DealZone

(Reporting by Ned Barnett in Chapel Hill, N.C.)

Author John Grisham, master of the legal thriller, says the real-life fraud scandals involving Bernard Madoff and Allen Stanford trump even the gripping fiction of his novels.

He says he is fascinated by the accusations of multibillion dollar Ponzi schemes, involving tangled webs of companies and offshore banks, which have put Wall Street financier Madoff in jail for 150 years and are also leveled against Texas billionaire and sports entrepreneur Stanford.

Madoff pleaded guilty in March to a $65 billion fraud and was jailed in June, while Stanford has pleaded not guilty to charges that he bilked investors in a $7 billion swindle.

“The thing about Bernie (Madoff) and Allen Stanford, you know, if I wrote that stuff nobody would believe it,” Grisham told reporters at the opening of the North Carolina Literary Festival at the University of North Carolina.

Lawyer-turned-author Grisham, 54, known for his works like “The Firm,” “The Testament” and “The Runaway Jury,” which probe such human failings as greed and deceit, said his imagination is no match for the stories behind real super swindlers.

Trying to report the comprehensive story of Allen Stanford, the Texan billionaire that the U.S. Securities and Exchange Commission has accused of perpetrating an $8 billion fraud, is like trying to reassemble 100 documents after they’ve been through the shredder.

Stanford’s business and sports interests and the subsequent investigations into them stretch across the ocean, through numerous government agencies and courts and into the lives of people in places big and small.

As usual, there was too much to fit into any one story.

Last week I flew from New York to Houston and drove about three hours north to Mexia, Texas the small town where Stanford grew up. I wrote about Mexia here, and about Stanford’s complicated personal ties — apparently he charmed women as well as investors and has left an angry trail of both, including an estranged wife, several girlfriends and six children with four women.

For Mark Tidwell and Charles Rawl, former employees who filed a whistleblower lawsuit against Texas billionaire Allen Stanford’s financial empire, this week’s move by U.S. securities regulators to charge Stanford and two associates with “massive, ongoing fraud” brought a certain kind of redemption. But for the thousands of investors who now cannot tap into their accounts until a court-appointed receiver sorts out claims, it could be a long wait.

Tidwell and Rawl both worked in Stanford’s posh Houston headquarters until December 2007, when they say they were forced to leave. In an interview with Reuters in Houston on Feb. 19. 2009, the two talked about their growing concerns while working at Stanford, as well as the silver-spooned culture that prevailed. Click here to hear audio

Mark Tidwell, 40, a former senior vice president at Stanford, recalls a plush dining room with a new menu every day, and perks aplenty for employees fortunate enough to make the “Top Producers Club.”

Allen Stanford’s financial empire is in chaos after the SEC charged that he and his partners were perpetrating a “massive” fraud, but only four months ago things appeared much sunnier, at least in a glowing Forbes profile that described his investment strategy as “sure and steady.”

The profile, “Crazy for Cricket,” was part of the Forbes 400 ranking of the richest Americans (Stanford was #205). It outlines his goal of competing within five years with the likes of UBS and Wachovia — although to be fair, the former company has had its own problems and Stanford managed to outlast the latter.

An exodus of wealth advisers is already under way, says Stanford, as writedowns and layoffs mount at those firms. In a single week in August, he says, his new Richmond, Va. office hired ex-UBS employees with clients representing $1 billion in assets. “There are a lot of deals to be made in financial services–banks, brokerages, trusts,” he says. Another industry he’s eyeing is desalination plants in developing countries like China: “We’re very bullish on making a lot of money on water in the next 20 years.”