Stanford Financial Receivership

Reports surfaced in early February 2009 that the SEC, the FBI, the Florida Office of Financial Regulation, and the Financial Industry Regulatory Authority (FINRA), a major U.S. private-sector oversight body, were investigating Stanford’s company Stanford Financial Group, questioning the consistently higher-than-market returns which Stanford International Bank claimed to make for its depositors.A former executive told SEC officials that Stanford presented hypothetical investment results as actual historical data in sales pitches to clients. Stanford claimed his CDs were as safe as, or safer than, U.S. government-insured accounts. A leaked cable from the U.S. Embassy in the Bahamas reported as early as 2006 that companies under Stanford’s control were “rumored to engage in bribery, money laundering, and political manipulation”. The U.S. Ambassador to the Bahamas at the time was reported to have “managed to stay out of any one-on-one photos with Stanford” during a charity breakfast event.

Federal agents raided the offices of Stanford Financial on February 17, 2009,and treated it as “a kind of crime scene — cautioning people not to leave fingerprints”.

The SEC charged Allen Stanford with “massive ongoing fraud” centered on an eight-billion-dollar investment scheme. Stanford’s assets, along with those of his companies, were frozen and placed into receivership by a U.S. federal judge, who also ordered Stanford to surrender his passport.

CNBC later reported that Stanford tried to flee the country on the same day as the raids on his headquarters: he contacted a private jet owner and attempted to pay for a flight to Antigua with a credit card, but was refused because the company would accept only a wire transfer.

FBI agents, acting at the request of the SEC, on February 19 located Stanford at his girlfriend’s house near Fredericksburg, Virginia, and served him with civil legal papers filed by the SEC. Stanford was not arrested until June 18, 2009. Stanford surrendered his passport to federal prosecutors, and hired criminal defense lawyer Brendan Sullivan, known for having represented Oliver North. The SEC often files civil charges before criminal charges are filed.

Following the allegations, various governments took over Stanford’s business operations. The Eastern Caribbean Central Bank (ECCB) announced that it had taken over the local operations of the Bank of Antigua (BOA) which would be renamed the Eastern Caribbean Amalgamated Bank (ECAB). The Venezuelan Government also took over the Stanford Bank Venezuela, the local branch of Stanford’s bank in that nation.

On February 27, 2009, the SEC said that Stanford and his accomplices operated a “massive Ponzi scheme”, misappropriated billions of dollars of investors’ money and falsified the Stanford International Bank’s records to hide their fraud. “Stanford International Bank’s financial statements, including its investment income, are fictional,” the SEC said. In an interview on April 20 at the law offices of Houston criminal attorney Dick DeGuerin, however, Stanford denied any wrongdoing. His companies had been well-run, he claimed, until the SEC “disembowelled” them.

On June 18, 2009, Stanford was taken into custody by FBI agents.[41] According to DeGuerin:

Federal agents in black SUVs surrounded his girlfriend’s house this afternoon, and just sat there. I told him to walk out and introduce himself. So he did, and he asked them, ‘If you’ve got a warrant, take me into custody. If you don’t, I’m going to Houston.’ And they did, so they arrested him.

On June 25, 2009, Stanford appeared in a Houston court and pleaded not guilty to charges of fraud, conspiracy and obstruction. His lawyer claimed that Stanford had resorted to liberal alcohol intake to grapple with the strain of the proceedings.

On August 27, 2009, Stanford was admitted into the Conroe, Texas, Regional Medical Center. He was being transported from the private prison in Huntsville, Texas, to the Federal Courthouse in Houston to attend a hearing concerning his attorney, who had asked the court to be dismissed from Stanford’s case. En route, Stanford complained of a racing heart.

On September 26, 2009, Stanford was hospitalized due to injuries sustained in a fight with another inmate at the private Joe Corley Detention Facility. His injuries were described as non-life threatening.

In March 2010, SEC Inspector General H. David Kotz issued a report finding the SEC failed to uncover the Ponzi scheme perpetrated by Stanford. Because of concerns, raised by David P. Weber, former SEC Chief Investigator, of improper conduct by Kotz, Inspector General David C. Williams of the U.S. Postal Service was brought in to conduct an independent, outside review of Kotz’s alleged conduct. The Williams Report questioned Kotz’s work on the Stanford investigation. It found that Kotz “appeared to have a conflict of interest” when he opened and supervised the investigation, because of his relationship with a Massachusetts attorney representing Stanford’s victims who, one month after starting the investigation, Kotz listed as a business reference and a “personal friend”.Kotz met with her after his departure from the SEC in an effort to seek business for his new job.

Stanford’s trial date was set for January 2011, but this was delayed due to his poor health.

Stanford, Federal Bureau of Prisons #35017-183, is incarcerated at the Federal Detention Center, Houston.In February 2011 Stanford issued a counter-claim of $7.2B of damages against the FBI and the SBC.

In May, prosecutors dropped seven charges against Stanford, leaving 14 charges ongoing.

By November 5, 2011, Stanford was being held at the Federal Medical Center, Butner, North Carolina, part of the Butner Federal Correctional Complex. Stanford’s attorneys claimed that their client was unfit to stand trial due to amnesia resulting from his sustained injuries. On December 22, 2011, however, he was found competent to stand trial by a U.S. District Judge.

On January 24, 2012, Stanford entered the Houston Federal Courthouse, U.S. District Judge David Hittner presiding, and the trial began. On March 6, a jury needed only three hours to convict him for masterminding a Ponzi scheme. Prosecutors sought a sentence of 230 years in prison–the maximum permitted by law, and 80 years more than the 150-year sentence handed to Bernard Madoff–calling him “a ruthless predator” who “lived a life steeped in deceit.” Stanford’s lawyers pressed for a sentence of 31 to 44 months and a maximum of 10 years; the former sentence, with credit for time served, could have allowed him to walk out of prison without further jail time. According to Peter Henning of the New York Times, judges have been more willing to impose sentences for financial fraudsters that effectively amount to life sentences in recent years. The extent to which such frauds wreck people’s lives, Henning wrote, amounts to “economic homicide,” and such outsized sentences are a way to express society’s anger at such conduct.

On June 14, 2012, Stanford was sentenced to 110 years in prison. Although it is less than half of the maximum sentence sought by prosecutors, it all but assures he will die in prison. Hittner also ordered Stanford to forfeit $5.9 billion, saying that Stanford had orchestrated “one of the most egregious frauds ever presented to a trial jury in federal court.” At sentencing, Stanford spoke for the first time in the proceedings, denying that he had ever swindled anyone. Instead, he blamed his company’s failure on “Gestapo tactics” by government regulators. He is currently incarcerated at Coleman II USP in Sumterville, FL; his earliest possible release is April 17, 2105.

On April 26, 2013; federal district judge David Godbey sided with the SEC in its civil suit against Stanford and ordered him to disgorge $6.7 billion–$5.9 billion in illegal profits and $861 million in interest–and pay a $5.9 billion fine. Godbey wrote that Stanford had carried out the fraud “with a high degree of scienter,” or knowledge that what he was doing was illegal, over a decade.

© Copyright Wake2o - Theme by Pexeto - Disclaimer - Terms and Conditions - Privacy Policy