FBI tries to build case against Stanford

When Bernard Madoff announced to his staff the existence and extent of his fraud, the FBI were on his doorstep the next morning.

But despite allegations in SEC papers that Allen Stanford to his staff a similar story, it was the SEC not the FBI that acted - and not as a result of those allegations. It was the FBI that happened across Stanford seemingly on his way to Washington - but he was not arrested.

Indeed, Stanford does not face any criminal proceedings. And the only one of his staff who does is charged with obstructing the SEC investigation: nothing to do with the alleged fraud.

And now it's clear that there has been no rush of people dashing to claim that Stanford and his group defrauded them. Increasingly, the case is beginning to look like something regulators decided to do, and now everyone else is helping them not lose face.

If the SEC case were strong, then Stanford would have been arrested. Instead, his business has been destroyed by nothing more than rumour and supposition.

For financial institutions, the case is a desperate warning: if government departments gang up on you, you are doomed. In the US, multiple departments act individually to attack a specific target. It's a shark-feeding frenzy. Each one taking a large bite, and coming back for more.

That the FBI has to advertise for victims demonstrates one of two things: the people who gave Stanford their investments do not think he cheated them. Or they were people who cannot ask for their money back because to do so might lead to an investigation of them. That is one of the allegations that has been published in the media although there is seemingly little to back it up.

The FBI's notice is below. Just one thing - there is nothing to prevent them using information obtained to build a case against the person making the report or anyone else. So if reports show transactions that should have been but were not reported under CTRs, then banks are at risk of investigation.

9 March 2009

SEEKING VICTIMS

In the Stanford Financial Group Case

Have you invested in the Stanford Financial Group or its affiliated companies in recent years? If so, you may be a victim of a multi-billion dollar investment fraud.

The Stanford Financial Group, which provides wealth management services to customers in some 140 countries, is under FBI investigation. On February 26, its Chief Investment Officer was charged with obstructing a separate investigation by the U.S. Securities and Exchange Commission.

Our case is ongoing, and while we can’t provide any additional information on our investigation at this time, we do need to hear from you to identify victims and to determine the extent of the potential fraud.

What we need to know:

• Your basic contact information (name, address, country, telephone numbers, e-mail address);
• Your investments/losses with Stanford Financial Group or its affiliated companies: Stanford Capital Management, the Stanford Group Company, the Stanford International Bank, the Stanford Trust Company, and the Bank of Antigua;
• Whether or not you can verify your investments/losses by providing your most recent financial statements; and
• Any additional information that may be helpful.

How to provide the above information:

• Submit via a dedicated e-mail address: stanford.group@ic.fbi.gov.

If you have investigative information that might help our case, please use our electronic public leads and tips form at https://tips.fbi.gov/.

Please send copies of any hard copy documentation to:

FBI Victim Assistance Program
Post Office Box 924427
Houston, TX 77292-4427
If we determine that you are a victim, we will be in touch with you. Please note: due to the number of expected responses, you may not hear back from us for several weeks.

Investors may also call (713) 693-5699 for recorded information on the victim assistance program. At this time we are unable to accept messages on this line because of expected call volume.

“The FBI understands the devastating financial, emotional, and physical impact that fraud can have in the lives of individuals and families,” says Kathryn Turman, Director of our Office for Victim Assistance. “We see it every day. Even in these large-scale cases, the victims and their losses are not just numbers to us. Even when we cannot restore lost funds we can usually provide help, hope, and support as we also work to bring justice to the perpetrators who are suspected of inflicting the damage.”

Due to the large number of people affected by this case, we are establishing a special website just for victims to receive updated information about the case and victim assistance resources. We will provide you with information on how to access the website when it becomes operational.