Friday, June 15, 2012

Despite being a DEA informer, billionaire gets 110 years in Ponzi scheme motivated by need to wash narcodollars

Houston – Sir Allen Stanford, a Houston investment banker, was about to board one of his fleet of personal jets in Wahington, D.C., one day in 2006 when the phone rang.

On the line from Miami, he heard the voice of Supervisory DEA Agent David Tinsley telling him he had been going over his accounts and he had found some dirty money – a lot of it – that came from a feared Mexican drug lord known in the underworld as the “Lord of the Heavens.”

Mr. Tinsley claimed that Amado Carrillo Fuentes had stashed $3.1 million in Sir Allen's Stanford International Bank, and they needed to have a conversation about the investigation.

The drug agent was in for a surprise.

R. Allen Stanford re-routed his trip to his Houston-based bank and showed up only a couple of hours later at the DEA's secure compound in Miami, ready to talk – without a phalanx of lawyers to back him up.

In a conference room, he listened as agents laid out their suspicions that dirty money from Mexico, Colombia, Venezuela, and Ecuador made the trip to his off-shore bank in Antigua before it wound up back in circulation stateside and elsewhere in Latin America.

Already surprised, the DEA boss was even more nonplussed when Sir Allen, an American knighted in his island tax haven where he did business running what prosecutors later claimed was nothing more than a $7 billion Ponzi scheme, wrote the DEA a check for $3.1 million to forfeit the questionable funds.

That investment and his cooperation with government investigations into drug money laundering bought the billionaire at least 10 years of immunity from SEC probes that eventually netted him a 110 year sentence in federal prison yesteray, convicted on 13 of 14 counts of wire and mail fraud.

According to a BBC report, that was the beginning of a 10-year relationship with the drug cops that eventually left small investors who bought certificates of deposit from the offshore bank holding the bag in a very profitable snipe hunt.

So far, a government-appointed receiver has recovered only $220 million of the funds obtained in the alleged multi-billion dollar fraud. Of those, the receiver is claiming $108 million in fees and expenses, which leaves the investors with very slim pickings.
Sir Allen stared his victims down in the sentencing hearing, blithely remaining impassive as they accused him of “financial terrorism” and angrily recalled how loss of their savings left them powerless to care for families afflicted with medical problems and a need for education.

In a sentencing memo to the Court, prosecutor William J. Stelmach wrote “Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in histtory, and he should be sentenced to 230 years.”

He called the defendant's bid for a sentence granting him credit for time served “obscene.”

It wasn't an easy time behind bars for the man who once sponsored cricket matches and owned dozens of sleek yachts and fleets of private jets.

In a federal detention center at Conroe, a fellow inmate beat him so severely authorities were forced to transfer him to a medical facility at Butner, North Carolina, where he convalesced from a broken nose, a brain concussion, a dislocated neck and severe contusions and lacerations of his face and head.

There was some question if he would be able to assist with his defense. When the court-appointed medical examiners gave prosecutors the green light, the Court didn't give him much time. 

His court-appointed lawyers tried to be released from his case. They claimed they did not have time to prepare, and Sir Allen did not have time to examine the thousands of documents seized when the bank failed.

What did Sir Allen have to say?

He called the government's tactics “Gestapo-like” and said he couldn't figure out what all the fuss was about.

Freezing his accounts and seizing what assets the bank held following its 2009 failure was unnecessary, he said. It would have all worked out – eventually.

Nevertheless, the evidence and testimony showed at trial that investors with older certificates were paid with money from purchases of later depositors. That's a crime, a federal offense.

When the bank's obligations far exceeded its assets and ability to pay off on the CD's, the SEC and prosecutors moved in. Like Bernie Madoff, Sir Robert Allen Stanford, 62 years of age, will likely die in prison, despite plans to appeal his conviction and sentence. 

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