By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
"Allen Stanford never asked us for anything, nor did he ever receive anything," McLaughlin says, adding that $45,900 was not a significant sum in a campaign that garnered tens of millions in donations.
But some experts say it would be foolish to think Stanford expected nothing for his money.
"Being vice chair of the DSCC means you have a great deal of influence over who gets campaign money," says Craig Holman, government affairs lobbyist for Public Citizen. "And Stanford wouldn't pump that much money into a hole that doesn't deliver something in return."
Charles Hazlett, a top Miami investment broker, aired his fears about the company in 2003.
In all, Stanford spent nearly $5 million lobbying Congress between 1999 and 2008 and dished out $2.4 million to federal candidates. He also sponsored dozens of free, "fact-finding" trips to Antigua and other Caribbean islands for politicians and their staffs on his fleet of jets. Records of the trips show that former Florida Representative Katherine Harris took one such jaunt to Saint John's. Disgraced Texas Republican Tom DeLay flew 11 times on Stanford's jets, according to The Dallas Morning News.
In the meantime, the red flags kept popping up. In March 2003, just months after Hazlett left Stanford, another employee — a Houston-based broker named Leyla Basagoitia — made even stronger accusations in Texas. In her filings, Basagoitia said Stanford encouraged "fraudulent inducement" and that the company was "engaged in a Ponzi scheme to defraud its clients." The company, she said, forced her to invest her clients' money in its Antiguan CDs even though she believed them to be "risky in nature and unsuitable."
Like Hazlett's, Basagoitia's claims were summarily dismissed, and both brokers were left to pay hundreds of thousands of dollars in back pay and attorney's fees to Stanford. Neither ever heard from the SEC regarding their accusations. And if their voices weren't loud enough for regulators, another Miami employee took his suspicions to court in 2006 and laid out in even greater detail Sir Allen's schemes.
Lawrence De Maria, a former business journalist for The New York Times and Forbes, was hired by Stanford in 2003 to run the company's internal magazine out of the Miami office. He was fired three years later, and soon thereafter, he charged in court that the company kicked him out for asking too many questions about its investment strategy.
In the filings, De Maria said he told his immediate boss in 2004 he suspected the firm was laundering South American drug money, lying to investors, running a gigantic Ponzi scheme and paying off Antiguan and American politicians to look the other way. The company settled De Maria's case almost immediately after his lawyers got a court order that would have forced Allen Stanford to testify.
De Maria, who now writes novels in Naples, declined through his lawyer to discuss the case because of the settlement. But he gave an interview with a Stanford lawyer three years ago.
"If you're taking money offshore, going through a bank and then offering up those funds to give high CD rates to lure more money back into the bank — to me, it was a definite Ponzi scheme," De Maria said in court.
"And I could never get an answer," De Maria continued, explaining that James Davis told him the firm got great returns by using better computer programs and analysts than anyone else in the business.
"[He said] they had a paradigm. They just knew how to play the market better than anybody else," De Maria added. "And I didn't buy that for a second."
The regulatory board that heard Hazlett's and Basagoitia's testimony is sanctioned directly by the SEC, and De Maria publicly made his claims in Miami-Dade Circuit Court. Yet the wing of the government charged with rooting out bank and investment fraud did not respond to the concerns piling up around Sir Allen's operations.
The SEC did open an investigation into Stanford's company in 2006, but dropped the inquiry at the request of another agency that hasn't yet been named, according to several sources. Representative Dennis Kucinich, among others in Congress, has demanded an explanation from the regulators about why the case was dropped. In 2007, regulators found the company was violating rules about how much capital it needed to keep on hand, so they levied a fine that amounted to a pittance — $20,000. That same year, the company paid another minuscule fine — $10,000 — for "misleading" information about its CDs.
The last, and perhaps most incredible, public warning that Stanford Group was in trouble came only three months ago from a low-key Venezuelan investment analyst named Alex Dalmady.
A thin, 48-year-old Caracas native, Dalmady grew up doing balance sheets for his dad, who worked for the accounting firm Price Waterhouse. He spent most of his adult life in the Venezuelan capital, where he analyzed the small national stock exchange in a subscription newsletter he published.
Six years ago, he moved with his family to Weston, Florida, after getting American residency. Last fall, a friend in Venezuela phoned him after the Madoff scandal and the global banking crisis began, asking him to take a look at his investments.
"Five minutes after I looked at Stanford...I said, 'This just doesn't smell right,'" Dalmady said in late February. "I said, 'Get your money out. Now.'"