Thursday, February 19, 2009

Depositors can't get their Cash

Billionaire's bank customers denied their deposits
Wednesday February 18, 7:09 pm ET
By Ben Fox, Associated Press Writer
Stanford depositors can't get their cash while politicians scramble and regulators urge calm

ST. JOHN'S, Antigua (AP) -- Panicky depositors were turned away from Stanford International Bank and some of its Latin American affiliates Wednesday, unable to withdraw their money after U.S. regulators accused Texas financier R. Allen Stanford of perpetrating an $8 billion fraud against his companies' investors.

Some customers arrived in Antigua by private jet and were driven up the lushly landscaped driveway of the bank's headquarters, only to be told that all assets have been frozen pending an investigation by Antiguan banking regulators.

"I don't know what to think. I have my life savings here," said Reinaldo Pinto Ramos, 48, a Venezuelan software firm owner who flew in by chartered plane from Caracas Wednesday with five other investors to check on their accounts. "We're waiting to see some light."

Banking regulators and politicians around the region are scrambling to contain the damage after the U.S. Securities and Exchange Commission filed civil fraud charges against the billionaire on Tuesday. Regional Director Rose Romero of the SEC's Fort Worth office called it a "fraud of shocking magnitude that has spread its tentacles throughout the world."

Stanford, 58, is a larger-than-life figure in the Caribbean, using his personal fortune -- estimated at $2.2 billion by Forbes magazine -- to bankroll public works and sports teams. He also is a major player in U.S. politics, personally donating nearly a million dollars, mostly to Democrats. At 6-foot-4 and 240 pounds, he towered over House Speaker Nancy Pelosi while giving her a warm hug at the Democratic National Convention last year.

He owns a home in the U.S. Virgin Islands, and operates businesses from Houston to Miami and Switzerland to Antigua, where the government knighted him in 2006 in recognition of his economic influence and charity work.

U.S. regulators have accused Stanford, two other executives and three of their companies of luring investors with promises of "improbable and unsubstantiated" high returns on certificates of deposit and other investments.

Many details about the alleged fraud remain unclear, but the SEC alleges a pattern of secrecy, including a failure to disclose the bank's exposure to losses by in money manager Bernard Madoff's alleged Ponzi scheme.

The SEC said no one but Stanford and James M. Davis of Baldwyn, Miss., the Antigua-based bank's chief financial officer, know where most of the depositors' cash is invested, and both men have failed to cooperate with investigators. "Approximately 90 percent of SIB's claimed investment portfolio resides in a 'black box' shielded from any independent oversight," the SEC said in its complaint.

Stanford wasn't talking Wednesday. A company Web site directed inquiries to the SEC. But in an e-mail to his employees last week, the billionaire said his company was cooperating with the probe, and vowed to "fight with every breath to continue to uphold our good name and continue the legacy we have built together."

A federal judge appointed a receiver to identify and protect Stanford's assets worldwide, including about $8 billion managed by bank, which has affiliates in Mexico, Panama, Colombia, Ecuador, Peru and Venezuela.

Also frozen were assets of Houston-based Stanford Capital Management and Stanford Group Company, which has 29 brokerage offices around the U.S.

"The fallout threatens catastrophic and immediate consequences" for the twin-island nation of Antigua and Barbuda, said Prime Minister Baldwin Spencer. It also could rattle the economies of smaller nations where Stanford's companies have had outsized influence.

SEC spokesman John Nester said the agency does not know where Stanford is. James Sullivan, the U.S. marshal for the Virgin Islands, said agents are monitoring his "extensive holdings" in St. Croix, including a boat he sometimes he docks there, but could not say whether he is currently in the territory. He does not currently face any charges requiring his presence in court.

"As of right now, all we are doing is an ongoing investigation to monitor his holdings, for lack of better term, and we are not actively pursuing him," Sullivan told The Associated Press.

Some U.S. lawmakers quickly announced they would donate his campaign contributions to charity.

The Stanford Financial Group, through its political action committee and employees, has contributed $2.4 million to political candidates, parties and committees in the U.S. since 1989, with nearly two-thirds going to Democrats, according to the Center for Responsive Politics, a group that tracks campaign spending.

Most of that cash flowed during the 2002 election cycle, when Congress was debating a financial services antifraud bill that would have linked the databases of state and federal banking, securities and insurance regulators. The bill ultimately died in the Senate, where the biggest recipients have been Sen. Bill Nelson, D-Fla. ($45,900); Sen. John McCain, R-Ariz. ($28,150); Sen. Chris Dodd, D-Conn. ($27,500); and Sen. John Cornyn, R-Texas ($19,700). Rep. Pete Sessions, R-Texas also received $41,375.

Stanford and his wife Susan also donated $931,100 of their own money, with 78 percent going to Democrats, including $4,600 to President Barack Obama's presidential campaign last May 31. Records show $2,300 of that was returned on the same day.

Governments across the region took a variety of actions Wednesday to protect local investors who'd deposited money with Stanford-linked institutions.

Colombia and Ecuador suspended the activities of Stanford's local brokerages Wednesday, and Panamanian regulators occupied Stanford bank branches hit by a run on deposits, which they described as an isolated "consequence of decisions adopted by foreign authorities." Assets at the bank's four Panama branches, which reportedly held $200 million in deposits at year's end, are held largely in liquid, fixed-income investments that can more easily be converted into cash to cover deposits if necessary, the bank said.

In Venezuela, banking regulator Edgar Hernandez said the government was considering a request for help from Stanford Bank SA in Caracas after a $26.5 million run on deposits removed about 12 percent of its holdings.

"We suggested an open intervention" by the government, including the possibility of the government or a state-run bank depositing funds to back deposits, Hugo Faria, one of the bank's directors, told The Associated Press.

In Mexico, where the Stanford Fondos unit manages about $50 million for some 3,400 clients, a note posted on a shuttered office door in the capital's wealthy Polanco neighborhood announced that all accounts "are temporarily frozen."

"We don't have any other information at this time, you will be contacted in the future with more details," the note said.

Karina Klinckwort, 38, had rushed to the office Wednesday: "Everything I have is with them, everything that my husband, may he rest in peace, invested is with them."

The Stanford-controlled Bank of Antigua was not named in the complaint, but many Antiguans lined up outside nevertheless to try to get their money. Some of these working-class depositors clutched portable radios to listen to financial news.

"People have to come to get their money," said electrician Rasta Kente.

But panicking will only make things worse, regional regulators warned.

"If individuals persist in rushing to the bank in a panic they will precipitate the very situation that we are all trying to avoid," said K. Dwight Venner, governor of the Eastern Caribbean Central Bank.

Associated Press Writers Anika Kentish in St. John's, Antigua; Jim Abrams in Washington, D.C.; Jeff Kummer in Dallas; Frank Bajak in Bogota; Jeanneth Valdivieso in Olga Rodriguez in Mexico City; and Fabiola Sanchez in Caracas, Venezuela contributed to this report.

Thursday, February 05, 2009

Are You Using Your Right Brain or Your Left Brain?

Do you see the image turning clock-wise or counter clock-wise? Can you use your imagination to make the image turn the other way? Try it, it's fun.

Wednesday, February 04, 2009

Let's Smile

A smile costs nothing but gives much.
It enriches those who receive without making poorer those who give.
It takes but a moment, but the memory of it sometimes lasts forever.
No one is so rich or mighty that he can get along without it, and no one is so poor that he cannot give it.
A smile creates happiness in the home, fosters goodwill in business, and is the cornerstone of friendship.
It brings rest to the weary, cheer to the discouraged, sunshine to the sad, and is nature's best antidote for trouble.
Yet it cannot be bought, begged, borrowed, or stolen, for it is something that is of no value to anyone until it is given away.
When people are too tired to give you a smile, give them one of yours.
No one needs a smile so much as he who has none to give. - Author unknown

Cheers! and don't forget to smile, smile and smile.