The criminal defendant formerly known as Sir Allen has fired one of his recently hired attorneys, Mike Essmyer. The Houston Chronicle’s Mary Flood has the story here.
You are currently browsing the archive for the Stanford category.
Today’s Wall Street Journal editorial makes the point, noted here two days ago, that the timing of the SEC’s suit against Goldman Sachs pushed the SEC OIG’s Report of Investigation on Allen Stanford to the back pages of the financial news. The WSJ also echoed our concern that it is very difficult to find the IG’s Report on the SEC website. Too bad. Nobody can rightfully blame Mary Schapiro for something that did not happen on her watch. Instead of just touting the SEC’s new procedures that will supposedly stop mega-fraudsters more readily in the future, Schapiro should have provided easy access to the OIG’s work. This is what open government, rather than spin, is all about.
The Report details the abysmal failure of the SEC’s Fort Worth District Office Enforcement Branch to publicize and stop Stanford Group Company’s Ponzi Scheme, despite numerous warnings from the same Office’s Examination Branch. The Journal rightfully notes that the SEC’s failure was even greater here than in the Madoff case, because here the warnings were consistent, forceful and coming from within the Commission’s own ranks.
Reading the the pitiful regulatory record contained in the OIG Report reminds me of my days investigating and prosecuting Savings & Loan Fraud in the early 1990s for the U.S. Attorney’s Office in the Western District of Texas. We were consistently faced with historical fraud that was identified by conscientious bank examiners and ignored or downplayed by their regulatory superiors.
Cynical observers have noted that the SEC’s complaint against Goldman Sachs gives President Obama a powerful weapon in his upcoming legislative battle against Wall Street over financial industry reform regulation. They aren’t cynical enough. The civil charges against Goldman Sachs came out on the same day that the SEC OIG released its Report of Investigation: SEC’s Response to Concerns Regarding Robert Allen Stanford’s Alleged Ponzi Scheme. Goldman Sachs coverage almost drowned out news of the IG’s Report. It is also extremely difficult to locate the Report on the SEC’s website.
There were two brief but good stories on the Report, however, by Zachary Goldfarb of the Washington Post and Michael R. Crittenden and Kara Scannell of the Wall Street Journal. Here is Goldfarb’s piece and here is Crittenden-Scannell’s.
I haven’t read the Report, but according to the stories, on-the-ground SEC examiners in the Fort Worth District Office’s Examination Branch found evidence of a Ponzi scheme as early as 1997, and concluded on four separate occasions that Stanford’s businesses were fraudulent. They were essentially ignored by the Fort Worth District Office’s Enforcement Branch. One such Enforcment Supervisor, Attorney Spencer Barasch, repeatedly quashed probes into Stanford, but later attempted to represent him in front of the SEC. According to the Journal, the IG has referred Mr. Barasch for possible bar disciplinary action.
The criminal defendant formerly known as Sir Allen got yet another set of lawyers from U.S. District Judge David Hittner yesterday. Mike Essmyer and Robert S. Bennett are the latest additions. Mary Flood of the Houston Chronicle has an excellent story here detailing recent events. How happy is Kent Schaffer to be out of the case? “I feel great, just like I did after my first divorce.” By most published accounts, Stanford appears to be the Platonic Form of high maintenance.
Allen Stanford is trying to get Judge Hittner’s Pretrial Detention Order reversed in the Fifth Circuit. Here is Stanford’s Reply (to the Government’s Response), filed last week.
Mary Flood of the Houston Chronicle has an excellent piece here on the efforts of Allen Stanford’s current and future criminal defense attorneys to get paid. Dick DeGuerin wants out, not having seen any money since March, but U.S. District Judge David Hittner will not allow it until a replacement comes in “unconditionally.” Such a ruling looks abusive to me this early in the proceedings. Bob Luskin wants to represent Stanford, but will not come in under Judge Hittner’s conditions unless payment is assured. Luskin’s problem is that Stanford’s assets have been frozen by a different federal judge out of Dallas in the SEC civil action. Stanford’s D&O carrier was purportedly willing to pay defense costs until the court-appointed receiver in the Dallas action announced that the policy proceeds were part of Stanford’s frozen assets and could not be released. Co-defendant Laura Pendergest-Holt and the other co-defendants could also pay their lawyers out of the D&O proceeds. Dan Cogdell, Pendergest-Holt’s criminal defense attorney says: “It couldn’t be more obvious that we’re entitled to be paid.” Undoubtedly he is correct. D&O Policies are purchased precisely for this reason. It just goes to show you something they never teach in law school. Insurance rules the business world. Meanwhile, Stanford and the DOJ are battling over Judge Hittner’s detention order in the Fifth Circuit. The order should be overturned–but don’t bet too much money on it in the Fifth Circuit.
CNBC reports here that Patton & Boggs’ ace DC white collar man, Bob Luskin, has replaced Houston’s Dick DeGuerin as Allen Stanford’s lead criminal attorney. DeGuerin could not get frozen funds released for Stanford’s defense and apparently was not sufficiently satisfied of future payment. CNBC says that DeGuerin has been working without pay since March. Pending at the Fifth Circuit is Stanford’s motion to vacate Judge Hittner’s draconian pretrial detention order.
Here is the Order, straight from PACER.
The Washington Post carries the Reuters story here. U.S. District Judge Hittner heard arguments today on the government’s appeal of U.S. Magistrate Judge Stacy’s jaw-droppingly low bond setting.
The Houston Chronicle’s Kristen Hays and Tom Fowler report here on the latest moves in the Allen Stanford prosecution. On Friday, Senior U.S. District Judge David Hittner granted a stay (pending appeal) of U.S. Magistrate Judge Frances Stacy’s surprisingly low bail setting ($500,000.00 with a $100,000.00 cash bond). Hittner will apparently hear the matter on Monday morning. Prosecutors are entitled to appeal such determinations to the district court.
Mary Flood and Tom Fowler of the Houston Chronicle report here on the latest developments.
Sir Allen “no relation to Leland” Stanford has turned himself in to the FBI, according to his lawyer, Dick DeGuerin, and this ABC News.com piece. Sealed indictments were returned in the case earlier today in Houston. Stay tuned.
The Houston Chronicle reports here that Virginia based law firm Hunton & Williams has agreed to turn over some records to Stanford receiver Ralph Janvey, but not all. Specifically, Hunton & Williams declined to turn over records related to its representation of Stanford’s non-U.S. businesses (including Stanford International Bank) and Allen Stanford individually. Janvey wants them all and has asked U.S. Dsitrict Judge David Godbey for an order to that effect.
According to his attorney David Finn, Stanford CFO and number two man James M. Davis is now cooperating with both the SEC and DOJ investigations. NPR.org has the report here. The story does not indicate whether Davis’ co-operation is taking the form of personal interviews or some type of attorney proffer. The difference may be significant. Finn is quoted as saying that Davis has not been promised leniency and that there will be a time and place to answer questions relating to allegations of Davis’ involvement in a fraud. This may mean that for now Davis is only answering, directly or indirectly, rather detailed factual questions related to the whereabouts of assets. At any rate, it is always dangerous for those with criminal exposure to talk to the government unprotected, whether the discussions are informal or under oath. Laura Pendergest-Holt found this out the hard way.
The Houston Chronicle ran this story yesterday, summarizing and updating the efforts of court-appointed receiver Ralph Janvey to locate and unfreeze investor funds. The hardest funds to find have been those related to certificates of deposit.