A Full-Service Bank: R. Allen Stanford and the CIA

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by Beyond
Orwell: The Electronic PoliceState, 2010



In a scandal-plagued
era such as ours, scarred by murderous wars, occupations and corruption
that would make a Roman emperor blush, accused crooks have names;
even juiced ones like R. Allen Stanford.

Last year,
when a federal court in Texas handed down indictments charging Stanford
International Bank (SIB) and its officers with "orchestrating
a fraudulent, multibillion dollar investment scheme," I wondered:
was there more to the story?

Indeed there

Once described
by fawning media as a "flamboyant Texan" and "philanthropist,"
Stanford was founder and sole shareholder of a global banking empire
once conservatively valued at $50 billion.

According to
the federal indictment, "Sir Allen," as he was dubbed
by a corrupt former minister of Antigua, ran a massive Ponzi scheme
camouflaged as a bank that sold some $7 billion in self-styled "certificates
of deposit" and $1.2 billion in mutual funds.

Operated from
behind a façade of well-appointed offices and with a jet-set
lifestyle to match, the Stanford grift may have been impressive
but it was a scam from the get-go. Lured by "high rates that
exceed those available through true certificates of deposits offered
by traditional banks," thousands lost their shirts.

Those high
rates were a lie and the bank’s "unique investment strategy"
about as legitimate as a penny-stock fraud or advance fee scam on
the internet. Of the $8 billion hoovered up by the banker and his
cronies, only about $500 million have been recovered.

Facing the
prospect of years in prison, The
Miami Herald

that SIB’s chief financial officer James Davis, once
Stanford’s college roommate and originally charged in the indictment,
copped a plea to save his own neck.

Davis told
the Justice Department that "his boss had been stealing from
investors for decades while paying bribes to regulators and even
performing blood oaths never to reveal his secrets."

Talk about
a wise guy!

And with connections
and generous pay-outs to U.S. politicians going back more than a
decade, 65% of which went to Democrats including our "change"
president, Allen Stanford was plugged-in.

Evidence also
suggests he may have gotten an assist covering his tracks from regulators
and U.S. secret state agencies, including the CIA.

SEC Stand

Allen Stanford
did business the American way; he swindled depositors and then siphoned-off
the proceeds into a spider’s web of offshore accounts.

The indictment
charges "it was part of the conspiracy that Stanford … and
others would cause the movement of millions of dollars of fraudulently
obtained investors’ funds from and among bank accounts located in
the Southern District of Texas and elsewhere in the United States
to various bank accounts located outside of the United States …
in order to exercise exclusive control over the investors’ funds."

Auditors learned
that funds were moved through Stanford-controlled accounts to offshore
banks, including HSBC in London, Bank Julius Baer in Zurich and
eight others; banks which have figured in past money laundering
or tax-avoidance scandals. None have been charged with an offense
in connection with the affair.

In all, 28
numbered accounts were listed by prosecutors, veritable black holes
that escaped scrutiny; that is if regulators in Washington
were minding the store, which they weren’t.

Years earlier,
SEC investigators at the commission’s Ft. Worth office uncovered
evidence of wrongdoing. According to an explosive report by the
SEC’s Office of the Inspector General, Ft. Worth examiners launched
a series of probes in 1997, 1998, 2002 and 2004 exploring SIB practices
but their diligence was sabotaged by high-level officials.

That report,
Investigation of the SEC’s Response to Concerns Regarding Robert
Allen Stanford’s Alleged Ponzi Scheme, Case No. OIG-526, March
31, 2010, paints a damning picture of the regulatory process.

The inspector
general states: "While the Fort Worth Examination group made
multiple efforts after each examination to convince the Fort Worth
Enforcement program (‘Enforcement’) to open and conduct an investigation
of Stanford, no meaningful effort was made by Enforcement to investigate
the potential fraud or to bring an action to attempt to stop it
until late 2005."

Last month,
the Fort
Worth Star-Telegram reported
that staff members, who spoke
on condition of anonymity because they feared management retaliation,
told the newspaper that higher-ups wanted "tools to do away
with people who have a dissenting opinion."

Senior managers
called the probes a "goat screw" and ordered them killed.

The OIG investigation
"found that the former head of Enforcement in Fort Worth, who
played a significant role in multiple decisions over the years to
quash investigations of Stanford, sought to represent Stanford on
three separate occasions after he left the Commission, and in fact
represented Stanford briefly in 2006 before he was informed
by the SEC Ethics Office that it was improper to do so." (emphasis

In Florida,

The Miami Herald revealed
that state regulators did the
SEC one better and gave the bank carte blanche to operate secretly,
moving "vast amounts of money offshore–without reporting a
penny to regulators."

The arrangement
between the bank and the Florida Office of Financial Regulation
was so brazen, that Stanford’s company "was allowed to sell
hundreds of millions in bank notes without allowing regulators to
check for fraud."

And once those
suspect instruments were sold, the Herald reported that "employees
shredded records of the trust agreements and CD purchases once the
original documents were sent to Antigua, state records show."

A sweet deal
if you can get it, or have powerful friends who might wish to avoid
messy inquiries touching upon sensitive matters.

New York Times

last year that current charges "stem from an inquiry
opened in October 2006," that is, nearly a decade "after
a routine exam of Stanford Group, according to Stephen J. Korotash,
an associate regional director of enforcement with the agency’s
Fort Worth office."

Korotash told
the Times that the SEC "stood down" its investigation
"at the request of another federal agency, which he declined
to name."

According to
in 2006 the Bush administration "bestowed on his intelligence
czar … broad authority, in the name of national security"
to excuse companies from "their normal accounting and securities-disclosure
obligations" if such disclosures revealed "certain top-secret
defense projects."

At the time,
William McLucas, the Securities and Exchange Commission’s former
enforcement chief told the publication that the ability to conceal
financial information from regulators under the rubric of "national
security" could lead some companies "to play fast and
loose with their numbers."

The former
official said, "it could be that you have a bunch of books
and records out there that no one knows about."

In response
to media reports, congressman Dennis Kucinich (D-OH), wrote a letter
to SEC Chair Mary Schapiro last year, demanding documents, and answers,
why the SEC suspended investigations of the "Stanford Group
under pressure from another unidentified federal agency."

The Ohio congressman
said, "if this is true … our subcommittee will demand that
the SEC reveal the name of that agency which told it not to enforce
federal laws which protect investors."

Neither documents
nor answers were forthcoming.

Cynics might
see something untoward here, but I think it’s all just a coincidence,
like drug planes bought with bundles of cash laundered
through American banks.

Drug Probes

In 1986 during
the Iran-Contra period, Allen Stanford’s Guardian International
Bank set up shop on the sleepy Caribbean isle of Montserrat (pop.

It didn’t take
long before the bank came under scrutiny. Guardian was the subject
of a joint Scotland Yard-FBI investigation "into so-called
‘brass-plate’ banks," The
Independent disclosed

the rest of the article

11, 2010

Tom Burghardt is a researcher and activist based in the San
Francisco Bay Area. In addition to publishing in Covert Action
Quarterly and Global Research,
an independent research and media group of writers, scholars, journalists
and activists based in Montreal, his articles can be read on
Dissident Voice,
The Intelligence Daily,
Pacific Free Press
and the whistleblowing website Wikileaks.
He is the editor of Police State America: U.S. Military “Civil
Disturbance” Planning, distributed by AK

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