Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 1 of 43
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION
REINALDO RANNI, individually and 0 • 2 2 0 5 on behalf of a class of all other similarly situated Plaintiffs, CIV-LENARD Case No.: MAGISTRATE JUDGE V. GARBER
JURY TRIAL DEMANDED
WILLIS OF COLORADO INC., and FILED by—D.C. WILLIS GROUP HOLDINGS LTD., Defendants. • JUL 1 7 2009 STEVEN M. LARIMORE CLERK U. S. DIST. CT t CLASS ACTION COMPLAINT i• S. D of FLAT. . . —
PLAINTIFF REINALDO RANNI ("Ranni"), individually and on behalf of a class of all
others similarly situated, (collectively "Plaintiffs"), file this Class Action Complaint against
Defendants, WILLIS OF COLORADO INC., ("Willis of Colorado") and WILLIS GROUP
HOLDINGS, LTD. ("Willis Group") (collectively "Willis" or "Defendants").
INTRODUCTION
1. This is a class action against an insurance broker, Willis, who played an
instrumental role in enabling Allen Stanford and his companies to perpetrate a massive multi-
billion dollar fraud against scores of investors, largely Venezuelans and other South Americans.
Through Stanford's Miami office, these investors purchased the now notorious Certificates of
Deposit offered by Stanford International Bank ("SIB") relying on phony assurances that the
CDs were insured, and SIB could be trusted as a sound bank. Willis supplied the proof for
Stanford. From 2005 through 2008, undated "safety and soundness" letters went out to
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Stanford's agents under Willis letterhead, and signed by a Willis executive, identifying the
insurance policies issued from Lloyd's of London supposedly underlying SIB's operations. The
letter proclaimed SIB's employees to be "first class business people," and claimed that SIB had
undergone a "stringent Risk Management Review by an outside audit firm."
2. None of it was true. The investments had no meaningful insurance relative to the
investors' CDs. The supposed independent auditor Defendants touted by Willis was a small
Antiguan firm Stanford controlled. And, far from SIB being a legitimate company that could
pass a real audit, SIB was a fraud that funneled deposits to Allen Stanford personally as
supposed undocumented "loans," speculated in real estate, and made other risky investments.
3. Willis provided these letters to Stanford, and sometimes directly to investors,
knowing the statements were false, or with severe recklessness as to the letters' veracity. Willis
had every expectation investors would be relying on the letters in deciding to invest in what they
believed were safe, insured high-yield CDs. Plaintiff Ram-ii was one such investor, and now he,
and a class of similarly situated investors, have a right to recover from Willis.
PARTIES
4. Plaintiff, REINALDO RANNI, is a citizen of Venezuela residing in Venezuela.
Additionally, this case seeks certification of a class of predominantly Venezuelan and South
American investors who were solicited to invest in CDs offered by Stanford International Bank
Ltd. by financial advisors in the Miami office of Stanford Group Company, and who were shown
and relied on letters prepared by Defendants.
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5. Defendant Willis of Colorado Inc. is a corporation organized under the laws of
Colorado and is a citizen of Colorado. Upon information and belief, Willis of Colorado is a
wholly owned subsidiary and agent of Defendant Willis Group Holding Ltd.
6. Defendant Willis Group is a corporation organized under the laws of Bermuda,
with its principal place of business in the United Kingdom. Willis Group is a publicly owned
company that trades on the New York Stock Exchange under the symbol "WSH." Willis
currently has a market capitalization of about $4.37 billion, with approximately 164 millions
shares outstanding. Willis Group is the parent company and principal of Willis of Colorado, its
agent.
SUBJECT MATTER JURISDICTION
7. This Court has original jurisdiction over this proceeding under 29 U.S.C. § 1331
as this case arises under the laws of the United States, and supplemental jurisdiction under 28
U.S.C. § 1367(a).
8. This Court further has original jurisdiction over this proceeding pursuant to 28
U.S.C. §1332(d)(2)(B) because this is a class action in which the amount in controversy exceeds
$5,000,000 exclusive of interest and cost and is a class in which members of the Plaintiff class
are citizens and residents of a foreign state and at least one Defendant is a citizen of a state.
PERSONAL JURISDICTION
9. This Court has personal jurisdiction over the non-residents Willis under 15 U.S.C.
§ 78aa. This Court further has personal jurisdiction under the Florida Long Arm Statute: §
48.193, Fla. Stat. Defendant Willis of Colorado committed a tortious act within the State of
Florida, as described herein. Defendant Willis Group likewise committed a tortious act within
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the State of Florida or, alternatively, is subject to personal jurisdiction by the tortious actions of
Willis of Colorado, its agent. Willis Group further has, both directly and via its subsidiaries,
affiliates, and agents, operated, conducted, engaged in, or carried on a business or business
venture in this state. Based on its general and specific contacts with the State of Florida, Willis
Group has purposefully availed itself of the privilege of conducting activities within Florida and
has established minimum contacts with the State of Florida under the Long Arm Statute.
VENUE
10. Venue is appropriate in the Southern District of Florida pursuant to 28 U.S.C.
1391(b) as a substantial part of the events or omissions giving rise to the claim occurred in the
District.
FACTUAL BACKGROUND
The Stanford Way
11. From at least about 1998 through February 2009, Allen Stanford, through
companies he controlled, SIB and its affiliate Stanford Group Company ("SGC"), executed a
massive Ponzi scheme through which they misappropriated billions of dollars of investor funds
selling phony CDs under false assurances that the CDs were safe and insured.
12. It ended February 17, 2009, when the Securities Exchange Commission brought
an action against Stanford, his agents, and the companies he ran, alleging multiple violations of
federal securities laws. In the action, the SEC froze all of Stanford's assets and put them into
receivership.
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13. Four months later, in June 2009, Stanford was indicted on 21 counts of fraud,
conspiracy, and obstruction of justice. Now in custody, and having been denied bond, Stanford
faces a maximum 250 years in prison.'
14. Allen Stanford had a checkered journey to prison. His first business was a chain
of gyms in Texas, which went bankrupt in 1982. He declared personal bankruptcy in 1984 and
got about $13 million in debts discharged.
15. In 1985, after a stint in the Cayman Islands where he supported himself as a scuba
instructor, Stanford opened a bank on the island of Montserrat, bringing along with him his
college roommate James Davis.
16. As the editor of OffshoreAlert, a newsletter that covers offshore banking,
described it in a July 2009 profile on Stanford in Vanity Fair, "The only reason you opened a
bank in Montserrat was to commit fraud." Ex. A hereto.
17. Stanford built a bank on the island and opened offices in Miami and Houston. To
attract depositors, Stanford placed ads in Latin American newspapers promising interest rates
approximately two percentage point higher than American bank rates.
18. Stanford had a rehearsed explanation for the bank's supposed ability to pay higher
interest rates: "It's only two points; our organization is very lean. We don't pay taxes in
Montserrat." One staff member quoted Stanford as saying, "'It is unbelievable. People are so
stupid, they will risk all their money, give it to someone they don't even know, for two points.'
One day he grabbed the calculator on my desk, ran the numbers for two points on a million
1 ABC News, June 19, 2009, http://abcnews.go.com/B/otter/WallStreetistory?ict=7881721&page=1.
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dollars: it was $20,000 a year. He said it was just unbelievable what people would do for just two
points more." Ex. A hereto.
19. By 1989, Stanford's Montserrat bank claimed $55.5 million in accounts. By
November 1990, it was $100 million. When an American computer programmer reported that
bank deposits were transferring into Stanford's personal account, an investigation commenced
led by Scotland Yard and the FBI. Evidence surfaced that Stanford was laundering money for
Columbian drug lords. Montserrat revoked Stanford's license in May 1991. Stanford fled to
Antigua and, in July 1995, the previously dormant volcano Soufriere Hills erupted, destroying
two-thirds of Montserrat.
20. In Antigua, Stanford picked up where he left off, building a bank and attracting
Latin American depositors with his promise of "two points" higher interest rates. He opened
branch offices throughout Latin America, including Venezuela, and diversified into conventional
banking and broker-dealer services.
21. U.S. authorities from several agencies continued investigating Stanford's
operations virtually non-stop. But Stanford struck back, developing a brazen system of counter-
intelligence that included hiring the former head of the Miami office of the FBI and the security
firm Kroll Associates to churn out propaganda promoting the supposed legitimacy of his
operations. Stanford intimidated his detractors in the courtroom as well, suing anyone who
criticized him.
22. Stanford also began pouring money into government and politics to beef up his
influence and connections. Stanford lined Antigua with lavish buildings and facilities, lent $87
million to the Antiguan government, contributed millions to U.S. Senators including Florida's
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Bill Nelson, and sponsored sports teams and events around the world, including the Miami Heat
and golfer Vijay Singh. It paid off as Stanford became a billionaire, Antingua made him a
knight, and U.S. investigators were stymied.
23. By 2000, Stanford's operation was poised for dramatic growth. The centerpiece
of Stanford's operation was the Certificates of Deposit he sold through his Antiguan bank SIB.
The CDs featured Stanford's standard "two points higher" interest rate. For example, SIB
offered 7.45% as of June 1, 2005, and 7.878% as of March 20, 2006, for a fixed rate CD based
on an investment of $100,000. In 2005 and 2006, the average U.S. rates for a 5 year CD were
4.957% and 5.705% respectively. 2 On November 28, 2008, SIB quoted 5.375% on a 3-year flex
CD, while comparable U.S. bank CDs paid under 3.2%.
24. Stanford began aggressively recruiting U.S.-based Financial Advisers, paying
them enormous signing bonuses and setting up sweet financial incentives to increase competition
between Stanford offices and among financial advisors to make the most sales. SIB paid the
Stanford office a 3% trailing commission for the life of the CD, while financial advisors received
a 1% commission with a potential 1% trailing commission. The SEC claimed that, in 2007, SIB
paid SGC and its affiliates more than $291 million in fees, up from $211 million in 2006.
25. SIB sold more than $1 billion in CDs per year between 2005 and 2008.
The Miami Office
26. Stanford set up the Miami office in about 1998 to be the hub for enticing his
coveted Latin American clients to buy CDs. SGC's Miami office was one of the biggest, if not
the biggest, Stanford office selling SIB's purported CDs in the world.
2 See http://www.jumbocdinvestments.com/historicalcdrates.htm. 7 HomERBoNNER 1209 Four Seasons Tower • 1441 Bnckell Avenue • Miami, Florida 33131 Telephone: (305) 350-5100 Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 8 of 43
27. SGC's bayfront Miami office on the 21 st Floor of the Miami Center was lavish—
with marble floors, oriental rugs, and expensive artwork—and the financial advisors recruited
there by Stanford used it to impress the Latin Americans. Word spread of the Miami office
throughout the hemisphere, and Latin Americans flocked there to buy SIB' s supposed CDs.
28. Among the Latin Americans, the Venezuelans were Stanford's best patrons, as
between $2 and $3 billion were invested by Venezuelan citizens in the alleged CDs.
29. Stanford enjoyed another key advantage in Miami: the State of Florida granted
Stanford unprecedented authority to sell hundreds of millions of dollars worth of supposed CDs
without reporting the purchases to Florida regulators.
30. In the first six years, Stanford's Miami office opened approximately 2,100
customer accounts and took in $600 million from customers, largely Latin Americans.
31. Unlike other Stanford branches around the country, the Miami office could take
money directly from clients wanting to buy the CDs, and was exempt from reporting the amounts
of money sent overseas, bypassing anti-laundering laws.
32. By 2005, the Miami office had approximately 46 employees.
33. Meanwhile, Allen Stanford began spending most of his time in South Florida at
his $10.5 million Coral Gables mansion.
Selling the Purported CDs And The Role Of Insurance
34. The Miami financial advisors marketed the CDs using Stanford's old formula.
SIB could cover the higher yields, clients were told, because SIB paid no taxes, had no
shareholders, all loans were secured by cash, and the CDs were supposedly backed by
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marketable, liquid securities. Above all, the SGC financial advisors touted the safety of the
supposed CDs.
35. To cement this appearance of safety, clients were enticed by claims of insurance.
SIB was not FDIC insured. So, to combat this, SIB created promotional material criticizing
FDIC insurance and touting certain coverage it claimed to have through Lloyd's of London.
Declaration of Alejandro Gonzalez, Ex. B.
36. To this end, beginning in about 2005 and continuing through about 2008,
Defendant Willis provided SIB with an undated form letter vouching for the supposed integrity
of SIB, and identifying specific insurance policy coverages Willis supposedly had placed on
behalf of SIB. The letters, which were signed by a Vice President of "Executive Risks," were
identical in content. The only change from year to year was the expiration dates of the purported
coverages. The form letter, Ex. C hereto, appeared on Willis letterhead, and with Willis' logo,
and read:
We are the insurance broker for Stanford International Bank and find them to be first class business people. We have placed the following coverages that are currently in effect:
1. Directors and Officers Liability Insurance with Lloyds of London (Expiration 8/15/06): 2. Bankers Blanket Bond with Lloyds of London (Expiration 8/15/06);
All of these coverages have been in effect for various terms for the past six to twelve years, however, no representations can be made that such coverages will remain in effect.
In order to qualify for above coverages, the Bank underwent a stringent Risk Management Review conducted by an outside audit firm.
We have found that all our dealings with the Bank have been conducted in a professional and satisfactory manner.
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Sincerely, Is Amy S. Baranoucky Vice President Executive Risks
37. Miami financial advisors routinely used the Willis letter to assure their Latin
American clients that the supposed SIB CDs were legitimate. And, for investors with over $1
million in the CD accounts, SGC financial advisors could obtain from Willis a letter addressed
specifically to the investor. Declaration of Alejandro Gonzalez, Ex. B.
38. Willis knew or should have known that its letters were being used to solicit new
investors in SIB's purported CDs.
39. By year-end 2008, Stanford financial advisors had sold approximately $8 billion
of supposed CDs, by touting SIB's safety and security—including, through the use of Willis'
letters, an appearance of meaningful insurance—and consistent, double-digit returns on SIB's
supposed investment portfolio.
The Ponzi Scheme
40. In reality, there was nothing safe, "first class," or satisfactory, let alone insured,
about SIB's products.
41. Far from having passed a "stringent Risk Management Review conducted by an
outside audit firm," there was no meaningful audit. The Antiguan regulator supposedly
responsible for oversight of the bank's investment portfolio, the Financial Services Regulatory
Commission (the "FSRC"), performed no audit. Rather than an "outside firm," it was SIB's own
accountant, a small local accounting firm in Antigua called C.A.S. Hewlett & Co., that was
responsible for auditing SIB's supposed $8 billion dollar investment portfolio. C.A.S.'s
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principal is over 70 years old, and he supposedly has provided auditing services to SIB since the
1990's. The SEC asserted in its original complaint that when it attempted several times to
contact C.A.S. Hewlett, nobody ever answered the phone.
42. In October 2008, a financial analyst in South Florida named Alex Dalmady was
asked to examine SIB's financials by a friend who had some of his savings in the alleged CDs.
Dalmady looked at SIB's simplistic web site and the supposed explanation offered for its returns
and immediately called his friend to tell him to get his money out.
43. Dalmady delved further into the numbers, did some calculations, and wrote an
article entitled "Duck Tales" he published in the Venezuelan financial magazine, Veneconomy, in
January 2009. Ex. C hereto. Using SIB's alleged financial reports from 2003 to 2008, Dalmady
found that SIB's supposed investment portfolio stretched the limits of credibility. Merely to
break even, SIB would have to make 8-9% annually to cover the high CD interest, the 3%
trailing commission paid out to the SGC branches, and the 1-2% commissions paid to financial
advisors. SIB reported that its portfolio outperformed the S&P by several percentage points for
three out of four years between 2003 and 2007, as well as annual returns in hedge funds of 22%
and in precious metals of 12%. For 2008, a year where the S&P was down -38%, SIB claimed
its portfolio had returns of "only" 5 or 6 %. Moreover, SIB claimed to have received an
unidentified $541 million capital infusion. The financial statements did not report what specific
securities it was invested in. Dalmady found these numbers incredible and concluded the
company was a fraud. See id.
44. That same month, on January 10, 2009, Stanford, Davis and SFG's supposed
Chief Investment Officer ("CIO") spoke to SIB's Top Performer's Club in Miami. Despite
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efforts to liquidate investment assets, SIB's cash position had fallen from the June 30, 2008
reported balance of $779 million to less than $28 million. Still, it was represented that SIB was
"stronger" than at any time in history.
45. By February 2009, the "Duck Tales" article had grabbed the attention of the
Federal Reserve and the SEC, as well as Stanford's own operation.
46. Stanford sent its CIO to testify before the SEC. At a prep meeting of Stanford
executives, on February 4, the CIO explained that SIB's assets were divided into three "tiers."
Tier I, about 10 percent of assets, held cash. Tier II, another 10 percent, was invested in mutual
funds managed by outside firms and had shrunk substantially in value.
47. Tier III held about 80 percent of SIB's assets and was handled by Stanford and
Davis. At the Miami meeting, Davis handed over a data drive disclosing Tier III's contents: an
alleged $3 billion in real estate, and $1.6 billion in undocumented loans to Allen Stanford. The
shortfall between investor deposits and SIB's assets amounted to about $2.5 billion. The
supposed marketable, liquid securities backing the billions of dollars in alleged CDs was a
complete fiction.
48. The S.E.C. filed suit February 17, 2009, seizing Stanford's assets. S.E.C. v.
Stanford International Bank, Ltd, et al., Case No. 3:09-CV-0298-N (N.D. Tex.). An Amended
Complaint against SIB, SGC, Stanford, and other entities and employees alleged violations of §
10(b) of the Securities Exchange Act for fraud and aiding and abetting; and violations of the
Investment Advisors Act and Investment Company Act, premised on the fact that SIB was not a
bank issuing legitimate, insured CDs, but an unregistered investment company.
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Plaintiff Reinaldo Ranni
49. Plaintiff Reinaldo Ranni is a Venezuelan citizen who was solicited by a SGC
financial advisor in the Miami office to invest in SIB CDs.
50. In about February 2007, Ranni visited Stanford's Miami office. Ranni had much
concern over the lack of FDIC insurance for the CDs. Ranni was shown the undated form Willis
letter identifying SIB's alleged insurance policies through Lloyd's of London, and vouching for
SIB's supposed integrity. Ex. B hereto.
51. Relying on the representations of safety and insurance in the Willis letter, Ranni
initially invested $150,000 in a CD.
52. Afterwards, Ranni's financial advisor encouraged him to invest in more CDs. In
May 2007, Ranni was willing to invest more, but wanted a Willis letter addressed personally to
him. The financial advisor confirmed Rarmi's personal Willis letter was on the way. Ex. B.
Ranni on May 25, 2007 invested about $1 million in a 24 month SIB CD allegedly paying
7.625%. Ex. E.
53. Subsequently, Ranni invested more money in CDs, relying on representations of
safety and soundness from the Willis letters. On April 2, 2008, he invested about $300,000 in a
12-month CD allegedly paying 6.875%; on November 6, 2008, about $201,000 in a 12-month
CD paying 5.375%; on December 12, 2008, $525,000 in a 3-month CD allegedly paying 2.75%;
and on February 5, 2009, $550,000 in a 12-month CD allegedly paying 5.5%. Id.
54. Before investing, Ranni wanted a Willis letter addressed personally to him. His
Miami financial advisor arranged to have such a letter sent from Willis, Exs. B, C.
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55. The Willis letters Rarmi saw and relied on contained the following material
misrepresentations of fact:
(1) SIB had undergone "a stringent Risk Management Review conducted
by an outside audit firm"—in fact, SIB had not, between 2005 and 2008,
undergone a serious audit by an "outside firm," but had supposedly been audited
by Stanford's own accountant in Antigua;
(2) SIB was comprised of "first class business people"—in fact, SIB's
principals were Allen Stanford, who had his Montserrat banking license revoked
on money laundering charges in 1991, and James Davis, who was Stanford's
college roommate. SIB's board consisted of an 85 year old cattle rancher and
former car salesman;
(3) The insurance "coverages" Willis had allegedly secured from Lloyd's
of London covered investments in SIB products, the number one investment
product being SIB's CDs—in fact, the purported CDs were uninsured, and clients
had no protection.
56. The Willis letters contained the following material omissions of fact:
1) the insurance coverages, if they existed, had nothing to do with
customer deposits and did not in any way insure SIB's CDs;
2) SIB was not regulated by the U.S. Government;
3) SIB was violating U.S. securities laws by operating as an unregistered
investment company soliciting and selling unregistered securities; and
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(4) SIB's main product, the CDs, were backed for the most part by
undocumented loans to Allen Stanford, private equity, and securities exposed to
market fluctuations.
57. Such material misrepresentations and omissions were made by Willis knowingly,
or with severe recklessness, for the purpose to inducing and/or misleading investors for SIB's
benefit into believing falsely that their deposits, and SIB's CDs, were insured, and that SIB was a
legitimate, professional bank.
58. Willis knew, or reasonably should have known, that the letters would be shown to
investors and/or used by agents of SIB to solicit investors.
59. As of February 17, 2009, the day the SEC brought its Complaint and froze all of
SIB's assets, Ranni had deposits (including accrued interest) at SIB amounting to $2,768,949.14.
Class Allegations
60. Plaintiff Ranni brings this action pursuant to Rule 23, Fed. R. Civ. P. on behalf of
himself and as a class of all clients similarly situated.
61. The Class is defined as all individuals solicited by SGC financial advisors from
the Miami SGC office to purchase SIB CDs, and who were shown and relied on Willis letters in
connection with their decision to purchase SIB CDs.
62. Over 2,100 accounts were opened through the Miami office. The number of
clients within the Class are so numerous that joinder of all members is impracticable.
63. There are common questions of law and fact that are common to the class and
these common questions predominate over individual issues. Such questions include, but are
not limited to: I) whether Defendants knowingly or with severe recklessness participated in the
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fraud committed by SIB and its principals and affiliates by supplying false "safety and comfort"
letters to SIB on Willis letterhead, and with a Willis executive's signature; 2) whether
Defendants did so knowing such letters would be used to solicit investors for SIB's fraudulent
CDs; 3) whether Defendants knew or reasonably should have known such letters created the
false impression in investors that SIB's fraudulent CDs were insured, and that SIB was a
legitimate bank that had passed a meaningful audit.
64. The Named Plaintiff's claims are typical of the Class Claims.
65. The Named Plaintiff has no interest adverse to the interests of other members of
the Class.
66. The Named Plaintiff will fairly and adequately protect the class' interests. The
Named Plaintiff has retained counsel experienced and competent in class action and complex
litigation.
67. Pursuant to Rule 23(a) and (b)(3), the Court should certify this action as a class
because questions of law or fact common to the members of the class predominate over any
questions affecting only the individual members, and a class action is superior to the other
available methods for the fair and efficient adjudication of the controversy. Many of the
investors who are class members have amounts invested which are too small to justify the cost
and expense of individual litigation and can only be assisted by a class action mechanism.
68. Pursuant to Rule 23(a) and (b)(1)(B) the Court should certify this action as a class
because the prosecution of separate actions by or against individual members of the class would
create a risk of adjudications with respect to individual members of the class that would as a
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practical matter be dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect their interests.
CAUSES OF ACTION
COUNT I—Violations of Section 10(b) of the 1934 Exchange Act and Rule 10b-5
69. Plaintiffs repeat and reallege paragraphs 1 through 68 above.
70. In violation of Exchange Act § 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5
promulgated thereunder [17 C.F.R. § 240.10b-51, Defendants, directly or indirectly, singly or in
concert with others, in connection with the purchase and sale of securities, by use of the means
and instrumentalities of interstate commerce and by use of the mails, have made untrue
statements of material facts and omitted to state material facts necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading; and
have engaged in acts, practices and courses of business which operate as a fraud and deceit upon
purchasers.
71. Specifically, Defendants prepared and disseminated letters for use by SIB and its
affiliates and agents to solicit customers, which contained untrue statements of material facts and
misrepresentations of material facts, and which omitted to state material facts necessary in order
to make the statements made, in light of the circumstances under which they were made, not
misleading. Defendants knew or should have known such letters would be disseminated to SIB
investors.
72. Defendants made the referenced misrepresentations and omissions knowingly or
with severe recklessness in disregard of the truth.
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73. Plaintiff Ranni and the Class relied on the misstatements and omissions of
material fact made by Defendants.
74. As a direct and proximate result of such reliance, Plaintiff Ranni and the Class
invested in SIB CDs and have suffered an economic loss as measured by the difference between
Plaintiffs' investment and the amount of any return of capital.
75. A causal connection exists between Defendants' material misrepresentations and
omissions and Plaintiffs loss, as the material misrepresentations specifically related to the
soundness and safety of the SIB CDs.
WHEREFORE, Plaintiff Ranni on behalf of himself and the Class, demands a judgment
in their favor and against Defendants, 1) determining this action to be a proper class pursuant to
Rule 23(a), (b)(1), and (b)(3), Fed. R. Civ. P.; 2) awarding Plaintiffs compensatory damages,
interest, and costs, and 3) awarding any and all other relief the Court may deem appropriate.
COUNT II—Violation of Florida Securities and Investor Protection Act, 517.301, 517.211, Fla. Stat.
76. Plaintiffs repeat and reallege paragraphs 1 through 68 above.
77. Defendants have, in connection with the rendering of investment advice and the
sale of an investment or security, made untrue statements of material facts and omitted to state
material facts necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading; and engaged in acts, practices and courses of
business which operate as a fraud and deceit upon Plaintiff Ranni and the Class.
78. Specifically, Defendants, directly and indirectly, prepared and disseminated
letters, which contained untrue statements of material facts, and which omitted to state material
facts necessary in order to make the statements made, in light of the circumstances under which
18 HOMERBONNER 1200 Four Seasons Tower • 1441 Bnckell Avenue • Miami, Florida 33131 Telephone: (305k 30-5I 00 Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 19 of 43
they were made, not misleading. Defendants knew or should have known such letters would be
disseminated to investors by Stanford's agents to solicit investors in the supposed SIB CDs.
79. Defendants made the referenced misrepresentations and omissions knowingly or
negligently.
80. Plaintiffs relied on the misstatement or omission of material fact in Defendants'
letters.
81. As a direct and proximate result of such reliance, Plaintiffs invested in SIB CDs
and have suffered an economic loss.
WHEREFORE, pursuant to § 517.211, Fla. Stat., Plaintiff Ranni on behalf of himself and
the Class, demands a judgment in their favor and against Defendants, 1) determining this action
to be a proper class pursuant to Rule 23(a), (b)(1), and (b)(3), Fed. R. Civ. P.; 2) awarding
Plaintiffs compensatory damages, attorneys fees, interest, and costs, and 3) awarding any and all
other relief the Court may deem appropriate.
COUNT III—Information Negligently Supplied For The Guidance Of Others
82. Plaintiffs repeat and reallege paragraphs 1 through 68 above.
83. Defendants, in the course of their business, profession or employment, or in a
transaction in which Defendants have a pecuniary interest, supplied false information for the
guidance of investors in SIB, including Plaintiff Ranni and the Class.
84. Defendants failed to exercise reasonable care or competence in communicating
the information.
85. Plaintiffs justifiably relied upon the information, causing them pecuniary loss.
19 HOMERBONNER 1200 Four Seasons Tower • 1441 Bnckell Avenue • Miami, Florida 33131 Telephone: (305) 350-5100 Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 20 of 43
WHEREFORE, Plaintiff Ranni on behalf of himself and the Class Members, demands a
judgment in their favor and against Defendants, 1) determining this action to be a proper class
pursuant to Rule 23(a), (b)(1), and (b)(3), Fed. R. Civ. P.; 2) awarding Plaintiffs compensatory
damages, interest, and costs, and 3) awarding any and all other relief the Court may deem
appropriate.
COUNT IV—Fraud
86. Plaintiff Ranni repeats and realleges paragraphs I through 68 above.
87. Defendants, in the course of a business relationships with SIB and/or SIB's
affiliates and agents, made material misrepresentations and omissions of fact to Plaintiffs
through letters, which Defendants knew or should have known, and had reason to expect, would
be transmitted to SIB investors such as Plaintiffs.
88. Defendants knew or should have known such statements were false, or made the
statements in reckless disregard for the truth.
89. Defendant made the misrepresentations and omissions of fact with the intention
and expectation that SIB investors would receive the statements and rely on them in deciding to
invest with SIB.
90. Plaintiff Ranni suffered damage in justifiable reliance on Defendants' statements.
WHEREFORE, Plaintiff Ranni on behalf of himself and the Class Members, demands a
judgment in their favor and against Defendants, 1) determining this action to be a proper class
pursuant to Rule 23(a), (b)(1), and (b)(3), Fed. R. Civ. P.; 2) awarding Plaintiffs compensatory
damages, interest, and costs; and 3) awarding any and all other relief the Court may deem
appropriate.
20 H OME RBONNER 1200 Four Seasons Tower • 1441 Brickell Avenue. Miami, Ronda 33131 Telephone: (305) 350-5100 Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 21 of 43
COUNT V—Negligent Misrepresentation
91. Plaintiffs repeat and reallege paragraphs 1 through 68 above.
92. Defendants, in the course of a business relationships with SIB and/or SIB's
affiliates and agents, made material misrepresentations to Plaintiffs through letters, which
Defendants knew or should have known, and had reason to expect, would be transmitted to SIB
investors.
93. Defendants knew of the misrepresentations, made the misrepresentations without
knowledge of their truth or falsity, or should have known the representations were false.
94. Defendants made the misrepresentations with the intention and expectation that
SIB investors would receive the statements and rely on them in deciding to invest with SIB.
95. Plaintiffs Ranni suffered damage in justifiable reliance on Defendants' statements.
WHEREFORE, Plaintiff Ranni on behalf of himself and the Class Members, demands a
judgment in their favor and against Defendants, I) determining this action to be a proper class
pursuant to Rule 23(a), (b)(I), and (b)(3), Fed. R. Civ. P.; 2) awarding Plaintiffs compensatory
damages, interest, and costs, and 3) awarding any and all other relief the Court may deem
appropriate.
JURY TRIAL DEMAND
Pursuant to Rule 38, Fed. R. Civ. P., Plaintiffs hereby demand a jury trial on all issues so
triable.
Date: July 17, 2009
21 HOMER BONNE R 1200 Four Seasons Tower • 1441 Bricked Avenue • Miami, Florida 33131 Telephone: (305) 35E1•5100 , Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 22 of 43
Respectfully submitted:
HOMER & BONNER, P.A. Attorneys for Plaintiff Ranni and Class The Four Seasons Tower 1441 Brickell Avenue Suite 1200 Miamii Florida 13131 Te1ephon6: (305 350-5100 Teleco s'er\t (305) 982-0064 ts omere omerbo n,•r.com
By: 4L_ Luis Delgado Florida Bar No. 475343 Christopher King Florida Bar No. 0123919
GADocs Wdox \CF149017 10001100044273.DOC
22 H OMERBONNER 1200 Four Seasons Tower • 1441 Brickell Avenue • Miami, Florida 33131 Telephone: (305) 350-5100
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. . ) Men Stanford arrives by helicopter at London's Lord's cricket field in June 2008 to announce the Stanford Super Series. Later, in Antigua, Ms own team of players, the Stanford Superstars, defeated England for the largest prize in the sport's history, $20 million, supplied by Stanford himself. By Lefteris Pitarakis/A.P. Images. Pirate of the Caribbean With little more than laserlike ambition and a brash Texas charm, Allen Stanford built an $8 billion Caribbean banking empire, exposed in February as perhaps the second-largest Ponzi scheme (after Madoffs) in history. How did a bankrupt Waco health-club owner vault onto the Forbes Four Hundred, while the S.E.C., the F.B.I., and others mounted investigation after investigation of his shadowy business? From Stanford Financial's Antiguan headquarters, the author follows Stanford's improbable trail, complete with multiple families, a moated Miami mansion, and a passion for cricket. By BRYAN BURROUGH July 2009
T n 2006, a Miami attorney named Milton M. Ferrell Jr. hoarded a private plane bound for the Caribbean island of Antigua. Ferrell had a meeting there with the 1 country's top private banker, R. Allen Stanford, a muscular, boisterous Texan billionaire whose $8 billion Stanford Financial Group had grown so profitable he had attained the No. 205 spot on the Forbes Four Hundred. Ferrell represented a number of wealthy Latin Americans, and Stanford had invited him for a tour of his Antiguan bank, hoping to attract money from Ferrell's clients.
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With Ferrell that day was a security consultant I'll call Trevor, an expert on the shadowy world of Caribbean banking. Trevor had heard the rumors about Stanford Financial—the suspiciously high returns on its certificates of deposit, the money-laundering investigations—but wanted to see Stanford's offices up close. Stanford himself—six feet four, with a mustache, close-cropped brown hair, wide-set eyes, and a crushing handshake—was waiting at his hangar when they landed. After a tour of the adjacent complex some called Stanforthille, which included three bank buildings, a vast cricket field, and a restaurant called the Sticky Wicket, Stanford ushered the men into his crown jewel, Stanford International Bank, an imposing structure that resembled a columned mansion, overlooking the airport. Inside, the company's gold-eagle logo was everywhere—on doors, walls, coffee mugs, and lapel pins. It even appeared, it was whispered, on the toilet scats.
"The first thing Allen says is how they use all these sophisticated financial techniques to get such good returns on these CD's, which consistently didn't make sense to me," Trevor recalls today. "So I said, 'Can I see your trading desk? Is it in London, New York?' Allen says, `No, we do it right here in Antigua.' So he takes us into this room with a big desk, full of computers. There's a bunch of 3oo-pound Antiguan women in there, you know, like these women who sell fruit in the market. Milton and I looked at each other like, 'No way."
At that point, Trevor asked to meet the bank's compliance officer, the executive tasked with making sure the firm's trades conformed to securities regulations. "So Allen takes us back to a corner of this room," Trevor goes on. "And I swear, the door was creaking on its hinges, and out comes this 70-year-old guy who clearly had nothing to do with banking. I mean, he looked like a janitor. Milton and I, we said to ourselves, This is just a giant Ponzi scheme. Clearly this outfit doesn't have the facilities to support this kind of business."
They were right: it didn't—though it took an awfully long time for American authorities to realize it. On February 17, 2009, after years of rumor and several weeks of intense investigation, U.S. marshals raided Stanford Financial's Houston headquarters. Even as camera crews filmed them toting out boxes of paperwork, the Securities and Exchange Commission filed a suit charging Stanford and his two top aides with fraud, freezing all of Stanford Financial's assets and shutting down a financial empire that catered to 30,000 customers in 131 countries, though the bulk of its business was in Latin America. The company, the S.E.C. charged, was in fact little more than an $8 billion Ponzi scheme—the second largest of the era, it appears, after Bernard Madoffs. Billions of dollars in deposits, the agency alleged, were simply missing. Nine days later Stanford's chief investment officer, Laura Pendergest-Holt, was arrested for lying to the S.E.C. (Stanford and Fendergest-Holt deny any wrongdoing.)
t was an odd scandal, even as it broke. For two days Allen Stanford was thought to be a fugitive, until F.B.I. agents found him near his girlfriend's family's I house in Virginia. Unlike Madoff or many of the other so-called mini-Madoffs, whose frauds surfaced in the wake of the global financial crisis, Stanford was not arrested. At the time of this writing, in fact, he remains a free man, though he may be indicted any day; his most notable appearance came in April, when he told ABC's Brian Ross that he would punch in the mouth anyone who said his bank was a money-laundering operation. By then the flash flood of media stories on Stanford had abated, and unlike in the Madoff scandal, there was no groundswell of public outrage, in large part because so many of Stanford's depositors were Latin American.
Yet Allen Stanford's is quite a tale. The story of his rise, in fact, is as improbable as any you're likely to read. Until February, "Sir" Allen—Antigua knighted him in 2006—sat atop a personal fortune valued at $2.2 billion, collected American and European politicians like stamps—a former president of Switzerland sat on his "international advisory board"—and in his spare time served as the world's foremost promoter of the sport of cricket, of all things. He had a mansion with a moat in South Florida and, apparently, one heck of a libido; according to an exhaustive investigation by London's Daily Mail, Stanford, a married man, fathered no fewer than five children by three women other than his wife.
But that's just the half of it. What is truly startling is how he did it. One might expect a financier running an $8 billion international banking colossus to have a background in, say, banking. Not Stanford. He founded his Caribbean empire 24 years ago after bankrupting his first business, a chain of upscale health clubs based in the central-Texas city of Waco, 25 miles from the Crawford hobby farm of former president George W. Bush. After that, there was even a brief spell where Stanford was seen flipping hamburgers at a burger joint his family owned for a short time before it too closed. Then, as far as many of his old Waco friends knew, he simply vanished.
"I worked out at his club in the late 70s. I knew Allen a little," says K. Paul Holt, a Waco businessman. "So one day last February, I go online and out of the corner of my eye I see this headline, R. ALLEN STANFORD, CARIBBEAN BANIUNG KING, IN $8 BILmoN SCANDAL. I said, 'There's no way in hell that can be Allen.' Then it says something about cricket, and I'm like, 'I don't think so.' And then I Googled him and there's something about a failed health club in Waco, Texas, and so I'm going, Whoa! How did somebody go from Total Fitness Center to being a knight in the Caribbean? Jesus Christ! But hey, you know, this is America. Anybody can be any-thing, I guess."
A Texas-Size Personality Nowhere is that more true than in the world of high finance; in the 25 years I've spent writing about bankers and their ilk, I've repeatedly been amazed by the humble backgrounds of even the most successful financiers. James Cayne, the fallen C.E.O. of Bear Stearns, was a cabbie when begot his first job on Wall Street. Ivan Boesky, the disgraced arbitrageur at the center of the great insider-trading scandals of the 198os, stumbled onto a trading floor after bankrupting his family's Detroit strip joint. In terms of sheer strangeness, though, one would need to look long and hard to find a career quite like that of Robert Allen Stanford.
Perhaps unsurprisingly, the most revealing glimpses of Stanford come from the years before he ensconced himself in mansions and yachts and boardrooms. He was born in IVIexia, Texas, a weary village of 7,000 or so south of Dallas. His father, James, who partnered with Stanford in his early ventures, owned an insurance agency. His mother, Sammie, wrote the society column for the local paper. By the time Stanford was nine his parents had divorced; his mother took Stanford and his younger brothel. to Fort Worth, where they grew up. After graduating from high school, in 1968, Stanford stumbled through a few small colleges before landing at Baylor University, in Waco, where he graduated in 1974. He has told some interviewers he was on the football team; he wasn't. He told others he taught scuba;
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he did. After college he briefly worked for his father, and married a pretty dental hygienist named Susan Williams.
Despite his unremarkable origins, by his mid-20s Stanford was already shaping up to be a classic Texas archetype: the swashbuckling entrepreneur, with a big smile, a roving eye, and a laserlike focus on making money. After the wedding the Stanfords moved into Apartment 204 at the Window Box Apartments in Waco. Not long after, Stanford acquired his first business, an exercise club called Mr. and Mrs. Health, on Lake Air Drive. According to former employees, Stanford had worked there in college and then bought it from his onetime boss.
. U.S, authorities examine the Sea Eagle, Stanford's 120-foot yacht, in March, By Jeffrey Salter/Bloomberg News/Landov.
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The Total Fitness Center, as Stanford re-christened it, was one of the first clubs in central Texas to feature newfangled Nautilus machines. It proved immensely popular; Stanford was able to sell memberships to scores of IATacoans for up to $1,000 a year, which generated contracts he was able to sell for cash to a finance company. In short order he opened Total Fitness clubs in neighboring Temple and Killeen and purchased an expensive riverside home. By his 30th birthday, in 1980, Stanford was driving a white .Taguar through the streets of the bucolic Texas city.
It got him noticed, which he clearly loved. "One of his ndes at the gym was you don't drop your weights—they can get damaged," recalls Tim Gardner, an assistant manager at Total Fitness, "but lean still see him sitting on the bench, doing curls, and then standing up and dropping these weights from as far up as he could do. And people would turn and look at him. It was just for the attention, see? He loved to be in the limelight like that. I think if you looked up 'narcissist' in the dictionary, you'd find Allen's picture."
"I'll never forget the first time I met Allen," says Gary Findley, who managed the gym for a time. "I was inside the gym, and I heard this loud noise outside. I mean, loud. I couldn't figure out what it was, so I walked outside. He was landing in the middle of our running track in a private helicopter with the name 'Total Fitness' on the side. That guy spent money like it was going out of style."
"I remember I had parties at this little apartment complex, and Allen was always there, laughing, joking," says a dentist named David Rhoden. He was kind of wild, in a fun way, definitely one of the loudest ones at the party, a bright spirit, never gloomy, a guy who would yell at you across the room,"
"He was really a likable or boy, big fella—he just had a presence about him, like a pro athlete," recalls Rick HageLstein, one of Stanford's Waco bankers. "One story I do remember is he came into my office once with bandages all around his right forearm, big or bunch of bandages. What had happened was he had a Rottweiler and some redneck up in Mexia had a pit bull. This guy challenged Allen, said, 'My pit bull can beat your Rottweiler.' Allen said, 'This is crazy.' The guy kept pushing him and got in Allen's face. So Allen hit the guy. And the pit bull lashed out at Allen and evidently did a good job on his forearm. He said, 'I had to beat that thang don't know how many times to get it loose.' That was Allen,"
That in-your-face combativeness was part of Stanford's persona from the outset. "Alien's a big guy. He uses his size to intimidate people, and he's extremely demanding," says Tim Gardner. "I remember hc told me, 'Tim, I flat out don't like you, but as long as you make me money, I'll keep you. Once you stop making me money, you're out the door.' That was very much Allen's way."
If Stanford lived big, he dreamed even bigger. By 1980 he had opened two large health clubs featuring racquetball courts in Austin, plus another club in Galveston. "When I knew him, he had a girlfriend in every town, and he was married, and several of these girls—real stripper types with big boobs—he had bought them cars and put them up in apartments," remembers Royle Berry, who worked at the Austin facility. "He was a real player. He was so aggressive and so interested in making money. But it just felt a little sleazy at times. I remember when he would come into the club, the first thing he'd do is say, 'How much cash do we have?' And he'd take all the cash."
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In about 1981, Stanford made his boldest move to date, announcing plans for his largest club yet, in the new Arena Towers development, on Houston's Southwest Freeway. According to Royle Berry, Stanford leveraged his other clubs to build the facility. His timing, however, couldn't have been worse. Falling oil prices triggeNd a statewide economic collapse, and by 1982, Stanford's athletic clubs were in Chapter 11. Two years later, he himself went bankrupt, listing $13.6 million in debt against barely $200,000 in assets. He left scores of angry creditors in the Waco area. It was the last most people in central Texas would hear of him for more than 20 years.
In fact, Stanford didn't flee Waco right away. In November 1984 a bankruptcy court cleared his debts, allowing him to start over. Gary Findley hadn't seen Stanford for months when he strode into a new restaurant in suburban Hewitt called Junior's Hamburgers. "I walked in there one night and who should I see flipping hamburgers but Allen—he had started the place," Findley remembers. Junior's, however, closed down before long, leaving big Allen Stanford, fresh out of bankruptcy, the guiding light behind not one but two shuttered businesses, without his Jaguar, his helicopter, or any way to make a living.
So he went to the Caribbean and opened a bank. Ticket to Paradise By 1985, Stanford and his wife were living in Houston. That's when he opened his first bank, on the Caribbean island of Montserrat. On its face, it is a startling transition: how on earth does a bankrupt Texas gym owner suddenly wake up one day and start an offshore bank?
The story Stanford told of how he entered Caribbean banking remained consistent over the years. During the inid-1980s, he explained, he and his father branched out into real estate, buying apartment complexes in the Houston area on the cheap and flipping them for big profits. It was with this money, Stanford told reporters—usually said to be about $6 million—that his father staked him to his first bank, in Montserrat, which became an incarnation of the family business, Stanford Financial.
In fact, little about this explanation makes sense. For one thing, Stanford Financial no longer existed; James Stanford had sold it in 1983, and for a lot less than $6 million. ("I wish I had had $6 million to pay him," says the Mexia businessman Bobby Forrest, who bought it. "It wasn't anywhere near that.") Wherever the family got the money—in a 1999 interview Stanford claimed it came from a group of Anibal' oil-refinery workers—it's hard to imagine it came from Houston real estate. While the Stanfords did become small-time developers later in the 198os, their projects appear to date from the period after the Montserrat bank's founding, in 1985. This suggests that the bank probably funded the real-estate deals, mostly apartment buildings, not the other way around.
But of all the businesses Stanford could have entered, why banking? And why in such an obscure spot as Montserrat? According to one former employee, it happened this way: After moving to Houston, Stanford was at loose ends and decided to return to one of his first loves, scuba-diving, taking a long vacation in the Caribbean during which he supported himself giving scuba lessons. It was beside a resort swimming pool, this employee says, that Stanford met a charming European expatriate named Frans Vingerhoedt, who dazzled him with stories of the easy money to be made operating a bank in the Caribbean.
n 1985, when Stanford first became interested in the Caribbean, the hottest new home for offshore banks was the tiny island of Montserrat, a British colony with a smoking volcano (that, in 1995, obliterated half the island) and barely 12,000 jittery residents. A notorious Beverly Hills broker named Jerome Schneider—later convicted of fraud—had discovered the colony's porous financial regulations and begun selling banking licenses; of Montserrat's 350 so-called instabanks, at least 200 arrived via Schneider.
By most accounts, it was a stunningly sleazy climate in which to operate. The vast majority of the Montserrat instabanks existed only on paper; their owners scarcely if ever visited the island. Scores of these banks would later he probed by British and U.S. authorities. One, Zurich Overseas Bank, whose owners would be indicted for fraud in Detroit, operated out of the Chez Nous tavern in the Montserrat town of Plymouth. "Almost every bank in Montserrat was operated illegally," says David Marchant, editor of OffshoreAtert, a newsletter that covers offshore banking. "They were all shell banks, and they were all pretty much involved in fraud. They were aft the same: certificate-of-deposit frauds, money-laundering. The fact that Stanford had a banking license in Montserrat is all you needed to know about his credibility. It wasn't like most of the banks were good and you had a few bad eggs. The only reason you opened a bank in Montserrat was to commit fraud."
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I. ' : ' Stanford with the Superstars in Antigua, 2008. Stanford's new Guardian International Bank, however, was sharply different from other Montserrat banks, Rather By Gareth Copley/P.A, Images. than avoid the island itself, Stanford actually opened a bank building and hired local women to staff it. (The building and all its contents, alas, were destroyed by Hurricane Hugo in 1989.) The island facilities were augmented by a sales office in Miami and another in Houston, where Stanford worked with a small group including his college roommate James Davis, who would go on to become Stanford Financial's C.F.O. But what also distinguished Guardian from other Montserrat banks was how Stanford constructed a mythos to establish his credibility. He began telling customers the company had been founded by his grandfather Lodis B. Stanford (a barber turned insurance agent) in Mexia in 1932 and, once he renamed the bank Stanford International, he hung a photo of the gray-haired old man in the lobby.
From the beginning, little about Stanford International was what it seemed. A rare glimpse of its early years comes from one of the bank's first employees, a person I'll call Maria, whose job in Houston included assembling its first marketing brochures. "I remember the bank in Montserrat," Maria says. "It had two stories, with three or four African-American ladies and one white lady, this really pretty girl, maybe 17 or 18. They had all these computers, but the power was not even switched on. The computers didn't even work."
n those early days on Montserrat, Stanford attracted depositors, as he would throughout his career, by placing advertisements, some featuring attractive young I women, in Latin-American newspapers. Far more alluring than the women, however, were the interest rates Stanford promised: two percentage points above American bank rates. "That was what Allen always said, 'Two points more,'" Maria says. "He told me, it is unbelievable. People are so stupid, they will risk all their money, give it to someone they don't even know, for two points.' One day he grabbed the calculator on my desk, ran the numbers for two points on a million dollars: it was $20,000 a year. He said it was just unbelievable what people would do for just two points more."
By 1988, Stanford had acquired his first three run-down Houston apartment complexes—possibly using depositors' money—as the hank's deposits began to skyrocket. By the end of 1989, Stanford claimed an astounding $55.5 million in accounts. By November 1990 the number hit $ too million. Even inside the bank, this kind of growth raised eyebrows. "Nobody knew if the numbers were true," Maria says. "If you asked Allen how he [managed to pay higher interest rates], he always said exactly the same thing he says now: 'It's only two points; our organization is very . lean. We don't pay taxes in Montserrat.' Nobody believed that. But he paid very well. So the questions stopped.
"I was suspicious when we did the first annual report," Maria continues. "We used to do the work at night, when everybody was already gone. It was weird. You could see they were playing with the numbers and changing them right there in front of me. Jim [Davis] would come back to my office and look at the numbers, then go back to Allen, who would conic in and say, 'Fine, let's just put this number down.' They were just making things up. Personally, I was hoping we could make enough money to cover up everything. But it just got worse and worse." Stanford, however, seemed without a care. He and his wife moved into a pink hacienda-style house in the northern suburb of Kingwood.
hen came trouble. According to David Marchant, it all began when an American computer programmer, hired to update another Montserrat bank's systems, T complained to local authorities that his boss appeared to be transferring deposits into his personal account. A Scotland Yard man named Dick Marston was summoned to investigate; Marston brought in the F.B.I. A probe Marston expected to take a few weeks turned into a massive investigation that lasted years. By 1989 more than a hundred banks were under scrutiny by British and American agents for every conceivable financial crime.
Stanford's operation, by then one of the larger Montserrat banks, quickly became a target. Where, Marston wondered, were all those deposits coming from? Colombian drug money was flooding into banks across the region, and there were persistent rumors that this was the source of Stanford's growth. Marston called in an expert from the Office of the Comptroller of the Currency. As a onetime F.B.I. agent involved in the Montserrat probe recalls, "The O.C.C. guy went down
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there, stood across from the Stanford office for maybe several hours, came back and said, 'Yep, that's a money-laundering operation.' Marston goes, 'How can you tell from just standing across the street?' The guy goes, 'I'm telling you, it is.' Then, a little later, we got fairly detailed intelligence that they were indeed laundering for major Colombian drug traffickers. I remember very clearly that, when the governor [of Montserrat] heard this, we had to literally peel the guy off the ceiling." The Montserrat authorities were already tossing dozens of shady banks out of the colony when the government revoked Stanford's license, in May 1991,
It was a crushing blow. "Allen disappeared for six or eight months after that," Maria says. "For a long period nobody saw him. He would call in at one in the morning, and he always said he was working on this big deal, it would save everything." For once, Stanford was true to his word. In time he found a new home for Stanford Financial, one where fungible banking regulations would prove ideal for his ambitions:
Antigua.
Island Hopping An American vacationer who wants only to sip rum punches on its legendary pink-sand beaches may not realize—or care—that Antigua was long host to one of the Caribbean's most corrupt governments, under the two Bird administrations. A militant trade unionist with little formal education, Vere Bird led Antigua to independence in 1981 and for years ran the two-island country—officially named Antigua and Barbuda—as a personal fiefdom amid constant allegations of criminal activities. One of his sons was behind a scheme to sell Israeli weapons to Colombian drug traffickers. Another was arrested at V. C. Bird International Airport with 25 pounds of cocaine in his luggage. Another son, Lester Bird, eventually took control of the government, in 1994, as the U.S. began voicing concerns that the island was becoming not only a money-laundering center but also a haven for Russian organized crime.
Such was the Antiguan milieu when Allen Stanford introduced himself to the Birds, amund 1990. He wanted to buy the local Bank of Antigua, on the verge of bankruptcy, and the Birds were happy to broker its sale to him. Soon after, Stanford opened a second Antiguan bank, a new incarnation of Stanford Financial, which he operated much as before, opening a bank building, hiring locals to staff it, and advertising high interest rates in Latin-American newspapers. From the outset Stanford worked diligently to forge a partnership with the Birds. He provided the money to build cricket fields and a hospital, a vast multicolored complex overlooking the capital of Saint John's. In 1995, Stanford went a step further, loaning the government several million dollars to cover salaries and pension contributions. The loans grew over the years. By the late 1990s, Stanford owned the Antigua Sun, one of the island's two daily newspapers, and when two editors protested Stanford's suppression of an article criticizing Lester Bird during the 1999 elections, he fired them. (Both sued successfully.)
"Stanford became Lester's go-to guy," says Winston Derrick, publisher of the competing Daily Observer. "When Lester needed a hospital, he turned to Stanford. When Lester needed anything, he turned to Stanford."
Stanford Financial boomed in its new home. By 1994 it claimed $35o million in assets, enough for Stanford, in the following years, to buy a Venezuelan bank and start a conventional broker-dealer operation in Houston; he eventually opened a corporate headquarters near Houston's Galleria mall. Later, branches were added in Panama, Peru, Ecuador, and Mexico.
tom the outset, U.S. authorities kept tabs on Stanford. The Internal Revenue Service sued Stanford and his wife for failing to file their 1990 return, and 2003. After the money- F sought more than $420,000 in back taxes; 19 years later, the I.R.S. is claiming they owe over $226 million for returns from 1999 to laundering allegations on Montserrat, the F.B.I. too has kept a keen eye on Stanford, more or less nonstop, for more than 20 years.
"In terms of his notoriety, once that kind of information started coming in, he was known to a lot of folks in law enforcement," says a former F.B.I. agent who investigated Stanford. "He stayed very prominently on the radar for years—still is. There was a series of investigations. Obviously none of them ever ended in indictments. But we're talking various F.B.I. field divisions, with multiple agents, then multiple agencies, over to to 12 years."
Throughout Stanford's first decade on Antigua, the focus of U.S. investigators remained largely, perhaps exclusively, money-laundering. Questions of whether the bank was swindling investors wouldn't arise for years. "If you were in the metaphoric bushes outside Stanford anytime in the last 20 years," notes one U.S. security consultant, "you would literally have been bumping into team after team of U.S. government agencies, shouting at each other to get out of the way, you know, 'Be quiet, Stanford will hear you.' Those agencies would include the F.B.I., [U.S.] Customs, and the S.E.C. From everything I hear, there was endless interagency conflict over what to do and how serious this guy was."
The authorities' inability to mount a criminal case against Stanford—not to mention everyone's inability to sniff out fraud—has left many, inside and outside the government, outraged. "Clients would come to us and go, 'Oh, this guy is offering such great rates, he's never been in trouble, should we go with him?" says the C.E.O. of one private-security firm. "And then you reach into your sources and they say, 'Stop, run, avoid this guy like the plague. He's hot—hot with the government.' Well Jesus, we're just private investigators, and we knew the guy was bad. Where was the government? Why didn't anyone hang a sign on this guy?"
Catch Me If You Can One reason was Stanford's defenses. He became known for suing anyone, even journalists, who suggested Stanford Financial was anything but legitimate. In 1996, when a writer for Caribbean Week portrayed the company as a money-launderer, Stanford sued and won a front-page retraction. No critic was too small to ignore. He once sued a Catholic-school principal in New York after the man, active in Antiguan polities, termed him a "neo-colonialist."
Behind the scenes, Stanford was even more aggressive. As the company grew, he became renowned within law-enforcement circles for aggressive counter- intelligence. Stanford's security chief was a former head of the F.B.I.'s Miami office. But his greatest asset may have been a top security firm, Kroll Associates, whose Miami office worked with Stanford for years. "Stanford was spending millions of dollars a year trying to figure out who was looking at him, and aggressively combating whoever it was," recalls the former F.B.I. agent. "Kroll was essentially running a propaganda campaign in defense of Stanford's good name. They beat http://www.vanityfair.cornipolitics/features/2009/07/allen-stanford200907?printable =true¤tPage—all 7/16/2009
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on inc many times: 'Hey, you got this all wrong, he's not a money-launderer, he's a great guy, leave him alone."
Kroll's role in defending Stanford's reputation, in both law-enforcement circles and the wider banking community, was an example of a controversial practice known within the private-security world as "reputational self—due diligence," that is, vouching for a client's good name. It is, by all accounts, an exceedingly lucrative business. "What Kroll would do," says a former Kroll executive, "was put together a ver y detailed description of the bank, what it does, look over its balance sheet, the origin of the deposits, and produce this really thick report that says, 'This bank complies with the [U.S.] guidelines for combating money- laundering, and you, Bank A, should feel free to work with them.' It is controversial, even inside the firm. Kroll is considered—how to say this nicely—well, they're willing to take more controversial clients for this type of service."
"Kroll can confirm that it has provided routine professional services to various businesses related to Allen Stanford," the company said in a statement issued to Vanity Fair. "All such work was provided consistent with Kroll's reputation, internal controls, and its history of working with law enforcement. Suggestions to the contrary are incorrect. Confidentiality restrictions prevent any further comment on those assignments."
Kroll's work for Stanford dates back at least a decade, to the moment when U.S. concerns about the company finally burst into the open. That happened in 1999, when a Drug Enforcement Administration probe revealed that members of Mexico's vicious Juarez cartel had deposited more than $3 million in accounts at Stanford. The bank froze the accounts, while the Bird government announced formation of a committee to rewrite its anti-money-laundering laws. To the U.S. government's dismay, Stanford himself was named to the committee. Another member was Thomas Cash, a former D.E.A. chief for Florida and the Caribbean who headed Kroll's Miami office and, former associates say, was long Kroll's liaison with Stanford. The committee produced a set of new regulations that appeared to weaken Antigua's banking laws rather than strengthen them.
he State Department howled, complaining that "the Antiguan government has effectively ceded oversight of its offshore section to an offshore banker and his T minions," When the Bird government shrugged, the U.S. Treasury officially designated Antigua a "money-laundering risk," just the second such warning ever issued against a sovereign country.
Under intense pressure, the Bird administration backed off and, after negotiations with U.S. authorities, tightened the island's laws. At the same time, according to a State Department cable obtained by The Philadelphia Inquirer, unnamed Stanford "allies" seized a sheaf of Antiguan banking records. "It appears that the U.S. offshore banker [Stanford] is taking advantage of loopholes to seize the initiative and protect himself from any future inquiries or investigations," noted the cable, which labeled the incident "Filegate, Antiguan style." "The high-powered legal and investigative guns from the U.S. are likely being tasked with cleansing the files to make sure there is nothing in them that could damage or implicate the American offshore banker."
Haying survived his first dustup with U.S. authorities, Stanford apparently realized he could use friends in Washington. Some of these new friends may have been inside the D.E.A.; a BBC broadcast in May claimed that Stanford became a D.E.A. informant. But his best friends were in politics. His political giving began about the time that a sweeping anti-money-laundering bill was introduced to Congress, around 2000. Stanford began donating large sums to a number of senators, including Minority Leader Tom Daschle, in an apparent effort to block it; in a later study, the public-interest group Public Citizen judged that Stanford's donations were probably crucial to the bill's eventual defeat in the Senate. Stanford's giving grew from there.
In 2002, his company gave $800,000 to the Democratic Senatorial Campaign Committee, the vice-chairman of which was Florida senator Bill Nelson, who received $43,900. In all, Stanford spent nearly $3 million lobbying Congress between 1999 and 2008 and dished out $2.4 million to federal candidates. He also sponsored dozens office "fact-finding" trips to Antigua and other Caribbean islands for politicians and their staffs on his fleet of jets. Former Republican House majority leader Tom DeLay, of Texas, among the largest recipients of Stanford's largesse, flew 11 times on Stanford's jets, according to The Dallas Morning News. Empire Building What remains of Stanford's Antiguan empire today is a series of mostly empty buildings that line the periphery of the island's airport; in fact, the first half-dozen structures a visitor encounters, even the airport parking lot, are Stanford's. Turn right at the airport traffic circle and you see the offices of his newspaper, the Antigua Sun, To the left is the Stanford Cricket Ground, an expanse of grass lined with grandstands, video screens, and Stanford's restaurant, the Sticky- Wicket, guarded by a statue of a cricket player. Looming over the traffic circle is Stanford International Bank itself, an immense building, engulfed in colorful tropical gardens; people working for a court-appointed receiver can be seen wandering in and out of its great mahogany front doors. Next door is another Stanford restaurant, the Pavilion, which features an 8,000-bottle wine cellar. Just up the street, past the observation tower and the botanical gardens, is a long, low plantation-style building, Stanford Trust. Across the way is the Bank of Antigua. The entire development has the just-built look and feel of a middle-class Miami subdivision.
By the early 2000s, Stanford's wealth, power, and visibility were all on the rise. As his company grew, Stanford became a distant, sometimes mercurial executive, a figure most employees saw only at official functions. "You would wait for hours to see him," recalls an executive, one of 13 who reported directly to the boss. "If you got called for a to-o'clock-in-the-morning meeting, it might bet o'clock in the morning by the time you got to see him. Time didn't matter. He demanded respect too. [Every meeting was] basically a table of yes-men. His wish was our command."
In Antigua, Stanford had become a polarizing figure. Many on the island, citing the gifts and money he had given the government, adored him. But others viewed him as a sharp-elbowed Yankee imperialist, a view propagated by opposition politicians during the hard-fought 2004 election in which Lester Bird was tossed out of office; Bird's replacement, Baldwin Spencer, termed Stanford "haughty, arrogant, and obnoxious."
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. ' ,.• . • •-" Stanford International Bank's Antigua et Stanford's power endured, in large part because of the financial hammerlock he held on the government. headquarters. By Gamma Hazelwood/Bloomberg N'''''/L"d°v• y By 2004 its debt to Stanford had grown to $87 million—nearly half its annual tax revenues. And in return for being allowed to put up the new buildings of an airport complex and purchase 19-acre Maiden Island (where he planned to build a new home), plus another islet, he supplied money to build a new national library and an education complex.
AS his fortune grew, however, he began spending more time in South Florida—he seldom visited the Houston headquarters, former employees say—where in October 2003 he paid $10.5 million for a 57-room mansion, called Tyecliffe Castle, on the Coral Gables waterfront. It was there that, according to the Daily Mail investigation and various court filings, Stanford secreted one of the women some inside his company began calling the outside wives."
By most accounts, there were at least three of them. The first was apparently a woman with the same name as his wife, Susan, whom he had dated in Houston. She lives today in a Dallas suburb with her and Stanford's 17-year-old son. A second woman, Beki Reeves-Stanford, lives in South Florida with their two teenage children. The third is Louise Sage, who lives in Kent, England. Stanford has two younger children with her. Their relationship became public when she sued for financial support.
With his wife, Stanford has a daughter, now in her 20s. According to reports, he and his wife separated in 1999; Susan filed for divorce in 2007. The case is pending. Stanford's current girlfriend is a former cocktail waitress, at one of his Antiguan restaurants.
tanford Financial, meanwhile, remained nearly as productive as its founder, topping $3 billion in deposits in 2004. Over time the company grew into a high- S pressure marketing powerhouse in which employees worked in groups with colorful names such as Money Machine, Superstars, and the Deal Hunters. Stanford offered several financial products, but its mainstay remained the high-rate C.D.'s sold out of its Antiguan bank. According to The Wall Street Journal, Stanford salesmen earned commissions of 1 percent for every dollar they brought in, a rate so rich some brokers called it "hank crack"—it was that addictive. Top producers might also win a luxury BMW sedan,
"He sort of burned through countries," notes an investigator working for Stanford's court-appointed receiver. "If you look at the internals, early on the money was coming from Brazil and Venezuela. Billions from Venezuela. Then Peru, Ecuador. You know, you can only get so many investors in one country to put in so much money before people start asking questions. So from there he moved to trying to capture money in Panama, then the U.S., which was difficult, and then Mexico. That's where he was at the very end."
Stanford Financial's drive to "capture" American depositors shifted into high gear in 2004. Between 2004 and 2007, the bank expanded its U.S. branches from 6 to more than 25, opening offices in Denver, San Francisco, and Boston, as well as in southern cities, such as Little Rock and Baton Rouge; a second headquarters of sorts was established, in Memphis, close to the northern-Mississippi home of Stanford's chief financial officer, Jim Davis. Prospective investors were often ushered through the hushed mahogany-and-marble corridors at the Houston headquarters, where they were led into the Lochs Room—named for Stanford's barber grandfather—for a promotional film, then plied with champagne and cigars in the executive dining room. The wealthiest prospects might be flown to Antigua aboard one of Stanford's six private jets, put up for a few nights at the luxurious Jumby Bay resort, and, if they were lucky, get to meet Stanford himself.
T.) it by hit, Stanford Financial emerged from its shadowy Caribbean origins. To popularize the brand, Stanford began throwing money into the usual kinds of Dcorporate philanthropy and naming opportunities. He sponsored the pm golfer Vijay Singh, along with two tournaments. There were Stanford banners in the Miami Heat's arena, a Stanford Field at the International Polo Club Palm Beach, plus millions given to hospitals, theaters, and museums, mostly in Memphis, Miami, and Houston. When it came to sports marketing, though, Stanford's passion was cricket, especially a fast-moving new version of the game called
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Twenty20 that can be played in hours instead of days.
In 2005, after completing his Antiguan cricket ground, Stanford announced a pan-Caribbean tournament. The hidebound cricket world, centered in England and India, snickered, but Stanford would not be deterred. He unveiled his own team, the Superstars, and, in a 2008 media event whose Texas-style audacity stunned the cricket community, challenged the English team to a match by landing a black "Stanford Financial" helicopter on London's most hallowed field, Lord's. He jumped out, promptly chest-bumped a British official, and thrust forward a Plexiglas box containing the match's prize: $20 million in cash, Stanford's Superstars won the big match, but the affair did little to ingratiate the Texan with the cricket establishment.
What kept attracting depositors, though, wasn't Stanford's publicity stunts. It was his profits. The first serious questions about Stanford's performance came as it began to hire dozens of veteran American brokers to staff its new American offices. One of those with suspicions was Lawrence DeM aria, a former New York Times reporter who, after enduring a six-hour grilling by an investigator from Kroll Associates, had been hired to supervise internal publications and write speeches for Stanford himself. DeMaria's "bullshit antennae," as he terms it, rose not long after he joined the company.
"I kept getting vibes throughout the company that nobody knew where the money was coming from or where it was going," he says today. "When I would ask about how the company made its money, not just the principals but the investment-banking divisions, the research department, I would get no answers. [Everyone] said they didn't know._ When I asked the investment people, they said, `We can't tell you, but believe us—we have computers. — Eventually DeMaria was fired. He sued and settled.
DeMaria's concerns were hardly unique. The executive who reported directly to Stanford recalls a talk with another executive in charge of the Antiguan bank; "I remember once having a conversation about how they make such great money. He said, You know, good investments, things like that. He told me right away it was not drug money. That it once had been drug money. But, you know, Oh they found out about it, paid a penalty, they would never do that again, right? [And he] told me it was not a Ponzi scheme. Everything was legit."
till, the rumors persisted, especially among the new American hires. In Miami, a broker named Charles Hazlett asked too many pointed questions, including S several of Stanford's 31-year-old chief investment officer, Laura Pendergest-Holt, and found himself dismissed; he too sued and won a settlement. In Houston, a pair of new Stanford brokers, Charles Rawl and Mark Tidwell, asked still more questions, and resigned just as they were dismissed. They eventually sued; their complaint reportedly triggered interest within the S.E.C.'s Fort Worth office, but for some reason the investigation went nowhere.
But it wasn't just U.S. brokers who raised questions. The most senior whistle-blower may have been Gonzalo Tirado, the longtime head of Stanford's Venezuelan bank, the company's largest outpost. After Tirado resigned, in 2005, he and the bank engaged in a hail of litigation, much of it centered on compensation matters. An investigator in Miami told me Tirado came to believe Stanford was engaged in criminal acts and alerted regulators in Venezuela and the U.S. In an e-mail exchange, Tirado confirms this, but declines to elaborate, noting, "I had more than three years telling the authorities in Venezuela and USA about his lack of loyalty and ethics."
Stanford Financial, however, easily weathered what few financial investigations it confronted. The S.E.C. and another agency began probes in 2005 and identified several technical infractions, but the probes neither received much attention in the press nor did anything to slow Stanford's growth. Buoyed by the U.S. economic boom, its assets roughly doubled between 2004 and 2008, to $8 billion,
In 2008 a magazine called World Finance named Stanford its Man of the Year. He was added to the University of Houston business school's Circle of Honor and spoke to a commencement class on the importance of ethics. "So," CNBC correspondent Carl Quintanilla asked Stanford in May 2008, "is it fun being a billionaire?"
"Well, oh, yes," he replied. "Yes, I have to say it is fun."
The fun, alas, was almost over.
Overdue Diligence One day last October, a 48-year-old independent financial analyst, Alex Dalmady, sitting in his office in South Florida, took a call from a friend. The friend, whom Dalmady refers to as Roberto, had much of his savings invested in Stanford C.D.'s, and in the wake of the financial meltdown, he asked Dalmady, as a favor, to examine the bank's financials and see if his money was safe. "So when I went over to the bank's Web site, I was stunned," Dalmady recalls in a Wog item, "First, it looked so simple, so unsophisticated. The language used wasn't quite right." The explanation Stanford offered for its returns, Dalmady felt, made no sense; no one could achieve market returns like that year after year, and no reputable commercial bank would trv. It was far too risky. As he later described it on his blog, Dalmady immediately called his friend and said, "Roberto, take your money out YESTERDAY !"
Once his friend was safe, Dalmady found himself returning to the Stanford Web site. In the interim, the Madoff scandal had hit, and his curiosity soon turned to suspicion. "It became obvious," Dalmady wrote. "No one was looking at stuff like this. The S.E.C. had its head up its butt. Sot dug deeper and put some numbers on a spreadsheet—took me about 30 minutes. It just got worse. Where was the portfolio? What were they invested in? [Twenty percent plus] returns on their hedge funds? No way. Outperforming the S&P in stocks? No way. With 30 percent deposit growth [i.e., money constantly coming in]? No way."
Stanford Financial, Dalmady judged, had to be a fraud. He decided to write up his conclusions in an article and offered it to an old friend who edited a Venezuelan financial magazine called Veneconomy, , which published it at the end of January. At first, the piece caused little stir. Titled "Duck Tales,' it was front-loaded with complex financial analysis; Stanford Financial wasn't even mentioned until page 4. But on February 9, a financial blog called the Devil's Excrement republished it, http://www.vanityfair.com/politics/features/2009/07/allen-stanford200907?printable =true¤tPage=all 7/16/2009
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at which point it was picked up by a popular Latin-American blog, the snarky Inca Kola News. The Inca Kola item, in turn, immediately became the focus of intense interest.
"So far today," a post on the blog read, "this humble blog has had several visits from major newswires, three visits from the US Federal Reserve and one from the SEC, all using [the terms] `Alex Dalmady,"Stanford,"Madoff etc as keyword entries. Not to mention all those people from an island called Antigua and plenty from a company called 'Stanford Eagle' in Houston. Hi guys, having a nice day?"
Subpoenas were already on the way. As an e-mail from a Stanford lawyer, included in court materials, explained, the S.E.C. wanted to confirm that "the bank is 'real,' the CDs are 'real,' that the money is actually invested as described in our documents, and that client funds in the CDs are safe and secure." Both Stanford and Jim Davis declined to be interviewed by the agency. Instead, they sent in their chief investment officer, tall, willowy Pendergest-Holt, a Davis protegee he had met at his rural Mississippi church. She would testify together with a team from Stanford International Bank.
ALSO ON VENNI
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Confessed fraud.ster Bernard Madoff bilked investors, friends, and philanthropists alike as part of his $65 billion Ponzi scheme. How did he do it? And how was he found out? Visit our Madoff archive to find out. Above, by Justin Lane/EPA/Corbis.
At a prep meeting of Stanford executives, on February 4, according to materials filed in a Dallas federal court, Pendergest-Holt sat down in a Miami conference room to explain to one of the firm's outside attorneys just how Stanford operated. Its assets, she said, were divided into three "tiers." Tier 1, about to percent of assets, was held in cash. Tier II, another to percent, was invested in mutual funds managed by outside firms; these holdings, Pendergest-Holt said, had fallen to $35o million from $850 million since just last June.
But it was the super-secret Tier HI that most interested the S.E.C. Tier III held about 80 percent of Stanford Financial's assets, roughly $7 billion; its contents and day-to-day management appear to have been handled only by Stanford, Davis, and Pendergest-Holt. At the Miami meeting, Davis, who was also present, handed Pendergest-Holt a data drive that broke down Tier III's contents in detail. She showed it to the group. According to these numbers, Tier III at that moment was composed of $3 billion in real estate, a $1.6 billion "loan to shareholder"—Allen Stanford—and nothing else.
Nothing. Else.
The shortfall came to nearly $2.5 billion. The bank executives in the room, who had never peered inside Tier III, were aghast. When the meeting reconvened the next day, Stanford appeared. Two of the bank executives said they' had no choice but to report this new information to the S.E.C. According to court materials, Stanford flew into a rage and pounded on the conference table.
"The assets are there!" he shouted.
On the third day things got stranger yet. Before Pendergest-Holt could even begin talking, another executive started to cry. "If you are going to go through more information I didn't know," he sniffed, "I don't want to be here, and I'm going to the authorities." One of the lawyers suggested they pray. Stanford, however, was unmoved. He insisted the bank still had $850 million more in assets than liabilities. For the first time, though, the group in the room could see their emperor had no clothes. A few hours later, the outside attorney walked into a Stanford man's office and said, "The party' is over."
On February to, Pendergest-Holt began giving sworn testimony to attorneys in the S.E.C.'s Fort Worth office. She played dumb. Asked whom she consulted with to prepare, she failed to mention either Davis or Stanford. "I have been to Antigua," she said. "I have reviewed statements and looked through, gosh, other issues." 'rime and again she insisted she knew nothing about Tier IIT. "I can state it as many ways as you would like me to," she said. "I don't know about Tier Ill, other than what I've already shared with you in about 20 different ways." There was a second interview a week later. "If I knew anything about Tier III, I'd tell you," she said. "God's honest truth."
As Pendergest-Holt spoke, federal agents were already raiding Stanford headquarters in Houston. A week later she was indicted for lying to the S.E.C. It was over.
ithin hours there were runs on the Stanford branches in Antigua and Venezuela, and throughout Latin America long lines of worried people sweated in the W tropical heat. Most will probably never see their money' again; one investigator told me he believes maybe $1 billion out of Stanford's $8 billion in assets might eventually be recovered.
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If Stanford Financial was in fact a Ponzi scheme, it was strikingly similar to Bernie Madoffs. As with Madoff s operation, only a handful of people appear to have known what was going on. Stanford's auditor, like Madoffs, was tiny, in this case a 14-person accounting firm in Antigua; its owner has recently died. Stanford's seven-member board was composed entirely of insiders, including Stanford's father and one of his elderly chums, disabled by a stroke. That such a scheme could grow so enormous, and last for so many years, is a devastating indictment of worldwide banking regulation. It took Alex Dalmady maybe two hours on the Internet to glean the amazing truth. It's not clear anyone in Washington ever seriously tried.
Allen Stanford declined to be interviewed for this article. But in an April publicity blitz clearly designed to head off his looming indictment, he told a number of interviewers, including ABC's Brian Ross, that his company was never a Ponzi scheme. If any money was missing, Stanford insisted, it was all Jim Davis's fault. (Davis is cooperating with the S.E.C. investigation and plans to enter in plea talks with government officials.) When Ross asked about comparisons to Madoff, Stanford began to tear up.
"Bullshit, that's bullshit," he said. "It makes me madder than hell and touches the core of my soul."
Stanford, who remains in seclusion in Houston, didn't display the first bit of guilt or remorse. Instead, he said he felt persecuted. "I'm the maverick rich Texan that they can put the moose head on the wall—and that's the only reason they went after me," Stanford told Ross. "I'm fighting for my survival and for my integrity." It's a fight, one suspects, that Allen Stanford should, and almost certainly will, lose.
With additional reporting by Christopher Bateman.
Bryan Burrough is a Vanity Fair special correspondent.
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION
REINALDO RANNI, individually and on behalf of a class of all other similarly situated Plaintiffs, Case No.: V.
WILLIS OF COLORADO INC., and WILLIS GROUP HOLDINGS LTD., Defendants.
DECLARATION OF ALEJANDRO GONZALEZ
1. My name is Alejandro Gonzalez. I am over the age of 18 and am competent to make this
declaration.
2. From about April 2006 through February 2009, I was a Financial Advisor ("FA")
employed by Stanford Group Company ("SGC") in SGC's Miami office.
3. SGC's Miami office was located on the 21 st Floor of the Miami Center and was decorated
lavishly—with marble floors, oriental rugs, and expensive artwork.
4. The main product I and my fellow FAs in Miami marketed to clients were Certificates of
Deposits offered by SGC's affiliate, Stanford International Bank ("SIB").
5. The majority of my clients, and the clients of the Miami SGC office in general, were
Venezuelans or citizens of other Latin American countries. I regularly brought clients or
potential clients to SGC's Miami offices to open accounts or purchase CDs. One such customer
I solicited was the Plaintiff in this case, Reinaldo Ranni.
6. I provided these clients with SIB promotional materials that touted the safety of the CDs,
identified insurance policies from Lloyd's of London relating to SIB, and criticized FDIC
insurance.
1 EXHIBIT B , Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 35 of 43
7. Many clients had questions about SIB's insurance. I assured them SIB had coverage
from Lloyd's of London. To prove it, it was my practice to show clients an undated letter on
Willis letterhead that identified SIB's coverage and that vouched for the safety and
professionalism of SIB.
8. Reinaldo Ranni and certain other customers asked for Willis letters personally addressed
to them. This was possible for customers who had at least $1 million in CDs. For these
customers, I would call SIB in Antigua, and SIB would arrange for Willis to issue a letter
directly to the client.
9. Mr. Ranni and many other of my clients would not have purchased SIB's CDs without
these assurances regarding insurance.
I DECLARE under penalty of perjury that the foregoing is tr and correct this day of
July 2009. / ein Aft!, Irk Aleja o Gonzalez
2 Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 36 of 43
Wi 1115
Telephone: (303) 218-4020 Fax: (303) 218-4058 Website:
Direct Line: (303) 218-4037 May 30, 2007 Direct Fax: (303) 218-4058 E-mail: Amy.Baranoucky&villis.com
Brava Idea Publicidad, C.A c/o Reinaldo Ranni Av. Victoria C/C Carlos Blank, C.C. Taurnar Center Nivel Mezzanina, Locales 02-03 La Victoria, Estado Aragua VENEZUELA
RE: STANFORD INTERNATIONAL BANK LIMITED Dear Mr. Ranni: We are the insurance broker for Stanford International Bank and find them to be first class business people. We have placed the following coverages that are currently in effect:
1. Directors and Officers Liability Insurance with Lloyds of London (Expiration 8/15/07);
2. Bankers Blanket Bond with Lloyds of London (Expiration 8/15/07);
All of these coverages have been in effect for various terms for the past six to twelve years, however, no representations can be made that such coverages will remain in effect
In order to qualify for the above coverages, the Bank underwent a stringent Risk Management Review conducted by an outside audit firm.
We have found that all our dealings with the Bank have been conducted in a professional and satisfactory manner.
Sincerely,
alffy SitiltOl* Amy Sf. Baranoucky Vice President Executive Risks
• Willis of Colorado, Inc. Independence Plaza 1050 17th Street Suite 750 Denver, CO 80265
EXHIBIT C
Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 37 of 43
Economy and Finance
Duck tales
One does not have to be a The financial world has been in a state of First off, one must realize that nothing is detective, or even a financial turmoil after the recent financial and invest- safe or sacred. There is a risk and margin of expert, to spot financial ment scandals. The collapse of seemingly error in everything, and in financial issues, institutions that may prove rock-solid institutions, billion-dollar swindles even more so. The rubber stamp of the CNV, insolvent, or worse, with the and hoaxes are everywhere. It seems there is SEC, FDIC or an auditor or the "word" of a passage of time. As the saying a new case every day. friend or partner are all relative. Nothing is goes, if it looks like a duck, if The "talking heads" ofthe world have natu- safe or "sure." Madoff duped the SEC, Enron it waddles like a duck and if rally taken up on this. Calls for stricter regu- had its way with "Arthur Anderson," and re- it quacks like a duck, it must lation are a constant, which is quite under- cently Saytam, a large Indian company, tricked be a duck standable. Nobody likes to see "innocent" the powerful auditing firm of people suffer at the hands of unscrupulous Price WaterhouseCoopers. financiers. Everything is relative and everything can But one has to be a realist also. These rack- be a lie. However, unless you wish to live like ets and hustles are as old as humanity itself a hermit there is no modem life without risks. and have been going on since Ug sold Og the The goal is to assume the risks that you think "magic stone" that made fire. Regardless of you can manage and do your best to keep how much effort is put into controlling or su- them under control. In business (and why pervising everything, there will always be a not?..in love also!), if you don't bet you can't loophole somewhere that a rip-off artist can win and if you don't play you can never win. wiggle himself through. There is a proverb in Another thing many can't grasp is why Spanish "Hecha la ley, hecha la trampa" (or these scams aren't uncovered. The truth is Italian"fatta la legge, trovato I' inganno) which that most of them are "found out" all by them- is something like "where there's a law, there's selves or when the circumstances make it a loophole." Scams will continue regardless of obvious. Madoff could have continued for- the regulatory hurdles thrown at them. They'll ever had he not faced fund redemptions with morph or mutate, much as pathological bacte- which he couldn't comply. Pyramid schemes ria do when facing an antibiotic attack. collapse when they run out of marks. And it's One must also face up the fact that if you not just because the participants are happy are on this planet long enough, you will be- while they are collecting profits. It's that a come a direct or indirect victim of one ofthese good scam is really hard to detect and almost impossible to uncover without inside help. frauds. Sooner or later, it will happen. It can be from being confident, trusting, naïve, Being "almost sure" is usually "not greedy or careless. Or simply stupid. But it enough." How do you blow the whistle when will happen. We've all been "taken" at some you're "almost sure"? It's preferable to not point. If not in a monetary deception, who get involved and the skeptic will keep it to hasn't been deceived by a 'friend," relative himself. Frankly, what does a whistle blower or"siglificant other?" It's human nature. Gall have to gain? So normally he'll back away will usually trump incredulity and skepticism. from the suspicious deal and leave things as When one thinks "he/she couldn't have," they were. well they could.. .and then some. With financial institutions, it is twice as How can you protect yourself? How does touchy. A suspicion can be considered a one avoidavoid being the victim of the next stabilizing rumor" and on certain occasions Madoff, DMG, La Vuelta, Gumi or Banco (though less often than one thinks), an un- Latino? founded rumor can turn into a self-fulfilling
VenEconomy Monthly / January 2009 11
EXHIBIT D
Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 38 of 43
.P 0-
prophecy. Yours truly still recalls when an extract from a report and too consistent. Everyone gets tripped up once in a while. about Banco Mercantil was taken out of context and splattered Not Bernie. Quite a few people thought he operated with in- on the front page of a newspaper, generating a mini-run on the sider information.. .and that's why they invested with him! bank. The bank survived obviously (it was structurally sound.. .a fact also stated in the report), but the affair left a bad 3. There are few people (or only one aftertaste. The analysis was correct and the quote was word for person) overseeing everything word, but a third party maliciously manipulated it. It is suspected that Madoff operated alone or with a small Back to how to protect yourself. The best scam antidote is group ofcollaborators. His auditor was a personal firm that worked common sense or what is called the "Duck Theory." The Duck out of a storefront office in New York. His multi billion-dollar Theory states quite simply that: if it "quacks" like a duck, if it hedge fund operated on a secret floor manned by only 19 people. walks like a duck and it has a bill like a duck...IT'S A DUCK! In the Barings scandal (1995), trader Nick Leeson managed to The only way to be 99.99% sure that it's a duck is to extract be able to execute his trades and control how and when they its DNA and analyze it and even then there is margin for error. I were booked. He lost a billion dollars and "broke the bank" respect Heisenberg; there is no absolute certainty, before anyone found out. A similar story emerged in 2008, when So what does a financial duck look like? Its traits are many Jerome Kurviel lost five million euros for Societe General. The and varied, but here are a few: point is that lies and secrets are best kept when few people are involved. I. It too good (to be true) 4. Few incentives for whistle blowers I still recall that Gumi (a pyramid scheme in Bolivar in the '90s) would pay 20% monthly interest on deposits. DMG (Co- Madoff was a philanthropist and a NASD director. His client lombia) offered to fully recharge members' prepaid cards after list was a "who's who" of the rich and famous. His detractors six months for free. Madoff didn't make any claims, but he had and those who suspected his activities weren't "kosher" were a track record of producing returns that consistently outpaced considered envious of his success. the market, without the volatility (risk) that usually goes with it. Who was going to uncover the mess? The SEC? Based on Banco Latino's rates were far higher than the rest of the what? Madoff sent all the information legally required of him banks' ...and so on. and signed by his auditor. The SEC (not unlike the Venezuelan CNV) doesn't conduct audits itself; it just makes sure that some- There's usually something very attractive or juicy being of- body does. fered or else no one would get in. The catch is that it can be too attractive. The most successful schemes, such as Madoff's, At one point, 22,000 people worked for Enron and they were straddle the "limit of reasonability," and that allows them to all really busy. But the company overvalued assets at offshore survive for a longtime. affiliates (aside from other accounting tricks) and was one big house of cards. Who was going to risk their job and career, 2. It can do what no one else can trying to discover and denounce the truth? Finance is a lot simpler than most people are led to believe A case study (we analysts must appear to be important). Most things can be explained with simple arithmetic. When the numbers or the ex- Thank you for bearing with me up until this point. Your pa- tience is about to be rewarded. Here is a case study: a duck planations become too complex.. .beware! "possibility" or better stated, something that could be a duck. What was Gumi doing that enabled it to pay 20% a month? And a "live" one, to boot. The whispered answer was that it was financing drug traffick- ers. A friend contacted me recently to ask about an offshore bank where he had deposited part of his savings. Not a great amount Not true! Frankly, why would traffickers need to finance their in the large scheme of things, but an important sum for him. I operations at those loan shark rates? Drug lords had the oppo- promised I would take a look at the "animal." Fortunately, there site problem, tons of cash to launder. It was all a lie of course; was information about the bank on the Internet, along with its Gumi was a simple pyramid scheme. audited financial statements. Enron, in its day, was into innovative and "exotic" businesses. This is a bank that operates on a small Caribbean island, They even had supposedly established a trading market for "band- inhabited by less than 100,000 people. Roughly, a population width." Their financial statements were almost impossible to de- the size of Altagracia de Orituco. cipher and there was good reason for that. They were a lie. More recently, Madoff's hedge funds would rack up extremely What is being offered? consistent monthly gains, which were far above the market The bank offered (still offers) high interest rates on CDs. Up average. It didn't seem that strange; there are people who are until recently the rate was about 7.5% on a one-year deposit. very good at the investing game. But they were a bit too large That compares quite favorably with 4-5% that U.S. banks were
12 VenEconomy Monthly / January 2009 Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 39 of 43
Economy and Finance
paying in the best case scenario, and recently rates have fallen PORTFOLIO RETURNS below 3%. My friend told me that its rates had always been that Overall Hedge Precious S&P high. Year Portfolio Stocks Funds Metals Index This has been an extremely successful strategy for the bank, at least as far as deposit growth is concerned. The bank's de- 2003 14.4% N/A N/A N/A 26.4% posits have grown from $624 million in 1999 to over $8.4 billion 2004 11.5% 8.2%J6.9% 12.3%'- 9.0% at year-end 2008. That's an average compound growth rate of 2005 10.3% 8.8% 21.6% 9.3% 3.0% 2006 11.0%•11.7% 25.1% 14.9%, 12.8% 34%! 2007 11.4% 8.2% 25.0% 15.0% 3.8% Now, that is unusual. Very aggressive deposit growth is usu- _zoos 6.0% N/A ally a "red flag" for banks. It's difficult to invest such a deluge of money efficiently. It also indicates that something may be the last few years it has gone from a low of 27% in stocks (2004) "too attractive." to a high of 60% in 2006. Nothing to see here, right? Oops...I think I saw a feather! How about this? The return on the portfolio over the last years: 2003: 14.4%, 2004: 11.5%, 2005: 10.3%, 2006: 11.0%, 2007: How does the bank operate? What does it 11.4%. Can you see a pattern emerging? One of consistency. do with the money? Considering only the stock portfolio, the returns were: 2004: The bank operates on a quite unique business model. It basi- 8.2%, 2005: 8.8%, 2006: 11.7%, 2007: 8.2%. Nothing out of the cally takes deposits from investors all around the world mainly ordinary, right? in the form of time deposits. But it doesn't make loans (techni- Consider the returns on the S&P 500 the same years: 2004: cally, a depositor can take out a loan with his/her own CD as 9%, 2005: 3%, 2006: 12.8%, 2007: 3.8% (we'll talk about 2008 collateral, but that's all). It has practically no service revenue. later). The bank did quite a bit better than average. Only 75 people actually work for the bank on the island, but As for other categories, they report a 22% average annual it captures deposits through a global network of independent profit on their hedge funds and 12% on precious metals. Not affiliated "advisors" who receive a commission for delivering bad at all. deposits to the bank (a high one... 1.5% per annum). This could seem quite "normal" for someone who is not in In order to make money, the bank invests in the capital mar- the investment world, but these performance figures are very, kets. Stocks, Bonds, Hedge Funds, Precious Metals and cur- very good. The last few years have been incredibly challenging rencies. Those are really fascinating things that go up and down for investing in most of these categories. In the '80s or '90s, and deliver great profits sometimes, not so much on other occa- returns of this magnitude could be considered "normal." Since sions, and at times (not few, especially recently) go down in 2000, however, they are on the "limit of the credible universe." value as well. I really would like to know which stocks, bonds, funds and You may be inclined to say: "lots of banks do that." Not so. metals these folks have invested in to achieve such returns. The so-called "investment banks (of which there are few left), Unfortunately, that is something they don't reveal. As an have several other businesses which generate revenue, such investor, I love to "toot my own horn" when I get something as underwriting, mergers and acquisitions, brokerage and asset right. The bank doesn't. One could argue that their portfolio is management. Yes, they have trading divisions, but the fee-based made up of private companies, not publicly traded ones. There businesses generate a stable flow of income that (usually) al- is some of that in the group of companies mentioned to be lows them to weather the ups and downs of the trading busi- associated with the bank, but it's not clear if those positions ness. are in this portfolio. Anyway, that private equity portfolio in- Commercial or retail banks will also "invest" money as Part of cludes stock in a resort developer, three motion pictures, a golf their strategy. But these are usually arbitrage situations. For club manufacturer, a golf course, an auction house and a res- example, if a bank can receive deposits from the public at 2% taurant in Memphis. These are small companies which could and use them to buy government paper with a 4% yield and a not represent a large portion of the bank's assets and frankly similar maturity, it is a low risk strategy which banks will execute looking at their nature, look more to be a millionaire's —toys" quite gladly. than investments. But that's not their main business. Normally banks will pay Back to our case study. Even if everything that this institu- little, charge a lot and still have a hard time making money on tion publishes and states is 100% true (apologies to Heisenberg), the margin. They make their profits with service charges. a "depositor" at this bank is effectively lending it money so the Back to our bank, which according to its financial statements, bank can then go out and play the markets with that money (the as of the end of 2007, was 42% invested in stocks, 20% in fixed bank has $16 in deposits for each dollar of equity). That fact income (bonds), 25% in hedge funds and 13% in precious met- alone is somewhat unsettling. Fortunately, the bank has con- als. That is a relatively typical allocation for this bank and over sistently achieved above-average results in all its investment
VenEconomy Monthly / January 2009 13
Case 1:09-cv-22085-JAL Document 1 Entered on FLSD Docket 07/20/2009 Page 40 of 43
0.1
categories. The owner is a powerful man. A "Forbes" list billionaire. Any That is, they have done what few (or no) others can. unsubstantiated suspicion could have legal consequences for the denouncer. Perhaps the nature of this beast is a" well-known What's that? I think I heard a "quack." secret." Many think it's strange, but no one wants to say any- Who manages and controls this animal? thing. Hey.. .the animal has webbed feet! As stated above, the bank has 75 employees on the island. But a small group manages it. There is mention of an invest- IT'S A DUCK! (I presume.) ment committee, but the members of the committee are not I almost forgot. The bank's name. It's the Stanford Interna- named. A few years ago there was an actual investment man- tional Bank, located in the paradisiacal island of Antigua in the ager or VP; now the position appears to be vacant. There is one Eastern Caribbean. board member, an 85-year-old cattle rancher and used car deal- The name has nothing to do with Stanford University, a well- ership owner who has the title of "Investments," so one can known U.S. learning institution. It takes its name from owner Sir presume that he advises some about that. Allen Stanford, a Texan billionaire and cricket aficionado. Sir The management team and board has basically been the same Allen has organized cricket matches on the island with $20 for many years. There is no mention of any special investment million prizes for the players. The Antiguan authorities knighted technology or strategy that can account for the results ob- him, not her majesty Queen Elizabeth!!. He was recently named tamed so far. That is, unless you count "long-term, hands-on World's Finance's "Man of the Year" for 2008. and globally diversified" as a strategy and not just a catch A little update on things also. For those who may not know, phrase. An $8 billion portfolio is not easy to manage, at least 2008 was an awful year for investing. The S&P had its worst not efficiently (to which the Barings and Societe General trad- performance since the great depression, falling 38%. Few in- ers can attest). vestment categories weathered the storm. For stocks, corpo- Without further information, we must assume that the admin- rate bonds, commodities, currencies and/or hedge funds, it was istrators are extraordinary beings. all pretty bad. What about the stockholders? There is only one. He has the In a Nov. 28 note to its depositors, the Stanford International title of Chairman of the Board and doesn't appear to have man- Bank acknowledged that it had performed poorly. But just "a agement responsibilities at the bank. little" poorly. They acknowledge a $110 million loss up until Auditors? Well, yes, the financial statements of the bank are that date (a quarter of the equity). Doing a little math, that audited. The auditor is a local (island) firm. The principal is a72- doesn't mean that the bank's investment portfolio lost money year-old gentleman who has been auditing the bank for many (like almost everyone). It means that they didn't profit enough years (at least ten). Price WaterhouseCoopers and KPMG have to get back to break even. Since the bank invests the money of offices on the island, and it is a good internal control practice to its depositors and has to pay them interest plus the commis- change auditors every few years, but the bank prefers to stick sions to its affiliated advisors, it must earn at least 8-9% on its with its trusted firm. investments in order to compensate these costs. The bank is The banking authorities which supervise the bank are those recognizing that in 2008, the year of the great crash in the mar- from the island. The same island with the population similar to kets, it "only" made a 5-6% return on its portfolio. Quite an act Altagracia de Orituco. The bank does not take institutional of contrition. The bank also affirms that it had no positions in deposits or deposits from other banks. This is not necessarily a Bernie Madoff's funds. What a reliefi bad thing, but corporate depositors would be expected to do Additionally, to improve the bank's financial standing, the some due diligence on the bank before committing their money. Dank has issued $541 million in new capital, presumably out of Hmm. This animal walks in a very peculiar way. Like a waddle. Sir Allen's bank account. This was for the peace of mind of the So why hasn't anyone noticed or said anything? bank's over 30,000 clients. But then, the 2007 audited state- There isn't really an interest in drawing attention to this case. ments affirm that bank had over 50,000 clients. Well, if it's more The depositors are not likely to suspect and much less say than 50,000, it's more than 30,000 also, right? Or maybe a few anything. Does anyone really read those financial statements clients got lost. that are lying around in bank offices? The local authorities Another little tidbit extracted from the Internet. Health Sys- prefer to leave these people alone. If the bank goes elsewhere, tems Solutions (HSSO) is a small ($8 million market cap) health who is going to build schools and maintain the roads and gar- technology company in which SIB reportedly has a 20% stake. dens? The bank plays an important social role on the island. In October 2008, HSSO offered to buy another company in the The depositors are people from around the world, but per- industry: Emageon Inc (EMAG) for $62 million. Emageon ac- haps not enough from one place in particular to arouse the cepted and the deal was to close in December after EMAG's interest of a regulatory agency. It is out of their jurisdiction stockholders approved it. SIB was supposed to fund the deal anyway. (we're assuming taking an equity stake, since they do not pro-
14 VenEconomy Monthly / January 2009 Case 1:09-cv-22085-JAL Document 1 • Entered on FLSD Docket 07/20/2009 Page 41 of 43
Economy and Finance
vide loans by definition). SIB did not send the money when dence in this ease? How about a complete audit by a more agreed and EMAG filed a complaint in Federal Court. The two familiar name such as KPMG? Or maybe a statement by the parties (HSSO and EM AG) later reaffirmed their merger intent bank's global custodian, a Credit Suisse or a Morgan Stanley, and agreed (on Dec. 29) to extend the closing deadline to Feb. affirming.. ."yeah these guys have $8 billion worth of securities 11. Because of SIB's initial failure to fund, HSSO was required in custody with us." That would be nice. A DNA test very to put up additional escrow amounts and faces additional pen- difficult to refute, if you will. But if it were only the animal alties if it fails to deliver again. saying it's not a duck.. .that would sound like a bunch of quack. SIB's failure to deliver those $62 million is a bit perplexing. Summing it up, be careful. But in particular, be careful with According to its financial statements, the bank is extremely animals that look like ducks that say that they're something liquid. Even if the 2007 statements are a bit dated, at that time else. Because they could be that other something, although it's there was $627 million in cash and of the $7 billion portfolio, very likely that they are just ducks. about 90% of the portfolio was listed at a term or one month or Disclaimer: The Stanford Group operates a commercial bank less. Such liquidity is a constant in SIB's financial statements in Venezuela. I have not analyzed this bank and am unaware of over the years, so we must presume that this time the deal its relationship with Stanford International Bank. Please, do not should close. We'll be keeping an eye on it. accuse me of destabilizing the financial system. All along this taxonomical discussion, we have been saying Alex Dalmady that the animal certainly looks like a duck. True to Heisenberg, (comments@oneupper corn) we must be willing to admit that it may not be a duck, if better The author is a financial analyst. evidence indicates that it is not. What would be better evi-
VenEconomy Monthly 1 January 2009 15 (.2- • 7'N, 45 c., .1- a) Balance Enquiry • co 0- Open-Ended Accounts . 0) Account Number Currency Interest Rate Principal Interest Balance as at ( A c) c) 1 ems. , Express _Account USD 0.1 % 23,565.48 4.39 23,569,87 1 C\I c) CDs c\I c.1%. Account Number Currency Interest Rate Term (in months) Maturity Date Principal Interest Balance as at 1_649.16 -Fixed_CD USD 7.625% 24 25 MAY 2009 1,001,254.45 142,017.07 1,143,271.52 -6 180367 .,..Fisectcp USD 7.375% 12 04 FEB 2009 0.00 0.00 0.00 0 0 304080 - Fixed CD USD 6.875% 12 02 APR 2009 300,321.53 18,716.50 319,038.03 O 311723 - Fixed CD USD 5.375% 12 06 NOV 2009 201,391.40 3,047.62 204,439.02 O 389023 - Fixed CD USD 2.75% 3 12 MAR 2009 524,978.69 2,656.66 527,635.35 Cf) —I 390914 - Fixed CD USD 5.5 % 12 06 FEB 2010 550,000.00 995.35 550,995.35 ti- c Loans o -0 Account Number Currency Interest Rate Term (in months) Maturity Date Principal Interest Balance as at ( 2 a) No Loan Accounts for you. IIIc TOTAL USD DEPOSITS : 2,768,949.14 .— TOTAL USD LOANS : 0.00 +E.a) Credits Cards E Credit Card Account Number Payment Due date Minimum Amount Due Balance = 0 0 O No Credit Card Accounts available for you
J < —) 6 CO c) (\I c\I > 9 co 9 a) Cl) CO (.0 C.)
, httDS://WWW.SibdireCt.COM/SilbdireCt-dll
zip gt 9 Document 1 Entered on FLSD Docket 07/20/2009 Page 0 2 0003 t6W1M9-6-;22086-JAL ., 4sIS 44 (Rev. MN CIVIL COVER SHEET The .TS 44 ciiiil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or other papers as er.quired by law, except as provided by local rules of court. This form, approved bythe Judicial Conference o(the United States in S . telpher 1971, is - . mrectfor the use of the Clerk of Coutt for the purpose ofinitia -rig the civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.) • 1•41 I. (a) PLAINTIFFS DEFENDANTS • Reinaldo Ranni, individually and on behalf of a class of Willis of Colorado Inc., all other similarly situated Plaintiffs, Willis Group Holdings Ltd. (h) County of Residence of First Listed Plaintiff United SIBIeS County of Residence of First Listed Defendant United States (EXCEPT IN U.S. PLAINTIFF CASES) UN U.S. PLAINTIFF CASES ONLY) NOTE: IN LAND CONDEMNATION CASES. USE THE LOCATION OF THE TRACT (C) Attorney's (Firm Name, Addrets. and Telephone Number) , — LAND INVOLVED. Christopher King, HomerBonner, 1441 Brickell Av c I , . : L ti. , 14 .1.. -,11 . 'illif. -a . • . ,..;"-r 0117 `,-: , .. . . Suite 1200, Miami, FL 33131 ,.- . , 1 lf , 1 n MAGISTRATE JUDGE • Dci — Cv2o — — Lein:v-4 /1r" GARBER JUL 1? 2009 . , ICI) Check County Where Action ATOSL: DEMIAMI- DADE 0 MONROE 0 EIROWARD 0 PALM BEACH 0 MARTIN Cl ST. LUCIE 0 pret_Aik • _. OB E 11 g I ND. GLUM U. S. Dl . . IL BASIS OF JURISDICTION (Place en "X" in One )301C Only) III. CITIZENSHIP OF PRINCIPAL PA RTIS:Vie.wr_inViarkasa (Or .•aintiff (For Diversity Cates Only) ••".• : 0 or :tee ,an) O 1 U.S. Government ig 3 Federal Queetion PTF OS? PIP DEF Plaintiff (U.S. Government Nuts Party) Citizen of This Slate CI 1 0 l Incorporated ar Mac ips1Place 0 4 Cl 4 of Business in This State
O 2 U.S. Government Cl 4 Divertiry Citizen of Another State 0 2 0 2 incorporated and Principal Place 0 5 Cl 5 Defendent of Businese Is Another Stun (indicate Citizenship of Per-ties in Item III) Citizen or Subject et a 0 3 Cl 3 Foreign Notion 0 6 0 6 Foreign Country IV. NATURE OF SUIT • bre. aa "X" in One Brut On] 111•11111.111MMINIMIIIIITIMININIIMINIIIIMIMBEIBIBMIt.''dd. . 'r : a‘ei a7c111.tafirf.1MMIll a 110 Insurance PERSONAL INJURY PERSONAL INJURY CI 610 Agrieulture CI 422 Appeal 2/ USC 158 CI 400 State Reopporrionment O 120e Marine 0 310 Airplee CI 362 Personal Injury - 0 620 Other Food & Drug f/ 423 Withdrawal Cl 410 Antitrust O 130 Millet Act . Cl 315 Airplane Product Med. Malpractice • 625 Drug Related Seizure 28 USC 157 Cl 430 Boob and Banking O 140 Negotiable Instrument Liability C3]65 Personal Injury - of Property 21 LISC 181 0 450 Commurce O 150 Recovery of Overpayment 0 320 Assault. Libel & Product Liebility0 630 Liquor Lases iiiiiinTrEnrant.:S 0 460 Deportation Jr Enforcement of ludgmeni Slander CI 368 Asbestos Personal 0 640 lilt. & Truck Cl 820 Copyright! 0 470 Racketeer Influenced and O 151 Mail:ere Act 0 330 Federal Employers' Injury Product 0 650 A ifilAC Rep. 0 830 Patent Corrupt Organizations O 152 Recovery of Defaulted Liability Liability 0 660 Occupational 0 840 Trademark 0 410 Coneumer Credit Stibrieni Leen! 0 340 Marine PERSONAL PROPERTY Safety/Health 0 490 Cable . (Excl. Veterans) 0 345 Marine Product 0 370 Other Freud 0 690 Other 0 110 9r Service O 153 Recovery of OverpaYmant Liability El 371 Truth in Leading AR s R 1 . , Lli, TY Securitice/Commodities/ of Veteran's Benefits Cl 350Motor Vehicle Cl 310 Other Personal 0 710 Fair Labor Standards 0 364 NIA (t395111) Exchaege O 160 Stockholders Stahl 0 355 Motor Vehicle Properly Damage Act 0 862 Black Lung (923) 0 873 Customer Challenge O 190 Other Contract Product Liability 0 335 Properly Damage Cl 720 Laborthi pint. Relations 0 863 DIWC1'01WW (405(g)) 12 LtSC 34I0 Cl 195 Contract Product Liability 0 360 Other Personal Product Liability 0 730 Labor/MgmtReporting Cl 869 SSID Title XVI 0 890 Other Statutory Aoions 13 196 Frenshise Iaju & Disclosure Act 0 865 RSI (405 891 Agricultural Acts . . . . 0 REAL PROP :It Ile . , .... - .41-'1UP : " MGR .' 0 740 Railway Labor ACi F.& L ., 4.. TA 5 fill. 0 892 Economic Stabilisation Act O 210 Land Condemnation 0 441 Voting , CI 510 Motions to Vacate: 0 790 Other Labor Litigation 0 1170 Tines (U.S. Plaintiff Cl 893 Environmental Matters O 220 Fomcloeure CI 442 Employment Sentence Cl 791 Enlist, Re. Inc. Seem* or Defendent) Cl 894 Energy Allocetion Act O 230 Rent Lean: & Ejectment Cl 443 Housing/ Habeas Corpus.: Act 0 871 IRS—Third Party CI O 240 Torts to Lend Accommodations 0 530 General 26 DSC 7609 895 freedom of Information Act O 245 Tort Product Liability Cl 444 Welfare 0 535 Death Penalty : 1 Themlf:R A7froN. 0 900 Appeal of Fee Determination Real 445 Amer. w/Diesbilitiet 462 Naturalization Under Equal Access to Justice 0 290 All Other Property 0 Employment CI 540 Man damue & Other o0 Ar." a 446 Amer. w/Disabilitics a 530 c ivii wo w 0 463 Hebeas Co rp la.e lien Detainee 465 Other Immigration 950 Constitutionality of State CO 440 Other Civil Rishis Cl 555 Prison Condition 0 Actions 0 Statutes _ V. ORIGIN "me In Appeal to District 'X" in One Box Only) Transferred from Ego I Original ID 2 Removed from Cl 3 Re-filed- 0 4 Reinstated or 0 5 anotherther district 0 6 Muitidistrict 0 7 judge from Proceeding State Court (see VI below) Reopened Litigation Magistrate Judgment a) Re-filed Case 0 YES al NO b) Related Cases 0 YES et NO VI. RELATED/RE-FILED (See instructions CASE(S). second page): JUDGE DOCKET NUMBER : Cite the U.S. Civil Statute under which you are filing and Write a Brief Statement of Cause (Do not rite jurisdictional statutes unless diversity): VII. CAUSE OF ACTION
LENGTH OF TRIAL via days estimated (for both sides • try entire case) VIII. REQUESTED IN io, CHECK IF THU IS A CLASS . --)3N DEMAN1 CHECK YES only if dent in complaint: COMPLAINT: UNDER F.R.C.P. 23 JURY DEMAND: Yes aNo ! //oft, ABOVE iNFORMATION IS TRUE & CORRECT TO S .' NATAAE t 0 ' , Y OF CORD DATE THE BEST OF MY KNOWLEDGE Jul yti2009 • f FOR OFFICE USE ONLY AM01.713SL)- , C76;)RECEIPT_ g