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The Rise and Fall of the Stanford Financial Group

On an overcast March day, Rosemary Mazor is saying goodbye to friends at the Stanford Financial Group in the Galleria area. This week, the doors are open for employees who didn't get time to gather their belongings before federal agents raided the building February 17.

Mazor had already collected her things, but she is in the area for a job interview so decided to come by anyway. She figured she would walk through the doors one more time, no matter how strange it felt. One last time through the lobby, up the elegant staircases and past all the proud Stanford eagles carved into the limestone and mahogany and marble.

The last time she was here, she didn't get to capture one last snapshot of this place she had come to consider a second home. It's kind of hard to get an image for posterity when you and the rest of your four-person team are being escorted out of the building by armed U.S. marshals.


Stanford Financial Group

"I look at it as a promising career that could have been," the 48-year-old Brooklyn native says. In three years, she worked her way up from receptionist to a management training ­specialist. She had even met the company's founder, Allen Stanford, who might possibly be the only Caribbean Knight Commander of the Most Distinguished Order ever to be accused of a multibillion-dollar Ponzi scheme.

When Mazor met Stanford, in the building's posh Eagle Room dining hall, she was blown away by the fact that he knew she was fresh from New York City and that she had two daughters. He had taken the time to find out about her life. The room could fit about 45 people, but it was just Stanford, an assistant and Mazor. She remembers being so excited that she had to tell her husband all about it as soon as she got home. Like other employees, Mazor had been fed the Stanford story, which was the tale of a humble yet scrappy family from Nowhere, Texas, who knew the value of hard work and who turned a few bucks into a fortune. Mazor loved that ethic, the family feel, the bonds she made almost immediately. It's what made her come in every day, getting up at 4:30 a.m. so her husband could drive her in their one car from their Cypress home to a bus stop on West Little York, which she rode for about 30 minutes to the Galleria.

She says none of her friends at work ever suspected anything about this man who spent so much time in Antigua, or how he came to be so cozy with the nation's government.

"We never questioned it," Mazor says. "We stood in awe of it."

Stanford seemed "like a good old boy — a nice, honorable man," Mazor recalls. "But there was a mystique about him that was told throughout the company. The mystique was: Don't mess with him."

Some sort of mystique must have kicked into high gear on February 17, when Mazor first heard the helicopters. She thought maybe they were news choppers swarming over a car accident. She opened the shade and looked up, but she wasn't able to make out any writing on the helicopters. Ever polite, she waved. When she turned back to her computer, she noticed the mass e-mail from human resources: Everyone was to meet in the 15th-floor lobby. That was her floor.

When she hit the lobby, she saw the marshals standing to the side, guns at their hips.

"It was like that U.S. Marshals movie. I ­expected Tommy Lee Jones to pop out anymoment," she recalls.

A man everyone would later come to know as the company's receiver, a Dallas lawyer named Ralph Janvey, walked partway up the staircase to better address the crowd. The company's now in receivership, he told them. Everyone looked at each other, dumbfounded. Mazor could only think of one thing: What the hell is going on? They were told to return to their offices, grab their things and sit tight.

There was one marshal for each person on Mazor's team, so when it was time to leave, there were ten of them crammed into the elevator, with the employees having no idea what was going on. Mazor felt like a criminal. She looked over at her boss, who looked back at her, and she figured he knew she felt the urge to open her mouth. To Mazor, it came down to this: Try to break the ice, or burst into tears.

So she spoke up: "Anyone hear any good jokes lately?"

Everyone in the elevator started laughing. It would be a while before Mazor would be able to smile again.

Florida-based investment broker Charles Hazlett worked for Stanford for nine months inside the towering Miami Center on Biscayne Boulevard. Hazlett had more than 15 years experience managing portfolios for investors in Latin America and the Caribbean when he jumped ship from Prudential Securities to an up-and-coming firm in downtown Miami, lured by up to $400,000 in bonuses, a $180,000 salary and a plush waterfront office.

The firm was unlike any other place he has ever worked. At weekly staff meetings, there was more talk about offshore banking deposits than the fluctuations of the stock market. In fact, at Stanford Group Company, hardly anyone talked about Wall Street.

There were bizarre rituals, such as the ­heraldic gold eagle that the company plastered on nearly every surface (the doors, the elevators, even the toilet seats) and sent employees home for forgetting to wear on their lapels.

And he couldn't figure out what was going on with those certificates of deposit in the company's offshore bank — the managers were relentless about those CDs, asking how many he had sold that week. Nothing else seemed to matter.

As Hazlett discovered in his nine months at Stanford, these were all reflections of the firm's quirky founder. Stanford flew the world on private jets, lived in a palatial Miami estate with its own moat and at times adopted a faux British accent. In Antigua, where he has been knighted, he attained an almost godlike status. He owned a daily newspaper and the Bank of Antigua, and he sat on the board regulating the island's banks — a board he also helped to create.

Hazlett was successful and very busy at his job, selling more than $10 million in certificates of deposit to the firm's offshore bank, which made him one of the company's top producers and earned him a $100,000 BMW as a bonus.

But then he started asking questions. Why were the CDs performing so well? What was the explanation for the incredible returns? And where were the deposits invested? The more Hazlett pressed his managers for an explanation, the more he was stonewalled.

He finally maneuvered his way into a meeting with Laura Pendergest, the company's chief investment officer. His biggest client, a Curaçao native with a $5 million stake, was going to pull out his cash unless Pendergest told Hazlett how the deposits were being invested.

According to Hazlett, she refused to give him any answers, saying, "It's proprietary information." She asked him to control his client. Hazlett said when he told ­Pendergest he wanted answers himself, she burst into tears and left the room.

Fifteen minutes later, the company's number two executive — a Mississippi native named James Davis — phoned Hazlett from Memphis.

"Do you believe in God?" Davis asked in a dry drawl, his voice rising with passion. "Do you fear God, Chuck?"

It took Hazlett another four months to leave the company and level an accusation in arbitration court of fraudulent practices, but from his meeting with Pendergest and followup phone call from Davis, he knew for a fact that he was down the rabbit hole and that something was very rotten at the Stanford Group.

Today, Stanford, Laura Pendergest-Holt (who got married since their first meeting) and ­Davis face federal charges that they swindled investors out of $8 billion in a massive Ponzi scheme run out of Houston, Miami and the Caribbean, taking money for supposed certificates of deposit and then simply paying off old customers with the new cash. The question remains why it took regulators six more years to catch on, especially when Hazlett's cries were far from isolated to South Florida.

The fallout in Miami, Latin America and the Caribbean has been devastating. More than 300 Stanford employees in Texas have lost jobs, thousands of investors have had accounts frozen and about 30,000 worldwide allegedly have lost a total of $8 billion in life savings to the giant house of cards. And each allegation has dealt another body blow to America's already teetering confidence in government safeguards and the economy.

Even more than Bernie Madoff's tale, Allen Stanford's rise and fall is the story of the past decade in America, where greed mixed with cynical politics birthed a perfect storm for accused hucksters such as Stanford to bring the global economy to its knees. And as Stanford's story shows, the warning signs were there. They were simply ignored.

When the elevator doors open to the posh Stanford offices in Miami, the wealth and vision once synonymous with the fallen firm are glaringly obvious.

Well-worn, brass-studded leather couches rest on rich Oriental rugs, conjuring images of an old-money British banker in his study. Leather-bound volumes and yellowed globes line polished mahogany bookshelves next to huge impressionist oil paintings.

For a time, these three floors seemed like the center of a new investment empire, built by a man who did everything in his power to change his origins.

Robert Allen Stanford, in fact, was born in 1950 in Mexia, an oil boomtown on the endless plains of central Texas about 85 miles south of Dallas.

He lived in Mexia (pronounced muh-HAY-uh) until the fourth grade, when his parents separated and he moved with his mother to Fort Worth. But those who remember him from that young age say that even then, he was famous for trying to make a buck.

"He was always known as an entrepreneur," says Bob Wright, editor of the Mexia Daily News and a family acquaintance. "He liked to make money, and he always seemed to have a few things going."

Childhood friend Jo Bennett recalled to the Houston Chronicle that as a boy, Stanford tried to sell her his bike for a profit when he got a new one as a gift. In high school, Stanford played football, and at Baylor University, he taught scuba lessons to make extra money. His roommate at Baylor was James Davis, who became a lifelong friend.

Stanford graduated from Baylor in 1974 with a business administration degree (Davis graduated the next year with an accounting and finance diploma) and joined his father in Mexia to help run the family insurance business. But Stanford had bigger plans.

"I couldn't stay in a small town and be content," Stanford told Forbes magazine last fall.

By the early 1980s, Stanford had persuaded his father to sell the insurance business and join him in Houston as a real estate speculator. Houston's market had crashed after the oil bubble burst, and the Stanfords began buying up distressed properties at bargain prices — run-down apartment complexes and strip malls, and later larger swaths of land.

By the mid-'80s, Allen Stanford had set his sights beyond real estate. In December 1985, with a few million in start-up cash from his father, he established an offshore bank called Guardian International Bank in Montserrat, a small British territory in the Leeward Islands.

The bank earned licenses to manage international banking accounts and in five years grew to about $14 million in holdings. But by 1990, Stanford faced an Internal Revenue Service lawsuit accusing him of owing the government $420,000 in unpaid taxes — and at the same time, the British government successfully pressured the territory to toughen regulations on its banks. In 1991, Stanford withdrew his license in Montserrat and began looking for another Caribbean home.

He found it later that year in the tiny island nation of Antigua and Barbuda, a country of about 85,000 in the middle of the Lesser Antilles. Stanford relocated to Antigua and split his company into the two central pieces that still exist today. The first, called Stanford International Bank, was housed in a hillside estate in the capital city of Saint John's. The other arm, called Stanford Group Company, was based in downtown Houston. He made James Davis, his college roommate, director and chief financial officer of both companies. Stanford, though, was the sole shareholder.

Stanford International Bank operated outside of direct U.S. scrutiny. The bank's certificates of deposit — which are similar to savings accounts, except that they are held for a preset period of time with a fixed interest — consistently returned more than most American deposits, with funds in the mid-'90s routinely bringing 15 percent interest.

Meanwhile, Stanford's Houston-based firm, Stanford Group Company, was a traditional Securities and Exchange Commission-regulated broker. It managed portfolios, traded stock and, quite prominently, sold CDs in Stanford's Antiguan bank to American investors.

About six years after moving his offshore bank to Antigua, Florida state records show, Allen Stanford brought his company to South Florida and made Miami the de facto heart of his new empire — midway between his Houston investment headquarters and the Antigua bank, and close to the wealthy Latin Americans to whom he catered.

He opened his first office in 1997 at the Miami Center, where he joined white-shoe law firms and the local branches of financial heavy hitters Smith Barney and Citibank.

By the end of the decade, his formula — pushing CDs in his offshore bank to U.S. and Latin American investors through his Houston- and Miami-based brokerages — was making the Texan a mint. And as Stanford grew richer in his island fiefdom, his eccentricities flowered like a tropical orchid.

He soon obtained Antiguan citizenship, persuaded the former British colony to bestow an honorary knighthood upon him and then demanded he be addressed ­everywhere as "Sir Allen." He became an avid cricket fan and brought the sport to Antigua by sponsoring a lavish international tournament with an unheard-of $20 million prize for the winning team. It was during this time that the six-foot-four Texan began talking with a slight British accent. He told reporters — falsely, it turned out — he could trace his lineage back to the founder of Stanford University. According to a Forbes profile, rumor abounded that he toted around a vial of blood in his briefcase that he claimed came from a priest with stigmata, or Christ-like wounds. Stanford denied carrying such a vial, but said he met a priest with stigmata in the early '90s and felt a "life-changing surge."

In October 2003, he found a suitable home to mirror this new image, paying $10.5 million for a massive, 57-bedroom mansion on the Coral Gables waterfront built by the Wackenhut family. He rechristened the estate — which was outfitted with turrets, grottoes, a pub and a throne-like toilet — Tyecliffe Castle.

Though he'd been married since 1974 to a Texas dental hygienist named Susan, Stanford began keeping mistresses around the Caribbean and Florida. According to court documents, he fathered six children with four women and paid around $200,000 a month in child support. One mistress, Louise Sage, lived in the Coral Gables manor with two of Stanford's children.

In the late '90s and '00s, the Stanford Group became a prominent player in South Florida sports and charities, sponsoring the VIP lobby at the American Airlines Arena, the Sony Ericsson Open in Key Biscayne and the International Polo Club in Palm Beach. Stanford also gave heartily to local nonprofits, including the Kiwanis Club of Little Havana and the Festival of the Arts in Boca Raton. Stanford, of course, didn't forget its home state — the company donated a $30,000 piece of medical equipment to the Texas Scottish Rite Hospital for Children in Dallas, and also sponsored the Houston Polo Club's Open Invitational in 2005. The company has also been slated to sponsor the Ladies Professional Golf Association's tour championship in Houston in November 2009.

By 2007, just 16 years after opening as a small bank on a tiny island, Stanford's enterprises seemed to have amassed a spectacular amount of wealth. The bank in Antigua counted 30,000 customers in 131 countries with more than $8 billion in investments. The Houston-based brokerage managed 35,000 accounts worth more than $50 billion. In addition to the downtown Miami location, the company operated South Florida offices in Boca Raton, Bonita Springs, Fort Lauderdale, Vero Beach and Longboat Key and employed more than 500 people. Forbes estimated Allen Stanford's personal worth at $2 billion, and he purchased an airline, a newspaper and a number of restaurants in Antigua.

Court filings spell out the Miami lifestyle that came with all the wealth: $75,000 Christmas gifts for his children by Louise Sage, regularly chartered $100,000 yachts, a $100 million fleet of personal jets, $25,000 monthly payments on his mansion.

In his more public dealings, Stanford's thin veneer of supposed old-money aristocracy always seemed moments away from cracking. During a now-infamous exchange on live television in late 2008, a sycophantic CNBC reporter asked him: "So, is it fun being a billionaire?"

Sir Allen shifted uncomfortably in his seat, chuckled awkwardly and cleared his throat. "Hmm, uh, yes," he said, eyes darting. "Yes, I'd have to say it is fun."

In January 2003, one year after he started as an investment broker at Stanford Group Company, Charles Hazlett packed a cardboard box inside his apartment-size office. He had just quit, after yet again demanding a meeting with top officials to talk about how the CDs performed so well.

Hazlett's customer in Curaçao had pulled out his $5 million investment one month earlier, but Hazlett stuck around longer, hoping his bizarre run-in with Laura Pendergest-Holt and the frightening, ­religion-tinged dressing-down from James Davis somehow had been an aberration.

Now he believed the worst. He had no proof of what exactly Sir Allen was up to in his Caribbean hideout, but Hazlett wanted no part of it. He called his lawyer.

"I want to take these guys to court," Hazlett said.

A few weeks later, the broker and his former company met in a Boca Raton arbitration court run by what is now called the Financial Industry Regulatory Authority, an industry group sanctioned by the SEC. Hazlett spelled out his experience: Brokers were heavily pressured to sell offshore CDs and were stonewalled when they tried to find out where the CDs were being invested.

Repeated calls to the SEC's press office seeking comment for this story were not returned.

"I thought, 'At least I put my story out there and someone on the regulatory side is going to realize these are bad guys,'" Haz­lett recalls today. "Because I know I'm not the only one that had this experience."

Hazlett lost his case and never again heard from the SEC, even though he was right — he wasn't the only Stanford employee complaining to regulators.

In fact, even as Stanford's business holdings and personal wealth grew exponentially, his brushes with legal and regulatory authorities were frequent, and the warning signs that something was amiss were many.

In 1999, a DEA investigation found that members of the vicious Juárez Cartel in Mexico had deposited more than $3 million in Stanford's bank to launder drug money. Stanford quickly surrendered the cartel's money to the DEA and earned praise from the agency for his quick action. But later that year, federal regulators placed Antigua on a blacklist of nations suspected of money laundering and fraud.

That same year, the Clinton administration introduced a bill to crack down on overseas banks favored by gambling rings, drug militias and terrorists. Two months later, according to a study by consumer advocacy group Public Citizen, Stanford hired a powerhouse lobbying group to fight the bill and began donating to both major parties. He handed out $208,000 to Republican campaign committees and $145,000 to Democrats that year. Among his biggest recipients were powerful Texas lawmakers, including House Democratic Caucus Chair Martin Frost. The bill, despite passing a House committee 31-1 with strong Treasury Department backing, was allowed to die in a Senate committee.

In 2002, as Congress took up a bill called the Financial Services Antifraud Network Act, which would have strengthened U.S. regulators, Stanford upped his lobbying. That year, according to the Center for Responsive Politics — a nonprofit group that monitors campaign money — Stanford's company gave $800,000 to the Democratic Senatorial Campaign Committee — the vice chairman of which was Florida's Senator Bill Nelson. The senator received more of Stanford's cash than any other member of Congress, according to one study, with $45,900 donated to his campaign. Stanford, in fact, hosted a fund-raising event for Nelson in Florida. The anti-money-laundering bill died in a Senate committee.

Nelson has given all of Stanford's donations to charity, and there's no clear link between his actions as DSCC vice-chairman or senator and what appear to be Stanford's efforts to kill the bill. The Florida Democrat was a junior senator in his first term when the bill was taken up, and his staff disputes the notion he wielded enough power to influence the legislation. The same provisions later found their way into the Patriot Act, and Nelson voted for them there, says Nelson spokesman Dan McLaughlin.

"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."

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.'"

"It wasn't just the balance sheets; there's one fishy thing after another," he said. "I looked up their board of directors, and I see it's Stanford, his dad and some other old guy in Mexia. I looked up his address, and it was on this cattle ranch in the middle of nowhere."

Dalmady never talked to a single person at Stanford, and based his research solely on public filings and the company's Web site. Yet after just a few weeks of reading up on the company, he was so certain Stanford was a fraud that this past December, he called a Caracas business paper and asked if they would publish a story laying out his suspicions. The editor agreed. In January, Dalmady's bylined piece ran in two Venezuelan newspapers and on their Web sites.

"I expected some kind of outrage," Dalmady says. "Instead, they send us this beautiful collection of PR bullshit. And then it's absolute silence, which was the final confirmation for me. Stanford was running a Ponzi."

According to the 25-page SEC complaint which formally charged Pendergest-Holt, Davis and Stanford with orchestrating an $8 billion "massive Ponzi scheme," Stanford's company claimed its investments lost only 1.3 percent in 2008 — a year when the S&P 500 dropped 39 percent. Stanford and Davis kept 90 percent of the company's supposed $8 billion in investments in a "black box" shielded from outside scrutiny. In essence, the regulators charge, Stanford never invested any of that money except in a few land deals and pet projects. The rest he used for himself and to pay interest on the older investments.

In the weeks since the SEC brought charges against Allen Stanford and his associates, the fallout has been monumental.

Besides all the people who lost their jobs, tens of thousands of investors have had their accounts frozen until the case is resolved. The 30,000 investors worldwide who sank money into Stanford International Bank CDs, meanwhile, face the prospect of losing life savings, retirement funds and charitable endowments — probably forever.

Antigua has been thrown into chaos. Stanford was the island's second-largest employer, and hundreds have gone unemployed for the past few weeks. Panicked residents have made a run on the island's banks and government financial centers since the charges were filed.

Three weeks after the company was charged with massive fraud, and Laura Pendergest-Holt was hit with felony criminal charges for allegedly lying to regulators, police found Allen Stanford hiding in one of his girlfriends' homes in rural Virginia. He had tried to pay a private pilot to fly him to Antigua, but his credit cards had already been frozen. He surrendered his passport and remains free today.

Stanford, who so far faces no criminal charges, hasn't commented about the SEC's case against his company. But his lawyer, well-known Houston attorney Dick DeGuerin, has denied that Stanford ran a Ponzi scheme.

"From what I've been able to figure out, this is not a Ponzi scheme, it is not toxic assets and it is not toxic loans," DeGuerin told Reuters. "There were hard assets for all the investments. And then SEC came in like gangbusters and has just incinerated the companies and caused a panic."

Government inquiries have begun into how the SEC and other regulators could miss such a gargantuan fraud for so long. A new anti-money-laundering bill to stiffen regulations on offshore banks has been introduced into the Senate — cosponsored by Senator Bill Nelson. And state attorneys general across the nation announced last month an initiative to crack down on financial fraud on a state level.

But some experts say all of those measures won't prevent the next Madoff or Stanford from preying on Americans again.

One problem, says Phillip Phan, a business professor at Johns Hopkins University who has studied large-scale frauds, is that regulators are usually lawyers and accountants trained to look for problems only in companies' balance sheets. If SEC agents had been more attuned to the most basic problems at Stanford, such as a board of directors with 85-year-old Mexia cattle ranchers at the top, the firm might never have built such a large scheme.

"We really should look at regulation more like intelligence gathering," Phan says. "We should be trying to spot all warning signs out there, in the same way the CIA employs linguists and sociologists and all the specialties. There's so much information out there beyond the balance sheets."

Every job interview Mazor's gone to always starts off the same: The interviewer will lean in close and sort of whisper, "So, what really happened at Stanford?"

And Mazor always says the same thing: she doesn't know more than anyone else.

"We were on the outside from [February] 17th on," she says, referring to the day the company was seized. She says she and her former co-workers can't get much information from Ralph Janvey, the receiver. Mazor says she's still due two months' severance. That would've covered about six months of mortgage payments and given her some breathing room to look for a new job.

"It's like he's making this up as he goes along," she says. "And I know it sounds like a little kid thing to say."

So far, Mazor says, everyone's been sympathetic. She doesn't feel like she's branded with a scarlet S. But now she and her other Stanford friends are having to find jobs in one of the worst recessions in memory.

"It killed me to see these people who grew to be my family during my time here just all suffering like this," Mazor says.

Outside the front doors of 5150 Westheimer, no more water flows through the marble fountain bearing the ubiquitous Stanford eagle logo. Mazor used to give tours of the Stanford building, and she would of course point out the elegant fountain, but she'd also point out something obscure — a small carving in the stone edifice several yards beyond the fountain. Allen Stanford, supposedly a man with deep religious convictions, made sure this corner of the building would reflect his company's core values. Under a crucifix, in capital letters, are the words "These companies are dedicated to the glory of God."

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Mazor would like to believe that, somewhere deep down, that's true. She would like to believe that, for the sake of the employees who were turned out onto the street, Stanford will cooperate with authorities.

"I know in my heart, when I first met him, that he was an honorable man," Mazor says. "I just want him to be honorable now."

Craig Malisow contributed to this story.


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