Fox Business Breaks Stanford Whistleblower Story

Although I tend to write about national and international issues, I cannot help but notice an important story that broke out very close to home and is having an impact through out the world of finance. Allen Stanford, who has been accused of being a "Mini Madoff" has dominated the headlines of finance newspapers for weeks and people have been trying to get a handle on the full extent of the damage he has done. Fox Business Network, in a recent interview with Stanford whistleblower Leyla Wydler has helped significantly in that effort. The network was the first to break with the Wydler interview.

Being interviewed by Fox's Adam Shapiro, with her attorney Mike Falick, Wydler went into detail about "what she knew," "when she knew it," and the efforts she took to get the word out to others.

This important interview included:

• Wydler’s attorney Mike Falick on the response they got from the NASD, now FINRA, during their lawsuit: “We were told by FINRA that our document request was irrelevant. Obviously, the document request was highly relevant, and had we gotten those documents not only would Leyla have won her case, but maybe 30,000 people wouldn’t have lost their life savings."
  
• On being pressured to bring more deposits to Stanford Financial’s off shore bank: “I was constantly bombarded with emails, telling us to bring more deposits into the bank. Management, and the managers there, they would be sending us emails and they even had scorecards and make teams within the offices, to see who would bring more deposits in.”


• On why she questioned Stanford Financial’s off shore CDs: “I knew they were not FDIC insured, I looked at their financial statements their financials were not audited by US reputable account firm, instead it was done by an unknown firm in Antigua, to me that was a red flag. I was not going to put my clients into a CD that seemed safe and very liquid when in fact it was not."


• On why she was terminated from Stanford Financial Group: “In 2000, I was recruited to work for Stanford as a broker. As a broker dealer, and not to sell their offshore product, which was at the bank in Antigua. I went through arbitration back in 2002 when I was terminated, I was working for Stanford since 2000 until 2002, and it was mainly because I was terminated because of my reluctance to sell those CDs.”


• On how the NASD, now FINRA, reacted when she claimed that Allen Stanford was running a Ponzi Scheme: “I guess indifferent, you know they didn’t even do their due diligence and say ‘Ok, I would like to see their portfolio appraisal and be verified by a 3rd party and to prove her wrong’.”


• On going to the SEC in 2004: “I had a list of everything, all my concerns. I wrote down a document and sent it to them and I told them these are my concerns, this is what happened, look into it, this might save people’s savings in the future, because we can stop this. And it was just sent to them, and that’s it.”


• On how much money would have been saved in NASD, now FINRA, would have listened to her: “When I left I believe that there was about a billion dollars in the bank and it ended at 7.2 billion.”

It was a "must see" interview and provided the kind of information that, if the regulators had been doing their job, would have saved people billions of dollars.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

The Stanford Financial Group Web Begins to Spread

As someone who lives in Houston and monitors financial articles, I have been particularly interested in the Stanford Financial story. Today, the Fox Business Channel has taken the lead on providing information on this hot topic.

Today I read that "Laura Pendergest-Holt, Stanford Financial Group’s chief investment officer, is likely to be indicted on Tuesday on criminal charges" at FoxBusiness.com. The total scope of the indictment is unknown at the time of this writing, but the article points out that "At minimum, the indictment will be on a charge of obstruction of justice, though her legal team thinks there could be a number of other charges brought against her as well." Knowing the way the government has pursued these type of cases, we can expect more, maybe many more. It is through the leveraging of these charges that the government gets pleas and information on others involved.

Pendergest-Holt is joining the firm’s founder, Chairman and CEO Robert Allen Stanford in the brewing hot water. Stanford, and three of his companies, have been charged by the Securities Exchange Commission (SEC) of orchestrating an $8 billion fraud related to a Certificate of Deposit program. Although he has not yet been charged with any crime at this point, accusations are flying and it seems to be a question of "when" and not "if" he will be facing charges. The indictment of Pendergest-Hold cannot bode well for Stanford.

In fact, the focus on Pendergest-Holt first, could be a part of the government's efforts to make sure that the bigger penalties fall on Stanford. It is not at all unusual for the government to go after the underlings in criminal cases first in order to assure a conviction and to get a heavy sentence for the ring leader.

Pendergest-Holt is the youngest of the Stanford senior executives and, at 35, may seem to be an unlikely central character in this story, but her knowledge of the inner workings of the firm and the relationships that drive it, makes her a very connected personality in this drama and a potentially attractive target to the government indeed.

Historically, an $8 billion fraud case would be considered massive and virtually unheard of; but thanks to the era of Bernie Madoff and his $50 billion Ponzi scheme, the Stanford story has largely been under the radar screen. Fortunately, Fox Business is being serious in its due diligence. Fox's prowess is a story in itself. Increasingly the new cable business network is becoming the leading network and is putting its older competitors (CNBC and Bloomberg) on notice, on the importance of being first.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.