URGENT >> BULLETIN >> MOVING: Allen Stanford Guilty In Colossal U.S./Caribbean Ponzi Caper

Robert Allen Stanford, once listed by Forbes magazine as one of the richest men in the United States, has been found guilty in a Texas federal court on charges he operated one of the most epic Ponzi frauds in U.S. history.

Stanford, 61, was found guilty on 13 of 14 criminal counts filed against him. The swindle involved about $7 billion — considerably less than Bernard Madoff’s caper, but still epic compared with virtually all other known Ponzi schemes.

An American, Stanford became a banking magnate in the Caribbean island of Antigua. His Ponzi scam involved certificates of deposit.

Watch Breaking News report on MyFoxHouston.com . . .

R. Allen Stanford Convicted in $7 Billion Ponzi Scheme: MyFoxHOUSTON.com

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12 Responses to “URGENT >> BULLETIN >> MOVING: Allen Stanford Guilty In Colossal U.S./Caribbean Ponzi Caper”

  1. Tony H: The story is also on Yahoo via Reuters:
    http://finance.yahoo.com/news/allen-stanford-jury-reaches-verdict-174352069.html

    Thanks for that, Tony.

    Patrick

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  2. He didn’t get a Presidential Medal for Excellence in (the check cleared) but he was knighted by Her Majesty the Queen for (basically the check cleared).

    Also, he wasn’t knighted in Britain, the Queen being Head of State of all the commonwealth nations, created him Knight Commander of Antigua as opposed to Knight Commander of the British Empire.

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  3. I wonder how much money Larry Friedman made of of Stanford’s victims. Talk about chasing ambulances….

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  4. Quick note:

    Justice Department statement on Stanford conviction:

    http://www.justice.gov/usao/txs/1News/Releases/2012%20March/120306%20Stanford.html

    The statement references the FBI’s Kevin Perkins.

    See this September 2010 PP Blog story on HYIPs that references Perkins’ testimony on Capitol Hill:

    http://patrickpretty.com/2010/09/22/fbi-says-it-has-opened-291-new-hyip-cases-and-has-780-pending-cases-of-high-yield-fraud-many-have-international-nexus-agency-notes/

    “Many of the Ponzi scheme investigations have an international nexus and have affected thousands of victims,” Perkins told the Senate Judiciary Committee in 2010.

    Patrick

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  5. My takeaways from this verdict:

    1. Hopefully we have seen the last of the mega ponzi schemes for a while. In this case, Stanford did not take in $7 Billion, his investors LOST $7 Billion. The most conservative estimate of the losses in the Madoff scheme is about $20 Billion. In addition, investors lost about $4 Billion to Tom Petters. Scott Rothstein investors lost about $1.2 Billion. The Drier scam and the Florida Grocery Scam losses approach $1 Billion. I would hope that there are no more ponzi schemes of this size and magnitude out in the either.

    2. The convictions are for wire fraud etc. While running a ponzi scheme is relevant, it seems strange that no one is charged in state court with simple fraud. I know these cases are difficult and expensive to prosecute but the size and scope of the losses are threats to the economic system. It seems to me that prosecutors are more worried about their win loss ration. Once it appears that a case requires work, they back off. In actuality, the same was true of the SEC. The SEC’s efforts need to be redirected to systemic fraud. The IRS needs to stop chasing individuals who underpay $1 thousand dollars and start paying attention to the Stanford’s of the world who are committing fraud on this scale.

    3. The scale of these mega ponzi schemes is just too hard to imagine. We are titillated by the antics of the HYIP internet schemes. Well we should be offended by their fraud. But they have never grown big enough to challenge the integrity of the economy.

    4. In sum, I’m saying that enforcement should go where the money is.

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  6. DL: I appreciate many of the points you made, but I must disagree with your point #4. There were just 2 Ponzi cases here in Orange County, CA that exceeded $1.5 Billion dollars, and I think it had a tremendous effect and challenged the integrity of the economy here. I can think of just 2 nationwide Ponzi’s that stole more than $1.2 Billion combined, and toss in another 18 ponzi’s and the amount exceeded $8 Billion dollars. You cannot have this much money taken out of the economy without it being catastrophic and challenging the integrity of the economy.

    I firmly believe this is one of the reasons why our economy is struggling to recover. We have had too much money being taken out of the economy that will never be put back in for a long time to come that was lost to these Ponzi’s. The losses to these Ponzi’s is staggering, and more important are only about 40% reported and trials result. It has been estimated that in 3 years, over $500 Billion dollars was stolen worldwide, and $300 Billion dollars of that was right here in the US. If it is true that this represents only about 40% of the total, then there is no doubt it has a tremendous impact and challenge to the integrity of the economy.

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  7. On top of which, it’s just plain wrong.

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  8. littleroundman: On top of which, it’s just plain wrong.

    I’ll second that.

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  9. DL: We are titillated by the antics of the HYIP internet schemes. Well we should be offended by their fraud. But they have never grown big enough to challenge the integrity of the economy.

    Hi DL,

    I agree with your point about the HYIP sphere being offensive, but respectfully disagree that it doesn’t challenge the integrity of the economy.

    A local economy can be undermined by an HYIP by a single magnetic promoter or a single upline “team” in a specific area. I know of at least two churches that were sucked into the ASD scheme. Things got so heated at one of the churches that the pastor banned ASD discussion. Congregants were pitted against other congregants.

    Here is the math from just four HYIP schemes:

    Genius Funds: $400 million.
    ASD: $110 million (at least).
    Legisi: $72 million.
    Pathway to Prosperity: $70 million.

    There are hundreds — if not thousands — of these “programs” operating simultaneously. Many of them rely on core groups of committed, serial scammers — and money gets circulated between and among schemes.

    It is organized crime that relies on loosely knit confederations to sustain itself, IMHO. The security situation it creates is untenable because vast sums get sucked into a black hole that is fed by a never-ending series of rat holes — and steroidal puppeteers are pulling the strings. The “face” of the “opportunity” may not be the braintrust, which leads to the darkest question of all:

    Is the money being used not only to enrich the purveyors, but also to arm terrorist organizations and/or extremists (violent or otherwise) — and are the rat-hole conduits being used by narcotics traffickers or gun runners or other criminal organizations to wash the cash?

    Patrick

    P.S. Many HYIP schemes largely are frauds aimed at what could be described as the “working class,” including folks in poverty or even desperate poverty.

    Here is how Professor James Byrne described the P2P fraud:

    http://patrickpretty.com/2010/06/01/real-hyip-expert-says-notion-of-secrecy-in-commercial-fraud-meant-to-discourage-reports-to-law-enforcement-james-byrne-consulted-with-government-before-p2p-ponzi-case-was-filed/

    Patrick

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  10. I appreciate what you are all saying. I did not mean to downplay the individual damage done by schemes that are just as horrendous in the lives of their victims. I certainly did not mean to suggest that schemes that do not approach a billion in losses are not important and that taken together they do not threaten the economy.

    What I was trying to convey is the sheer size of the fraud committed by the Stanford/Madoff/Rothstein/Petters of the world.

    I often wonder about the psychology of the people who pull off these schemes whether great or small. They have to have charisma in order to bring in the investors. At the same time, they have to be able to lie continually. No of them seems to ever be bothered by guilt except that they are caught and punished. It seems the definition of psycopath.

    Anyway, I appreciate the good discussion.

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  11. Narcissistic Personality disorder and Antisocial Personality Disorder both have the inability to empathize as elements.

    Sociopathy and psychopathy are now generally accepted as being subsets of ASPD.

    Combine ASPD AND a narcissistic personality disorder and you have the perfect recipe for one of the abovementioned criminal fraudsters.

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