With Bernie Madoff now behind bars, some are wondering: Why is Allen Stanford, the man the U.S. government accuses of basically being the nation’s second-biggest financial scam artist, still free?
Consider: the Securities and Exchange Commission filed suit against Stanford almost a month ago. Although it was a civil action, the SEC alleged that Stanford “perpetrated a massive fraud” that separated $8 billion from the people who had earned it.
If it wasn’t clear enough, Feb. 27 the SEC amended its complaint, charging outright that Stanford had been running a “massive Ponzi scheme” and that he personally pocketed some share of a $1.6 billion bounty from the swindle.
Moreover, the Feds arrested one of his top executives and alleged co-conspirator, Laura Pendergest-Holt. If they thought bracelets looked so good on her, why not try them on “Sir” Allen himself?
The feds have been predictably quiet on their strategy. But I spoke with a number of former federal prosecutors with experience in white-collar prosecutions. (None has been involved in the Stanford matter.) They generally agreed that while it appeared the feds had enough to arrest Stanford, it was not beyond comprehension that they would leave him be for now, while they built their case.
For one, the case is a sprawling financial mess complicated by the fact that lots of evidence is apparently overseas, outside U.S. prosecutors’ jurisdiction. Unless they thought Stanford was a serious flight risk or a (current) threat to the public, it makes sense to wait, the former prosecutors agreed. If they booked Stanford, prosecutors would be required by law to bring an indictment or file a complaint within weeks, and the consensus was they could likely use more time.
Stanford has reportedly surrendered his passport, reducing the chances he might flee. He has declined to cooperate with the investigation, citing his Fifth Amendment right not to incriminate himself. In other filings, his lawyer has said the SEC’s claims are false.
There could be other benefits to leaving Stanford on the street, some of the ex-prosecutors said. Under surveillance, he could lead investigators to other conspirators or assets they had not found and frozen. And if investigators gather proof Stanford attempted to conceal evidence, it could bring new charges as well as “consciousness of guilt” evidence, which could help win a conviction.
Only one of the ex-feds, former SEC enforcement officer and special AUSA Phillip L. Stern, agreed to be named. Stern, now a lawyer with the firm Neal, Gerber and Eisenberg, doubted Stanford would lead investigators to much of use. “Presumably Stanford knows where the money is,” said Stern. “But I think the government’s going to have to try and find it through other ways.”