Reply #121: SEC suspected Allen Stanford of Ponzi scheme a decade ago, report says

[Demeter]

THE TRUTH WILL OUT--BUT IT WON'T HIT U.S. PAPERS, OH, NO. WE HAVE TO GO TO ENGLAND TO FIND OUT WHAT'S BEEN GOING ON IN OUR OWN GOVERNMENT....

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7103091.ece

ONE OF W'S DRINKING BUDDY GOOD OLE BOYS, I'LL BETCHA!


A former leading lawyer for the US Securities and Exchange Commission blocked several investigations of Allen Stanford, the financier charged with defrauding investors of $7 billion (£4.5 billion), before going on to work for him, according to investigators.

Spencer Barasch, the former head of enforcement for the SEC in Fort Worth, Texas, “repeatedly attempted to represent Mr Stanford in connection with the investigation he had blocked for seven years”, a report by the SEC’s inspector-general says.

The report has revealed a damning picture of failure and inertia at the SEC, despite widely held suspicions within the agency dating back to 1997 that Mr Stanford was running a Ponzi, or pyramid, scheme. He was not charged until last year.

It has found that the SEC’s Fort Worth examination group conducted investigations of Mr Stanford in 1997, 1998, 2002 and 2004, concluding in each case that he was likely to be operating a Ponzi scheme or something similar. As early as 1997, one official said that the purported above-market returns on the certificates of deposit sold by Stanford companies were “absolutely ludicrous”.

The report has exposed divisions within the SEC’s Fort Worth office between the examinations team, which strongly suspected Mr Stanford of wrongdoing, and the enforcement division, which repeatedly failed to take any action against him until a final investigation opened in 2005.

According to the inspector-general, Fort Worth officials perceived that they were being judged on the numbers of cases that they won. “As a result, cases like Stanford, which were not considered ‘quick-hit’ or ‘slam-dunk’ cases, were not encouraged,” the report says.

In addition it states that Mr Barasch “played a significant role in multiple decisions over the years to quash investigations of Stanford”. After leaving in April 2005 Mr Barasch asked the SEC on three occasions if he could represent Mr Stanford, but permission was denied each time on the ground that it would be a conflict of interest. In 2006 Mr Barasch briefly represented Mr Stanford before being reminded by the SEC Ethics Office that it was improper to do so.

According to the report, when asked by the inspector-general why he was so insistent on representing him, Mr Barasch replied: “Every lawyer in Texas and beyond is going to get rich over this case. Okay? And I hated being on the sidelines.”

Mr Barasch, who now works for the law firm Andrews Kurth, could not be reached for comment. Bob Jewell, the firm’s managing partner, said that the firm disagreed with the allegations in the report. Mr Barasch “served the SEC with honour, integrity and distinction ... We believe he acted properly during his contacts with the Stanford Financial Group and the Securities and Exchange Commission. He did not violate conflicts of interest.”

Mr Stanford, once considered one of the richest men in the United States, with an estimated net worth of more than $2 billion, is best known in Britain for organising a Twenty20 cricket match in 2008 between England and a West Indian team called the “Stanford Superstars”. Each player on the winning team received $1 million.

Mr Stanford has denied the charges and said last year: “I would die and go to Hell if it’s a Ponzi scheme.” He is awaiting trial in Texas.

The inspector-general’s report into the SEC’s handling of the Stanford investigation was released last Friday, the same day that the agency brought fraud charges against Goldman Sachs, prompting accusations that the SEC was trying to cover up the findings.

WHY DOES THIS LAWYER STILL HAVE STANDING AT THE BAR? FORGET KANSAS, WHAT'S THE MATTER WITH TEXAS?

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