My Take on Why the SEC Did Not Pursue Allen Stanford
Posted by Larry Doyle on April 20, 2010 4:19 PM |
Why did the SEC charge Goldman Sachs with fraud last Friday and not another day? Little doubt the SEC was trying to deflect attention from the scathing review of the SEC in its Investigation of Stanford Financial debacle. How bad is it? Well, let’s review a letter embedded in the SEC OIG’s review of the Stanford Alleged Ponzi Scheme,
Below please find a referral from NASD concerning Stanford Financial Group
Id. at 1. The letter stated:
STANFORD FINANCIAL IS THE SUBJECT OF A
LINGERING CORPORATE FRAUD SCANDAL
PERPETUATED AS A “MASSIVE PONZI SCHEME”
THAT WILL DESTROY THE LIFE SAVINGS OF
MANY, DAMAGE THE REPUTATION OF ALL
ASSOCIATED PARTIES, RIDICULE SECURITIES
AND BANKING AUTHORITIES, AND SHAME THE
UNITED STATES OF AMERICA.
The Stanford Financial Group [SFG] of Houston, Texas has
been selling to people of the United States and of Latin
America, offshore certificates of deposit issued by Stanford
International Bank, a wholly owned unregulated subsidiary.
With the mask of a regulated US Corporation and by
association with Wall Street giant Bear Stearns, investors
are led to believe these CD’s are absolutely safe
investments. Not withstanding this promise, investor
proceeds are being directed into speculative investments
like stocks, options, futures, currencies, real estate, and
For the past seventeen years or so, Stanford International
Bank has reported to clients in perfect format and
beautifully printed material of the highest quality,
consistent high returns on the bank’s portfolio, with never a
down year, regardless of the volatile nature of the
The questionable activities of the bank have been covered
up by an apparent clean operation of a US Broker-Dealer
affiliate with offices in Houston, Miami, and other cities
that clears through Bear Stearns Securities Corporation.
Registered Representatives of the firm, as well as many
unregistered representatives that office within the B-D, are
unreasonably pressured into selling the CD’s. Solicitation
of these high risk offshore securities occurs from the
United States and investors are misled about the true nature
of the securities.
The offshore bank has never been audited by a large
reputable accounting firm, and Stanford has never shown
verifiable portfolio appraisals. The bank’s portfolio is
invested primarily in high risk securities, which is not
congruent with the nature of safe CD investments promised
Unbelievable returns of the portfolio, non verifiable
portfolio appraisals, non prudent investment strategies,
information from insiders, and lavish expense management
styles, suggest the portfolio is deeply underwater. If true,
returns and expenses are being paid out of clients’ monies
and by the size of the portfolio this would be one of the
largest Ponzi Schemes ever discovered.
This letter is being written by an insider who does not wish
to remain silent, but also fears for his own personal safety
and that of his family. The issue is being referred for
investigation to the proper authorities, related parties, and
persons whose mission is to inform the general public. The
key point to focus on is the real market value of Stanford
International Bank’s investment portfolio, which is
believed to be significantly below the bank’s obligations to
clients. Overlooking these issues and not thoroughly
investigating them is becoming an accomplice to any
September 1, 2003 Letter to the NASD Complaint Center
This letter was sent in late 2003 but the fact is the SEC started to detect real irregularities within Stanford’s operations beginning in 1998. Even at that time, allegations of fraud and a Ponzi scheme were running strong. These allegations continued for the next decade before Stanford was seized and shut down in early 2009. How could the SEC bungle this situation for so long?
I believe there is a lot more to this Stanford fiasco than meets the eye. While I am not an apologist for the SEC, recall that the BBC broke a story one year ago hinting that Stanford was actually being used as an informer by our government to infiltrate the Central American drug trade. Under the cover of government protection, Stanford ran his scheme in order to attract drug money and allow the Feds the opportunity to track the drug trade.
In the process of this activity, I actually believe Allen Stanford ran an operation that was largely a fraud mixed in with parts of an otherwise reputable broker-dealer, all under the protection of Uncle Sam. Who else ran a criminal operation while being protected by the Feds? The man who currently occupies a spot on the FBI’s Top Ten Most Wanted List, that is James “Whitey” Bulger.
I drew this comparison last May and I ask it again today, “Allen Stanford and Whitey Bulger, Two Peas in a Pod?” Bulger operated his Irish Mob, otherwise known as the Winter Hill Gang, in Boston while ratting out the Italiam Mafia to the Feds.
Do I have proof of this Stanford cover? Nope, but I think this BBC storyline deserves further exploration as there are currently too many dead ends, black holes, and stop signs in the midst of this Stanford debacle to think that there is not something even more nefarious going on behind the scenes.
Did the U. S. government actually fail to protect Stanford investors in the pursuit of big game in the Latin American drug trade? Personally, I believe they did.