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Six Degrees Of Allen Stanford

Here at TPMmuckraker, the more we think about the Allen Stanford saga, the more it seems like a kind of harmonic convergence of recent high-profile muck.

The emerging story's range of ties -- some incidental, some more substantive -- to some other high-profile scandals of the past few years, from Bermard Madoff to Jack Abramoff to Rod Blagojevich -- is pretty striking.

First, Madoff.

It's not just that questions about the pace of the SEC's Stanford investigation -- including whether the agency's decision to bring charges yesterday was prompted in part by recent news reports -- have to be considered in light of the SEC's well-documented missteps on the Madoff case.

It's also that, according to the SEC complaint, Stanford's investors were exposed to losses via Madoff -- but falsely assured them they weren't.

From the complaint:

In a December 2008 Monthly Report, the bank told investors that their money was safe because SID "had no direct or indirect exposure to any of [Bernard] Madoffs investments."

But, contrary to this statement, at least $400,000 in Tier 2 was invested in Meridian, a New York-based hedge fund that used Tremont Partners as its asset manager. Tremont invested approximately 6-8% of the SIB assets they indirectly managed with Madoffs investment firm.

Pendergest, Davis and Stanford knew about this exposure to loss relating to the Meridian investment. On December 15, 2008, an Analyst informed Pendergast, Davis and Stanford in a weekly report that his "rough estimate is a loss of $400k ... based on the indirect exposure" to Madoff'.

As for Abramoff, we reported yesterday that a bevvy lawmakers with ties to the crooked lobbyist or a history of other ethical problems - including then-GOP members of Congress Bob Ney, Katherine Harris, Tom Feeney, and John Sweeney, as well as current Rep. Charlie Rangel -- went on a 2005 junket to Antigua that was funded by an organization with close links to Stanford.

Indeed, until yesterday, that organization, the Inter-American Economic Council, had photographs from the trip -- showing Harris, Feeney, and pals hobnobbing in splendor with Antiguan dignitaries -- posted on its website. It's since removed them, but not before we saved them. You can see the slideshow here.

And there's also another congressional angle which, though not on a par with the Abramoff sleaze, nonetheless appears to reflect the cynical money-for-access culture that has characterized Washington politics in recent years:

In 2002, as we reported yesterday, after lobbying from Stanford's firm, the Democratic-controlled Senate killed a bill designed to bolster efforts to catch financial fraud. During that cycle, Stanford's company had given an eye-popping $800,000 to the Democratic Senatorial Campaign Committee. And according to campaign finance records examined by TPMmuckraker, it had also given generously to key Democrats on the Senate Banking committee: $8000 to Chuck Schumer, $6000 to Chris Dodd, and $1000 to then-chair Paul Sarbanes.

So there's that.

What about Blago?

Well, it turns out that, according to lobby disclosure reports examined by TPMmuckraker, one of Stanford's paid lobbyists in 2002 -- the year that the firm was lobbying on the anti-financial-fraud bill -- was John Wyma. One form lists Wyma and his team's work as "Helping them address legislature (sic) which involves financial services companies."

In case you'd forgotten, Wyma used to be one of Blagojevich's closest aides, before cooperating with Pat Fitzgerald's investigation by secretly recording conversations with the then governor.

The two were apparently think as thieves at one time. The Chicago Tribune reported at the time of Blago's arrest:

The governor routinely reported exchanging personal gifts and often appeared at Wyma-sponsored fundraisers where Wyma's clients hobnobbed with the governor before turning over checks for his campaign fund.

Now all we need is a link to the U.S. Attorney firings, and we'll be all set.


8 Comments

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Or a link to the US attorneys who were not fired! Maybe somebody knew but chose to not investigate?

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hey mr fungi.

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Do you happen to have the name of Stanford's audit firm? I have established a link between Madoff and other schemes currently under indictment by looking at that link?

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answer to sara

The Antigua-based accountancy firm purportedly responsible for auditing Allen Stanford's $8bn (£5.6bn) business empire is in a state of confusion following the death of its founder last month.

The firm, CAS Hewlett, is described by the US Securities and Exchange Commission as a "small local accounting firm". The regulator said its efforts to make contact had been unsuccessful: "The commission attempted several times to contact Hewlett by telephone. No one ever answered the phone."
--
"I have no comment," said longtime Stanford lawyer Richard Razook of the law firm Hunton & Williams. "I don't want to discus that at all. Thank you." Thomas Sjoblom, a partner at Proskauer Rose, had represented Allen Stanford until last week, when he withdrew as Stanford Investment Bank was supposed to document its assets, according to a person familiar with the matter.
Proskauer Lawyer Raised ‘Red Flag’ in Billionaire Probe
Posted 2 hours, 25 minutes ago
By Debra Cassens Weiss
The Securities and Exchange Commission accused a Texas investment manager in an $8 billion fraud just days after his lawyer raised a red flag by disaffirming everything he had told authorities.
The civil complaint by the SEC claims billionaire Robert Allen Stanford and businesses he controlled sold $8 billion in certificates of deposit based on unsubstantiated claims that the CDs had been generating double-digit annual returns since 1995. The complaint also claims investors were misled about how their money was invested.
The lawyer, identified by Bloomberg News as Thomas Sjoblom at Proskauer Rose in Washington, D.C., represented the Antigua affiliate of Stanford’s investment advisory firm. Sjoblom disavowed everything he told authorities as Stanford ignored subpoenas seeking to account for the $ 8 billion in depositor money, the story says.
Peter Henning, a criminal and securities law professor at Wayne State, told Bloomberg that the withdrawal “is a massive red flag” that “screams fraud.”
“If the SEC hadn’t turned up the heat by that point, it did then,” Henning told the wire service. Sjoblom joined Proskauer Rose in 1999 after working 20 years for the SEC, according to Times Online.
A separate story by Bloomberg highlights a different legal problem for Stanford. Stanford University filed a trademark infringement suit last year that claimed Stanford Financial Group Co. was capitalizing on the school’s name, the story says. A hearing in the case is set for March 20.

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OK -- none of those audit names ring a bell with me. I've been following Madoff's use of McGladrey and Pollen, (as well as some of his feeder funds use of the Bloomington MN firm) and some of the non-profits that received support from Madoff's enterprises, and the use of the same firm by Tom Petters, and some of his "investors". Petters is currently indicted in what looks like a 3.8 billion Ponzi Scheme, and is resident in the St. Paul Jail as a flight risk, awaiting his May Federal Court Trial. As with the Madoff case, where apparently the sons' fessed up, Petters came to prosecutors on a silver platter, as one of the key participants just walked into the USA's office and gave them the case.

I think some of these cases are "like" the US Attorney's cases, in that they are only being reported in the local or regional press, even if they do involve billions, and if we can collect the details on these "mini" ponzi schemes and who was involved, we may see patterns not evident when one looks only at them as individual cases.

BBC Overnight is reporting that a division of the Stanford Bank is in Venezuela, and they are currently having a very disorderly bank-run. Interesting...

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Well, maybe Blago can use his connections to get Stanford on The View

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Boy, Katherine Harris looks real different without the crazy clown makeup.

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And to think, another son of the Lone Star State, "Kenny boy", started it all. Makes me proud to be a Texan. (not) I'm not sure if I'm glad, or sorry that Molly Ivans isn't around to comment on the sorry mess.

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