Investment fraud suspect Stanford was major political donor

Until 2000, Robert Allen Stanford had no record of giving money to anyone in Washington. But then the Clinton administration introduced legislation to crack down on international money laundering.

Suddenly Mr. Stanford, whose company ran a bank in Antigua, made a lot of friends, spreading money to both political parties and their leaders. The legislation languished in a Senate committee until the terrorist attacks of 9/11 convinced Congress it needed to act.

Stanford, accused by the US Securities and Exchange Commission (SEC) of an $8 billion fraud, continued to give money to scores of members of Congress, as well as the Obama presidential campaign.

The contributions, along with those from accused swindler Bernard Madoff, once again raise questions about the relationship of the rich and sometimes fraudulent to America’s lawmakers.

The campaign contributions are “one vehicle to try to influence and skew policy,” says Sheila Krumholz, executive director of the Center for Responsive Politics (CRP), which follows campaign contributions. “Often the efforts are too brazen.”

Donations of $2.4 million

In Stanford’s case, since 2000 he, his company, or its employees have delivered $2.4 million to political operations, according to Ms. Krumholz. Stanford and his wife personally gave $931,000.

Although he donated to politicians of both parties, 65 percent of his donations went to Democrats, including $31,750 from Stanford, his family, and employees to the presidential campaign of Barack Obama.

“It’s a lot of money when you consider 99 percent of the public doesn’t even give $200,” the amount needed to gain the attention of the Federal Election Commission, Krumholz says. “It makes him a big player.”

In fact, politicians of both parties have been scrambling to distance themselves from the scandal. An Obama aide says the $4,600 contribution from Stanford himself has been donated to charity. Sen. Bill Nelson (D) of Florida is going one step further, shedding money that came from Stanford or his employees.

“Bill has told his campaign he wants every thin dime associated with Stanford returned to a charity or used in some way that could help folks who were deceived by this guy,” a Nelson aide says in an e-mail.

Echoes of Madoff scandal

The same thing happened after the Madoff financial scandal broke. Mr. Madoff and his wife were also contributors to the political process, giving $238,200 since 1991, according to the CRP. His own donations, plus those of his firm, total nearly $1 million.

Two of the largest recipients, Sens. Ron Wyden (D) of Oregon ($13,000) and Charles Schumer (D) of New York ($12,000), say they have donated the money to charity.

Federal authorities accuse Stanford of “massive” fraud centering on high-interest-rate certificates of deposit (CDs). According to the SEC, in recent weeks the Stanford Financial Group has quoted rates as high as 10 percent on a five-year CD, more than twice the highest current US rate, which bankrate.com says is less than 4 percent.

Stanford, who has not been charged with any crime, may have yet more pressing concerns. According to an ABC News report, federal authorities are investigating the banker regarding money laundering for a Mexican drug cartel. The network, on its website, says one of Stanford’s private planes was detained last year by Mexican officials, who found suspicious checks that might be drug related.

Ties to US, Antigua

Stanford, who was born in Mexia, Texas, has dual citizenship in the US and the Caribbean nation of Antigua and Barbuda, the site of his international banking operations.

In the past, the Caribbean island nation has been in the cross hairs over its money-laundering rules.
Twelve years ago, after the US imposed sanctions on the island, then-Prime Minister Lester Bird asked Stanford to help oversee a rewrite of Antigua’s money-laundering regulations.

“The embassy described it as record-gate or file-gate,” recalls Jonathan Winer, then deputy assistant secretary of State for international law enforcement. “Stanford took over the records of the offshore bank regulator, created the rules for cleaning it up, and drafted the legislation. None of us had ever seen anything like this before,” says Mr. Winer, now a senior vice president at APCO International in Washington, a global consulting firm.

Stuart Eizenstat, who was deputy secretary of the Treasury from 1999 to 2001, recalls the notoriety of Antigua as it failed to improve. Antigua appeared on a Treasury “name and shame” list during that period, but, unlike other countries, Antigua was not “shamed.”

“That list included Russia, Liechtenstein, Panama, Israel, and Antigua among countries not up to international standards,” says Mr. Eizenstat, now head of the international practice at the law firm Covington & Burling in Washington.

“Most of the other countries did change their rules, but not Antigua,” he says.

Fraud legislation stalled

Cutting down on money laundering and financial fraud became a significant interest of Rep. Mike Rogers (R) of Michigan, a former FBI agent. He introduced legislation to improve the ability of state and federal agencies to share information. With the support of the Clinton administration, it passed the House.

But when the bill reached the US Senate, it stalled.

The public-interest lobbying group Public Citizen became curious about what happened. It found Stanford had given contributions to the “soft money” accounts of then-Sen. Tom Daschle (D) of South Dakota, who was Senate minority leader, as well as other key legislators and both political parties.

“What we concluded was that it was his soft-money contribution, aimed at killing the money-laundering legislation, that got the bill killed,” says Steve Weissman, then at Public Citizen, now associate director for policy at the Campaign Finance Institute in Washington.

Representative Rogers knew from his experience at the FBI that something needed to be done, says a spokeswoman.

“If the law had been adopted, it would have surely impacted transparency and made it easier to prevent the fraud cases we’re seeing now,” she says, quoting him.