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Another Madoff? Sir Allen Stanford being accused of $8B fraud


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Feb 10 2009 11:39AM EST

What's Going On at Stanford International Bank?

Ray Pellecchia and I think that if Harry Markopolos had put his theories about Bernie Madoff online, Madoff would not have been able to continue his scam much longer. Against that, a lot of people are saying that no matter how detailed Markopolos's analysis, without the backing of a large institution like the Wall Street Journal or the SEC, nothing would have happened.


So it'll be interesting to see what happens now that Alex Dalmady has gone public with his suspicions about Stanford International Bank, an Antigua-based private bank with $8 billion in assets. Dalmady's report can be found here; it makes for quite a rollicking read, and if I had any money with SIB I'd be asking some pointed questions right now.



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How can we profit off of this alleged Ponzi Scheme?


On Yahoo Finance, it shows the current insider holdings of this Stanford International Bank






Looks like they own large stakes in

ELAN.OB (40% ownership)

HSSO.OB (20% ownership)

DGC (25% ownership)


If this bank is forced to liquidate, wont these stocks essentially get clobbered?


It seems as if only DGC is shortable and currently there are 44K shares shorted



Any opinions?

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Keep in mind that this is an off-shore bank.


If Coy A, Sub A made a Euro$ deposit in the bank & Coy A, Sub B simply withdrew it (for use in the US) there would be no loan. But Coy A would be up the capital tax, less a substantial fee for services rendered. At $100M increments this isn't change. What's good for Coy A is also good for money laundry, drug lords, arms dealers, & various sundry. Friends in the right places, a small rake for the house on every transaction, & honest dealing incentive.


There is more to this than published


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more from Bloomberg today...




Stanford Blames ‘Former Disgruntled’ Workers in Probe (Update1)

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By Alison Fitzgerald


Feb. 13 (Bloomberg) -- R. Allen Stanford, the billionaire chairman of Houston-based investment firm Stanford Group Co., blamed “former disgruntled employees” for stoking regulatory probes into his firm.


Stanford Group is under investigation by the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, according to people familiar with the matter who declined to be identified because they didn’t want to put their jobs at risk. The agencies are examining the company’s sales of certificates of deposit issued by its Antigua-based affiliate, Stanford International Bank Ltd., and the consistent, above- average returns those investments paid, the people said.


“We are all aware that former disgruntled employees have gone to the regulators questioning our work and our processes,” Stanford said yesterday in an e-mail to staff members that was obtained by Bloomberg News. “This could have compounded an otherwise routine examination.”


Investigators from Finra visited six Stanford Group offices last month, downloaded information from computer hard drives and looked through files, the people said.


“Regulatory officers have conveyed to us these visits are part of their routine examinations,” Stanford said in his e-mail message. He repeated that assertion in a letter to clients dated Feb. 11 and obtained by Bloomberg.


“Please do not get discouraged by what you read in the press,” Allen Stanford wrote in the letter. “We are hard at work delivering on our commitment to you.”


Finra has asked former employees about the bank’s stated returns on investment, the people said.


‘Decisive Steps’


The returns were between 10.3 percent and 15.1 percent every year from 1995 until last year, according to documents and annual reports on the bank’s Web site.


SIB has $8.5 billion in assets and 30,000 clients, according to the site.


Deposits climbed to $7.7 billion in July, from $3 billion at the end of 2004, according to press releases and the mid-year report posted on the site.


“On the issue of Stanford International Bank, I want to be very clear,” Stanford said in the e-mail. “SIB remains a strong institution, and even without the benefit of billions in U.S. taxpayers’ dollars we are taking a number of decisive steps to reinforce our financial strength. We will take the necessary actions to protect our depositors.”


‘Whatever Steps Necessary’


Stanford in his letter assured clients he will take “whatever steps necessary” to protect their deposits.


“We have already added two capital infusions into the bank and are considering additional actions,” he wrote.


Stanford, 58, vowed to “fight with every breath to continue to uphold our good name.”


Finra spokesman Herb Perone said the agency doesn’t confirm or deny investigations. Kevin Edmundson, an SEC investigator in Ft. Worth, Texas, said, “I can’t even confirm the existence of the investigation.”


The SEC issued subpoenas last July to at least two former Stanford employees. Last month, the agency questioned two former Stanford financial advisers, according to the people familiar with the situation.


The SEC has stepped up probes after being accused of failing to heed warnings that Bernard Madoff’s investment returns were too good to be true. Madoff was arrested Dec. 11 after allegedly telling his sons that his business was a $50 billion Ponzi scheme. The SEC has since announced unrelated lawsuits against at least seven money managers for allegedly inflating profits or siphoning off client money.


Marketing CDs


Stanford Group pushed its financial advisers to steer clients’ money into the offshore CDs, paying a 1 percent bonus commission and offering prizes including trips and cash for the best producers, according to four former advisers who asked not to be identified.


Marketing material for Stanford Group CDs raised red flags, said Bob Parrish, a financial planner and accountant in Longboat Key, Florida.


The use of the term “CD” to describe the investment was misleading because most investors associate it with a safe, FDIC- insured instrument, Parrish said.


‘Enjoying Those Checks’


“It was a familiar term being used to describe an instrument that really would not fall within the meaning of a CD,” Parrish said in a telephone interview. He advised six clients to take their money out of the CDs, he said.


An internal e-mail from 2005 obtained by Bloomberg showed Stanford urging a team of 61 Stanford Group financial advisers to bring $62.5 million in new money to the bank in one quarter.


“Many of you are just now enjoying those checks from our 2nd quarter team performance of $44 MM,” the e-mail said. “I’m sure you look forward to getting another one after this quarter.”


Stanford Group’s one-year, $100,000 CD paid 4.5 percent annual yield as of Nov. 28, according a posting on the Web site yesterday. A one-year, $10,000 CD purchased at JPMorgan Chase & Co. would earn 1.5 percent, according to its consumer banking Web site.


SIB describes the CDs in its disclosure statement as traditional bank deposits. The bank doesn’t lend proceeds and instead invests in a mix of equities, metals, currencies and derivatives, according to its Web site and CD disclosures.


To contact the reporter on this story: Alison Fitzgerald in Washington at Afitzgerald2@bloomberg.net


Last Updated: February 13, 2009 08:41 EST

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  • 2 weeks later...

Looks like most of the assets are gone.




"There is a liquidity crisis in this company," Ralph Janvey, the Stanford receiver, told U.S. District Judge David Godbey in Dallas in his first public comments since taking over the Stanford companies in February.


Hundreds of millions of dollars of Stanford assets will likely be recovered for investors instead of billions, Janvey told the court.


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