Ponzi Scheme Indictments

Today in Washington, D.C., the FBI, Department of Justice, and our partner agencies announced at a press conference the unsealing of an indictment in the Southern District of Texas related to a multi-billion dollar Ponzi scheme that victimized thousands of people in the U.S. and abroad.

The indictment charges Robert Allen Stanford, the sole shareholder of the Houston-based Stanford Financial Group and other affiliated companies, with defrauding investors who purchased approximately $7 billion in certificates of deposit administered by Stanford International Bank, an offshore bank located on the island of Antigua.

Charges against Stanford, along with four other individuals, include conspiracy to commit mail fraud, mail fraud and securities fraud, wire fraud, obstructing an investigation by the Securities and Exchange Commission (SEC), and conspiracy to commit money laundering.

Said Lanny Breuer, Assistant Attorney General for the Department of Justice’s Criminal Division, “As today’s charges make clear, the Department will vigorously root out and expose financial crimes that wreak havoc on innocent investors.”

Also charged were:

• Laura Pendergest-Holt, chief investment officer of Stanford Financial Group and a member of Stanford International Bank’s investment committee, who had also been previously charged with obstruction of justice in a separate SEC proceeding;
  
• Gilberto Lopez, Stanford Financial Group’s chief accounting officer;
  
• Mark Kuhrt, global controller for Stanford Financial Group;
  
• Leroy King, administrator and chief executive officer of the Financial Services Regulatory Commission, the regulator for Antigua and Barbuda’s financial services industry. King allegedly accepted bribes to ensure that Stanford International Bank was not subject to close scrutiny by Antiguan or U.S. regulators.

Officials announcing the indictments included, from left, Lanny A. Breuer, assistant attorney general for the Criminal Division; Robert Khuzami, director of the U.S. Securities and Exchange Commission Division of Enforcement; Kevin Perkins, assistant director of the FBI Criminal Investigative Division; and Greg Campbell, deputy chief of the U.S. Postal Inspection Service. Not shown are Eileen Mayer, chief of the Internal Revenue Service-Criminal Investigative Division; and Tim Johnson, U.S. Attorney for the Southern District of Texas.
Additionally, a criminal information was unsealed today charging James M. Davis, Stanford Financial Group’s chief financial officer, for his role in the scheme, along with an indictment charging another former Stanford Financial Group employee with destroying company records.

The scam. According to the indictment, Stanford International Bank offered—through its network of financial advisors—CDs with higher (and ultimately bogus) rates of return than those available through CDs offered by U.S. banks. Stanford and his co-conspirators also misrepresented to clients the actual financial condition of Stanford International Bank, its investment strategy, and the extent of its regulatory oversight by Antiguan authorities.

Definition: What is a Ponzi scheme?

While collecting billions from his investors, who placed their trust and in some cases their life savings with him, Stanford and his co-defendants were allegedly misusing and misappropriating most of these assets, including diverting at least $1.6 billion into undisclosed personal loans to Stanford himself.

According to FBI Assistant Director Kevin Perkins, the FBI has seen an increase in Ponzi schemes. In the past 18 months, we’ve opened 100 new cases into these scams, many involving losses of more than $20 million. “Ponzi schemes and other securities fraud investigations are one of the top priorities of the FBI’s Criminal Investigative Division,” said Perkins. “We recognize the enormous impact these crimes have on the economy as a whole and on the trust of investors.”

Echoed U.S. Attorney Tim Johnson, Southern District of Texas, “The investing public needs to be assured that it is protected from those who would corruptly deprive them of their financial security.”

The case was worked jointly by the Department of Justice, FBI, Internal Revenue Service, U.S. Postal Inspection Service, and U.S. Securities and Exchange Commission.

The Moral War Of God's Own Pacesetters

partial transcript:
MADDOW: Late in the day on Tuesday, when Nevada Senator John Ensign called a press conference in Las Vegas, the news that he was announcing he‘d had an affair registered about a 4.0, say, on the political Richter scale. Significant damage unlikely, though you may sense some moderate shaking. That‘s how it felt initially. Not that big a deal.
But it turns out this wasn‘t a short sharp shock. It turns out this is one of those prolong earthquake experiences in which the aftershocks do way more damage than the initial ka-chunk. The initial announcement from Ensign, backed up by a statement by his office, was that the senator had conducted an affair from December 2007 through August of last year with a campaign staffer who was married to a man who worked in his Senate office.
So, both the woman he was sleeping with and the man she was married to were on Ensign‘s payroll. A personal failure to be sure, which the senator himself proclaimed, and an ethical fiasco given that both of these people work for him. Also, a hypocrisy problem, given Senator Ensign‘s demand that President Clinton resign because of his affair with Monica Lewinsky and Senator Ensign‘s demands for the resignation of Larry Craig, after Senator Craig got nabbed in the famous wide stance in the men‘s room public sex sting.
But the personal failure, the ethical issue and hypocrisy problem were all evident right away on Tuesday. Those were the initial shock.
The aftershocks? The subsequent reporting about this scandal?
They‘ve been even worse.
NBC News has reported that on the day he announced that he‘d had the affair, Senator Ensign explained to other senators that the reason he was coming forward about the affair now was because his ex-mistress was trying to extort money from him. The same claim always anonymous, but remarkably similar in language and tone was made to “The Associated Press,” FOX News, Politico.com, “The Las Vegas Review Journal” and “The New York Times.” This claim that his ex-mistress‘ husband was also a former employee of Senator Ensign had demanded a substantial such money from the senator and that‘s what prompted his public revelation.
Here‘s the problem with that claim: extortion is a felony. Extortion of the United States senator is the kind of felony that‘s likely to get a lot of law enforcement attention. But local authorities in Las Vegas and the FBI claim that no reports of an extortion attempt were ever made to them, nor are they investigating any claims of extortion against Senator Ensign specifically.
Today, as picked up on by Zachary Roth at TPM Muckraker, the extortion claim was replaced by another still anonymous claim sourced this time to Senator Ensign‘s staffers that the reason the senator had to go public now was because his ex-mistress and her husband were not trying to extort money -- that‘s old story—the new story is that they had approached a television news network about publicizing the affair. And that‘s why he had to go public now.
The shifting of anonymous explanations for the senator‘s timing and coming forward were emerging today alongside new details about the employment history of the senator‘s ex-mistress and the employment history of her family. In 2007, when her affair with Senator Ensign began, Cynthia Hampton was employed at Ensign‘s Battle Born Political Action Committee. She was earning about $1,400 a month. Once the affair with the senator got under way, her salary was doubled to nearly $2,800 a month.
At the same time, Ms. Hampton was also employed by Ensign‘s campaign committee. Again, around the time the affair began, her salary at the campaign committee doubled, from $500 a month to $1,000 a month.
Even more remarkably, during the time that Senator Ensign and Cynthia Hampton were having an affair, John Ensign was the head of the National Republican Senatorial Committee. That‘s the part of the Republican Party responsible for electing and re-electing Republican senators.
For the record, depending on how the Coleman-Franken thing turns out, while Ensign was at the helm of the NRSC, the Republican Party lost eight, maybe nine seats in the Senate.
But anyway, while he was head of the National Republican Senatorial Committee, and while he was caring on an affair with Cynthia Hampton, the National Republican Senatorial Committee found it in its heart to also put Mrs. Hampton‘s 19-year-old son on the Republican Party‘s payroll. The National Republican Senatorial Committee, then chaired by John Ensign, paid his mistress‘ 19-year-old son $5,400 over a period that started four months into the affair, between Senator Ensign and this young man‘s mother, and ending the month that the affair ended.
The National Republican Senatorial Committee today confirmed to us that Cynthia Hampton‘s 19-year-old son was listed on the organization‘s expenditures. They then referred all further questions to Senator Ensign‘s office.
For the record, the 19-year-old was supposedly paid for research policy consulting.
Despite the involvement in this scandal now of the actual Republican Party and its fundraising and campaign arms, Republican senators are not exactly falling all over themselves to weigh in on the matter. Senator Kyl said, “I‘m not going to say anything.” Senator Grassley said, “It would be intellectually dishonest for me to comment.”
Senator Gregg said, “It‘s a personal matter.” Senator Crapo said, “I‘m going to reserve comment.” Senator Collin said, “I don‘t have a comment right now.”
Senator Vitter, he said, “I‘m late.” He actually said, “I‘m late.”
Senator Vitter.
The John Ensign scandal, it seems, is just getting started. It Republican senators try to ignore this the way they‘ve tried to ignore David Vitter after his prostitution problem, does that mean that the Democrats can pass any old gay rights legislation they want without fear of Family Values moralizing from the “wide stance” side of the aisle?

Brzezinsky: There are two Irans

Same-sex behavior nearly universal in animals

Examples of same-sex behavior can be found in almost all species in the animal kingdom — from worms to frogs to birds — making the practice nearly universal among animals, according to a new review of research on the topic.

"It's clear that same-sex sexual behavior extends far beyond the well-known examples that dominate both the scientific and popular literature: for example, bonobos, dolphins, penguins and fruit flies," said Nathan Bailey, a postdoctoral researcher at the University of California, Riverside.

Same-sex behaviors in different species are not all equivalent, the review finds. For instance, male fruit flies sometimes court other male flies, but this behavior is due to a missing gene that gives the flies the ability to distinguish between sexes, said Bailey, a co-author of the review. "That is very different from male bottlenose dolphins, who engage in same-sex interactions to facilitate group bonding, or female Laysan Albatross that can remain pair-bonded for life," he added.

The review also found a gap in the literature: While many studies have tried to understand why same-sex coupling exists and why it might make sense in terms of evolution, few have looked at what the evolutionary consequences of this behavior might be.

"Like any other behavior that doesn't lead directly to reproduction — such as aggression or altruism — same-sex behavior can have evolutionary consequences that are just now beginning to be considered," Bailey said. "For example, male-male copulations in locusts can be costly for the mounted male" and this cost may put evolutionary pressure on the locusts, he said. As a result, a larger number of males may secrete a particular chemical that discourages the mounting behavior, he added.

In their future research, Bailey and Marlene Zuk, a biology professor at UCR, plan to try and address questions about the evolutionary outcomes of same-sex couplings, focusing on the Laysan Albatrosses.

The review article was published in the June 16 issue of the journal Trends in Ecology and Evolution, and the study was funded by the UCR Academia Senate.

Homosexuality has been documented in almost 500 species of animals, signaling that sexual preference is predetermined. Considered the closest living relative to humans, bonobos are not shy about seeking sexual pleasure. Nearly all of these peace-loving apes are bisexual and often resolve conflict by the "make love, not war" principle. They copulate frequently, scream out in delight while doing so, and often engage in homosexual activities. About two thirds of the homosexual activities are amongst females.

The Worst Places to be a Refugee

WASHINGTON (IPS) - Gaza, South Africa and Thailand are among the world's worst places to be a refugee, according to the latest annual World Refugee Survey released here Wednesday by the U.S. Committee for Refugees and Immigrants (USCRI).
The survey, which was issued in advance of World Refugee Day Jun. 20, found that the number of refugees had dropped modestly worldwide in the past year – from 14 million to 13.6 million, according to USCRI.
Of those, well over half, or nearly 8.5 million, have been trapped in refugee camps or otherwise denied their rights under the 1951 UN Convention Relating to the Status of Refugees and its 1967 Protocol.
Of these, Palestinians, more than 2.6 million of whom have been "warehoused" for up to 60 years throughout the Middle East, constitute the largest national group that has been displaced for the longest period of time, according to the report. It also named Gaza as one of the worst places in the world, particularly in the aftermath of the three-week Israeli military campaign that began late last December.
Israeli authorities have so far permitted only humanitarian goods to be imported into Gaza since Operation Cast Lead, in which more than 1,400 Palestinians were killed. They have yet to permit reconstruction and related supplies to be shipped into the territory, which is governed by Hamas, an Islamist party the U.S. and other western countries have labeled a "terrorist" organisation.

The latest report was released one day after the publication by the UN High Commissioner for Refugees (UNHCR) of its annual report. It found that some 15.2 million people qualified as refugees during 2008 - down from 16 million one year ago - and that more than 800,000 were currently seeking asylum in foreign countries.
It also found that some 26 million more people were internally displaced; that is, they had fled their homes but were still living within their homelands' borders.
The greatest number of newly displaced people over the past year, according the UNHCR report, were found in Pakistan, Sri Lanka and Somalia, where violence has uprooted hundreds of thousands of people, including more than two million civilians who fled their homes in Pakistan's Swat Valley alone, to escape offensives by the Taliban and counter-insurgency operations by the country's army and paramilitary forces.

According to the USCRI report, the world's largest refugee group over the last year was the 3.231 million Palestinians living in refugee camps in the West Bank and Gaza, as well as elsewhere in the Greater Middle East.
The next largest group was Afghans, nearly three million of whom are currently living outside their homeland's borders, the vast majority in Pakistan and Iran, according to the report.
Increased violence between the Taliban and its allies on the one hand and the U.S. and other international forces, as well as the expanding Afghan Army, on the other, has provoked some Afghans to seek safe haven across the border. Pakistan's recent counter-insurgency campaign along the Afghan border has also provoked thousands of Pakistanis to flee into Afghanistan. Nonetheless, nearly a quarter million Afghan refugees returned to their homeland from Pakistan in the course of the year.
Iraqis, who for the previous three years had been the largest new source of refugees, now claim third place among all refugee groups, according to the report.
Nearly two million Iraqis are living abroad, mostly in Syria, Jordan and Lebanon. As violence in Iraq has diminished over the past two years, the exodus from Iraq has also fallen sharply, and some Iraqis have begun to trickle back home, according to the report.

Some 800,000 refugees from Burma, or Myanmar, are living outside their homeland, mostly in Thailand and Bangladesh.
Somalia, where continued fighting among various factions forced a total of some 80,000 people to flee to Kenya (60,000) or Yemen (20,000), and hundreds of thousands to become internally displaced, ranks fifth as the largest source of refugees.
These countries were followed by Sudan (428,000 people), Colombia (400,000), and the Democratic Republic of Congo (DRC) (385,000), according to the USCRI report.
Besides Gaza, the report identified South Africa and Thailand as among the worst places for refugees to be living. It noted the xenophobic violence that swept South Africa last May, as mobs of the country's poorest citizens rampaged through slums and shanty-towns attacking suspected foreigners and, in some cases, even setting them on fire. As many as 10,000 refugees fled South Africa for Zambia.
Thailand was cited as a poor performer as a result of its treatment of Rohingya refugees - in one case, the Thai Navy towed unseaworthy boats with nearly 1,000 Rohingyas and scant food and water aboard into the open sea to prevent them coming from ashore - and its plans to forcibly repatriate Hmong refugees to Laos.
Other countries that rank among the worst for refugees include Kenya, for its treatment of Somali refugees; Malaysia, due to officials selling deportees to gangs along the Malaysia-Thailand border; Egypt, because of its treatment of African migrants; and Turkey, for forcibly repatriating refugees, overcrowding detention centers and beating detainees.

In one incident, four refugees drowned when Turkish officials forced them to swim across a river to Iraq.

Brazil, Ecuador and Costa Rica, on the other hand, were among the countries that treated refugees best, according to the report, which noted that Brasilia had permitted Palestinians forced to flee Iraq to settle within its borders. Ecuador also launched a registration programme aimed at protecting and ensuring the rights to work and travel of tens of thousands of Colombian refugees who have sought safe haven there.
Some of the world’s poorest countries are also home to large populations of refugees. Chad, a constant on the UN’s list of least developed countries, has a refugee population of 268,000 while Sudan hosts 175,800 refugees from Eritrea and Ethiopia.
Overall, nations with a per capita GDP of less than 2,000 dollars hosted almost two-thirds of all refugees. According to the UNCHR report, "among the 25 countries with the highest number of refugees per 1 USD GDP per capita, all are developing countries, including 15 Least Developed Countries."



The report gave Europe a grade of "D" and the U.S. a grade of "F" for "refoulement," or returning refugees to places where their lives or freedoms could be threatened. It also gave Europe and the U.S. grades of "D" for "detention/access to courts."

Are terror groups finding a haven in Bangladesh?

Jatiyo Smriti Soudho, a tribute to the martyrs of the Bangladesh Liberation War.

In recent days, Bangladeshi police have been hot on the trail of disturbing developments: they've uncovered a plot that used Bangladesh to transit thousands of weapons to an Indian separatist group, and followed up by arresting key members of that group in Dhaka, the Bangladeshi capital, reports The Times of India.

Around the same time, police arrested a fugitive hit man working for Daud Ibrahim, one of South Asia's most notorious terrorists. While in custody, the assassin divulged that 150 of Mr. Ibrahim's operatives are stationed in Bangladesh, according to The Daily Star, a leading English-language newspaper based in Dhaka.

Ibrahim's network is said to span Al-Qaeda, Bollywood, and the organized crime world of Dubai. India authorities blame him for masterminding several bomb attacks inside India, according to Foreign Policy.

The news is deeply unsettling for Bangladesh, a poor, Muslim-majority nation of 150 million that is struggling to put democracy back into place following two years of military-backed rule, according to BDNews24, a Bangladeshi news service:

Local government minister Syed Asharful Islam said ... Bangladesh would face the fate of Pakistan if the country was not prepared to tackle the growing spate of terrorism.

Talking to reporters in the capital he said Bangladesh needed to work seriously to tackle the issue since terrorism is a global phenomenon....

Ashraful's remarks echoed US ambassador James F Moriarty's comment that Bangladesh still faced threat of militancy.

About terrorism, Moriarty said at a Meet the Press at Dhaka Reporters Unity that recent seizure of weapons in Bhola and continued arrest of suspected ... militants demonstrate that "terrorism remains a concern" in the country.

He said Washington got "disturbing indications" of terrorist threat in Bangladesh."

The arms case is particularly disturbing because of the alleged role of Bangladesh's intelligence service. The Daily Star reports that two former intelligence chiefs have admitted to collusion in the deal, which consisted of more than 20,000 grenades. The arms were intended for the Indian separatist group United Liberation Front of Assam, or ULFA.

The Indian Express newspaper has also pointed out that Pakistan's security service, the ISI, was allegedly involved:

Retired Wing Commander Shahabuddin, an ex-director of the National Security Intelligence told investigators that detained suspects of the haul had several talks with ISI officials working with Pakistan's High Commission in Dhaka, Pratham Olo said quoting officials familiar to the probe.

The revelations are shocking because they have confirmed allegations that India has leveled at Bangladesh for years, says Diganta Sarkar, a blogger originally from West Bengal in India, on his blog The New Horizon.

India has long been accusing that Bangladesh has been used for anti-Indian activities, especially with ULFA. Bangladesh has so far denied all these. However, if this confession statement is true, the allegations would be difficult to deny. [Bangladeshi Prime Minister] Sheikh Hasina has promised the countrymen that they will free Bangladesh from any traces of terror. If she is sincere to her promise, ULFA is going to face tough time ahead. As we can see, the ball-game has already changed.

Obama and Dems on Regulatory Reform

Lawmakers object to Fed powers

By CAROL E. LEE

After Obama's remarks on regulatory reform, a group of Democratic legislators reacted to his message in a conversation with reporters.

Rep. Barney Frank (D-Mass.) called POTUS's plan a very important step -- but said Congress probably won't give him everything he wants. Members will come up with a "product that looks a lot like what the president wants."

"I like how he framed it," Sen. Chris Dodd (D-Conn.) said, adding that there will be debate over the details.

Both of them said they will have reform done by the end of the year.

The sticking point between the administration and Congress seems likely to be the regulatory role of the Federal Reserve, with Frank and Dodd making clear that they do not agree with Obama's plan to expand the Fed's powers.

"There’s not a lot of confidence in the Fed," Dodd said.

With health care reform occupying so much time, the Senate is not going to consider the financial regulations legislation "until the fall some time," Dodd said.

Rep. Melissa Bean (D-Ill.) vowed that there will be "very prompt action" on POTUS's plan, though larger structural reform will take more time. Rep. Jim Himes (D-Conn.), a former Goldman executive, agreed that "some of this stuff" will be slow in coming.