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Did Allen Stanford “Forget” State Secrets? Come On!!

Posted by Larry Doyle on January 23, 2012 10:09 PM |

Remember Allen Stanford?

Yes, we have waited close to three years for the once, but now dethroned, Sir Allen Stanford to come to trial for the charges brought against him in his management of a supposed Ponzi-scheme centered within his bank in Antigua.

While I imagine most readers of this blog certainly remember Allen Stanford quite well, the key question to be addressed in this trial is just how much does Stanford himself remember as to what truly transpired within his operation.

Scratching your head? Let’s navigate.  

Reports have it that Stanford is claiming amnesia due to a beating he took while incarcerated without bail. Is this to be believed? Bloomberg reports, Allen Stanford Trial Begins as Indigent Ex-Billionaire Claims Memory Loss:

The R. Allen Stanford who arrived at the Houston federal courthouse in shackles to start his $7 billion investment fraud trial today is far different from the Texas billionaire prosecutors indicted 2 1/2 years ago.

Weeks before his June 2009 indictment, Stanford strode into the same courthouse with a high-profile defense lawyer and volunteered to surrender. U.S. marshals declined at the time to arrest the Stanford Group Co. founder, then estimated by Forbes to be worth $2.2 billion.

“I’m not a damn swindler,” Stanford said weeks before he was charged. He vowed to clear his name, take back assets seized by securities regulators, and repay more than 20,000 investors he’s accused of defrauding through allegedly bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

Now 61 and visibly thinner, Stanford has endured a string of setbacks since he was indicted and jailed because prosecutors said he might try to flee. In September 2009, he suffered broken facial bones in a beating by another inmate and became addicted to anti-anxiety medications prescribed by prison doctors after the attack.

After eight months in a prison rehabilitation unit, Stanford claims he still can’t remember much of his life or details of his once far-flung business empire, according to his lawyers.

“In a complex financial fraud case, it’s almost impossible for defense counsel with even substantial resources to put on a good defense without the active participation of their client,” said Barry Pollack, a white-collar defense attorney with Miller & Chevalier in Washington who isn’t involved in the case. “His attorneys are hamstrung without his help.”

Does this seem somewhat surreal to you? It does to me.

Is Stanford’s memory loss a convenient development? Let’s go back in time and revisit a commentary I wrote in May 2009 which references a story emanating from the United Kingdom which may shed further light on this situation and help Sir Allen recall what really happened. I wrote, Allen Stanford and Whitey Bulger: Two Peas in a Pod?:

We all know the SEC totally dropped the ball in the oversight of the Bernie Madoff Ponzi scheme. On the heels of that and to alleviate massive pressure on the commission, the SEC quickly moved on Allen Stanford.

MAJOR hat tip to MC in sharing with me a story broken by the BBC, Stanford Drug Informer Role Claim:

Evidence has emerged that the Texan who bankrolled English cricket may have been a US government informer.

Sir Allen Stanford, who is accused of bank fraud, is the subject of an investigation by the BBC’s Panorama.

Sources told Panorama that if he was a paid anti-drug agency informer, that could explain why a 2006 probe into his financial dealings was quietly dropped.

Sir Allen vigorously denies allegations of financial wrongdoing, despite a massive shortfall in his bank’s assets.

But the British receiver of his failed Stanford International Bank – based in Antigua – told Panorama that the books clearly show the deficit.

If in fact this development is accurate, has the U.S. government, via the DEA, facilitated a Ponzi scheme?  I am not so naive as to think that there aren’t massive undercover operations ongoing regularly to infiltrate and expose illicit activities. However, if in fact that were the case, how did the DEA lose control of Stanford’s investment activities? Is there a massive in-house brawl currently ongoing between the DEA and the SEC?

The BBC reports:

Secret documents seen by Panorama show both governments knew in 1990 that the Texan was a former bankrupt and his first bank was suspected of involvement with Latin American money-launderers.

In 1999, both the British and the Americans were aware of the facts surrounding a cheque for $3.1m (£2.05m) that Sir Allen paid to the Drug Enforcement Administration (DEA).

It was drug money originally paid in to Stanford International Bank by agents acting for a feared Mexican drug lord known as the ‘Lord of the Heavens’.

The cheque was proof that Stanford International Bank had been used to launder Mexican drug money – whether or not Sir Allen knew it at the time.

On 17 February of this year, the US Securities and Exchange Commission (SEC) accused Sir Allen of running a multi-billion dollar Ponzi fraud – when cash from new depositors is used to pay dividends to old depositors – civil charges he has denied.

Two and a half months after the SEC filing, the Texan has not yet faced criminal charges.

He was initially investigated by the SEC for running a possible Ponzi fraud in the summer of 2006, but by the winter of that year the inquiry was stopped.

Do you think if there is a shred of truth and evidence to this story highlighted by the BBC that Allen Stanford et al might be better off if he were to “forget” it? Even if innocent American investors were to suffer in the process? You think?

Infiltrating illicit international drug trades is one thing – and obviously a good thing. Potentially providing cover—knowingly or unknowingly—to a financier who developed and managed a Ponzi-style operation in the process is entirely different.

Is that something akin to ‘state secrets’ which people involved in the operation would just as soon have Allen Stanford “forget”?

Will we ever know what really happened?

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

  • Peter S.

    LD, for me to consider Stanford and the government running a Ponzi scheme that defrauded mostly retirees and passive investors is a bit of a stretch. I need conclusive documents, timelines, and the motives of all parties thought to be involved in a fraud, before I could even comprehend such a betrayal. What are the odds that bad behaviors in our financial sectors have gone unexposed for years because some in government chose to be duplicitous rather diligent – I think we know how that worked out for us – its conclusive.

  • LD

    Peter,

    I am not stating that the government knowingly and categorically was involved in Stanford running a Ponzi scheme but that in hindsight that it appears that Stanford effectively was running a Ponzi while being protected by the Feds.

    Not that I expect this line of questioning to be pursued but that article from the BBC strikes me as reason enough for Stanford to “forget” what may have really happened.

  • BR…Recommended

    Come on Larry..

    Our Government has been running a huge ponzi for decades, Social Security, and stealing funds from it all the while and you question if they “might” possibly be involved in something as seedy as knowing and allowing if not outright abetting Stanford in running a huge ponzi scheme on investors and depositors?

    I would be quite surprised if the Government was NOT involved in it, at least with knowledge, if not outright support.

    If we had even an inkling of all they are involved in right this minute, some of us might have a panic attack just from hearing about it.

    Meanwhile Soros is pounding the drum announcing that outright survival is what we will be facing soon and not to worry too much about making a profit or whatever as our concerns should be personal safety and ready access to food if we want to make it through what he says is coming very soon.

    My guess is he is doing one of two things or both.. he is promoting one of the elite’s memes of fear yet again which is how they get the masses to surrender their freedoms and wealth to the State for perceived safety and support or he is also working behind the scenes to bring about exactly what he is predicting, in order to assure he and the rest of the monied elite finally gain worldwide control over all of us and remove as much as possible of whatever wealth we still hold.

    I mean is there any doubt at all that they are going to continue to bury all of Europe in austerity and bleed them dry in the process and just what makes any of us think they will settle for any less than doing exactly the same thing to us?

    World leaders have been promising in speeches that a New World Order would soon be upon us.. and how else other than fear, chaos and calamity will they ever get the masses to surrender to it?

    Sure, they will punish an occasional crook or two when public pressure gets to be too much at some key juncture in the process, but mostly they will simply delay or even ignore such issues as best they can until it all falls apart around us as I suspect they intend it to, so that they can introduce their plans to save us all.

    I strongly suspect this whole thing has been afoot for a good while and they finally have most of the World involved such that they think they can bring it about if enough fear and chaos is created throughout.

    I wonder what the stats look like recently on the number of expatriates compared to prior years. I would almost bet the figures are going up and I would expect that process to accelerate until such time as they impose stricter capital controls and much more stringent passport restrictions.

    Might be a good idea to make sure you have a fully renewed passport now, just in case. I know I run the risk that you may think I am going off the deep end.. but in every direction I look, I see the same corrupt and evil behavior, going mostly un-prosecuted, in fact, it is more often rewarded than not.

    The middle class is steadily disappearing, the Boomers have little chance or possibility of retiring and freedoms keep disappearing in either the name of protection against terrorism or in the form of restrictions and new controls on the Internet, which is the only Media source available to the people that is not fully owned and controlled by the elite.

    Once the European banks come rushing over here to collect on the insurance and counter party protection sold to them by U.S. institutions when they invested in all that debt just what do you think is going to happen?

    Even now, the boys in the government are most eager to devalue the Dollar.. anyway they can, whether that is through huge amounts of money printing wherein eventually a good portion of that money finally does find its way into the economy or also through a formal devaluation if necessary.

    They are not going to allow things to degenerate into a full blown deflationary spiral if there’s anything at all they can do to avoid it. They claim we are so much better off than the Europeans as we smartly recapitalized our banks early on.. Baloney! Our top 6 banks are wholly insolvent if they had to follow normal accounting rules for the assets on their books. The only reason they are still in business now is because of creative accounting rules put in place to let them ignore the truth.

    Sooner or later they are coming after our retirement accounts and that will be the last we ever see of them. Those who think otherwise simply are not paying attention. What will we be given in return? A tiny monthly stipend from some new Government annuity ponzi scheme, until such time as they admit they are forced to admit that they must take the remainder of those monies from us in the name of a true national emergency.

    Best Regards,

    P.S. if Stanford forgot “State secrets” it is because they used some drug on him.. they would not leave it to the chance of “potential” amnesia from some planned beating while incarcerated.

  • Craig

    Seems simple to me. Solve the entire crisis. Find those 400 who control a supposid 47% of the wealth in the US, seize their assets,draft them and send them to the front lines in Afganistan. Who will notice?

    • Peter S.

      Their lobbyists.

  • Craig

    Then pack them up too. Two for one, BONUS.

  • Errol

    I was an employee of Stanford in the 1990s. I am hearing flat out lies that James Davis is the culprit in this supposed Ponzi scheme. JD had no authority in any Stanford entity. Allen signed off on everything, even a purchase of ten dollars. I want to testify for the prosecution in this case.

  • Bill

    Stanford could very easily have been running the Ponzi scheme under the aegis of US officials without their knowledge. I know of another case in which a corrupt lawyer under investigation for tax fraud was cooperating with the feds, during which time he stole quite a bit of money from clients, albeit nowhere near the scale of that alleged in Stanford’s case.






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