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Stanford Gears up for a Legal Showdown

Posted by: Matthew Goldstein on March 26

Alleged fraudster R. Allen Stanford is gunning for a fight.

Dick DeGuerin, the celebrated Houston criminal defense lawyer who is now representing Stanford, came out firing verbal bullets today at the Securities and Exchange Commission, which has civilly charged the 59-year-old Texas finacier with running a massive $8 billion Ponzi scheme.

“This is not a Ponzi scheme,” says DeGuerin, in an interview with BusinessWeek’s Unstructured Finance blog. “The SEC is using Stanford as a distraction from its failures in Madoff. This is not Madoff.”

What DeGuerin is referring to, of course, is the even bigger scandal surrounding New York money manager Bernard Madoff, the mastermind of the biggest Ponzi scheme ever. Madoff, earlier this month pleaded guilty in federal court, to charges he ran a $65 billion Ponzi scheme for decades. The SEC has been widely faulted for not detecting the fraud and ignoring tell-tale signs from a would be whistleblower.

“There are hard assets for evey dollar invested” with Stanford’s offshore bank in Antigua, says DeGuerin. “The losses in the Stanford case are right in line with the stock market.”

The SEC, in its civil complaint, has alleged that Stanford took at least $1.6 billion in personal loans from his offshore bank and deceived investors about the assets the bank was investing its money in. The SEC alleges the high-yields on the certificates of deposit sold by Stanford International Bank were deceptive and unsustainable.

“We’ll let the complaint speak for itself,” says SEC spokesman John Nester.

Earlier this week, Unstructured Finance first reported that Stanford was on the verge of hiring DeGuerin, who has represented everyone from cult leader David Koresh to former Republican House Majority Leader Tom DeLay. DeGuerin says he’s in the process of putting together a legal team to assist him. The first step, he says, is going into federal court to get a judge to unfreeze some of Stanford’s reported $2.2 billion in assets, so he can pay for his legal defense.

Right now, the only charges pending against Stanford are civil fraud charges. But federal prosecutors are also investigating and have already filed obstruction of justice charges against the former chief investment officer at Stanford’s once fast-growing Stanford Financial Group.

Meanwhile, Stanford’s top deputy, Jim Davis, the company’s former chief financial officer, is now cooperating with authorities, according to his lawyer David Finn. The SEC also filed civil fraud charges against Davis.

DeGuerin, however, brushed off the news that Davis is working with Stanford’s accusers. “If he tells the truth it doesn’t concern us.”

Unlike Madoff, who went down without much of a fight, Stanford is not going to make this easy for the authorities. Stay tuned. This thing is just heating up.

Reader Comments


March 26, 2009 01:22 PM

Go Stanford, Go !!
I Invested in your group; and I'm sure that there are thousands like me that believe what Mr. DeGuerin is saying. The SEC is the fraud; and, they are not happy with the taxed money that we pay them; but, now they want to get our worked money.

They say that they can't find the assets; here are some clues:
- Panama: the bank that 3 months ago was estimated in millions of dollars, now the value is $0
- Venezuela: Bank value over $150 mill three months ago, now they are selling it for $60 mill
- Stanford Investments: 3 months ago value $3,000 mill; now ???????
- Etc.....

With all this panic (created by the SEC) about the off-shore banking, they believe that people will move $ to US banking system.... if anything, I'm buying EUROs.

Mr. DeGuerin; please add to your comments:
- Merrill lynch broken
- Bank of America in a crisis
- Citigroup; not even words
- Wachovia RIP
- AIG bonuses
- Etc.....

Good Luck!


March 26, 2009 02:10 PM



March 26, 2009 07:24 PM

I trust Sir. Allen Stanford. This problem was caused by the SEC, and they should pay for all the damage to Stanford’s image and reputation; and also for the actual bankruptcy of this Finance Empire.
I understand he could have had some problems, but not as bad as CITIBANK, Bank of America, AIG etc. that took BILLIONS from our tax money. Without this government TARP support they ALL would certainly be broke.
Why is STANFORD different?

donald forester

March 28, 2009 05:12 PM

theadviser's assets were frozen.How much?Is SIB insured by SIPC,Lloyd's etc?The receivers remain mute,why?Janvey wants to tap into $10million fund forhis fee.If assets are found will he take a per centage as well?how aboutNigelSmith of Vantis?SEC cleared SIB/CD's 2006.what happened in 2years?

donald forester

March 28, 2009 05:12 PM

theadviser's assets were frozen.How much?Is SIB insured by SIPC,Lloyd's etc?The receivers remain mute,why?Janvey wants to tap into $10million fund forhis fee.If assets are found will he take a per centage as well?how aboutNigelSmith of Vantis?SEC cleared SIB/CD's 2006.what happened in 2years?


March 30, 2009 03:53 PM

If Stanford committed a crime, why hasn't he been charged?

Why did the SEC freeze all accounts without hard evidence of a crime or at the very least a solid investigation?

If Stanford committed any crime, why is the SEC making investors pay for that crime with investors' hard earned money?

Ted Apodaca

April 1, 2009 11:05 AM

I've worked all my life overseas to save for my retirement.I am 52 years old, why do I have to pay for someones doing!!!It hurt's me to think what has happened. I'm not rich just another person trying to get by in this life time.



April 1, 2009 03:05 PM

My honest lifetime savings went to SIB, and now my life has changed big time because of the alleged fraud. in the meantime, Janvey and Vantis are getting paid with our money......
SEC needs to get their act together and return our money to us investors.

Thank you for your interest. This blog is no longer active.



BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.

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