Anatomy of a Ponzi by Colleen Cross

Author:Colleen Cross
Language: eng
Format: epub
Publisher: Colleen Cross
Published: 2013-12-31T05:00:00+00:00

Web of Deceit

“It was a classic case of the rat being put in charge of the cheese,” Marian Althea Crick testified at Stanford’s Houston trial. As Antigua’s top banking regulator, Crick had plenty of expertise. She had suspected Stanford’s criminal motives almost as soon as he started up Stanford International Bank (SIB) in Antigua in 1996. It had not escaped her attention that Stanford’s arrival coincided with the crackdown in neighboring Montserrat, where he had been running Guardian International Bank.

Soon after Stanford’s arrival on the island, his cozy relationship with Antigua’s then-prime minister became apparent. Lester Bird, a lawyer by profession, had succeeded his father, Vere Bird, thereby cementing the Bird family dynasty by becoming Antigua’s second prime minister since gaining independent rule from Britain. Lester Bird held the office from 1994 to 2004.

Crick’s criticism referred to the fact that Bird had appointed Stanford to an advisory board seat of the regulatory agency that oversaw banking activity on the island. Like Crick’s rat guarding the cheese analogy, Stanford’s seat was a clearly a conflict of interest. The owner of a regulated bank should never have supervisory oversight over itself, or make the rules under which his own bank operated.

While Crick succeeded in having Stanford removed from his seat, he continued to meddle. Stanford used his influence to try to get her fired when she asked too many questions. When that didn’t work, Stanford waited until Crick was away in 1998 to briefly take over the newly established Financial Services Regulatory Commission (FSRC). The Attorney General intervened when Crick complained, and Stanford was kicked out.

Ever tenacious, Stanford established an office of employees in 1999 to work on Antigua’s regulatory banking reforms. In 2001, while Stanford International Bank was undergoing a regulatory audit, Stanford used his government influence to try to send Crick and the auditor examining SIB on a month-long international trip. His plan was to replace the auditor with a more agreeable one.

When his underhanded tactics failed, Stanford tried to curry favor with Crick by upgrading her economy air travel to first class. Crick reported Stanford’s antics, but the government took no action. Crick eventually resigned in 2002, much to the delight of Stanford. Now he could operate with impunity.

Crick’s replacement was Leroy King, a much more malleable and agreeable fellow. Stanford immediately began courting him, paying him millions in bribes, and providing him with private jet trips and NFL Super Bowl tickets to ensure his cooperation.

Stanford’s tentacles now reached into the highest echelons of Antigua’s government. He participated in writing the banking reform legislation under which his bank operated and he had King in his pocket. He used King to manage SIB’s regulatory audits. King certified SIB’s fictitious investment returns and financial position, thereby misleading investors, other regulators (such as the United States Securities and Exchange Commission (SEC)), and others. In essence, King claimed that SIB’s investment portfolio had been verified.

Aside from King’s rubber-stamped audits of SIB, he also provided Stanford with access to confidential regulatory information about Stanford and SIB, including details on inquiries from the SEC regarding Stanford.

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