Allen Stanford’s many lives

June 4, 2009

The clock is still ticking on what would appear to be an inevitable indictment for disgraced Texas financier R. Allen Stanford, the man who allegedly ran an $8 billion Ponzi scheme out of his Antigua-based bank. It appears the federal prosecutors manning the investigation are trying to make sure they have an airtight case before filing criminal charges–something Stanford and his lawyer expect will happen any day.

At first blush, it’s hard to fathom why it should take this long for prosecutors to file charges, given that Stanford and two of his top associates were the subject of a civil action by the Securities and Exchange Commission nearly three months ago. One of those associates, Laura Pendergest-Holt, has even been indicted on federal obstruction of justice charges. But still nothing on Stanford.

Bryan Burroughs, in the most recent issue of Vanity Fair, does a good job detailing how just about every US investigative agency was on Stanford’s tail for more than 15 years. But whether it was allegations of money laundering, or fleecing investors with the sale of dubious CDs, no one was ever able to get the goods on Stanford.

In fact, I’m told Houston and New Orleans agents from DEA and IRS even considered running an ABSCAM-style sting on Stanford in 1998. The plan called for the agencies to work together and rent a yacht and throw a party with undercover agents posing as big-time drug dealers. The agencies planned to invite Stanford and some of his cronies to the party to see if he’d be willing to do business with the drug dealers. In other words, help them hide the proceeds from their illegal trade. The sting never happened.  It’s not entirely clear why.

Ironically, a year later, DEA agents in Miami would praise Stanford as being one of the good guys in agreeing to turn over money that a group of alleged drug dealers had stashed away in an account at his Antigua-based bank. Again, it’s not clear if the Miami agents knew about the aborted sting the Houston agents had discussed.

Sure, a lot of the difficulty in going after Stanford stemmed from the simple fact that he kept the core of his operation in a tiny country, whose political leaders were all too cozy with the native Texan and dependent on his largess to fuel the nation’s economy. But there probably also was a simple lack of will on the part of the SEC, FBI, DEA and IRS to follow things through, in part because so many of Stanford’s banking customers were Latin Americans.

Or, as Burroughs describes, may be it was the aggressive lobbying by the investigative firm Kroll that tamed the authorities looking into Stanford. And, of course, don’t rule out the impact of inter-agency turf battles making it difficult for anyone investigative agency to take the lead and bring Stanford to justice.

In the end, the sad part of the Stanford story will be one of missed opportunities by investigators. All those years of failing to bring a case against Stanford simply allowed him to build his empire and sell more CDs to investors wanting to believe they’d found a can’t lose proposition.

It would have been nice if one of those agencies had thrown up some red flag along the way to at least warn investors to stay away.

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