Wednesday, February 25, 2009

Stanford's shadowy financial empire

Stanford's shadowy financial empire.

No one will ever know just how Charlesworth Shelley Hewlett, who ran CAS Hewlett & Company out of a small office sandwiched between fish and chips shops on South Bury Road in Enfield in north London, came to be the accountant for Allen Stanford's $50 billion financial empire that included Stanford International Bank (SIB). That is because Mr. Hewlett, known as a quiet gray-haired man to those who had offices in his north London office block, died "peacefully" a few weeks before the Stanford scandal hit the front pages. Hewlett was 73 but no one knows the reason for Hewlett's death.
CAS Hewlett maintained only four other offices, three in the London area, including one in Ilford in Essex, England and another in Antigua, where SIB is headquartered.
There are definite links between the Stanford scam and that involving Bernard Madoff's $50 billion Ponzi scheme. Perhaps the one most striking similarity between the two men is that they used small, virtually unknown accounting firms to handle multi-billion dollar enterprises that are usually audited by the large international accounting firms like Price Waterhouse Coopers and Ernst and Young. Madoff used Friehling & Horowitz, a small three-person firm in New City, New York, while Stanford used Hewlett with four offices of one to two rooms in the London area with no signs of regular employees. WMR has been informed by a knowledgeable source that Hewlett's rented offices had a desk, a filing cabinet, and a telephone. None of the telephones had answering machines. Neighboring office workers noticed an individual entering and exiting Hewlett's offices about once a week.
We have learned that four planes in Stanford Aviation LLC's eight plane fleet -- which consists of two Hawker 880XPs, a Hawker Siddeley HS-125-600A, a Convair 440 (N800SA -- which the FAA files state has "multiple records"), a Bombardier BD-700-1A10 (N1SA), two Gulfstream Aerospace G-IVs, and a Hawker Siddeley HS-125-600A (N10SA), have been sold within the last six months through two CIA shell companies that are next to impossible for investigators to trace. One of Stanford's G-IVs (N2SA) has, in fact, disappeared from the FAA registry of planes registered in the United States. Stanford Aviation has offices at 5050 Westheimer Road in Houston, Texas; 201 S. Biscayne Boulevard, Miami, Florida; and 100 Jim Davidson Drive, Sugar Land, Texas.
Stanford's Bombardier was sighted at Bird International Airport in Antigua on March 20, 2008 and at Cointrin International Airport in Geneva on July 22, 2004. The Convair 440 was exported to the Dominican Republic and flew for Trans Dominican Airways (TRADO). It was last photographed in 2004 in the "bone yard" at Las Americas International Airport in Santo Domingo behind the Dominicana hangars.
A recent report in the London Observer that one of Stanford's planes detained by Mexican law enforcement because it contained checks linked to the Mexican Gulf Cartel, one of the most violent drug syndicates in the region, may be a "false flag" designed to throw the U.S. Drug Enforcement Administration (DEA) and FBI off the trail of the planes previously sold by the Stanford Group through CIA shell companies. We have learned that these planes may have actually been involved in both drug running and the CIA's extraordinary rendition program of transporting kidnapped Muslims to Guantanamo Bay, Cuba and other locations.
Representative Dennis Kucinich recently stated that the Stanford case has similarities to the Iran-contra scandal of the Reagan administration. There are reports that Stanford has hired Washington's Williams and Connolly lawyer Brendan Sullivan as his attorney. Sullivan represented Iran-contra felon Oliver North during the Iran-contra congressional hearings.
Stanford hails from Mexia, Texas but lived for some time in the Coral Gables, Florida home once owned by George Wackenhut, Sr., the former FBI agent who left the bureau and set of Wackenhut Corporation to engage in investigative operations that FBI director J. Edgar Hoover was legally barred from being involved with.
Kucinich may be correct about who is actually behind Stanford and why. North's Iran-contra network used off-shore contrivances in the Cayman Islands to launder money. Stanford International Bank primarily used Antigua and Barbuda for the same purpose. Up to 30 percent of the investments in SIB were from wealthy right-wing Venezuelans who were trying to protect their money from Hugo Chavez's socialist government in Venezuela. In November 2008, Venezuelan military intelligence agents raided SIB's office in Caracas and seized documents and revealed that four employees of the bank were suspected U.S. intelligence agents.
There is some evidence that the CIA arranged for wealthy Venezuelans to hide their money in SIB's Antigua account in return for a percentage of the certificates of deposit accounts' interest going to a CIA slush fund to secretly fund covert operations directed against left-wing governments in Bolivia, Ecuador, and Venezuela. The wealthy Venezuelans were constrained to report their losses from SIB because they would be immediately charged with tax evasion by the Venezuelan government.
It was recently revealed that in addition to contributing money to Republican and Democratic politicians, Stanford was connected to a $50 million hedge fund operated by Paradigm Global, run by Vice President Joe Biden's son, Hunter Biden, and the Vice President's brother James Biden.
What us becoming clear that Madoff and Stanford are not sitting in jail presently because of who is sitting in the Vice President's mansion in northwest Washington, DC and in certain Senate and House seats in Congress...

-- When Federal agents raided the offices of Stanford Financial Group earlier this month, exposing a massive fraud and successfully preventing its perpetrator, Allen Stanford, from lamming it overseas, it was the culmination of more than an investigation into a despicable "mini-Madoff" Ponzi operation. It was also a neat little public relations moment for the beleaguered Financial Industry Regulatory Authority and their former head Mary Schapiro, who now heads up the equally beleaguered Securities and Exchange Commission. Despite what you may have thought about the way FINRA and the SEC seemed to be clueless to the ways of Bernie Madoff -- and those agencies could have made use of both celebrated whistleblower Harry Markopolos and a timely article from Michael Ocrant at MAR Hedge -- this new regulatory regime was serious about bringing scofflaws to justice, and those who were formerly asleep at the switch were going to get regular wake up calls.

Rolling up Stanford Financial would have been an excellent, and subtle way of noting that times have changed. As usual though, reality isn't that simple. It turns out that another forgotten reporter, in this case David Ivanovich of the Houston Chronicle, had raised some serious alarms about Stanford back in 2000. In an article entitled "Houston Banker Tries to Create Caribbean Empire, Runs into Problems with Feds" (July 16, 2000) Ivanovich chronicles Stanford's wheeler-dealing in the nation of Antigua, painting a picture of Stanford that finds him waist deep in shadiness, even downright creepiness.

Back around the turn of the century, Stanford had managed to run afoul of the State Department, who were, at that time, on a "crusade against [offshore] money laundering":

Stanford, a little-known investment banker and real estate developer in Houston, caught the State Department's attention for his leading role in tightening Antigua's already secretive banking laws.

Washington insisted that the changes could hamper international efforts to halt the flow of drug money. The result was a protracted confrontation between the United States and Antigua that is only now being resolved.

Stanford had deep ties to Antigua and their government, and the way Ivanovich describes it, Stanford's conduct comes across more like a cult-leader than a financier:

Holding dual U.S.-Antiguan citizenship, Stanford owns Antigua's largest newspaper, heads a local commercial bank and enjoys access to Prime Minister Lester Bird.

He is the man to whom the islanders have turned to help finance construction of a hospital, build a shelter for single mothers and start up a carrier when airline service to the region was curtailed.

And honestly? This part alone is mindbending enough:

When a Catholic priest stricken with the stigmata (wounds resembling those Jesus suffered in his crucifixion) needed medical treatment in the United States, Stanford flew him on his private plane.

"That was a major personal event in my life," Stanford said. "It was truly an out-of-this-world experience, a supernatural experience." Indeed, Stanford still carries with him congealed fluids that drained from the priest's foot.

You see, where I come from, people who carry around a jar of congealed priest foot-juice? You keep an eye on them. As it turns out, however, Stanford didn't begin to attract attention until he started injecting himself into the formulation of Antigua's banking laws. Ivanovich fleshes out the timeline:

Antigua's offshore sector became more worrisome as individuals believed to have ties to Russian organized crime moved in.

In October 1997, the Antiguan-based European Union Bank collapsed, with its Russian founders suspected of absconding with $ 10 million in depositors' money. In May 1998, the U.S. Customs Service accused the Caribbean American Bank of Antigua and eight individuals of bilking hundreds of investors out of $ 60 million.

Last fall, the Antiguan government accused Pavlo Lazarenko, the former prime minister of Ukraine, of laundering more than $ 80 million through an institution on the island.

As the island's reputation began to deteriorate, Prime Minister Bird asked Stanford in 1996 to spearhead an effort to revise Antigua's banking laws, clean up the offshore sector and expand the industry.

At Stanford's urging, Bird named Stanford's attorney, Carlos Loumiet, an international law and banking expert, to a special advisory board. The panel included former officials from the Drug Enforcement Administration, the Federal Bureau of Investigation and U.S. Customs.

Two other members of Loumiet's firm, including Pat O'Brien, a former U.S. Customs special agent for South Florida, joined the effort.

Stanford was the "driving force" behind the movement, O'Brien said. Stanford Financial's Bank of Antigua, the company's commercial bank serving the local Antiguan population, loaned the government the money to pay for the project.

At the time, Stanford's bank was "Antigua's largest bank serving offshore customers." For some reason, no one seemed to be bothered by the fact that he was the 'driving force" behind a rewriting of the laws that would govern his business. Maybe that's because initially, there seemed to be little reason for concern. Many "of the changes were to the liking of countries such as the United States and Britain," especially the mandate for greater transparency: "Individuals, for instance, could no longer obscure their connections to offshore accounts by depositing funds in the name of an anonymous corporation."

Soon enough, however, a rather substantial conflict of interest emerged:

As part of the changes, the government created an agency to regulate the offshore sector, the International Financial Sector Authority.


Stanford said his appointment to the board was "an interim step" to help get the program under way.

So what happened in the interim? Well, the International Financial Sector Authority did a bang-up job, kneecapping all of Stanford's competition:

While the United States and Antigua were wrangling over the legal changes, the country's new regulatory authority began cracking down on the offshore sector.

The Financial Sector Authority was empowered to close institutions that were short of capital, had not been properly audited, or that were engaged in fraud or money laundering.

The authority shuttered dozens of institutions, paring the number of offshore banks operating in Antigua from 57 down to 18.


Go figure. I'll have you know, however, that Ivanovich had me wanting to bait a hook as soon as I read about that terrifying foot-juice stuff. This forgotten article bears a striking semblance to Ocrant's take on Madoff -- a distant early warning of corruption to come. You'd think that brewing up conflicts of interest, placing yourself in charge of your own regulation, and running afoul of major government agencies would earn you a special red flag with organizations tasked with policing and preserving our financial interests. You'd be wrong!

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