"Regulators" can't stop even obvious frauds

How was $8 billion fraudster “Sir” R. Allen Stanford not stopped? He had declared personal bankruptcy in 1984 with a negative net worth of $13.4 million. And his Ponzi scheme was built on lies:

Stanford developed the history that the bank’s roots went back to 1932—to a financial-services company started by his grandfather, Lodis. There was no mention of Stanford’s failed effort at trying to run a string of health clubs in Texas, nor the two then-recent bankruptcy filings. Instead, all the bank’s early marketing material focused on Lodis Stanford and “the wise guidance of our parent company, The Stanford Financial Group.” In 1992, a year after Guardian relocated to Antigua and was rechristened Stanford International, the bank put out a brochure that said the company was “celebrating our 60th anniversary” in helping customers find “conservative yet lucrative investments.”

Says a former employee who worked with Stanford more than a dozen years ago: “Allen decided to make his grandfather the anchor of the company history and ordered a picture of Grandpa to be placed in every office.” …It was long taken as gospel within the company that the firm’s roots went back more than 70 years.

But the truth appears far different. His grandfather was a barber in Mexia who later started a small insurance brokerage called Stanford Financial. The brokerage was eventually sold to a larger company. People familiar with Stanford said there’s no evidence of any continuous link between the grandfather’s insurance business and the offshore bank and brokerage firm founded by the younger Stanford in the 1980s.

In later years, Stanford would continue to embellish his family story. For years, he would describe himself as a distant relative of Leland Stanford, the former California governor who founded Stanford University. But university officials have long said there’s no evidence of any familial link between the college and Allen Stanford’s family.

Posted by James on Tuesday, March 10, 2009