STANFORD TROUBLES SPOTTED IN 2002

Reports are now coming out of the SEC investigation into the alleged Ponzi scheme by Texas/Antigua banker R. Allen Stanford, that investors were suspicious as early as 2002. Apparently they made those suspicions known the the SEC, but the government didn't bother acting for another six years.

While the SEC has now levied civil charges, a federal grand jury is studying the possibility of a criminal case against Stanford, his company and his executives for perpetrating what they call an ongoing fraud by selling high-yield certificates of deposit that promised out sized returns.

To date, the only criminal charge in the matter has come down against Stanford's chief investment officer, Laura Pendergest-Holt, for obstruction of justice.

Although the SEC their charges against Stanford and others in February of this year, it now turns out the Commission was alerted to potential fraud as early as October 2002. At that time, a Mexican accountant questioned certain family investments in Stanford's CDs. At a time when prime banks in the States were paying 4%, Stanford was offering 9%. The accountant questioned the legitimacy of those CDs, and also the fact that Stanford's bank, which was American by birth and right, was being audited not in the States but in Antigua.

It is known that the accountant urged the SEC to make certain that investors do not get cheated.

Some 11 months later, a whistleblower --- described as an “insider who does not wish to remain silent, but also fears for his own personal safety and that of his family” --- wrote to the SEC that “Stanford Financial is the subject of a lingering corporate fraud scandal perpetuated as a massive Ponzi scheme that will destroy the life savings of many, damage the reputation of all associated parties, ridicule securities and banking authorities, and shame the United States of America.”

The insider then claimed that the fraud had gone on for 17 years.

Less than two years after that, a disgruntled former employee reported "illegal financial activities.” There were also accusations that the high yield CDs were simply a hedge fund.

In answer to those accusations, an SEC spokesperson issued a statement claiming, "The SEC was unable to obtain detailed information about the offshore CDs in part because of complicating factors involving jurisdiction, including whether CDs issued by a foreign bank are securities covered by the federal securities laws, whether the CDs were covered by U.S. banking laws, and the application of Antiguan laws governing confidentiality."

The administration of George W. Bush, in power during that time, has close ties to the Texas Bankers Association and one of Bush's closest allies in the Senate was Texan Phil Gramm, who not only had close ties to the Texas bankers, but was said to be personally close with Stanford.