Deep Dive
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Michael Maron was literally on top of the world in the spring of 2009.
He was in the process of climbing Mount Everest when he stopped for an interview with a local TV station via satellite in order to generate publicity for a raffle that he had organized. From an altitude of 25,000 feet, Marion announced through choppy audio that he would be giving away his 6,600 square foot, multi-million dollar home located in the Biltmore Estates in Phoenix to one lucky ticket holder. High altitude acclimatization climb.
The drawing was planned for July 4th, 2009 and Marin calculated that he needed to sell at least 176,000 tickets at $25 each to reach his target of $4.4 million. He would use some of the money to pay off the remaining mortgage on the house and he planned to donate another portion to a crisis center for children. Any remaining cash would go into his pockets. On the surface, the stunt appeared to be nothing more than a rich man downsizing in the most attention-starved manner possible.
but the reality was much darker. Michael Maron was in dire financial straits, but that hadn't always been the case. There was a time when Michael Maron was on top of the world figuratively as well. Throughout the 80s and 90s, he traded complex investment instruments on Wall Street and became a millionaire. He moved to Japan and worked for global investment firms like Merrill Lynch and Lehman Brothers before returning to the United States. He drove a Rolls Royce, traveled all over the world,
bought expensive art, flew his own airplane, and purchased an Arizona mansion from a business partner who had lost it to foreclosure during the financial crisis in 2008. Marin paid $3.5 million for the home. The monthly mortgage payment alone was $17,250, and there was a balloon payment of $2.3 million that was due six months after the raffle was to be held. $2.3 million that Michael Marin did not have.
In fact, by his standards, he had very few liquid assets at all. His bank account, which contained more than $900,000 earlier in the year, had dwindled to $42,700 by the summer, and there were only $50 remaining in his 401k. So this was his plan, to unload the house and the imminent payment and all of his financial stress, $25 at a time. But the raffle failed to garner any real excitement. Very few tickets had sold.
Michael Marin was nowhere near his goal. And to make matters worse, Arizona state authorities determined that the raffle was actually illegal and shut the whole thing down. Time for plan B. Okay, what's your emergency? My house is on fire. Are you going to be able to get out? I've got one of those ladders. You have a ladder where? I'd rather work on that than talk to you, so let me get out of here. At 424 in the morning on July 5th, 2009,
Michael Marin awoke to the sound of a smoke alarm. Smoke from the first floor was pouring into his upstairs bedroom. He jumped out of bed and made a quick phone call for help, then headed straight for his closet and grabbed a rope ladder and a scuba mask and an oxygen tank. You know, the kind of common items that we all have in our bedroom closets.
Marin attached the mask to his face, strapped the tank to his back, opened his bedroom window, and used the ladder to climb down to the safety of his front lawn. I realized that I actually had some air left in that tank, and that's what enabled me to get back to the window and deploy that ladder. If I hadn't had those two things, we wouldn't be talking. How convenient. Almost as convenient as the insurance policy that Marin had purchased on the house that would cover most of his losses.
Almost as convenient as the fact that none of Michael Marin's prized paintings were in the house while it burned. Almost as convenient as the stacks and trails of old phone books that investigators found lining the floor and staircase that helped spread the fire. Not to mention the four containers of flammable acetone that had been conveniently placed in four different locations in the home where Marin lived alone. The only part of the plan that was not convenient was when his insurance company became suspicious of the accidental nature of the incident.
An investigation conducted by the sheriff's office and the fire department concluded that the incident was obviously intentional. Michael Marin was arrested for suspicion of arson on August 19, 2009. He spent 10 days in jail before being released on bond, and of course he claimed that he had nothing to do with the fire at his home, telling KNXV in Phoenix, I'm shocked, utterly and completely shocked. I'm innocent of these charges. I'm anxious to prove that.
Marin would get his day in court, but lawyers aren't cheap, and he was dead broke. He sent an email to friends and acquaintances asking for help. Part of it read, quote,
I've exhausted all of my other options. I am literally at the end of my rope. Literally at the end of my rope, he said. Is that an incorrect use of the word literally or obvious foreshadowing? Let's find out. Michael Maron's trial was scheduled for May 21st, 2012. He seemed optimistic the day before it started. He even made a Facebook post that contained a cheesy metaphor about mountains and peaks and valleys or something like that.
His girlfriend at the time, Susie Spicer, has talked about how at peace and focused Michael seemed, which she attributed to his spirituality and daily meditations. But that optimism withered away when the court hearings began. Marin, who was 53 years old at the time, was facing at least 16 years behind bars during the trial, which lasted a month. The jury was shown pictures of the phone books and the acetone. They were told about the insurance policy and Marin's missing possessions.
They heard from the sheriff's deputies and the fire captain who conducted the investigation. And a little after 1pm on June 28th, 2012, the verdict was in.
We the jury, duly impound and sworn in the above entitled action upon our oaths do find the defendant Michael James Mair guilty of arson of an occupying structure. We further find this offense is a dangerous felony because the offense involved the discharge, use or threatening exhibition of fire, a deadly weapon or dangerous instrument. Yes. Signed by the foreperson. Is this your true verdict so say you want it all? Yes.
The jury found Michael Marin guilty of arson of an occupied structure, and since his crime involved the quote, threatening exhibition of fire, it was considered to be a dangerous felony, which in Arizona meant that Marin would never be eligible for parole, and he would be taken into custody immediately after the court adjourned.
In the video, you can see Michael process this reality while the verdict is being read. He closes his eyes and rubs his face with his hands, and it appears that he places something in his mouth, and then reaches for a bottle of water and takes a drink. Ladies and gentlemen, before we can conclude your service here, there's a few other matters we have to tend to.
The jury is asked to leave the courtroom so that Judge Bruce Cohen could discuss the next phase of the trial with the prosecuting attorneys and Marin's defense. About seven minutes had passed since the verdict was read.
and Michael turns around in his chair to face his girlfriend Susie and mouths the words "I love you". The first sign of trouble comes a few minutes later when Michael Marin lets out a few dry coughs. As his counsel was reviewing documents, you can see him struggling to swallow and focusing on his breathing. Another brief moment passes before all-out panic sets in.
Marin scoots his chair away from the table and doubles over as his attorney Lindsey Abraham tries to keep him from falling onto the floor. The entire courtroom was frozen except for a few bystanders and Susie Spicer who rushed to the front and helped Abraham lie Michael onto his back. You can even hear a bit of nervous laughter coming from spectators as they try to figure out what was happening.
Michael's tie was removed and his shirt was ripped open as the sheriff's deputy and fire captain who testified against him attempted to administer first aid but it was too late. Michael's cheeks had turned blue and there was a clear liquid oozing from his mouth. He was dead before he even hit the floor. A few days later, Michael Marin's son received an email from his father. Michael had scheduled the email to send after the trial just in case "things don't go well in court."
In the email, Marin included information about his will and the location of his car in Mesa, Arizona. His son passed the information on to investigators who were able to locate the vehicle. Inside, they found a canister of cyanide and empty, unused pill capsules. Michael Marin took the easy way out, and nobody who knew him was surprised. He would be remembered as an egomaniac and a liar. He was a narcissist with a penchant for petty behavior and self-destruction.
He was never someone who could admit when he was wrong. Michael Marin spent his whole life throwing his money around, trying to convince himself and everybody else that he was something that he wasn't. Alan Stanford, another egomaniac in denial, did the same thing, but on a much larger scale. A flamboyant Texas billionaire's offshore financial empire crumbles, and he suffers the consequences, while his victims discover what it's like to start over from scratch on this episode of Swindled.
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The Eagle, proud symbol of Stanford Financial Group. Like the eagle, we soar higher and farther, taking the art of financial services to new heights. We scan the landscape with eagle vision, seeing opportunities where others cannot, opportunities for new markets, new investments, and new ways of enhancing your financial security.
Up here, the possibilities are endless because potential has no boundaries. Alan Stanford knew how to put on a show. One day in the summer of 1981, Stanford visited one of his upscale health clubs he owned in Waco, Texas. By landing his personal helicopter in the middle of the running track, he climbed out waving and smiling, appearing to be at the top of his game.
but the truth was his businesses were failing due to an over-eager expansion. Stanford and his wife Susan had accumulated almost $14 million in personal debt, which was owed to over 100 different creditors. A fact that anyone on the outside would never have been able to guess, because Alan Stanford doubled down on his salesmanship. He had an innate ability to convey the appearance of luxury and the perceived value of exclusivity, even if it was untrue.
and it was easy to believe Alan Stanford because of who he appeared to be. He looked like your best friend's dad who always wore a little too much cologne and maybe spent a little too much time in the sun. He was tall, 6'4" and athletic with bright blue eyes and a cheesy mustache, and he had a deep, booming small-town Texas twang that you could hear from the other side of the room. He was always wearing khakis and sporty polo shirts. Even on his days off, he looked like the kind of man who was probably good at golf.
The kind of man who would spend the entire 4th of July manning the grill. Alan Stanford seemed like a friendly but mysterious man you felt like you could trust. A man you thought would keep you safe from harm. "Hello, I'm Alan Stanford." When his total fitness centers went bankrupt in 1982, Alan Stanford fled from Central Texas and in the process fled from all of the investors and banks to whom he owed money. He was vacationing on a Caribbean island when he came up with the idea for his next venture.
Legend has it that a conversation with a stranger at a hotel bar convinced Allen to start an offshore bank. Allen was only 32 years old. He had plenty of time to try something new. How hard could it be? Stanford partnered with his old college roommate James Davis and obtained $6 million of seed money from an unknown source to create Guardian International Bank on the British territory island of Montserrat in 1985.
Initially, Stanford claimed that the startup money came from flipping apartment complexes with his father in Houston and Austin, but he's also said it came from oil refinery workers in Aruba, amongst other places. Guardian International Bank would become the latest offshoot of the family business that Allen's grandfather started during the Great Depression, the family insurance business that had actually been sold by his grandfather in 1983, but that's just a minor detail. No one would ever look into it.
And besides, Alan Stanford was selling prestige. He used his family's history in business to sell a tradition of success. The bank operated for half a decade before the UK's government began sniffing around its books at the behest of Montserratian officials. Montserrat wanted Guardian International banished from the country. No official reasoning has ever been released, but it probably had something to do with the type of clientele that an offshore bank usually attracts: money launderers, gangsters, and tax evaders.
So to avoid prolonging the investigation and opening himself up to potential prosecution, Stanford agreed to leave the island of Montserrat and to take his bank with him. 1991 is when Alan Stanford and his newly renamed Stanford International Bank landed on the shores of Antigua, an incredibly beautiful and at the time incredibly corrupt island in the West Indies. He made quick friends with the soon-to-be Prime Minister of the island nation, a man named Lester Byrd.
the latest in a line of scandal-ridden Antiguan dictators from the Byrd family. With the blessing of the Antiguan government, Alan Stanford began recruiting wealthy Latin Americans to invest their money with his bank. Some of them, economically anxious about the stability of their governments, were looking for a stable and reliable bank to keep their money, while others needed a place to launder the cash generated by their drug cartels. In less than three years, Stanford International Bank was worth more than $350 million.
In the years to follow, from the mid-90s to the early aughts, Stanford International Bank continued to grow at an astounding rate. Thousands of clients from all over the world put their nest eggs in the hands of the mysterious man from Texas. In less than a decade, the Stanford Financial Group was managing more than $830 million in assets.
Stanford Financial Group is a family of financial services companies with global reach. We serve over 40,000 clients who reside in 79 countries on six continents. Our world headquarters are located in Houston, Texas.
And we have a continual growing number of offices around the world to serve our clients.
The Stanford Financial Group now consisted of a string of banks, both onshore and offshore, a wealth management group with a team of financial advisors, a trust company, and a golden bullion division. Stanford even acquired the Bank of Antigua, establishing himself as the primary financier of the Antiguan government. He would loan them money to build streets and bridges and schools, and they would give him first dibs on the island's most prime real estate.
and to ensure that the good times would last. Stanford would often use his money and power to curry favor, like the time he bought the island's newspaper just to fire two editors who were critical of the prime minister. Alan Stanford loved Antigua, and Antigua loved Alan Stanford. He was even knighted by a government official in 2006 because Sir Alan Stanford had become central to the new Antiguan economy. He had brought to the island new development, new jobs. He was giving Antigua a better standing around the world,
and many of the island's natives were grateful for it. He had opened multiple hospitality establishments, purchased and renovated the port where he parked his yacht, built a restaurant and a beautiful office building, and had many more projects planned for the future. That's the reason we have a pavilion. That's the reason we have a sticky wicket. That's the reason we have the most beautiful grounds at an airport that anybody at any airport has ever seen. That's the reason we're in this hangar right now.
That's the reason we want to develop the rest of the property around this old closed down, disused runway 10 into something that doesn't exist on the planet so that people
the upper stratosphere of wealth the richest people if you want to put it in very layman's terms in the world that we bring down here will be impressed and will do business with us in this country I am totally committed to one thing and that is growing our business in a quality way which means that we're growing our business with what we call high net worth people and ladies and gentlemen high net worth people rich people if you want to call them that are
The Stanford Standard of Excellence was nothing but a way to impress potential investors. And it was working. Prospects with a net worth greater than $5 million were given a VIP courtship that included a flight to Antigua on one of Stanford's six private jets, a free stay at the Jumbie Bay Resort,
a private dining room with meals prepared by a five-star chef, and of course a personal one-on-one meeting with Alan Stanford himself, where he would undoubtedly ask if there was anything else that he could do for you, like donate to a charity of your choosing or sponsor your son or daughter's Little League team. By 2006, the millions of dollars had turned into billions of dollars,
The Stanford Financial Group was now managing more than $50 billion in investor money for more than 30,000 clients in 131 countries, which landed Alan Stanford on Forbes' list of the richest Americans. The Stanford Financial Empire was built on the back of a low-risk investment called a Certificate of Deposit, or CD, which Stanford International began offering in 1998.
Historically, CDs have been considered safe and stable investments because of their low fixed interest rates and fixed maturity dates. When you invest in a CD, you know how much money your investment will earn, and you know exactly when you will earn it. Of course, the certificates of deposit offered by Stanford were no ordinary CDs. To honor the Stanford standard of excellence, his bank was offering something that no other bank could match.
At the time, an average five-year term certificate of deposit from somewhere like J.P. Morgan yielded about a 1.75% rate of return. The advertised rate of return for a Stanford CD was 4.5%. Even more impressive, the rate of return of Stanford's entire portfolio of investment instruments was reported to consistently hover around 16%, a rate that was referred to as impossible by the Securities and Exchange Commission in 1996.
Stanford claims he was able to achieve these improbable returns by using what he called a unique investing strategy. He gave credit for the high returns to his bank's diversified portfolio of investments, as if it was a concept he had just invented. Whatever it was, it worked. During the financial crisis of 2008, when the stock market lost up to 40% of its value, the Stanford Financial Group's portfolio of investments decreased in value by only 1.3%.
It's not affecting us at all. First of all, our business is wealth management. We run about $55 billion globally right now. It's just a private group of companies. Our revenue and financing sources are internal, so we don't use credit markets. So that's not impacted us. And what credit we extend, we do on a cash-secured basis with clients' own cash, 80% of what they keep with us. Same thing with credit cards, etc. So...
Not only was Alan Stanford one of the only people in the world who would refer to 2008 as the best of times, he was apparently one of the only people in the world who saw the whole thing coming.
Well, it's very simple because we never understood what the risk was. You know, securitized debt's been around for over three decades now. And when you start packaging something with a lot of assets that are all mixed up and you can't get your arms around what the real asset is, therefore what the risk is, we decided that whatever perceived profits there might be,
we decided not to take that risk because we didn't know what the risk really was and the perceived profits really became irrelevant. Kind of makes you wonder whether or not the banks, what they were thinking and whether or not they really understood it, doesn't it? I think we're going to see a lot of problems surface during the first quarter of '09. Before we let you go, is it fun being a billionaire? Well,
Yes. Yes. Yes. I have to say it is fun being a billionaire. I think it's a hard word. It's all we need. Sir Alan, thanks for being on the program. It's great talking to you. It was true. Alan Stanford was having a blast being a billionaire. He owned mansions in Houston, Antigua, and St. Croix. He bought a 57-room, 18,000-square-foot castle in Coral Gables, Florida, complete with a moat and a tower. He only lived there for one year and then had it demolished.
He bought islands, helicopters, yachts, and jets like a kid in a candy store. He even used his money to try and revolutionize an entire professional sport. Stanford became interested in the sport of cricket after the Antiguan locals laughed at him when he promised to build them a baseball field. He became so enthusiastic about the game that he organized his own team, made up of the best players from all over Latin America.
Stanford thought cricket was too slow. The games were too long. He thought it needed to be bigger and better and faster. So Stanford put his money where his mouth was and invited the English team to the brand new cricket field he had built in Antigua for a match against his West Indies All-Stars. The winning team would split a $20 million prize that Stanford would provide. Alan Stanford arrived at the game by landing a helicopter in the middle of the field, the same way he had decades earlier at his health club in Waco.
He paused for a photo op next to the $20 million in cash that was on display in a plexiglass box, and then he took a seat and watched while his team defeated the English team by 10 wickets. The game might have cemented Alan Stanford as the world's number one promoter of the sport, but unfortunately, the result of the game was overshadowed by the antics of the game's larger-than-life organizer.
During the game, the camera had Panda Stanford sitting in his seat with his arms around two women and another bouncing on his knee. Everybody was laughing and smiling and having a good time, but some people who saw the footage found it inappropriate, including the English players who were married to those three women.
Allen Stanford claimed that it was all a big misunderstanding and he had no idea who those women were. He said he went to the English players locker room after the game to apologize in person and he issued a public apology a few days later. Those women weren't the only ones who had been, um, sitting in Stanford's lap. Outside of his marriage to Susan, Allen fathered four children from three different women. He was paying over $150,000 a year in child support and another half a million on food and housing.
Allen's affairs had become somewhat of an open secret. When his wife Susan would visit Antigua, she found herself essentially on house arrest. She was shadowed closely by security everywhere she went under the guise of safety to avoid getting kidnapped. But it was rumored that the true purpose of this tactic was to keep her from running into Allen while he was out on the town with one of his girlfriends. Susan finally had enough and petitioned for divorce in 2007 after 34 years of marriage.
But Alan Stanford wasn't going to let a pending divorce ruin all of his fun. No, Alan Stanford's fun would be ruined by something else entirely. Support for Swindled comes from SimpliSafe. If you're like me, you're constantly thinking about the safety of the people and things you value most. After my neighbor was robbed at knife point, I knew I needed to secure my home with the best. My research led me to SimpliSafe.com.
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On February 17, 2009, the doors of the Stanford Financial Group's offices in Houston were locked. The entire company's assets were frozen.
The Securities and Exchange Commission had filed a civil complaint against Stanford, alleging that the bank was engaged in $7 billion fraud related to its certificates of deposit, the same certificates of deposit that had been such a hit with its clients around the world.
According to the indictment, Stanford and his co-defendants allegedly misused and misappropriated most of those investment assets, including diverting at least $1.6 billion into undisclosed personal loans to Stanford himself.
The indictment charged Alan Stanford with conspiracy to commit wire fraud, mail fraud, and securities fraud.
7 counts of wire fraud, 10 counts of mail fraud, conspiracy to obstruct an investigation by the SEC, obstruction of an investigation by the SEC, and conspiracy to commit money laundering. Stanford had artificially inflated the returns of his bank CDs, and instead of using the money collected from the purchase of those CDs to invest in stocks and securities, he used it to fund his lavish lifestyle.
The SEC also accused the Stanford Group of covering its tracks by continually recruiting new investors to cover the high returns promised to its current investors, the classic definition of a Ponzi scheme. When the charges were announced, Stanford's bewildered investors lined up outside the bank's offices in Houston and Antigua, only to be turned away and directed to a website maintained by the court-appointed receiver who was now in possession of all of Stanford's assets.
The receiver was also responsible for notifying over 1,000 Stanford employees in the U.S. that they no longer had a job. For many, it was like déjà vu. The entire world had watched these same scenes play out less than six months earlier when Bertie Madoff was arrested for orchestrating one of the largest Ponzi schemes in history. These comparisons to Madoff infuriated Alan Stanford, who accused the SEC of coming after him to make up for letting Madoff slip through their fingers.
He promoted this theory to a reporter from ABC, saying quote: Alan was right. The Madoff comparisons were bullshit, because the SEC had been investigating Stanford long before the Madoff scandal broke. In fact, Stanford's house of cards began to crumble more than four years earlier.
When two former financial advisors for the bank, Charlie Rall and Mark Tidwell, began questioning management about certain things that were occurring at the company, they asked about the letters their clients had received from the SEC that were seeking information about the bank's certificates of deposit. Management assured the advisors and their clients that everything was fine, that it was a routine procedure that happens all the time.
Less than two months later, assistants to the financial advisors at Stanford were instructed by management to remove any notes, emails, and other documentation from the client files and destroy it. Brawlin Tidwell had seen the writing on the wall, and when Stanford management discovered that the two men were planning to resign, the company retaliated, labeled them disgruntled, and sued them for $600,000.
Rall and Tidwell filed a countersuit in January 2008, alleging that they had been forced to commit illegal acts on the company's behalf. In July 2008, Rall and Tidwell were subpoenaed by the SEC, and the two former advisors turned to whistleblowers, told them everything they knew. When the details of the investigation reached the Stanford offices, Allen Stanford denied any wrongdoing. He played the plausible deniability card and claimed to be more of a delegator than a micromanager.
This was not a Ponzi scheme, never in my life have I ever set out to defraud a person. Never. Never have we done anything that I'm not proud of. Never have we done anything, to the best of my knowledge, that was illegal or wrong. And if there are things that were done that, outside of my direct control, I don't know what to say.
Even after meetings with his executive staff where he was shown evidence that the bank was insolvent, Alan Stanford insisted that everything was in order. But as the dire financial situation of the bank became more clear, Alan proclaimed that he could not testify in front of the SEC because he had been misled. And as a result, he had unintentionally misled investors. Instead, the company nominated Laura to do all the talking.
Laura Pendergast Holt was the bank's chief investment officer who technically oversaw the $50 billion operation. She was 35 years old. She had a bachelor's degree in mathematics and a master's degree in science and very little work experience prior to her time at Stanford. Those were her only qualifications, unless you count her relationship with James Davis, Alan Stanford's former roommate and the Stanford Financial Group's CFO.
pendergest holt had met james davis at a church that he owned in her hometown of baldwin mississippi about a decade earlier davis saw potential in laura and began to mentor her he was the one that helped her get an executive position at stanford it didn't matter to davis that laura was unqualified for the position because she was qualified for something else davis and pendergest holt were sleeping together from 2001 to 2003
Laura's cousin, Heather Shepherd, was also hired to work at Stanford as an equity specialist. James Davis was sleeping with her, too. During the first week of February 2009, Stanford executives, including Alan Stanford and James Davis, conducted several meetings in Miami to prepare Laura for her meeting with the SEC. She was given details about the bank's Tier 3 portfolio, which represented about 81% of the $8 billion in CD investments.
The only problem was that no one at the company could account for even half of that. The money was gone. They were able to find $3 billion tied up in real estate investments, while another $1.6 billion was expended as a loan to a shareholder. That shareholder was, of course, Alan Stanford. Laura Pendergast Holt met with the SEC in Fort Worth, Texas on February 10, 2009. She was asked about the Tier 3 investments. She told them that she wasn't privy to the details of the Tier 3 portfolio.
She was asked if any loans to shareholders had been made from the Tier 3. She said she had no idea. She never even told them about the Miami meetings. She never told them that she had prepared for the meeting with the bank's president. She was resolute in her dishonesty. A week later, on February 17th, the Stanford offices were raided. On February 26th, Laura Pendergast Holt was charged with obstruction of justice. She would be the first Stanford associate charged with the crime.
She pleaded guilty and was eventually sentenced to three years in prison. With three years of supervised release, James Davis immediately lawyered up and agreed to cooperate. He was charged with fraud and obstruction. He also pleaded guilty and was sentenced to a short term of five years in jail in exchange for his cooperation and testimony against Alan Stanford. This is Davis' attorney, David Finn.
This enterprise was smoke and mirrors, bailing wire and duct tape for 15 to 20 years. It was phony from the beginning. You had to have accountants that didn't account, regulators that didn't regulate, auditors that didn't audit, lawyers that didn't do their job. And did my client drop the ball and break the law? Absolutely he did. But at the end of the day, follow the money. Follow the money. And you'll see that very little of that money went into Jim Davis's pocket.
Alan Stanford, on the other hand, attempted to flee the U.S., but was turned down by a pilot he tried to hire, who was aware that Stanford's assets were frozen and refused to accept his credit card as a payment. Alan traveled to Fredericksburg, Virginia instead, where he stayed with his current girlfriend's family, before turning himself into the FBI on June 18th, when criminal charges were formally filed against him.
Also arrested were Gilberto Lopez, the bank's chief accounting officer, and Mark Kurt, the bank's global controller. Both men were accused of working behind the scenes to cover up Stanford's misuse of funds from being discovered. In 2013, after a five-week jury trial in which they were convicted of obstruction of justice by committing perjury, they were both sentenced to 20 years in prison. An Antiguan financial regulator named Leroy King was also named in the original indictment.
He was accused of accepting $100,000 in bribes, free trips on Stanford's plane, and Super Bowl tickets so that he would turn a blind eye to the bank's nefarious dealings. Leroy King was never arrested because Antica has fought his extradition. He is currently wanted in the United States on 10 charges of wire fraud, mail fraud, securities fraud, and money laundering. Alan Stanford pleaded not guilty to the fraud charges on June 25, 2009. His trial was scheduled for later that year.
He was facing up to 250 years in prison. Alan Stanford was ordered to remain behind bars without bail until his trial. The judge ruled that there was enough evidence to consider him a flight risk. So Stanford was transported to the Joe Corley Detention Center in Conroe, Texas, where, according to him, he was held in a cell built for four with nine other inmates. He spent the majority of his time there working on his case.
so much so that he monopolized the community telephone with constant and lengthy conversations with his lawyer and his daughter. And Stanford's fellow inmates had grown impatient with his inconsideration. Alan Stanford was sitting at the phone as usual on the morning of September 24th, 2009 when he heard a group of inmates from behind him yelling for him to hurry up and end his call. Stanford spun around in his chair and shot a menacing glare in their direction.
Alan Stanford was not a man used to taking orders or making exceptions for anyone, so he chose to ignore their demands. Stanford returned his attention to the conversation he was having with his lawyer and turned his back on the angry inmates. What happened next is a bit of a blur for Alan Stanford, and understandably so. He said he remembers being pulled out of the chair from behind by a group of men and hitting his head on the ground. He remembers being picked up off the ground and thrown into a concrete wall headfirst.
The last thing he remembers is being put into a chokehold until he lost consciousness. What Allen didn't remember, but would find out later, was that one of the men stomped on his face multiple times before leaving the scene. It's approximately 10:37 AM, date 9/24/09. I'm Captain Ramos. I'm taking a recording of a 10-10 just happened in dorm 505 C hallway between two white detainees.
Just checking down the dorm for possible weapons. Both the detainees and the guard were at medical this time. I was going to get you a -- over on the sink. Yes, sir. The shower and the telephone area where the altercation is alleged to begin. There's actually no blood -- In the shower area? -- or evidence located in the shower area. We do have copious amounts of blood on the mirror wall, laboratory, and inside the toilet. It appears this was a cleanup site. We have copious amounts of blood
located on the bottom bunk, bunk number five, or excuse me, bunk number six. We have no blood located in the rear of the cell. Most of the blood appears to indicate that the altercation happened between the telephone and the TV area and the front side of the day room table. I'm Major Bainham.
Stanford had been transported to the prison's medical center for evaluation. He was conscious but in a considerable amount of pain.
and it became very apparent that he had no idea who he was or where he was can you tell me your name that's my name what's your name
What's your name? Sir, what's your name? You know what day it is? What is today? The date? It's the end of the year. What is that? That's for your dizziness. Okay, I got you some water. Just water. Just put those in your mouth. I'll be able to swallow these. Here's some.
Try to drink a little bit of water first. Just try. It's for dizzying. I can't swallow it. Your nose is dripping here. I'm going to ask you some real basic questions, okay? I'm Dr. Austin. What is your name? I know. You told me that. But what is your name? Do you remember what your name is? Do you know where you are right now? Can you tell me what building this is, where you are right now?
Can you tell me your name, sir? Can you tell me your name? That's my name. What is your name? Can you tell me what date today's date is? Can you tell me where you are? Can you tell me where you are, sir? Are you at home? Where are you right now? He has mental status changes. He needs to go out. He needs to go out.
Alan Stanford had 32 broken bones on his face. His skull was fractured and his brain was swollen. He had to undergo an eight-hour surgical procedure to repair all of the damage.
a procedure in which doctors used titanium screws and mesh to hold everything together. After the surgery, Stanford was moved into a 7 foot by 6 foot special housing unit called The Hole, where he spent the next month recovering. He claims he only saw a doctor one time during that month. He claims he was denied proper neurological care. He was given no antibiotics or painkillers. Instead, he was fed an anti-anxiety drug to the point of addiction, which led to his trial being delayed.
The judge ruled that Stanford's brain injury and prescription drug addiction had left him too incompetent to stand trial. Stanford has called his treatment in prison barbaric. He compared it to how you might expect to be treated in prison in somewhere like North Korea or Russia. After three years in detention, Alan Stanford finally had his trial in February 2012. It lasted six weeks and featured testimony from former employees.
including James Davis, the star witness who admitted to working with Allen to falsify bank records, annual reports, and other documents to conceal the fraud. Davis said he was ashamed and embarrassed of what he had done, and he also offered this interesting antidote related to Allen's relationship with Leroy King, the Antiguan financial regulator.
The latest twist in Stanford's larger-than-life story, which took a pretty surreal turn last week, that's when Stanford's CEO, F.O. James Davis, revealed that Stanford and his alleged partner in crime, the chief regulator of Antigua, shared a very special secret that they participated in a ceremony where they exchanged blood to become blood brothers. Alan Stanford did not testify at his own trial.
But through his public defenders, he blamed James Davis for the bank's issues since it was his duty to oversee the financial operations. Stanford highlighted his philanthropic efforts. He pointed out how he had built up the Antiguan economy and how he had become the island's largest private employer. His arguments did little to convince the jury of his innocence. Alan Stanford was convicted of 13 of the 14 charges against him.
Before he was sentenced, Alan Stanford stood up and gave a defiant, rambling statement that lasted more than 40 minutes. He described the injuries he suffered in prison. He criticized the government for acting like the Gestapo. He pointed to himself as the victim. He even recounted riding horses with George W. Bush. And for one last time, he proclaimed his innocence, telling the court, "...I am and will always be at peace with the way I conducted myself in business. I did not run a Ponzi scheme."
I didn't defraud anybody." Allen Stanford ended his statement without apologizing to anyone. U.S. District Judge David Hittner called the Stanford case, quote, "one of the most egregious frauds ever presented to a trial jury in federal court," and he sentenced Allen Stanford to 110 years in prison and ordered him to repay $5.9 billion, which was mostly a symbolic gesture since the billionaire was now penniless.
I had worked all my life trying to not be a burden on anybody, my government, my children, or anybody. And now with my life savings, I figured that we could live comfortable the rest of our lives, not extravagant, but comfortable the rest of our lives, and not be a burden on our children. Now I don't know what's going to happen. While Alan Stanford is suffering in prison, the victims of his Ponzi scheme are suffering in their own right.
Many of them retired oil workers and construction workers who had spent their entire lives saving for an easy retirement. And now this, relegated to scraping by on social security checks and reliant on a court-appointed lawyer to recover their money. Dallas attorney Ralph Johnvy is in charge of tracking down the billions of missing dollars, a job that wasn't going to be easy and it wasn't going to be cheap.
John V. recruited more than 100 lawyers and consultants to help with the effort and demanded a fee of $27 million on top of a portion of what had yet to be recovered. The consulting firm John V. hired was charging $280 an hour to photocopy documents and print shipping labels. The only thing worse than getting ripped off once is getting ripped off twice. This is Stanford victim Byron Ratliff. My plea is...
The political end from whom the victims were asking for help are the same people that let it happen in the first place.
It was revealed during his trial that Alan Stanford had donated more than $2.4 million to US politicians on both sides of the aisle. Bill Nelson, a Democratic senator from Florida, received almost $46,000 in donations from Stanford. Pete Sessions, a Republican congressman from Texas, received over $40,000. Stanford donated almost $30,000 to both John McCain and Barack Obama during the 2008 presidential election.
Tom DeLay, the adulterous and alcoholic former Republican House Majority Leader, had flown on Stanford's jet 11 times. And to top it off, in the 10 years before his arrest, Stanford had spent another $4.8 million lobbying American politicians. And these are the people who should have seen it coming, right?
This is Stanford victim Blaine Smith. No one said a thing in 1999 when the Stanford Group received a negative supervisory review from the SEC when it found that some actions taken by the bank's advisors were inconsistent with its investors' intentions.
No one said a thing when the DEA discovered that the Juarez cartel from Mexico had deposited more than $3 million in Stanford accounts that same year. No one said a thing when Stanford was fined multiple times for multiple failures of compliance. No one said a thing when a Stanford employee sent a letter detailing the Ponzi scheme to the SEC in 2002, seven years before the indictment.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into federal law by President Obama on July 21, 2010 in response to the 2008 global financial crisis. The act established the Consumer Financial Protection Bureau, whose mission it is to protect consumers in the financial markets, but it did little for people who had already been burned. Although not perfect, at the very least, the new bureau would attempt to keep another Alan Stanford from happening again.
On May 24th, 2018, a law that would partially repeal Dodd-Frank was signed into law by President Trump. The new law exempts dozens of U.S. banks from the banking regulations established by the Dodd-Frank Act.
By the end of 2017, nearly $345 million had been recovered. Only $92 million had been distributed to the victims, pennies on the dollar of what was lost. And many of the oldest victims have never seen a dime because they died before anything was ever returned to them. I got enough for us to live four years pretty comfortably as long as we budget ourselves and scramped and saved, we'd be all right for at least four years.
but also knew that that wasn't much of a future. In four years, I had to be either working or dead. Not afraid to work, but this is supposed to be my golden years. He turned my golden days into nightmares. Swindled is written, researched, produced, and hosted by me, a concerned citizen, with music by Ethan Helfrich. For more information about the show, visit swindledpodcast.com and follow us on Twitter, Facebook, and Instagram at swindledpodcast.
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