As markets wind down and as money vanishes like snow in springtime, it is increasingly obvious that from top to bottom, the entire hedge fund, investment banking and financial advising business is riddled with fraud, filled with crooks and a total disaster. The Stanford files is just another replay of the Madoff schemes only Stanford decided to hot-foot it out of the country and is probably getting his face changed, new ID and other things to hide himself overseas. Anarchy and chaos are the anthesis of banking. Banking is all about control, restraint and caution.
In a civil complaint filed in federal court in Dallas, Texas, the SEC accused Stanford, 58, and two aides at Stanford Financial Group of selling the CDs in a scheme that stretched from around the world.
The SEC complaint named Stanford International Bank, based in Antigua with 30,000 clients in 131 countries and $8.5 billion in assets, as well as broker-dealer and investment adviser units based in Houston, with 30 U.S. offices. In all, the company claims to oversee $50 billion in assets.
Stanford’s assets have been frozen and a federal judge has appointed a receiver to take possession and control of the defendants’ assets. (Reporting by Randall Mikkelsen, editing by Jackie Frank, Toni Reinhold)
Looks like they followed in the footsteps of that cute little mortgage titan: MINI-MADOFF WARREN [SEAGRAVE] FLEES IN PRIVATE JET.Another scamster tried using the fake suicide trip. Yet another pulled the old ‘pretend my airplane crashed into water while I escape on a motorcycle’ game. Some of these creepy con artists gave up and simply killed themselves. Every day, someone new.
Stanford Attorney’s Exit ‘Screams Fraud,’ Spurred SEC
As R. Allen Stanford assured clients last week that U.S. investigators were conducting “routine examinations” of his Texas investment advisory firm, a lawyer for his company’s Antigua affiliate was backing out.
Stanford, the 58-year-old billionaire now accused of running a “massive, ongoing fraud,” spent his final weeks at the firm struggling to soothe clients while disregarding subpoenas that sought to account for almost $8 billion of their money, according to a lawsuit filed yesterday by the Securities and Exchange Commission. Regulators pounced days after a lawyer at the Antigua bank at the heart of the case “disaffirmed” everything he had told authorities.
“The attorney’s withdrawal is a massive red flag” that “screams fraud,” said Peter Henning, who teaches criminal and securities law at Wayne State University in Detroit. “If the SEC hadn’t turned up the heat by that point, it did then.”
Hurrah! After a giant RED flag was hoisted, the SEC figured out what was going on. Of course, under Bush, the SEC ceased pushing investigations from top to bottom except of the possibility some rich person financing Democrats could be caught in a swindle. Even then, they didn’t get Madoff.
The main thrust was to unleash the creative powers of con artists by having the government not regulate these businesses. Since no one was watching, everyone decided to break the few remaining laws and go full-scale criminal. The SEC was launched due to the Great Depression. It was reduced to inefficient bystander so we could repeat every one of the mistakes of the Great Depression.
Stanford, for example, even had the cheek to call a number of his scams, ‘Trusts’. Now, at the heart of the US side of the world collapse in 1929, which was due to European powers unable to pay the US for WWI loans, were the ‘Trusts’. They grew like mushrooms just like the odious offshore hedge funds and offshore investment banks like Stanford’s.
The actions – or inaction – of the bankers is unveiled in a 700-plus-page dossier of e-mails, letters and analysis filed with the SEC by Harry Markopolos, the fraud investigator who tried to blow the whistle on Madoff for eight years.
The silence by the executives is disturbing to some, who claim a second alarm bell could have forced the SEC’s hand and brought Madoff’s alleged scam to an end sooner.
Markopolos told the SEC, according to the documents in the file, that he had been in contact with Gross, Hill and Haslett and that they would give evidence to the SEC so long as they were never required to speak in an official capacity.
Citigroup confirmed that Gross had been an employee but had left the bank some months ago. The company declined to comment about his views on Madoff.
A source close to Citi said Gross should not be singled out, as his views about Madoff were commonplace on Wall Street, adding that Gross did not spend much time analyzing Madoff’s investment strategies.Texas Financial Firm Accused of Fraud – NYTimes.com
In the complaint, the S.E.C. called “improbable, if not impossible” claims by the offshore bank that it paid “significantly” higher returns on its C.D.’s because of the high quality of its investments.
The S.E.C. accused the bank and its affiliates of falsely stating in marketing materials that client funds were placed in liquid financial instruments, when in fact they were invested in private equity funds and real estate. On Nov. 28, Stanford International Bank quoted a rate of 5.375 percent on a $100,000 three-year C.D., compared with rates of less than 3.2 percent at American banks. The bank recently has offered rates of more than 10 percent on five-year C.D.’s, the filing stated.
In the complaint, the S.E.C. requested that the defendants’ assets be frozen and that a receiver be appointed to take control of business operations. It also requested that the assets of the bank and other offshore units be repatriated. And the agency asked that Mr. Stanford and the other named executives be required to surrender their passports.
The S.E.C. has come under fire in Congress and the media for ignoring repeated warnings over a period of years about the Bernard L. Madoff, who is accused of running a $50 billion Ponzi scheme. While investigators have been looking at Mr. Stanford and his financial empire’s activities for many months, the scrutiny into the too-good-to-be-true returns on the C.D.’s increased substantially after the Madoff case.
Oddly enough, even the Stanford operation was touched by Mr. Madoff. Despite the fact the Antigua-bank assured investors in a report in December 2008 that it had no “direct or indirect” exposure Mr. Madoff’s funds, the bank suffered an estimated $400,000 in losses, apparently through investments in so-called feeder funds.
Well, the passports were not turned in and if they can’t catch this crook, you know where to look: the Riviera or South America. Maybe, he could go to Cuba. Heh. Many of these guys live without much cash on hand, only drug kings hold most wealth offshore and in cash or gold. We shall see how long this guy can be on the lam. He is, after all, getting old.
Warren, on the other hand, is only 27 and can start all over again, maybe as a dictator on some very small island. Stanford is funny in another way, he couldn’t resist another fraud’s funds so he fell into the Madoff caper.
Part of the problem for anyone trying to understand the Stanford controversy is the complexity of the Stanford companies themselves.
Stanford Financial is really a collection of independent companies; independent insofar as there is no group company of which the individual business are subsidaries; though dependent insofar as they are all owned by one man – Sir Allen Stanford.
So here at FT Alphaville we’ve undertaken to sketch (and we stress sketch, as the below is by no means definitive) a hopefully illuminating schematic of the Stanford universe.
The above article details all the interlocking, self-feeding trusts created by the Stanford con man.
Hundreds of people lined up to withdraw money from banks in Antigua and Caracas affiliated with Texas billionaire Allen Stanford, a day after the tycoon was charged with an $8 billion fraud.
The whereabouts of the brash, 58-year-old financier were unknown. CNBC television said he tried to hire a private jet to fly from Houston, the site of his U.S. headquarters, to Antigua, but the jet lessor refused to accept his credit card.
So now, there is run on all of Stanford’s banks and we find out more about how he tried to flee. The fact that he showed them a credit card means, this foolish con man got too used to living on the sunny side of the street and therefore, kept all of his loot where the authorities could seize it. This bodes ill for his enterprise.
On Tuesday Stanford became a one-man reason for people to buy certificates of deposit only from banks insured by the Federal Deposit Insurance Corp. Stanford, a Texan operating from the tropical island paradise of Antigua, was sued by the Securities and Exchange Commission for making up stories and statistics to sell $8 billion of what the commission said were “self-styled” CDs that fraudulently promised higher returns than “true certificates of deposit offered by traditional banks.”…
This will be good for the legitimate banking system. For banks, insured certificates of deposit are one of the more stable sources of financing they can get. Depositors are less likely to run to take their money back than are institutions that lend to banks through the capital markets. That’s why banks build branches to attract deposits. And, that’s why the government raised FDIC insurance coverage of bank deposits to $250,000 from $100,000 on Oct. 3 after the near meltdown of the financial system. The additional insurance essentially encourages people to lend to banks so that the banks can lend to others and support the economy.
No money is safe when systems fail. People rush from one place to another, seeking shelter. Eventually, the storm will end only after it destroys the value of everything including money, itself. But right now, the safe place is in things run by governments who are all running immense budget deficits this year and have no means for selling off these debts to outsiders. I smell trouble here.
Gold is rapidly approaching last year’s high. It gained $18 today and is now at $985.60. So the story that people are buying government CDs isn’t really the truth. They are buying gold.
Normally, we can say, this is a classic bubble graph. But the severe problems assailing all of the financial system means, we could be seeing a new plateau unless governments unleash their attack dogs on gold. It is obvious, people are scared and they have very good reason to be scared: you can’t trust anyone. It is hilarious that a story talking about people being cheated by Madoffs and Stanfords are going for CDs when it seems obvious to me, they are going for gold. Why couldn’t the reporter remark on this obvious connection?
Now for a trio of tales from Britain, the other Financial Powerhouse:
HBOS sacked and gagged a senior executive who four years ago warned the board of the bank that they were taking excessive risks, according to evidence given in Parliament this morning.
MPs on the Treasury Select Committee were given details of a submission from the former head of risk at HBOS who claimed that he warned the board repeatedly that they were taking risks with financial stability and consumer protection.
Paul Moore, a former partner of KMPG and head of group regulatory risk at HBOS between 2002 and 2005, accused the bank of “a total failure of all key aspects of corporate governance” and said that he was repeatedly rebuffed and thwarted when he tried to register concern.
In a highly sensitive development he also pointed the finger of blame firmly at Sir James Crosby, the former chief executive of HBOS, who is deputy chairman of the chief City regulator the Financial Services Authority and a senior adviser to the Government.
Lloyds shares dived as much as 20pc on the opening of the market in London, but had recovered to trade flat at 61p by late morning.
The shares have been under heavy pressure since the bank shocked the market late on Friday with £11bn of losses at HBOS, the mortgage lender it bought last Autumn in a rescue deal.
Lloyds helped drag down the rest of the battered banking sector, with Royal Bank of Scotland and Barclays lower. Overall, the FTSE 100 was down just under 1pc.
Senior banking sources say that the rate and scale of the write-downs suggest the bank will need to raise £5bn to £10bn more in capital. It was also suggested it might seek to save almost £500m a year in dividend payments to the Government by getting them to convert their preference shares into ordinary shares, leaving taxpayers with more than 50pc of the company.
The Throne in England protects all the pirate islands where many con artists, tax dodgers and flim flam men use as a safe haven. Every week, the biggest banks ‘shock’ everyone….HAHAHA….actually, to be very cynical here, the only people ‘shocked’ are the ones wearing Vichy police uniforms.
Speaking of Rick’s Place and gambling:
It should be illegal for gambling dens to forward money on the spot to drunken gamblers. The spread of gambling across this nation and the planet has been a blight on our economic system. It teaches bad morals. It worships Lady Luck and her obscene daughter, Miz Risky, the wild heathen girl who drinks and drives and has unprotected sex. Heh.
Well, gamblers making up losses loot systems. The more gamblers there are, the more likely we will have fraud, deviancy, truancy and embezzlement. People hope the turning of a card or the spinning of the wheel will make them rich. Along with wild speculation using con men operating schemes out of pirate coves protected by British Royalty. Note that Stanford purchased a ‘sir’ to append to his odious name. Even though it came from Antiqua and not Her Majesty.
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