong, the withdrawal of money had to be viewed in the context of what was happening at the time.

He upheld a similar view when he noted a series of deposits that were made to Chase Morgan accounts and questioned the timing in which those sizeable deposits stopped in February of last year.

During the course of his submissions, the prosecutor contended that King and Stanford were very good friends and that he, from time to time, produced reports that indicated SIBL was solvent and in good standing.

Should the magistrate order King’s extradition, the former FSRC boss would have the opportunity to file an appeal in the High court.

King remains on house arrest and will continue to report to the St John’s Police Station twice daily, accompanied by one of his two sureties.

Stanford Receiver’s Team May Get $8.8 Million in Fees (Update2)

By Andrew M. Harris and Laurel Brubaker Calkins

Jan. 25 (Bloomberg) -- Ralph Janvey, the court-appointed receiver for R. Allen Stanford’s businesses, and the firms he hired will be paid almost $8.8 million if the judge in a civil fraud case against the indicted financier approves Janvey’s agreement with federal regulators and an investor advocate.

Janvey and John Little, the lawyer appointed by a federal judge in Dallas to represent Stanford investors in the civil enforcement action, filed a proposed order today in conjunction with the U.S. Securities and Exchange Commission, settling disagreements over each other’s fee applications.

The filing marks the first time Janvey, Little and the SEC have reached agreement on how much lawyers should be paid for their work on behalf of Stanford’s investors.

“Any time we can reach an agreement without further burdening the court, that’s the appropriate way to go,’’ David Reece, the SEC’s lead attorney in the case, said in a phone interview. “We can disagree with the receiver about the scope or a particular expense, but we agree that there’s a lot of work that has to be done and that work costs money.’’

U.S. District Judge David Godbey previously approved $20 million in fees and expenses for the receivership team led by Janvey, the Dallas lawyer appointed after the SEC sued Stanford, three of his businesses and two associates in February.



$7 Billion Fraud



The SEC accused Stanford in the lawsuit of leading a $7 billion fraud scheme. The financier, who also faces criminal charges, has denied all allegations of wrongdoing.

The SEC previously opposed Janvey’s fee request, arguing that he was overstaffing his team with lawyers and accountants who were charging excessive rates. Little previously said Janvey’s fees might ultimately consume the entire estate which might be used to pay investors.

Under their proposed order, Little will receive more than $203,000, or 85 percent of the amount he seeks for his work from July 1 to the end of September.

Janvey, a partner in the Dallas law firm Krage & Janvey LLP, would defer payment of 35 percent of his team’s billings for work done from June to September by more than a dozen firms including the law firm Baker Botts LLP, his outside counsel, according to the filing.

Both would be allowed to apply for the balances they claim at an unspecified date in the future.



Deferring Compensation



Little said the parties reached a compromise when both he and Janvey agreed to increase the amount of compensation each is deferring by 15 percent for the months in dispute. This means Janvey will hold back an additional $2.7 million in billings, while Little will hold back $36,000 in charges, if Godbey approves the deal, Little said today in an e-mail.

“The increased hold-back does not apply to any specific work or category of work, although the receiver, the SEC and I all recognized that the primary area of dispute during the period at issue involved the clawback claims,’’ Little said.

Both the SEC and Little fought Janvey’s attempts to sue investors for proceeds they received from allegedly bogus certificates of deposit issued by Antigua-based Stanford International Bank Ltd.

“My hope, which I think is shared by both the SEC and the receiver, is that this agreement might lead to further collaboration between and among the SEC, the receiver and the examiner, and fewer disputes,’’ Little said.

The accord doesn’t resolve objections by Stanford’s attorneys, who have previously criticized Janvey’s fee requests as excessive.

Stanford’s lead lawyer in the SEC case, Ruth Brewer Schuster, didn’t immediately return a call seeking comment today.

Friday, 22 January 2010

TD Bank Loses Bid to End Stanford Investments Lawsuit

Toronto-Dominion Bank Canada’s second-biggest bank by assets, must face a lawsuit accusing it of negligence for accepting deposits for the Antigua-based bank run by alleged Ponzi scheme operator R. Allen Stanford.

Investors in Alberta and Quebec claim in the suit that they lost C$17 million ($16.1 million) when Stanford International Bank Ltd. collapsed last year amid fraud allegations. The case can move ahead on narrower grounds than initially proposed, Ontario Superior Court Judge Herman Wilton-Siegel in Toronto said in a ruling released yesterday.

“The court has allowed the negligence claim to proceed based on actual knowledge, willful blindness and recklessness,” Jim Patterson of Bennett Jones LLP, who represents the plaintiffs, said today in a phone interview. “We will proceed.”

Stanford faces 21 criminal charges that he swindled investors of more than $7 billion in a scheme that paid above- market rates to early investors by taking money from those who bought certificates of deposit sold by his bank. The investors included the plaintiffs in the Ontario case, who bought the deposits through Toronto-Dominion, the correspondent bank for Stanford International.

Susan Webb, a spokeswoman for the Toronto-based bank, declined to immediately comment.

Five Plaintiffs

The five plaintiffs in the case are closely held Dynasty Furniture Manufacturing Ltd., which is based in Calgary; Alberta investors Shafiq Hirani, Hanif Asaria and Dinmohamed Sunderji; and a Quebec company. The high-yield certificates of deposit bought by the plaintiffs appear to have been issued as part of a Ponzi scheme that collapsed in February, Wilton-Siegel wrote.

Toronto-Dominion maintained 12 accounts for Stanford International and accepted deposits into the accounts, the judge said.

Wilton-Siegel dismissed the investors’ claims that the bank had a duty of care to investigate the Stanford accounts and to verify they were legitimate. The law doesn’t require banks to conduct such investigations for their clients, the judge said.

“Nor is there any case law imposing liability on a bank for failing to conduct such an investigation,” Wilton-Siegel wrote.

The judge also dismissed claims the bank ought to have known the Stanford scheme was illegal.

Wilton-Siegel allowed the investors to change the wording in their filing to proceed with a claim that the bank failed to comply with the Proceeds of Crime Act, a federal anti-money laundering law.

Thursday, 21 January 2010

Stanford Receiver Asks to Sell Money-Losing Memphis Golf Course

Allen Stanford's court-appointed receiver asked a judge’s permission to sell the Texas financier’s stake in a Jack Nicklaus-designed golf course near Memphis, Tennessee, for $3 million.

Ralph Janvey, the receiver appointed to recover money for Stanford’s investors, filed papers yesterday in federal court in Dallas seeking approval to sell the half-interest in Spring Creek Golf Course and its affiliated golf club to Stanford’s partner in the project. The partner, identified as the Meyer Family, has been paying the project’s bills for the past year and, as part of the purchase, agreed to cover Stanford’s share of the project’s operating deficits, estimated at $1.4 million for 2009.

Stanford invested more than $30 million in Spring Creek, which is a 40-minute drive from Memphis, according to Janvey. In June, Spring Creek Ranch Club completed improvements that added a golf house as well as teaching and practice facilities to the course, which Stanford intended to use as a tournament site.

“Because of Spring Creek’s remote location and operating deficits, it is unlikely that the receivership estate will ever recover a significant amount of its investment through a future sale, particularly if Spring Creek must cease operations for financial reasons,” Janvey’s lawyer, Kevin Sadler, said in the filing.

Janvey’s real estate adviser, CB Richard Ellis, recommended the sale, noting that “most golf courses have lost 30 percent to 50 percent of their value since 2007.”

Tournaments, Golfers

Stanford, whose Stanford Financial Group was a major sponsor of several golf tournaments and professional golfers, has denied all wrongdoing related to civil and criminal charges that he defrauded investors of more than $7 billion through the sale of allegedly bogus certificates of deposit at Antigua-based Stanford International Bank Ltd. Stanford has opposed all efforts to sell his assets before his trial, which is set for January 2011.

Sunday, 17 January 2010

Stanford Receiver, SEC Ask Judge to Put Investor Suits on Hold

Allen Stanford's receiver and U.S. regulators asked a federal judge to temporarily stop all lawsuits by investors against their former financial advisers at Stanford Group Co. and other Stanford-related entities.

“There have now been more than 50 cases filed in state and federal courts that somehow relate to the sale of Stanford CDs or the receivership,’’ Kevin Sadler, an attorney for receiver Ralph Janvey, said today in a filing made jointly with the U.S. Securities and Exchange Commission.

Responding to investors’ document requests to support those lawsuits “will consume more and more’’ of the dwindling assets the receiver could use to repay all investors allegedly swindled by the Texas financier, Sadler said in the filing in federal court in Dallas.

Stanford investors have sued their former financial advisers and the clearinghouse and trust company that serviced their accounts in an attempt to recover some of the estimated $7 billion lost through what prosecutors claim was a Ponzi scheme involving certificates of deposit sold by Antigua-based Stanford International Bank Ltd.

In court filings, investors’ lawyers have urged the judge to allow the suits, which the receiver and regulators want to delay until Stanford’s criminal and SEC cases are completed. The investors claim their lawsuits are their best hope of generating significant recovery by tapping insurance coverage for the brokers and other entities before deadlines for filing such claims.

Stanford receiver says CD investors returning funds

The receiver in accused swindler Allen Stanford's fraud case said on Friday he has recovered nearly $2 million from certain investors who bought certificates of deposit from Stanford's offshore bank.

Ralph Janvey, the court-appointed lawyer charged with returning assets to investors, sued about 200 Stanford customers in December, accusing them of unfairly cashing out before Stanford's firm was shut down in February 2009, when the U.S. Securities and Exchange Commission filed civil fraud charges.

So far, Janvey has finalized more than 30 settlements totaling over $1.8 million and additional settlements totaling $1 million are expected soon, the lawyer said in a statement on his website.

Stanford, 59, is accused of running a $7 billion Ponzi scheme that prosecutors say relied on sales of fraudulent CDs issued by his offshore bank in Antigua.

Friday, 8 January 2010

Allen Stanford's Daughter Fighting Sale Of Her Million Dollar Condo

Before Allen Stanford was accused of an investment scheme that allegedly funded his billion-dollar lifestyle, he bought his daughter a $1.3 million luxury condo in Houston.

The court-appointed receiver wants to sell it and give the proceeds to Stanford's out-of-luck investors.

Randi Stanford is less-than-happy about losing her home.

AP, via the New York Times: Stanford's daughter Randi argued in court papers that she is entitled to stay in the 2,800 square foot condo because it was a gift from her father, who is accused of leading a $7 billion Ponzi scheme.

Randi Stanford said the condo is not part of the allegedly tainted assets seized by the government and accused the receiver in control of her dad's businesses of ''Gestapo-like tactics.'' ...

Janvey notified Randi Stanford in late March that he intended to sell her condo. He offered to allow her to continue living there rent free so long as she maintained it in good order. He also offered to provide three hours notice before showing the unit to prospective buyers and 30-days notice for her to remove her possessions upon selling it.

Instead, she declined to cooperate and does not recognize Janvey's authority over the condo, the receiver said.

Texas law considers something a gift if the gift giver relinquishes all dominion and control over the property. Unfortunately for Randi Stanford, the article said her father is the sole member of the LLC that owns the condo.

But, should the judge rule she has to relinquish it, she will be able to recover from the sell proceeds improvements she independently made -- including the $113,000 in upkeep payments she said she made.

The Associated Press is reporting that Stanford's daughter may face contempt of court charges in Dallas.

Judge David C. Godbey on Wednesday ordered Randi Stanford to appear in court later this month. She is apparently enmeshed in a legal battle to keep her Houston condominium.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Efforts to reach Rodriguez were not successful.

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

Alleged Ponzi Mastermind Stanford Pwned in Antigua

In early 2008, while federal investigators were busy looking into disgraced financier Robert Allen Stanford for his part in an alleged $8 billion fraudulent investment scheme, Eastern European hackers were quietly hoovering up tens of thousands of customer financial records from the Bank of Antigua, an institution formerly owned by the Stanford Group.

According to a fraud investigator with firsthand knowledge of the break-in, the hackers responsible infiltrated a component of the Stanford Group’s network by exploiting vulnerabilities in the company’s web servers and databases. On the condition of anonymity, the investigator shared with this author files recovered from the breach, which were stored in plain text for at least several weeks on a website controlled by the attackers. This source said he forwarded the same information on to the FBI shortly after discovering it in early 2008.

Once inside Stanford’s network, the unidentified hackers appear to have swiped the credentials from an internal network administrator. They soon had downloaded the user names and password hashes for more than 1,000 employees of Stanford Financial, Stanford Group, Stanford Trust and Stanford International Bank.

Among the purloined files is a listing of what appears to be ownership and balance information for tens of thousands of customer accounts at Bank of Antigua. Each listing includes the account number, owner’s name, address, balance and accrued interest.

Mr. Stanford is set to go on trial this month for allegations that he led a $8 billion fraud scheme. In addition, federal authorities reportedly have been investigating whether Stanford was involved in laundering drug money for Mexico’s notorious Gulf Cartel.

Many of those account holders listed in the inventory of accounts gave addresses in the United States, but a large portion belong to individuals in South America and Mexico. While most of the accounts were worth between $10,000 and $50,000 USD, more than a thousand accounts had balances between $100,000 and $900,000. Nearly all of the accounts with balances in excess of $1 million apparently belong to an organization or individual named “Kadima Panamena.”




An official with the U.S. Justice Department confirmed that the agency had received a copy of the purloined files, and that the documents contained information concerning Stanford’s holdings that the government did not previously possess. But the official, speaking on condition of anonymity because he was not authorized to discuss the ongoing investigation, said it remains unclear what, if any, impact the documents may have had in the government’s case against Stanford.

It’s also unclear whether the hackers managed to steal any funds from the accounts listed in the recovered documents, or indeed whether the attackers ever had direct access to Bank of Antigua accounts. Still, a set of documents found with the account information suggest the perpetrators did a fairly thorough job mapping the internal networks connecting Stanford offices in Austin, Baton Rouge, Boca Raton, Boston, Denver, Ft. Lauderdale, Houston, Memphis, Miami, Montreal, New York, San Francisco, Sugarland and Washington, D.C.

Also listed in the network map is a location called “Newspapers” — which may be reference to The Antigua Sun, a newspaper formerly owned by Stanford — as well as “CSTAR” and “CSUN,” which probably refers to airlines once owned by Stanford — Caribbean Star Airlines and Caribbean Sun Airlines.

According to the private investigator, the perpetrators used what the government has described as a “hacking platform,” a series of web servers that were leased out to criminal gangs for the purposes of breaking into customer databases belonging to banks and retailers through so-called SQL-injection attacks. Indeed, the source said, the hacking platform used in this attack was the source of several other such attacks against financial institutions around that same time frame, including OmniAmerican Credit Union and Global Cash Card, a distributor of prepaid debit cards used mainly for payroll payments.

Global Cash Card and OmniAmerican were both named as breach victims in the U.S. government’s case (.pdf) against Israeli hacker Ehud Tenenbaum, a 29-year-old man who made headlines in the late ’90s for breaking into Pentagon computers.
The U.S. government also cites the use of hacking platforms (.pdf) in its prosecution of Albert Gonzalez, the Florida computer hacker who pleaded guilty last week to conspiracy charges for intrusions into Heartland Payment Systems.

Allen Stanford appeals bail decision again

Allen Stanford's lawyers on Tuesday asked an appeals court for the second time to review a judge's decision denying the accused swindler bail.

Last month, U.S. District Judge David Hittner in Houston issued an order denying pleas from Stanford's lawyers and family that he be released from jail due to his deteriorating mental and physical health.
Stanford, 59, was first deemed a flight risk and denied bail by Hittner in June last year. The judge's initial decision was appealed and upheld by the United States Court of Appeals for the Fifth Circuit in New Orleans.
Stanford is in a federal detention center in Houston awaiting his January 2011 trial.
The Texas financier surrendered to authorities on June 18 after prosecutors charged him with leading a $7 billion Ponzi scheme centered on certificates of deposit issued by his offshore bank in Antigua.
Stanford's lawyers, Kent Schaffer and George Secrest, filed the latest appeal with the appellate court in New Orleans, court documents showed.

Stanford Clients to Get Back Gold Coins, Bullion, Judge Rules

R. Allen Stanford’s gold customers will regain possession of $21.2 million in coins and bullion seized 11 months ago from the company’s Houston headquarters when federal regulators raided the offices on suspicions the financier was running a $7 billion Ponzi scheme.

Investors had urged U.S. District Judge David Godbey, who is overseeing the U.S. Securities and Exchange Commission’s fraud lawsuit against Stanford in Dallas, to release their gold as prices for the metal reached an all-time high during 2009.

“Coins and bullion that have been individually marked and stored for 147 Stanford Coin and Bullion customers” will be returned to their owners, Godbey said in yesterday’s order. Gold that had been paid for in full and not delivered to another 70 customers will also be released, Godbey ruled.

Stanford, several of his top executives and three of his companies were sued by the SEC in February for allegedly paying early investors by taking money from later investors in more than $7 billion of certificates of deposit sold by Antigua-based Stanford International Bank Ltd. Regulators won a court order freezing Stanford’s corporate and personal assets until the case is resolved.

Stanford, who denies all wrongdoing, is in jail awaiting trial on 21 criminal counts that mirror the civil allegations.

Stanford’s Vault

Ralph Janvey, the court-appointed receiver marshalling Stanford’s assets to repay investors, didn’t oppose the return of coins and bullion that were stored in individually labeled boxes in Stanford’s vault. Those customers argued that Stanford held their gold as a courtesy and that the company had no ownership interest in their gold.

Godbey deferred ruling on whether the receiver should return about $500,000 in cash collected from gold customers whose orders weren’t filled. The judge ruled that Janvey needn’t hand over about $1 million in coins and bullion to customers who hadn’t finished paying for their purchases when regulators seized Stanford’s operations.

Janvey got permission to liquidate about $1.8 million in coins and bullion in the division’s unsold inventory. Gold for immediate delivery was trading at $1,122.85 an ounce yesterday.

Separately, Stanford’s criminal-defense lawyers yesterday asked the U.S. Court of Appeals in New Orleans to overturn last month’s lower-court ruling denying his request to be released on bail. Stanford is on the verge of “a complete nervous breakdown” because of his incarceration, his lawyers said.

Tuesday, 5 January 2010

Stanford's Lawyer Played Key Role In Shielding Banker From Scrutiny

We told you arlier today about Yolanda Suarez, the Florida lawyer who forged ties with members of Congress and ran interference with journalists on behalf of Allen Stanford. But it's also worth paying attention to another Florida lawyer and key Stanford ally, who appears to have played an equally crucial role in allowing the Texas banker -- who was charged in June with orchestrating a multi-billion dollar Ponzi scheme -- to stay a step ahead of the government for so long.

As Stanford's lawyer of choice, Carlos Loumiet helped set up the unusual regulatory arrangement that allowed the Stanford Financial Group (SFG) to move hundreds of millions of dollars from Florida to Antigua with little scrutiny. Soon afterwards, he served on a Stanford-funded task-force to rewrite Antigua's banking laws -- an effort that U.S. regulators have said left major loopholes and hindered efforts to crack down on fraud. And the court-appointed receiver seeking to unravel Stanford's far-flung financial empire has demanded that the two law firms that have employed Loumiet -- who hasn't been charged with any wrongdoing -- hand over records of their work on behalf of Stanford.

As the Miami Herald reported earlier this year, the story starts in 1998, when Stanford wanted to set up an easy way to move money from SFG's Miami office, which sold certificates of deposit to investors, to Antigua, where his banking empire was headquartered.

He turned to Loumiet, at the time a lawyer at Greenberg Traurig. That's the Miami firm where Suarez, then SFG's legal counsel, had previously worked, and which would later become known as the firm from which Jack Abramoff bribed government officials. As the Herald has also reported, despite the objections of the state's top banking lawyer, Loumiet prevailed on Florida officials to allow SFG to set up a special trust office that could move money to Antigua without submitting to fraud or money -laundering checks. With the money pipeline established, the Herald reported, the Miami office sold millions in CDs over the next decade, then used jets to fly the checks, stuffed in pouches, to Antigua.

That wasn't the end of Loumiet's service to Stanford though. About a year later, the Clinton administration, as part of an effort to crack down on money laundering, was considering cutting off access to U.S. currency for all offshore institutions in Antigua.
In order to convince U.S. regulators to back off, Stanford volunteered to organize and fund a task force to re-write Antigua's banking laws -- allowing him to appoint the task force's members. Stanford named Loumiet and another Greenberg lawyer, Patrick O'Brien.

Loumiet touts the experience in the bio on his law firm website. But the revised laws that he and his fellow panelists drew up were denounced by the U.S. government as containing loopholes that made it even harder than previously for regulators to access bank records. In a letter to the Antiguan Prime Minister, the Treasury Department complained that the island nation had "weakened its anti-money laundering laws to the point they are now significantly below international standards, making Antigua more vulnerable to money laundering."

In an interview with the Washington Post at the time, Loumiet defended Stanford and suggested the U.S. and Britain did not have Antigua's best interests at heart. "Allen Stanford did not feel that if this was done with the benevolent help of the U.S. and Britain it would help Antigua," he said. "They were trying to put the fox in charge of the chicken coop, and frankly the chickens weren't very happy about it."

In any case, the panel had done its job. Stanford's operation continued largely free from regulatory scrutiny.

But Stanford still appears to have taken pains to keep Loumiet involved. When, in 2001, the lawyer moved from Greenberg to Hunton & Williams, where he remains, Stanford switched to the new firm and continued to use Loumiet as a lawyer.

That wasn't all Stanford used Loumiet's new firm for. Since 2000, Stanford Financial Group, like many large companies, had hired lobbyists to promote its interests in Washington. But, according to lobbying disclosure reports, Hunton was hired in 2005 to lobby Congress on tax issues, on behalf of Stanford personally. A spokeswoman for the firm declined to discuss what the work consisted of.

The court-appointed receiver on the Stanford case, Ralph Janvey, appears to see Loumiet's work as central to the operation. Janvey has asked both Greenberg and Hunton for files containing records of their work for Stanford. Hunton has handed over some files, but is fighting to keep others secret, citing legal issues regarding jurisdiction and client privilege.

A request to Loumiet from TPMmuckraker to discuss his work on behalf of Stanford was referred to a Hunton spokeswoman, who declined to comment.

Sunday, 3 January 2010

Feds probe links between lawmakers, Allen Stanford

MIAMI — Just hours after federal agents charged banker Allen Stanford with fleecing investors of $7 billion, the disgraced financier received a message from one of Congress' most powerful members, Pete Sessions.

“I love you and believe in you,” said the e-mail sent on Feb. 17. “If you want my ear/voice — e-mail,” it said, signed “Pete.”

The message from the chair of the National Republican Congressional Committee represents one of the many ties between members of Congress and the indicted banker that have caught the attention of federal agents.

The Justice Department is investigating millions of dollars Allen Stanford and his staff contributed to lawmakers over the past decade to determine if the banker received special favors from politicians while building his spectacular offshore bank in Antigua, McClatchy Newspapers has learned.

Agents are examining campaign dollars, as well as lavish Caribbean trips funded by Stanford for politicians and their spouses, feting them with lobster dinners and caviar.

The money Stanford gave Sessions and other lawmakers was stolen from his clients while he carried out what prosecutors now say was one of the nation's largest Ponzi schemes.

Sessions, 54, a longtime House member from Dallas who met with Stanford during two trips to the Caribbean, did not respond to interview requests.

Supporters say the lawmaker, who received $44,375 from Stanford and his staff, was not assigned to any of the committees with oversight over Stanford's bank and brokerages.

His press secretary, Emily Davis, said she was unable to comment on the e-mail sent at 11:31 a.m. on the day Stanford was charged by the U.S. Securities and Exchange Commission. “I haven't seen it, so I can't verify its authenticity at this time,” she said.

Found on the servers
But the message found on Stanford's computer servers and the contributions he made to Sessions and other lawmakers — totaling $2.3 million — are now part of the government's inquiry.

Records show Stanford also doled out $5 million on lobbying since 2001, setting up his own Washington firm last year with expensive furnishings and artwork — the money plundered from his customers' accounts.

Over the years, he took on battles to protect his banking network while fending off regulators.

In 2001, he pressed successfully to kill a bill that would have exposed the flow of millions into his secretive offshore bank in Antigua.

The next year, he helped block legislation that would have drawn more government scrutiny to his bank.

While he was fighting reforms to financial secrecy and offshore banking laws, Stanford was hobnobbing with dozens of lawmakers.

Stanford hosted a wedding dinner for New York's U.S. Rep. John Sweeney at his five-star restaurant in Antigua in 2004 — toasting the couple for photographers—and staged a cocktail fundraiser for now-disgraced Ohio congressman Bob Ney at his bayfront Miami office.

“He legitimized himself by having himself vetted by powerful members of Congress,” said Steven Riger, a former vice president at Stanford's Miami brokerage. “It was all about the public's perception.”

Kent Schaffer, Stanford's court-appointed attorney, said his client never asked for special favors. “Stanford gave contributions to politicians, but there was nothing criminal behind it,” he said.

The federal investigation comes after months of criticism from victims' groups complaining that elected leaders failed to vet Stanford before accepting money from him the past 10 years. If they had, they would have discovered that the U.S. State Department in 1999 concluded that Stanford helped create a haven for money-laundering in Antigua.

Most members of Congress contacted by McClatchy Newspapers declined to discuss their ties to the banker, other than to say they have since returned the contributions.

Stanford's foray into the Washington power game began in 2001, shortly after he was allowed to open a controversial trust office in Miami.

The special office was a boon to Stanford's bank, generating millions in the sale of certificates of deposit — the money stuffed in pouches and sent on jets to his banking headquarters in Antigua.

But when a bill was created to compel offshore bankers to reveal the sources of money flowing into their banks, Stanford jumped into the fight to kill it.

The measure would have forced Stanford — who was moving millions illegally through his Miami trust office — to open his books to federal regulators.

“He wanted the complete freedom to move money offshore without any threat,” said Jack Blum, a lawyer who testified before Congress supporting the legislation. “He was cheerleading for the offshore tax havens.”

To combat the bill, Stanford launched a strategy he would use for the next eight years: He gave money to the party in power, including $40,000 to the Senate Republican Campaign Committee and $100,000 to the inaugural committee of George W. Bush, records show.

By summer of 2001, the bill was dead.

In the ensuing years, Stanford's banking empire flourished, with the Miami office generating hundreds of millions of dollars, records show.

In late 2001, Stanford confronted another threat: A bill allowing state and federal regulators to share details about fraud cases — which would have brought Stanford's brokerages under closer scrutiny — landed in the Senate Banking Committee.

Though the Senate was now controlled by Democrats, Stanford was prepared: He had given $500,000 to the Democratic Senatorial Campaign Committee in 2002 — his largest-ever contribution.

“I told him that the Democrats were going to take over, and he needed to make friends with them,” recalled his lobbyist Ben Barnes, once Texas' lieutenant governor.

Stanford also doled out $100,000 to a national lobbying group to fight the measure.

The bill, which sparked sweeping opposition from brokerages and insurers, never made it to a vote.

While he was scoring points in Washington, Stanford was squaring off for a crisis at his banking headquarters in Antigua.

In 2003, investors began questioning the legitimacy of his certificates of deposit, which generated higher returns than major U.S. banks, and articles began appearing in news magazines about money-laundering in Antigua.

In addition, Stanford was drawing the scrutiny of the SEC, which was demanding to know where his bank was investing customers' money.

A contact in Antigua
In the ensuing years, Stanford would play a dual role of staving off regulators — paying $200,000 in bribes to Antiguan banking chief Leroy King — while forging ties with members of Congress, court records show.

Those connections deepened when Stanford started hosting a series of congressional visits to Antigua.

It began in 2003, when lawmakers including Sessions, Ney, John Sweeney, Gregory Meeks, Donald Payne, Max Sandlin and Phil Crane arrived in Antigua on a mission to “promote relations” with the Caribbean nation.

The cost of the January trip — including nights in luxury hotels and two Stanford jets for travel — came to $39,500, records show.

For four days, they gathered for talks on business in the Caribbean, trading jokes with Prime Minister Lester Bird and touring the island.

In time, the group of lawmakers, which became known as the “Caribbean Caucus,” would take 11 more trips — the costs picked up by the Inter-American Economic Council, a nonprofit funded by Stanford.

A total of $311,307 was spent on the trips to places like Montego Bay, St. Croix and Key Biscayne. “We were rolling out food, caviar, wine, lobster,” recalled Stanford's personal chef, Jonas Hagg.

During a 2004 Antiguan trip, Sweeney and his 34-year-old girlfriend were married, with Stanford hosting the ceremony and reception for the New York Republican at the famed Pavilion Restaurant.

“If it wasn't for Allen, I certainly would not be here today,” Sweeney told Stanford's newspaper, The Antigua Sun. “He has done a tremendous job of promoting and raising the awareness of Antigua in the United States, and people take notice of a man of his standing and stature in the halls of Washington.”

Photos of Stanford and caucus members were splashed in company publications and news releases. “You looked and you saw all these important people,” Riger said. “That legitimacy allowed him to go out and collect a lot of money.”

Stanford was not only funding the trips — the money looted from his customers — but also staging fundraisers.

He held an event at his office on the 21st floor of the Miami Center for Ohio house member Ney, who was later sentenced to 30 months in prison after admitting to accepting gifts and money from clients of lobbyist Jack Abramoff.

He rallied his brokers when Sessions was in a tight race with Democrat Martin Frost in Texas in 2004.

Working the phones
“He got on the speakerphone and told everyone to give to Pete Sessions,” said Riger. “He said Sessions was good for our company and we needed to give to him.”

Stanford raised $38,875 in the final weeks of the campaign for Sessions, who defeated Frost.

While he was forging ties in Washington, he was getting into deeper trouble with the SEC. By 2006, the agency had sent two confidential letters to the Antiguan government demanding information about the solvency of Stanford's bank, records show.

Both times, Stanford was aided by lead regulator King, who managed to keep the bank's finances secret while accepting thousands in bribes from Stanford — their pledge sealed in a blood oath in Stanford's airplane hangar in Antigua, according to court records and interviews.

With pressure mounting from the SEC, Stanford increased his lobbying in Washington.

In 2008, he started his own lobby firm on 14th Street and New York Avenue, spending $2.2 million — more than he spent the previous four years combined, records show.

“He was spreading his money around,” said Blum, the Washington expert on money-laundering.

“It was a way of gaining legitimacy and getting people to say, ‘Hey, I'm OK.' “

Just one month before the FBI launched a criminal probe into his banking empire, Stanford hosted a lavish gathering of powerful Washington insiders, with keynote speeches from Madeleine Albright, former secretary of state, and Paul Wolfowitz, former deputy secretary of defense.

Also co-hosting the May event: Miami lawyer Yolanda Suarez, Stanford's longtime chief of staff.

The topic: the global financial crisis, and the private sector's need to work with government.

But Stanford's own crisis was about to explode.

On Feb. 17, armed with court orders, federal agents swarmed into his offices across the country, shutting down his operations and declaring that Stanford was running a massive fraud.

In his Houston headquarters, agents found reams of company documents, electronic records and e-mails received by Stanford in his final days, including the message from Sessions.

As the scandal unfolded, members of the Caribbean Caucus began returning their contributions.

Nineteen lawmakers gave back a total of $87,800 to the court-appointed receiver as of August. Others, including Meeks, Sessions, Sandlin, Sweeney and Crane, said they turned some of the money over to charities.

In addition, Democratic House member Charlie Rangel returned $11,800 to charities, and Democratic Florida Sen. Bill Nelson $45,000 to charities, half of which came from a fundraiser at Stanford's Miami office in 2006.

“Just like a number of people, (they) started to run for cover the minute Allen was under scrutiny,” said Schaffer, Stanford's attorney.

“People he had been very close to — and never asked anything of — all of a sudden are distancing themselves. Whether he's innocent or guilty, they don't really care. They worry about how it affects their image.”

As federal agents examine Stanford's political contributions, victims' groups have criticized lawmakers for failing to vet Stanford before accepting his donations and trips.

The State Department had singled out Stanford in a 1999 report for using his influence to weaken the Antiguan banking laws, creating “one of the most attractive financial centers in the Caribbean for money launderers.”

“None of this was difficult to ascertain,” said Bill Branscum, a former U.S. Treasury agent who investigated laundering in the Caribbean. “With the position of public trust comes a consummate responsibility. They should have made it their business to figure out what was going on.”

“You've got to give (Stanford) credit — he got the best bang for his buck.”