Allen Stanford

Rove's Lawyer Insists: I Won't Work for Stanford Without Getting Paid

Zachary Roth | August 5, 2009, 12:20PM

Looks like our old friend Allen Stanford is having some trouble finding a lawyer.

Two high-profile white-collar crime attorneys, including the man who represents Karl Rove, are trying to make sure they don't get roped into defending the cricket-loving billionaire -- who's accused of orchestrating an $8 billion fraud -- without a guarantee of payment.

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Allen Stanford

Stanford Complains: Prison Too Prison-Like

Zachary Roth | July 27, 2009, 6:05PM

Allen Stanford, the Texas banker charged with orchestrating an $8 billion fraud, isn't too happy behind bars, it seems.

His attorney, the heavy-hitting criminal defense lawyer Dick DeGuerin, has filed papers calling conditions at the federal detention facility north of Houston where Stanford is being held "oppressive," and asking that the cricket-loving billionaire be moved.

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Sex

Abstinence-Supporting GOP State Lawmaker Admits To Sex With 22-Year-Old Intern

Zachary Roth | July 23, 2009, 4:19PM

Paging Keith Olbermann. You can call off the search...we've found your Worst Person in the World for tonight.

Meet Tennessee state senator Paul Stanley. He's a solid conservative Republican and married father of two, who according to his website is "a member of Christ United Methodist Church, where he serves as a Sunday school teacher and board member of their day school." (Check out the religious imagery on the site -- the sun poking through clouds, as if manifesting God's presence -- which of course shows Stanley's deeply pious nature.)

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Allen Stanford

Stanford Indicted On Criminal Charges

Zachary Roth | June 19, 2009, 1:12PM

The bell has finally tolled for Allen Stanford.

Federal prosecutors today filed a criminal indictment against the billionaire Texan, as well as three other Stanford Financial Group executives and the former head of the Antiguan bank regulatory agency, charging them with helping to orchestrate a $7 billion Ponzi scheme.

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Allen Stanford

Allen Stanford's New Lawyers: Admiralty And Maritime Law Experts

Zachary Roth | June 8, 2009, 5:56PM

Remember our old friend Allen Stanford? Matthew Goldstein, who had been covering the Stanford story closely at BusinessWeek, and has now moved to Reuters, has an interesting catch about the cricket-loving billionaire's curious legal strategy.

Goldstein reports that Stanford last week replaced his civil defense team with a group of lawyers from the Gulf Law Group, a little-known Washington, DC-based firm.

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Allen Stanford

When The DEA Came Calling, Allen Stanford Re-Routed His Plane

Moe Tkacik | May 12, 2009, 6:54PM

An anecdote in a new GQ Allen Stanford story sheds some light on yesterday's weird reports that the suspected Ponzi schemer secured himself ten years of SEC amnesty by being an informant for the Drug Enforcement Administration -- and also the continuing puzzle of why the Stanford's "statuesque" CIO Laura Pendergest-Holt, who was formally indicted today, isn't cooperating with the government. Stanford wasn't just any DEA informant, he turned his plane around at the chance to rat out a Mexican drug lord! Also, Stanford was a bit cultlike.

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Allen Stanford

Why Would Laura Pendergest-Holt Take The Fall For Allen Stanford's Ponzi?

Moe Tkacik | May 12, 2009, 4:19PM

Suspected Ponzi schemer Sir Allen Stanford's chief investment officer Laura Pendergest-Holt was indicted in Houston this morning for obstructing and conspiring to obstruct the federal investigation into Stanford's sham money manager. Aside from a new allegation that Pendergest transferred $4.3 million of bank funds into the bank's operating account after speaking to the SEC, the charges don't appear much different from those laid out in a criminal complaint filed against the photogenic 35-year-old overseer of Stanford's "Tier 2" investments in February. (That's not for lack of rifling through her underwear drawer, according to a motion filed by her lawyer.)

That complaint depicted Pendergest-Holt's role in the Stanford enterprise as less mastermind than a case of (yes we realize this is a lame joke but) "Who Framed Jessica Rabbit?"

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Allen Stanford

Fox: New Indictment In Stanford Ponzi Tomorrow Still Won't Be Charging Allen Stanford With Anything

Moe Tkacik | May 11, 2009, 5:41PM

Today was a surreal day in the surreal case of accused (though not yet criminally-charged) Texas ponzi schemer Allen Stanford, even by the standards of Stanford. First came a credulity-straining BBC report that Stanford somehow bought himself 10 years of amnesty from SEC scrutiny by serving as an informant for the Drug Enforcement Administration. Then Fox Business News piped in, excerpting a strange paragraph from a letter it had received as part of a Freedom of Information Act request from someone claiming that two of Stanford's clients were part of the Venezuelan mafia. CNBC replayed the segment of its interview with Stanford in which reporter Scott Cohn asks if the disgraced financier had ever assisted "federal authorities" -- to which Stanford blurts out "You mean the CIA?" before declining to comment further. (It's embedded after the jump.)

But not everyone in the Stanford family cooperates, and tomorrow we may finally get some clarity on this bizarre scam in the form of a "global indictment," if reports from Fox Business News are accurate. Stanford himself still isn't getting charged, though; the feds are coming down again on his glamorous chief investment officer Laura Pendergest-Holt, who was already arrested and charged with obstruction of justice in the scheme -- and last week denied every allegation against her. The Fox clip, also after the jump.

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Allen Stanford

Viva Las Vegas: Stanford Spent A Quarter Million At The Bellagio -- After Asset Freeze, Say Feds

Zachary Roth | May 5, 2009, 11:09AM

It looks like Allen Stanford just couldn't quit his high-living ways -- even when the chips, so to speak, were down.

The Financial Times has a great find in the court filings made by the SEC in Stanford's case:

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Allen Stanford

Stanford To Feds: Take Me Now. Please?

Zachary Roth | May 1, 2009, 11:07AM

Doesn't anyone want Allen Stanford?

The accused Ponzi schemer tried to turn himself in to the Feds yesterday -- without success.

Over to the Houston Chronicle:

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Allen Stanford

Stanford Rages: "I Start To Get An Itch To Grab Somebody By The Throat"

Zachary Roth | April 20, 2009, 6:05PM

Allen Stanford has gone on a PR blitz in an effort to clear his name. But from the looks of it, he may already be regretting doing so.

The Texas billionaire, accused earlier this year by the SEC of orchestrating a "massvie ongoing fraud," sat down today with the New York Times, in the office of his lawyer, Dick DeGuerin. That interview was preceded by one with the Houston Chronicle.

The Times' writeup is worth excerpting at length:

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Karl Rove

J. Edgar Rove? Bush's Brain Claims He Kept Loyalty File On GOP Rep

Zachary Roth | April 10, 2009, 12:46PM

Did Karl Rove compile a "loyalty file" on former GOP congressman Tom Feeney? That's what Rove himself has reportedly claimed.

Politico reports on a chance encounter at Charlie Palmer's Steak last night between Bush's brain and Jason Roe, a former chief of staff to Feeney, the Florida congressman who was defeated for reelection last fall*.

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Allen Stanford

In Interview, Stanford Plays World's Smallest Violin

Zachary Roth | April 6, 2009, 3:34PM

Texas billionaire Allen Stanford has given ABC News his first interview since being charged by the SEC with orchestrating a massive Ponzi scheme. And he doesn't offer a sympathetic portrait.

Amid protestations of innocence -- "I would die and go to hell if it's a Ponzi scheme," and "if it was a Ponzi scheme, why are they finding billions and billions of dollars all over the place?" -- Stanford revealed he expects to be indicted by a federal grand jury in the next two weeks. (A senior official at the Justice Department told ABC News the case is "moving along rapidly.")

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Allen Stanford

Lawyer: Stanford Number 2 Helping To Probe Billionaire's Money Trail

Zachary Roth | April 6, 2009, 1:44PM

The walls around Allen Stanford appear to be closing in ever tighter.

David Finn, a lawyer for Jim Davis, the number 2 man at Stanford Financial, tells Bloomberg that Davis is helping investigators track Stanford's European assets, focusing on Swiss banks.

In addition to potentially helping to build a criminal case against Stanford, tracking the assets could help repay victims of Stanford's alleged fraud.

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Allen Stanford

Stanford Lawyer: "SEC Came In Like A Bunch Of Storm Troopers"

Zachary Roth | March 26, 2009, 3:06PM

Dick DeGuerin, the hard-charging Texas lawyer who just signed on to represent Allen Stanford, isn't pulling any punches.

In an interview with TPMmuckraker moments ago, DeGuerin denied that Stanford was running a Ponzi scheme. And, referring to federal investigators' raids on Stanford offices as the SEC prepared charges last month, DeGuerin played the Nazi card, declaring:

The SEC came in like a bunch of Storm Troopers, which caused a panic, and caused the banks in Venezuela and elsewhere to nationalize his banks, just take them away.

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Allen Stanford

Stanford Lawyer: SEC Using Sir Allen As "Distraction" From Madoff

Zachary Roth | March 26, 2009, 2:31PM

Yesterday, we noted BusinessWeek reporting that Dick DeGuerin, the high-profile Texas lawyer who has represented Tom DeLay and David Koresh, among other bold-faced names, might have signed up to defend accused massive Ponzi schemer Allen Stanford.

And today, the magazine confirms that DeGuerin is on the case -- and that the official Stanford fight back, after weeks of being portrayed as a corrupt, Gatsby-esque fraud -- is underway.

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Allen Stanford

For Stanford Number 2, A Gated Home With Ionic Columns, And A God-Fearing Rep

Zachary Roth | March 26, 2009, 12:56PM

Bloomberg has some good details about Jim Davis, Allen Stanford's Number 2 man, who, along with his boss, has been charged with orchestrating a massive Ponzi scheme.

In mid-January, Davis -- who still lives in the region of northern Mississippi where he was born -- sent a text message to the youth pastor of a local church he helped start, telling him: "I'm praying for you."

Among church congregants, Davis, known by some as Mr. Jim, was viewed as God-fearing and honest, according to Ethan Nanney, an elder at the church. In fact, Nanney told Bloomberg, Davis started the church, whose pastor is black, because he wanted a place where black and white people could come together. Davis is also on the board of Memphis's National Civil Rights Museum, which is located at the motel where Martin Luther King Jr. was assassinated.

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Allen Stanford

Stanford Number 2, "Devastated" By Alleged Fraud, Talks With Investigators

Zachary Roth | March 26, 2009, 9:12AM

Is the noose tightening?

James Davis, Allen Stanford's number 2, sat down with FBI and SEC investigators yesterday, Davis' lawyer, David Finn, told Bloomberg. Finn said earlier this week that Davis would fully cooperate with both investigations.

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Allen Stanford

Report: Stanford May Hire DeLay Lawyer

Zachary Roth | March 24, 2009, 6:27PM

We probably should have seen this coming.

Billionaire Texas banker Allen Stanford is considering hiring Dick DeGuerin -- the heavy-hitting Texas defense lawyer who has represented a string of big-name clients, including former House Speaker Tom DeLay -- to defend him on charges that he orchestrated an $8 billion Ponzi scheme, reports BusinessWeek.

The magazine sources that news to "a person familiar with the securities fraud investigation" into Stanford, and adds:

A secretary for DeGuerin says the attorney had been contacted about representing Stanford, but declined to comment further.

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Allen Stanford

In Ominous Sign For Sir Allen, Feds Flip Stanford Number Two

Zachary Roth | March 24, 2009, 1:46PM

This doesn't sound like good news for Sir Allen...

James Davis, the number two at Stanford Financial Group, is cooperating with the federal civil and criminal probes into the $8 billion Ponzi scheme that both are accused of orchestrating, Davis' lawyer has told (sub. req.) the Wall Street Journal.

That's a shift by the former SFG chief financial officer, who was also Allen Stanford's college roommate. Previously, Davis had taken the fifth, along with Stanford himself, and had refused to provide investigators with key company documents.

To date, Stanford, Davis, and a third Stanford employee, Laura Pendergest-Holt, have been charged in a civil complaint filed by the SEC. But only Pendergest-Holt currently faces criminal charges, relating to obstruction of justice.

That's likely to change. Even Davis' cooperation doesn't appear likely to shield him from facing his own criminal charges. But it can hardly come as welcome news for the cricket-loving billionaire.

Allen Stanford

Stanford Exec: Court-Appointed Lawyers Went Through My Panty Drawer!

Zachary Roth | March 11, 2009, 6:16PM

No one likes lawyers rifling through their underwear drawer.

Laura Pendergest-Holt, the chief investment officer for Stanford Financial Group -- who has been charged along with Allen Stanford himself and number 2 Jim Davis -- is trying to get overturned a court order that put her assets under the control of a court-appointed receiver.

In an emergency motion, attorneys for Pendergest-Holt wrote that lawyers for the receiver, Ralph Janvey, conducted a raid of her Mississippi home March 2, seizing her family's car, diverting her mail, went through her underwear drawer, and mocked her husband -- telling him he wouldn't be living in the house for long.

The court filing called the move a "stunning act of bad faith", and asked for the assets to be returned form the control of the receiver. It argued that Pendergest-Holt had agreed to the seizure only before she knew that criminal charges would be filed against her. Now that they have been, the seizure violates her constitutional rights, according to the filing.

The filing says:

In effect, the Receiver's lawyers, in the context of the civil case, have conducted a free-wheeling warrantless search of Ms. Pendergest-Holt's home and have taken Ms. Pendergest-Holt's personal property without due process of law. Because the Receiver's lawyers are duty-bound to cooperate with the SEC, DOJ and FBI under the Receivership Order, the Government will no doubt be the primary beneficiary of the Receiver's unlawful search and seizure of Defendant's property.

Pendergest-Holt was charged by the SEC earlier this month with making misrepresentations to the FBI about, among among things, her knowledge of Stanford's portfolio.

Allen Stanford

Stanford Takes The Fifth

Zachary Roth | March 11, 2009, 3:05PM

In better days, Allen Stanford was, by most accounts, a loqacious and charming figure, wooing clients, lawmakers, and foreign dignitaries alike with the sheer power of his personality.

Now, not so much.

In court documents filed today, Stanford took the fifth, declining to testify in the SEC's complaint against him, in which he is accused of orchestrating an $8 billion Ponzi scheme.

His former college roommate and Number 2 at Stanford Financial Group, Jim Davis, is likewise staying mum, it was reported last week.

Allen Stanford

Stanford Said He Talked To Treasury About Changing Tax Law

Zachary Roth | March 10, 2009, 5:40PM

We told you earlier today about Allen Stanford's lobbying to get some businesses taxed at the US Virgin Islands rate rather than the US rate. And about how Stanford had lately been in the process of moving his Caribbean headquarters to St. Croix, in the Virgin Islands.

Well, one Virgin Islands paper, the St. Thomas Source, has some more interesting details on those subjects...

The paper reports that, in a speech at a 2007 economic summit in St. Croix, Stanford made his pitch for more favorable tax laws that he said would spur more investment. He sought changes that would have allowed money from companies headquartered in the Virgin Islands (like his own) to flow into the US virtually tax free.

Stanford presented this change as a boon to the whole region:

"If that were to happen, the Caribbean Basin as a whole, and the Virgin Islands in particular, would see serious investment begin to flow in almost overnight."

Stanford even said he brought up the idea to US Treasury Department officials, and hoped to have "draft legislation" ready to present by mid October.

He repeated the pitch at a ceremony to break ground on his new planned Caribbean headquarters in the V.I.

"The law must include all Caribbean-created revenues, as long as the company is headquartered in the Virgin Islands," he told the crowd, which contained local dignitaries and lawmakers.

There is no record of any such legislation being introduced since at least 2005, says the paper.

Allen Stanford

Stanford Financial: Help Wanted!

Zachary Roth | March 10, 2009, 11:28AM

Allen Stanford may have been accused of orchestrating an $8 billion Ponzi scheme. But maybe things aren't all doom and gloom for his firm.

It looks like Stanford Financial is still hiring -- even in these tough economic times!

The company's Antiguan assets have been seized, but if you want to work in client services, IT, or security(!) on the island, you can still send in your resume.

Perhaps unsurprisingly, the firm doesn't seem to have any openings for accountants, or lawyers.

Allen Stanford

Stanford Lobbyist: He Wanted Virgin Islands Tax Rate

Zachary Roth | March 10, 2009, 11:16AM

The Houston Chronicle has a takeout on Ben Barnes, the storied Texas power-broker who's been thrust back into the limelight through his work as Allen Stanford's Washington lobbyist.

Barnes -- who didn't return our call when we wanted to talk about this several weeks ago -- reveals one intriguing nugget about what he was up to on Stanford's behalf.

Reports the paper:

[O]ver the past year, [Stanford] was interested in having business taxed at the U.S. Virgin Islands tax rate rather than the U.S. rate, Barnes said. Stanford wanted legislation to promote investment in the Caribbean.

"This was not Allen Stanford's legislation. This was the U.S. Virgin Islands idea because they wanted more people to come down there, earn money there," Barnes said.

No such measure was approved either by Congress or the U.S. Treasury, he said.

It's unclear exactly what this means. Which businesses would this change have applied to? Stanford had assets in the Virgin Islands, but the major part of his business was based in Antigua.

But -- along with Stanford's opposition to efforts to crack down on offshore tax havens -- it's another small piece of evidence that goes to answer the question of what Stanford hoped to get out of his assiduous attention to American lawmakers.

Late Update: We overlooked this, but it seems that Stanford was in the process of moving his operation to the Virgin Islands. In February 2008, he announced plans to break ground on construction of the ominously titled "Stanford Financial Group global management complex," which would "serve as the head office for Stanford's operations in the Caribbean."

Lester Byrd, the Antiguan prime minister with whom Stanford had been worryingly close -- it was through Byrd that Stanford obtained his knighthood -- left office in 2004, and the Texan had chillier relations with his successor.

Allen Stanford

Texas Paper On Cornyn and Sessions' Stanford Ties: "What Were They Thinking?"

Zachary Roth | March 4, 2009, 11:05AM

Are lawmakers who took those Antiguan junkets on Allen Stanford's dime paying a political price back home?

It's hard to say. But John Cornyn and Pete Sessions, the Texas GOP senator and congressman respectively, can't be psyched about this Dallas Morning News editorial.

"What were they thinking?" asks the piece in its lead, pointing out that Cornyn and Sessions must have known when they accepted those trips that Stanford would have been looking to curry favor.

The editors conclude, a bit lamely:

Sessions and Cornyn have donated $9,000 of those funds to charity. They would be wise to donate the rest - and to use better judgment next time.

The paper might have added that Sessions would also be wise to ensure that his staff doesn't misinform reporters about the nature of the congressman's relationship with Stanford.

Still, it's a start.

Allen Stanford

Stanford Victims Starting To Emerge

Zachary Roth | March 3, 2009, 2:37PM

Just as happened in the Bernard Madoff scandal, we're now starting to hear some heart-wrenching stories from the victims of Allen Stanford's alleged fraud.

One older couple told their tale of woe to a North Texas TV station:

Marsha and Arlie Carter always planned to live out their golden years in Rainbow, Texas, outside Dallas. They sold their software company -- the business they built together from nothing -- to finance their dream.

"We hoped to pass it down to my kids and grandkids," Marsha said.

Then, last month, they turned on the news and learned the company their broker worked for was entangled in a case of massive alleged fraud. All the money associated with Stanford Financial Group was frozen, including about 30,000 brokerage accounts.

That's where the Carters were keeping most of the money they had saved.

"There's a possibility that we might lose the house if we can't have enough income to make the payments on it," Marsha Carter said.

Less tragically, the Dallas Morning News reports that many clients who had brokerage, money-market or mutual fund accounts with Stanford can't get to their money because those accounts have been frozen by a court-appointed receiver.

Reports the paper:

Mark Choate, chief executive of an irrigation landscape company, has a brokerage account that's been frozen for two weeks. "During that time," Choate says, "the stock market has been dropping like a rock, and I haven't been able to do anything about it."

A lawyer for clients like these tells the DMN:

A guy called me Thursday who has all of his net worth tied up in a construction project and meets his payroll through his Stanford accounts. He said, 'Larry, if I don't have access to that money, all these people aren't going to get paid. My construction project will go kaput, and my whole life will be in ruin.'

There's even a suggestion that Stanford may have swindled some of those West Indian cricket players who "won" $1 million each after beating England in a Stanford-organized match last year. In an interview conducted before Stanford's alleged fraud came to light but published this week, one player told (sub. req.) the New Yorker that he had left his prize-money in Stanford's bank, after the billionaire assured him and other players that he would keep it safe.

Meanwhile, a showdown has quietly been brewing, reports the Associated Press, between that court-appointed receiver, Texas lawyer Ralph Janvey, and the government of Antigua, where the Senate voted Friday to seize Stanford's property.

Stanford is Antigua's largest private employer, with about 800 people working for him. So the country's officials are anxious to keep Stanford's businesses in operation, rather than allowing Janvey to use the assets to pay back swindled investors.

Looks like this story could be with us a while...

Allen Stanford

In Stanford's Wake, Levin Announces New Improved Tax Haven Bill

Zachary Roth | March 2, 2009, 5:01PM

Remember that bill we told you about last week, the one that was designed to crack down on offshore tax havens and might have helped stop Allen Stanford's alleged $8 billion scam? Well, it's back.

As we reported, the bill, introduced in 2007 by Sen. Carl Levin, died in the Senate Finance committee. A committee aide later told us that Committee chair Max Baucus never took it up because he favored a different approach to the problem.

But now Levin -- joined by Senators Sheldon Whitehouse, Claire McCaskill, D-Mo. and Bill Nelson -- has come back with an improved version of the legislation, the "Stop Tax Haven Abuse Act."

According to a press release, the bill now has three new provisions, that would:

(1) treat foreign corporations managed and controlled in the United States as domestic corporations for income tax purposes; (2) close an offshore tax dividend loophole that enables non-U.S persons to dodge payment of U.S. taxes on U.S. stock dividends; and (3) expand the tax return reporting requirements for passive foreign investment corporations (PFICs) to include U.S. persons who don't own a PFIC, but have formed, sent assets to, received assets from, or benefitted from a PFIC.

Baucus has already announced that he intends to introduce his own version of the legislation, that's more targeted at giving the IRS the tools it needs to detect tax cheats. So we'll have to see how that plays out.

But it seems like one silver lining in the Allen Stanford case is that it's gotten lawmakers into gear to try to fix the problem once and for all.

Allen Stanford

Stanford Provided Majority Of Funds For Group That Sponsored Lawmaker Junkets

Zachary Roth | March 2, 2009, 12:34PM

From the start of the Allen Stanford mess, we've sort of had a hunch that the Inter-American Economic Council -- which paid for several Caribbean junkets and other events for US lawmakers -- was largely a creature of the Texas billionaire. And that hunch is looking increasingly accurate.

The Dallas Morning News reports that in 2005, the year the IAEC funded that big trip to Antigua for lawmakers of both parties that we posted pictures of, Stanford Financial provided 85 percent of the IAEC's revenue, according to its president, Barry Featherman.

Featherman also told the DMN that the IAEC raises no money except for the funds it receives from sponsors like Stanford for specific events. In other words, the organization exists, it appears, only to hold events with public officials.

And Featherman added that the group hasn't paid for any trips since 2007, thanks mostly to ethics rules passed by the new Democratic Congress early in that year, which banned House members from accepting free trips on private planes.

There are some other interesting nuggets in the DMN story. The paper reports that Tom DeLay "made at least 11 trips on Stanford planes between 2003 and 2006, according to federal campaign finance records."

And remember how the office of Texas GOP congressman Pete Sessions first claimed that Sessions didn't know Stanford personally -- a claim that was undone when we posted pictures of the two men schmoozing on that 2005 trip to Antigua? Well it looks like Sessions was getting more than just a nice Caribbean trip out of Stanford. The DMN reports that in 2004 when, thanks to redistricting, Sessions was in a razor-tight race to hold onto his Congressional seat against the powerful incumbent Democrat Martin Frost, Stanford's company came to the rescue, giving $37,875 in the final weeks of the race.

Separately, it looks like Team Stanford is staying mum on the charges that it orchestrated an $8 billion fraud. James Davis, Stanford's college roommate and the number two at Stanford Financial, who has also been charged in the SEC complaint, took the Fifth last week under questioning by agency investigators.

And last week, Laura Pendergest-Holt, the company's chief investment officer, was charged with criminally obstructing the SEC probe. The FBI filed court documents claiming Pendergest-Holt made "misrepresentations" about her knowledge of Stanford's investment portfolio, and about whether she met with other Stanford officials to prepare for her testimony. The charge may be evidence that the government is trying to flip Pendergest-Holt to testify about Stanford himself.

Allen Stanford

Baucus Committee: We Prefer Different Approach To Tax Haven Problem

Zachary Roth | February 25, 2009, 4:55PM

Yesterday, we revealed how a bill that might have sought to close off-shore tax loopholes -- and which might have helped catch Allen Stanford -- died in Max Baucus' Senate Finance committee in 2007.

Now, a Finance committee aide has provided an emailed statement to TPMmuckraker, making the case that the committee didn't take up the bill, sponsored by Carl Levin, because Baucus differed with some aspects of the bill's approach, and noting that Baucus is working on a separate bill to address the problem.

In a nutshell, according to the statement, Baucus favors an approach more targeted at giving the IRS the necessary tools to detect tax cheats than was the Levin bill, which took a broader tack.

The Chairman announced in 2008 that he is writing legislation to address the use of tax havens by individuals. In particular, Senator Baucus and his staff are working with Treasury and the IRS to give them the right tools to detect the tax abuse we are all concerned about. Senator Baucus's goal is to move the sharpest possible bill that will give the IRS tools -- including additional reporting requirements -- to determine when a taxpayer uses a tax haven and the identity of the user.

It will be important to move legislation that gives the IRS the best chance to find abusers in the first place, in order to apply certain rebuttable presumptions that would make income US-sourced income on which US taxes should be paid.

The bill you mention is quite broad, and while it creates a series of changes to the burden of proof, that only helps once the IRS has detected the use of a tax haven.

The Finance Committee actively fights offshore tax havens - in the JOBS bill with inversions policy, tax shelter penalties, and increased transparency with regard to tax shelter promoters; in last year's military bill, with provisions to stop US companies with Federal contracts from setting up entities in tax havens to run employees through in order to avoid employment taxes. FOGEI/FORI in the energy bill tightened up a bit the way oil and gas pay US tax on foreign-earned income. Other proposals have been made public as well, particularly with regard to Bermuda reinsurance. The Committee also sent the GAO to Ugland House in the Cayman Islands to investigate one of the most notorious suspected tax havens in the world. And the Committee will take this issue up again at a hearing in March.

In other words, according to the aide, this was an issue of legitimate policy differences -- not an effort by Baucus to kill legislation opposed by a contributor.

We'll be watching for those hearings in March.

Allen Stanford

Ney Praised Stanford In Congressional Record -- Just As He Did For Abramoff

Zachary Roth | February 24, 2009, 6:21PM

Did Allen Stanford get the Jack Abramoff treatment from Bob Ney?

Via the Sunlight Foundation, check out what Ney, the Ohio GOP congressman who went to jail for his role in the Jack Abramoff scandal, entered into the Congressional Record in September 2005:

Mr. Ney: Mr. Speaker --

Whereas, Allen R. Stanford has been recognized as the 2006 Recipient of the "Excellence in Leadership Award" by the Inter-American Economic Council ; and

Whereas, Allen R. Stanford has been acknowledged for his performance and leadership in the areas of finance and investments; and

Whereas, Allen R. Stanford should be commended for his service as the CEO of the Stanford Financial Group based in Houston, Texas.

Therefore, I join with the residents of the entire 18th Congressional District of Ohio in honoring and congratulating Allen R. Stanford for his outstanding accomplishments.

We already knew that Stanford and Ney, who sat on the House Financial Services committee, were tight. Here they're positioned right next to each other at a 2004 Washington event put on by the Stanford-backed Inter-American Economic Council.

(Looks like Ney even got a speaking gig at that event).

And Ney's chief of staff, Wil Heaton -- who also pleaded guilty in connection with the Abramoff scheme -- went on that now-famous (kind of) 2005 junket to Antigua for lawmakers and their aides, paid for by the IAEC.

But the statement unearthed by the Sunlight Foundation suggests the relationship was even cozier. Indeed, it fits an intriguing pattern:

According to Abramoff's plea agreement, one of the "official acts" that Ney took on behalf of Abramoff was an October 2000 agreement "to insert a statement into the Congressional Record which praised the new owner of the Florida gaming company, Abramoff's business partner."

The Abramoff partner was Adam Kidan, who in 2005 pleaded guilty to conspiracy and fraud in connection to his venture with Abramoff. Abramoff and Kidan gave $10,000, in Ney's name, to the National Republican Congressional Committee.

Just as Abramoff and Kidan sought to get a PR boost by having nice things said about them in Congress, Stanford may have also have stood to benefit from Ney's move. Stanford's ability to attract investors depended on maintaining a sterling reputation. Having his "outstanding accomplishments" praised in the Congressional Record could go a long way to polishing that reputation.

What might Ney have gotten in return? Well, he received $26,200 in campaign contributions from Stanford Financial Group employees. And, even more interestingly, the Sunlight Foundation's Paul Blumenthal notes that the majority of that sum, $14,200, came just over a month after the Congressional Record statement -- after Ney had gotten nothing from Stanford for all of 2005.

Blumenthal also notes that, during more trying times for the congressman, Stanford became a contributor to Ney's legal defense fund.

So, memo to federal investigators: if you see Bob Ney praising anyone else in the Congressional Record, it might be worth getting a little suspicious.

Allen Stanford

Bill That Might Have Helped Catch Stanford Died In Senate Finance Committee

Zachary Roth | February 24, 2009, 1:58PM

It's clear by this point that Allen Stanford put a lot of energy into wooing members of Congress. He was a prodigious political giver over the last decade, and even seems to have paid for some lucky lawmakers to soak up the sun in Antigua.

But few people, we're guessing, would choose to hang out with John Sweeney, Katherine Harris and co. just for fun. So what did Stanford want in return?

Over at TPMDC, Elana provided part of the answer in two posts that explain how Stanford's firm helped fight an effort to crack down on international money laundering during the late Clinton years, as well as how, shortly after, he met with Martin Frost, at the time the chair of the House Democratic caucus (and to whose political groups Stanford was contributing soft money), in a bid to convince Frost to oppose anti-money laundering initiatives.

But that was hardly the last congressional effort to deal with the problems of offshore business operations. In February 2007, Sen. Carl Levin, joined by then-senators Norm Coleman and Barack Obama, introduced the Stop Tax Haven Abuse Act, which would have closed offshore tax loopholes and forced companies to disclose far more information about their operations.

The bill listed 34 jurisdictions as probable locations for U.S. tax evasion -- one of which was Antigua and Barbuda, the Caribbean island nation where Stanford's sprawling financial empire was headquartered.

Although the measure was not primarily intended to root out large-scale frauds like the one Stanford is now accused of orchestrating, it likely would nonetheless have done so, as a "nice side benefit", according to Robert McIntyre of Citizens for Tax Justice, simply because it would have given US authorities access to far more information about offshore businesses.

What happened to the bill? Levin's office told us it came under the jurisdiction of the Senate Finance committee, which appears never to have brought it to a vote.

Since 2000, Finance chair Max Baucus has received $1000 from Stanford's firm, according to the Center for Responsive Politics. And Chuck Schumer has taken $17,000, more than all but sitting five members of Congress*.

During 2007, Stanford paid $500,000 to Ben Barnes' firm to lobby the Senate on a range of issues, including "lobbying issues related to banking" according to Senate lobbying disclosure records.

It's worth clarifying: Stanford is hardly the only businessman who'd potentially have had a lot to lose from efforts to crack down on offshore tax loopholes. Numerous Fortune 500 companies have offshore operations that could help them avoid paying US taxes, a recent GAO report found. And "fair tax" advocates tell TPMmuckraker that a broad range range of corporate interests has, over the last decade, been involved in preserving such loopholes. So even if Stanford's influence with lawmakers was a factor here, it's not as if he would have been working alone.

A spokesman for the Senate Finance committee pledged to provide TPMmuckraker with more information about the circumstances under which Levin's bill died. We'll update with anything else we learn.

* This sentence has been edited from an earlier version which referred to the contributions from Stanford received by Bill Nelson, a current finance committee member. Nelson did not join the committee until January of this year -- after the period in question.

Joe Biden

Report: Biden's Relatives Ran Fund Marketed By Stanford

Zachary Roth | February 24, 2009, 10:05AM

A fund of hedge funds run by Vice President Biden's son and brother -- Hunter Biden and James Biden -- was marketed exclusively by Allen Stanford's companies, reports the Wall Street Journal.

From the paper:

The $50 million fund was jointly branded between the Bidens' Paradigm Global Advisors LLC and a Stanford Financial Group entity and was known as the Paradigm Stanford Capital Management Core Alternative Fund. Stanford-related companies marketed the fund to investors and also invested about $2.7 million of their own money in the fund, according to a lawyer for Paradigm. Paradigm Global Advisors is owned through a holding company by the vice president's son, Hunter, and Joe Biden's brother, James.

The fund has offered to turn over the $2.7 million investment it received from Mr. Stanford's firm in 2007 to a court-appointed receiver in the SEC's civil fraud case involving Mr. Stanford, according to Paradigm's attorney, Marc X. LoPresti. The fund terminated its relationship with Mr. Stanford's companies after the SEC filed civil charges against them last week, Mr. LoPresti said.

Paradigm's lawyer told the Journal that the Bidens never met or communicated with Mr. Stanford. "There is no connection between the Bidens and Allen Stanford or Stanford period, full stop," he said. "There never was any meeting between any member of the Biden family, no phone calls, zero correspondence."

Stanford was charged last week by the SEC with orchestrating an $8 billion investment scam. He has cultivated ties to a slew of Washington lawmakers.

A Paradigm marketer, Jeffrey Schneider, told the Journal he brought in the Stanford business.

According to Paradigm's lawyer, companies owned by Stanford put up $2.7 million in seed money and marketed the fund. SEC records show the fund, launched in June 2007, had 104 investors with assets of $49.8 million, as of November 2008.

It's hard to know what to make of this for now. But there seems to be more information yet to come out about the fee structure of the arrangement.

The paper reports:

Under an agreement, Stanford was entitled to share in a portion of the fund's management and performance fees, Mr. LoPresti [Paradigm's lawyer] said. "That's all I'm going to say on the fee side of things," he said.

Just what the White House needs.

Allen Stanford

For Stanford, A Long Trail Of Run-Ins With Authorities

Zachary Roth | February 23, 2009, 12:13PM

Relatively few Americans had heard of Allen Stanford until the last week or so. But it turns out that, over the last decade, the Texas billionaire had attracted the scrutiny of a range of government authorities, and been the subject of several civil suits -- so much so that it's hard to believe it took until last week for him to be formally charged.

Let's recap what we know about the various inquiries, investigations, and lawsuits focused on Stanford's sprawling financial empire over the last decade:

Circa 1998

- Stanford writes in a letter to the US ambassador to Antigua that he has been investigated by numerous agencies over the years, and none had found evidence of wrongdoing.

1999

- After Stanford finds that a former Mexican drug lord had used his bank to hide or launder money, he voluntarily makes out a cashier's check worth $3.1 million, and gives it to the Drug Enforcement Agency.

- The Treasury Department places Antigua -- where Stanford's business is based, and with whose government he is cozy -- on its money-laundering watch list.

Circa 1999

- Texas securities regulators find evidence of potential money laundering involving Stanford. They refer it to the FBI and the SEC, because it involves offshore banks. Texas securities commissioner Denise Voigt Crawford later tells the state legislative committee: "Why it took 10 years for the feds to move on it, I cannot answer." She added: "We worked with the FBI and the SEC and basically gave them the case. We told them what we'd seen and they were going to run with it."

2005

- A lawsuit filed in Florida accuses Stanford of aiding a Ponzi scheme.

2006

- The SEC's Fort Worth office opens an investigation into Stanford's business, but is asked by another agency to "stand down," and complies. (Rep. Dennis Kucinich, who chairs the House Domestic Policy subcommittee, asked late last week that the agency turn over documents related to that sequence of events.)

2006

- A second Florida lawsuit, this one filed by a former employee, accused Stanford of being involved in a Ponzi scheme.

2007

- Two former employees sue Stanford, alleging fraud.

- The SEC finds, during a routine exam, that Stanford's Houston-based broker-dealer operation is violating net capital requirements. The firm pays a $20,000 fine.

- Stanford Financial pays a $10,000 fine to FINRA in response to allegations that it gave out "misleading, unfair and unbalanced information" about its certificates of deposit.

2008

- Stanford Financial pays a $30,000 fine to FINRA in response to allegations that it didn't adequately disclose in its research reports its method for valuing certain securities, among other information.

- FBI opens an investigation into whether Stanford laundered drug money for Mexico's violent Gulf Cartel. Mexican authorities detained one of Stanford's private planes after officials found checks inside believed to be connected to the cartel. (The DEA also at some point probed Stanford for laundering drug money.)

- That inquiry into Stanford by the SEC's Fort Worth office is reopened, in the wake of widespread criticism of the agency for failing to catch Bernard Madoff's alleged $50 billion Ponzi scheme, and for de-emphasizing enforcement in recent years.

2009

- SEC files charges against Stanford, alleging "massive ongoing fraud."

As we reported last week, there's strong reason to believe that the SEC should have pushed harder on Stanford sooner. The long history of inquiries that failed to uncover Stanford's alleged $8 billion fraud only strengthens that notion.

Allen Stanford

Through Obscure Non-Profit, Stanford Wooed Lawmakers

Zachary Roth | February 20, 2009, 6:58PM

By now, we've all seen those pictures of Allen Stanford hobnobbing with lawmakers in Antigua. But, with the exception of one trip by Sen. John Cornyn, it wasn't Stanford himself who picked up the tab for these jaunts -- it was an obscure outfit called the Inter-American Economic Council.

And taking a closer look at the IAEC, and its ties to Stanford, sheds some light on how the Texas billionaire gained access to all those members of Congress -- and what he hoped to gain by doing so.

The IAEC's website says that the Washington-based group was founded in 1999 and that it aims to "provide senior Government Officials, leading Business Executives, and Academic Professionals the opportunity to engage in a dialogue about current and future economic strategies in the Hemisphere." And in 2003, the Associated Press reported (via Nexis) that, according to IAEC president Barry Featherman, the organization "relies mostly on contributions from U.S. corporations."

But the group appears to have remarkably close ties to Stanford himself. In this 2006 report, Bloomberg described Stanford as a "principal backer" of the organization. And Stanford Financial told Bloomberg that it had "donated the use of its aircraft" to the IAEC for one 2006 trip to Jamaica that four Democratic lawmakers went on.

That same year, the IAEC gave Stanford its "Excellence in Leadership" award. A press release put out by the group (since removed from its website) declared that Stanford "has strongly supported the work that the IAEC is doing in Latin America and the Caribbean."

Stanford also appears to have taken advantage of IAEC-funded events by showing up personally to schmooze lawmakers. We already posted these shots of current or former lawmakers including Katherine Harris, Pete Sessions, Tom Feeney, James Clyburn, and John Sweeney chilling with Stanford and Caribbean dignitaries in Antigua in 2005.

But there's also another set of interesting shots from the previous year, showing Stanford breaking bread with, and addressing, lawmakers -- including former GOP congressman Bob Ney (since jailed for taking bribes from Jack Abramoff) -- at an IAEC-sponsored event in Washington.

(You can see the slideshow of photographs from that event here.)

What was Stanford talking to lawmakers about? An IAEC press release from (via Nexis) from the event gives a hint. It says that in his speech, Stanford "addressed the need to streamline regulatory regimes that make it difficult for investors to take advantage of all of the opportunities that exist in the region."

And that same year, Newsday reported (via Nexis) on an IAEC-sponsored trip to Jamaica that included Democratic congressman Gregory Meeks. The IAEC, said the paper, hoped to "ease Patriot Act restrictions on offshore banking," and that according to Meeks, "the trip was an effort by the Inter-American Economic Council to explain the hardships the act has imposed on Caribbean banks."

In other words, Stanford and the IAEC used these events to try to convince lawmakers not to crack down on tax loopholes that work to benefit offshore banking -- exactly the loopholes that allowed Stanford to operate his alleged multi-billion-dollar scam, free from regulatory scrutiny, for so long .

In fact, the IAEC even seems to have used its clout to create a new congressional caucus -- the Caribbean Caucus -- made up of may of the lawmakers who went on the IAEC-backed trips.

After one such trip in 2003, attended by then-Rep. Phil Crane (R-IL), among others, Featherman, the IAEC president, revealed that "Congress is expected to form an informal, bipartisan Caribbean caucus to focus on issues of interest to the region," according to the AP (via Nexis).

The Caribbean Caucus would at various times include, among others, Ney, Meeks, Sweeney, Sessions, Feeney, Charlie Rangel, Mel Watt, Donald Payne, Phil English, Steve Chabot, Donna Christensen, Diane Watson, and Al Wynn, all of whom went to events on IAEC's dime.

Indeed, Stanford seems to have had some sway not only over the IAEC, but over the membership of the Caribbean Caucus itself. That Bloomberg story from 2006 reports that it was Stanford himself who asked Sessions to become a member of the caucus. Sessions seems to have agreed.

The IAEC is staying mum about its relationship to Stanford -- it hasn't returned either of TPMmuckraker's calls over the last few days. And the office of Rep. Payne, who was at one time listed as a co-chair, along with Ney, of the Caribbean Caucus, declined to make anyone available to answer TPMmuckraker's questions.