Tweet
Stanford Points Fingers in Fraud Case
Michael Stravato for The New York Times
Allen Stanford, right, chariman of Stanford Financial, and his attorney Dick Deguerin, during an interview in Houston on Monday.
By CLIFFORD KRAUSS
Published: April 20, 2009
HOUSTON — R. Allen Stanford, the Texas financier accused of defrauding tens of thousands of bank depositors, said on Monday that he was not a thief. He denied that his operation was a Ponzi scheme and suggested that if any depositor money had been lost, it was largely a result of “Gestapo tactics” used by the government.
“I don’t think there is any money missing,” Mr. Stanford said. “There never was a Ponzi scheme, and there never was an attempt to defraud anybody.”
The government has said as much as $6 billion is missing.
In an interview at his lawyer’s office in Houston, a high-strung, emotional Mr. Stanford offered various theories about the problems that have engulfed his Stanford Financial Group and Stanford International Bank.
He allowed that some of the assets held by his organization on behalf of clients might have declined in value. As explanation, he cited the economic crisis and actions the government had taken against him in recent months. But in another part of the interview, Mr. Stanford suggested that if any fraud had been committed, James M. Davis, his former chief financial officer, was to blame.
“The investment and risk committee reported to Jim Davis, not to me,” he said. “The Stanford International Bank quarterly report was produced in Tupelo, Miss., under Davis’s direction and signed off by him. I trusted his integrity.”
Mr. Davis is cooperating with the government, and it seems increasingly likely he and Mr. Stanford will square off in court.
Through his lawyer, Mr. Davis has characterized himself publicly as little more than a dupe. “Stanford told my client what the quarterly numbers for the firm had to be,” said Mr. Davis’s lawyer, David Finn. “He used Davis. And if Davis didn’t go along with it, he said he could easily find someone else who would.”
Mr. Stanford replied, “That is an absolute lie.”
In the interview, Mr. Stanford swung between defiance and self-pity. He tapped his feet much of the time, and when he stopped tapping, his legs shook. He portrayed himself as a hard-working, honest man who loves his children and is dedicated to his former employees and investors.
He denied an accusation by the Securities and Exchange Commission that he had taken a $1.6 billion loan from his company without disclosing it, adding, “the money was not going to me personally; it was going into investments.”
Mr. Stanford has not been charged with a crime. In February, the S.E.C. filed a civil suit accusing him and two other executives of engaging in an international fraud, effectively shutting down the operation. Mr. Stanford has largely remained silent since then. But in one of a series of media interviews in his lawyer’s office on Monday, Mr. Stanford took the gloves off.
Dressed in a somber blue double-breasted suit and conservative tie, he accused the S.E.C. of squandering the assets of his financial companies. He said the court-appointed receiver was a “jerk” whose aides, assigned to look for missing funds, “can’t find their rear end from a hole in a ground.”
He said the credit cards in his wallet were worthless, he had been locked out of his apartment on St. Croix, his bank accounts were frozen and he did not even have money to pay his lawyer.
“It’s debilitating, devastating, horrific,” he said. “But I am going to fight for my name, and I am going to win.” Still wearing the Stanford Eagle logo pin on his lapel, he pledged to work hard to get his investors’ money back.
Mr. Stanford denied the allegation in the civil case that he had operated a “massive Ponzi scheme.”
In a Ponzi scheme, early investors are paid abnormally high returns with money from later investors. Ever more people are lured into the fraud until it eventually collapses.
Mr. Stanford said that he had put his depositors’ money into “real assets backed up by real investments.”
He said the S.E.C. “took an organization that had a net value of about $3.5 to $5 billion and basically crippled it; they rendered it almost worthless.”
His suspected fraud involved billions of dollars of certificates of deposit issued by Stanford International Bank, located on the island of Antigua. The instruments, paying unusually high returns, were marketed from Stanford Financial Group offices around the United States and Latin America. In recent weeks, receivers in the United States and Antigua have frozen assets, closed down Stanford operations and fired hundreds of employees.
Once the S.E.C. stepped in, Mr. Stanford said there was a “ripple effect” around the world with governments freezing assets of his various investment offices. Mr. Stanford’s lawyer, Dick DeGuerin, said any shortages were because “investments have lost value because of the actions of the S.E.C. and the fall of the stock market.”
In the interview, Mr. Stanford appeared to lay out a defense strategy that includes blaming Mr. Davis — his chief financial officer and former roommate at Baylor University — for whatever fraud might have occurred.
Mr. Stanford and Mr. Davis always seemed to be an odd couple, according to former employees of Stanford Financial Group. Mr. Stanford was known for his quick temper and taste for the high life, while Mr. Davis was seen as a soft-spoken religious man who started his own church in Mississippi and led prayers before business meetings.
Now the relationship appears to be turning ugly.
Mr. Finn said Mr. Davis is telling federal investigators “the truth, the whole truth and nothing but the truth, and the truth implicates Mr. Stanford up to his eyeballs in fraud.”
So far only Laura Pendergest-Holt, Stanford Financial’s chief investment officer, has been charged criminally, with obstruction of justice.
An S.E.C. spokesman, John Nestor, said he would not comment on Mr. Stanford’s assertions. “We stand by the allegations of our complaint,” Mr. Nestor said.
Mr. Stanford and Mr. Davis are accused of fabricating the performance of Stanford International Bank’s investment portfolio.
“If bad things were happening, he never brought them to my attention,” Mr. Stanford said of Mr. Davis. “He did his job, and I stayed out of his hair.”
NYTimes
Michael Stravato for The New York TimesAllen Stanford, right, chariman of Stanford Financial, and his attorney Dick Deguerin, during an interview in Houston on Monday.
By CLIFFORD KRAUSS
Published: April 20, 2009
HOUSTON — R. Allen Stanford, the Texas financier accused of defrauding tens of thousands of bank depositors, said on Monday that he was not a thief. He denied that his operation was a Ponzi scheme and suggested that if any depositor money had been lost, it was largely a result of “Gestapo tactics” used by the government.
“I don’t think there is any money missing,” Mr. Stanford said. “There never was a Ponzi scheme, and there never was an attempt to defraud anybody.”
The government has said as much as $6 billion is missing.
In an interview at his lawyer’s office in Houston, a high-strung, emotional Mr. Stanford offered various theories about the problems that have engulfed his Stanford Financial Group and Stanford International Bank.
He allowed that some of the assets held by his organization on behalf of clients might have declined in value. As explanation, he cited the economic crisis and actions the government had taken against him in recent months. But in another part of the interview, Mr. Stanford suggested that if any fraud had been committed, James M. Davis, his former chief financial officer, was to blame.
“The investment and risk committee reported to Jim Davis, not to me,” he said. “The Stanford International Bank quarterly report was produced in Tupelo, Miss., under Davis’s direction and signed off by him. I trusted his integrity.”
Mr. Davis is cooperating with the government, and it seems increasingly likely he and Mr. Stanford will square off in court.
Through his lawyer, Mr. Davis has characterized himself publicly as little more than a dupe. “Stanford told my client what the quarterly numbers for the firm had to be,” said Mr. Davis’s lawyer, David Finn. “He used Davis. And if Davis didn’t go along with it, he said he could easily find someone else who would.”
Mr. Stanford replied, “That is an absolute lie.”
In the interview, Mr. Stanford swung between defiance and self-pity. He tapped his feet much of the time, and when he stopped tapping, his legs shook. He portrayed himself as a hard-working, honest man who loves his children and is dedicated to his former employees and investors.
He denied an accusation by the Securities and Exchange Commission that he had taken a $1.6 billion loan from his company without disclosing it, adding, “the money was not going to me personally; it was going into investments.”
Mr. Stanford has not been charged with a crime. In February, the S.E.C. filed a civil suit accusing him and two other executives of engaging in an international fraud, effectively shutting down the operation. Mr. Stanford has largely remained silent since then. But in one of a series of media interviews in his lawyer’s office on Monday, Mr. Stanford took the gloves off.
Dressed in a somber blue double-breasted suit and conservative tie, he accused the S.E.C. of squandering the assets of his financial companies. He said the court-appointed receiver was a “jerk” whose aides, assigned to look for missing funds, “can’t find their rear end from a hole in a ground.”
He said the credit cards in his wallet were worthless, he had been locked out of his apartment on St. Croix, his bank accounts were frozen and he did not even have money to pay his lawyer.
“It’s debilitating, devastating, horrific,” he said. “But I am going to fight for my name, and I am going to win.” Still wearing the Stanford Eagle logo pin on his lapel, he pledged to work hard to get his investors’ money back.
Mr. Stanford denied the allegation in the civil case that he had operated a “massive Ponzi scheme.”
In a Ponzi scheme, early investors are paid abnormally high returns with money from later investors. Ever more people are lured into the fraud until it eventually collapses.
Mr. Stanford said that he had put his depositors’ money into “real assets backed up by real investments.”
He said the S.E.C. “took an organization that had a net value of about $3.5 to $5 billion and basically crippled it; they rendered it almost worthless.”
His suspected fraud involved billions of dollars of certificates of deposit issued by Stanford International Bank, located on the island of Antigua. The instruments, paying unusually high returns, were marketed from Stanford Financial Group offices around the United States and Latin America. In recent weeks, receivers in the United States and Antigua have frozen assets, closed down Stanford operations and fired hundreds of employees.
Once the S.E.C. stepped in, Mr. Stanford said there was a “ripple effect” around the world with governments freezing assets of his various investment offices. Mr. Stanford’s lawyer, Dick DeGuerin, said any shortages were because “investments have lost value because of the actions of the S.E.C. and the fall of the stock market.”
In the interview, Mr. Stanford appeared to lay out a defense strategy that includes blaming Mr. Davis — his chief financial officer and former roommate at Baylor University — for whatever fraud might have occurred.
Mr. Stanford and Mr. Davis always seemed to be an odd couple, according to former employees of Stanford Financial Group. Mr. Stanford was known for his quick temper and taste for the high life, while Mr. Davis was seen as a soft-spoken religious man who started his own church in Mississippi and led prayers before business meetings.
Now the relationship appears to be turning ugly.
Mr. Finn said Mr. Davis is telling federal investigators “the truth, the whole truth and nothing but the truth, and the truth implicates Mr. Stanford up to his eyeballs in fraud.”
So far only Laura Pendergest-Holt, Stanford Financial’s chief investment officer, has been charged criminally, with obstruction of justice.
An S.E.C. spokesman, John Nestor, said he would not comment on Mr. Stanford’s assertions. “We stand by the allegations of our complaint,” Mr. Nestor said.
Mr. Stanford and Mr. Davis are accused of fabricating the performance of Stanford International Bank’s investment portfolio.
“If bad things were happening, he never brought them to my attention,” Mr. Stanford said of Mr. Davis. “He did his job, and I stayed out of his hair.”
NYTimes
