It’s a Scandal that Fraudsters Bernie Madoff and Robert Allen Stanford Were Not Shut Down by the SEC

Believe it or not Bernie Madoff’s phony monthly trading reports listed trades on days the market was closed, or at prices that were far off the market or in volumes that simply never existed. Yet, Madoff’s scam continued for 36 years, from 1972 until 2008, as the SEC was incapable of discovering the truth, and Madoff’s clients never read their phoney monthly statements, since through bull and bear markets Madoff always turned in profits that were not real. And shocking as it may seem, the SEC knew that Stanford was a fraud early on in 1998, but chose not to prosecute as the securities he sold were short term notes of a foreign bank supposedly yielding 12% and were not shares of stock. Imagine the stupidity of that pusillanimous decision. What a bunch of wimps!

Such were the most shocking revelations at a Boston College Conference on the Madoff and Stanford Cases ” The Legacy of Mr. Ponzi,” that the American College of Bankruptcy organized last Friday, at which I was a speaker on the Madoff crimes. I emphasized the lackadaisical performance by the Securities and Exchange Commission as the key absurdity of allowing these crimes to damage so many naive investors who wanted to believe against all past investment history that Madoff’s year-in,year-out returns of 9%-10% and Stanford’s offer of a 12% coupon on his bank’s notes could somehow be a rational expectation by small investors entrusting these two con men with most of their valuable savings. By comparison, Mr. Ponzi was put out of business in a very short time long before there was even an SEC existing. So much for the securities regulatory process where scams are concerned. It is a travesty of justice.

Clearly, the SEC should have had the smarts and the will to put Madoff and Stanford out of business before they were able to do so much harm. The fact that the SEC was inadequate to the challenge should give legislators the motivation to order a review of the agency’s leadership, manpower, and its statutory powers. It appears that the political connections of Madoff and the political contributions by Stanford may well have dulled or dented the investigations into their chicanery and kept the cops off the beat. Especially, as in the case of Madoff, the recent conviction of 5 employees together with the conviction of Madoff’s brother and other high-level employees reveals clearly the conspiracy pretty well included between 15 and 20 people. Stanford’s behavior involved an offshore bank in the Caribbean and so must not have been seen as so crucial to the SEC. It’s ability to make securities criminal cases is far overshadowed by the Justice Department.

After 6 years of progress, Irving H. Picard, the Trustee for the Liquidation of Bernard L. Madoff Investments Securities, has been able to pay the innocent Madoff investors back 56% of the money they lost. With any luck in another 155 claims for $6 billion more payments, Picard is hopeful of returning 100% to those legitimate Madoff losers. “ My goal is 100%”, he said before a crowd of over 100 students and bankruptcy experts at Boston College Law School in Newton, Mass. on Friday. He has spent $980 million in legal and administrative fees to collect $9.8 billion so far. By comparison the Stanford fundraising is only about $240 million, while the costs have been $120 million or 50% of receipts. Picard revealed for the first time that fabricated backdated trades for Madoff’s sons(one committed suicide) in Apple common shares that threw off paper profits of $6.5 million suggests that they “should have known” the enterprise was a scam.

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For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/

 

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Senator Vitter’s Letter to Sharon Bowen

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For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/

U.S. Senator sets hurdle for CFTC hopeful Bowen

(Reuters) – A U.S. senator questioned a candidate for the Commodity Futures Trading Commission over a decision that left victims of the Allen Stanford fraud out of pocket, raising a hurdle she must jump to get the job.

In a letter on Friday, Louisiana Republican David Vitter asked Sharon Bowen – who has been nominated by President Barack Obama to join the derivatives regulator – a series of 10 questions about her role in the decision.

Bowen is the acting head of the Securities Investor Protection Corporation (SIPC), the body that seeks to recoup money for investors if their broker goes under.

SIPC holds there is no basis in law to refund people who lost money in the $7 billion Ponzi scheme set up by Allen Stanford, who is serving a 110-year jail sentence.

The Securities and Exchange Commission (SEC) lost a court case in which it contested that decision, though an appeal in the case is still pending. A group of 14 senators and fraud victims are supporting the SEC’s legal fight.

“It seems that SIPC continues to prioritize protecting its Wall Street members by hiring lawyers to fight the SEC in court rather than protect investors,” Vitter said in his letter.

SIPC, created under the Securities Investor Protection Act (SIPA), is funded by Wall Street firms.

Vitter also asked whether SIPC had received any outside funding for its legal defense, whether its decision had been influenced by the banks, and wanted to know whether Bowen had received any gifts while at SIPC.

Bowen and two other nominees to the five-strong CFTC met little pushback in a Senate committee at a confirmation hearing on March 6, but it is no surprise that the Stanford scandal is coming to haunt Bowen. Thad Cochran, the highest-ranking Republican on the Committee, mentioned the scandal during the meeting, though he did not pursue the issue.

The agency – down to just two Commissioners, one Democrat and one Republican – is facing a leadership vacuum just as it is implementing some of the most fundamental reforms of financial markets after the 2007-09 credit meltdown.

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For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/

 

Distribution Schedules

In accordance with the Court’s May 30, 2013 Order Approving Receiver’s Interim Distribution Plan, the Receiver has filed the following schedules of distribution payments with the United States District Court for the Northern District of Texas, Dallas Division. This page will be periodically updated with additional schedules that are filed on a rolling basis as responses to Certification Notices are received and processed.

* 1st Schedule (August 20, 2013)

Stanford Ponzi Victims To Be Compensated

GENEVA — The office of Switzerland’s attorney general says its criminal investigation into former Texas tycoon R. Allen Stanford’s massive Ponzi scheme has concluded that some of the victims’ money was laundered in Swiss accounts.

The office says the investigation since Feb. 2009 is completed and all of the assets remaining in Switzerland will be returned to fraud victims.

It said Monday that Stanford Group (Suisse) AG was fined 1 million Swiss francs ($1.1 million) and ordered to pay between 6 million and 9 million francs in claims. It has provided American authorities with banking documents and hearing transcripts for use in U.S. criminal proceedings.

The U.S. Supreme Court ruled last month that Stanford’s victims can go forward with class-action lawsuits against those that allegedly aided the $7.2 billion fraud.

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For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/

Joint Liquidators Take Court Action

jls

Antigua St. John’s – The joint liquidators of the Stanford International Bank Ltd (SIBL) obtained authorisation from the Antiguan court to take back funds from holders of certificates of deposit (CDs).

According to a release, most of the victims are from Venezuela, other countries in Latin America, and the United States. They sent a letter asking for the return of money withdrawn from their accounts during the six months prior to the collapse of the SIBL, and demanded a response within 120 days of receipt of the letter.

COViSAL’s response can be read at: http://covisal.blogspot.com/2014/02/stanfords-victims-defrauded-again-by.html

According to the release, “families who had their life savings deposited at SIBL, were completely unaware of any problems the bank was having. There were no red flags or suspicious circumstances known to the depositors, who continued doing business with SIBL during its regular commercial operations until the bank closed its doors in 2009. It is a fact that the majority of depositors only became aware of trouble at SIBL when the SEC seized Stanford Financial Group on February 17, 2009.”

Covisal’s director said, “The withdrawals made from their savings during the six months prior to the closing of SIBL’s operations, were not ‘Preferential Payments,’ but legitimate withdrawals of part of the principal invested by the rightful owners of the money. These withdrawals were made rightfully and in good faith. Families withdrew part of their invested principal regularly to pay for living expenses, medical treatments, relatives in need, down payments, business expenses, etc.”

Families lost their livelihood in Stanford’s fraud; many sold their homes and what other assets they had left in order to survive for the past five years. The majority of depositors at SIBL are common people, families who worked very hard for 30-40 years to save money for their retirement, for a college fund for their children or grandchildren, and to have savings available for a medical emergency, among other things. Since the closing of SIBL in 2009, victims of the fraud have been living in dire straits; the Stanford fiasco destroyed their lives.

According to court records, the bank’s run might have happened the week of February 9, 2009 at the earliest.

According to the release, “If the management of SIBL permitted the redemption of CDs in the six months leading up to February 23, 2009, it was most likely their Preferred Customers who withdrew their money plus interest – unfairly prejudicial against all CD creditors and depositors at SIBL.”

The joint liquidators sent a summary of receipts and payments that shows receipts of $108.8 M as of December 31, 2013. Of this amount, $95.1 M was part of the $100 million that UK authorities confiscated following a request from the US Department of Justice on April 2009. The liquidators so far have spent $58.6 M. The release questioned, “Why are the expenses so vague and lacking in supportive evidence? What honest and transparent legal entity is providing oversight of the liquidation’s affairs? The real accomplishment of the Joint Liquidators seems to be in giving themselves ‘Preferential Payments’.”

The Open Letter from COViSAL to the Antiguan Court and the Joint Liquidators can be read here

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For a full and open debate on the Stanford Receivership visit the Stanford International Victims Group – SIVG official forum http://sivg.org.ag/