Check out theDevil's Excrement on this esp the comments section on his latest post, as MO scooped the world last night by hearing of frozen parallel dollar accounts. What happened after that was a guy living in Florida, one Rama K. Vyalasu, was indicted on charges of money laundering that have clear connections to the Venezuelan parallel market as well as wire transfers inside the USA (read the indictment here).
One of the consequences of all this action is that the normal parallel market has been virtually closed down all day, with the ask shooting to VEF7 on the uncertainty (bid staying around 6...big big spread). It remains to be seen whether Venezuela gets a normal parallel market tomorrow or whether there will be further moves by US authorities against the presumed drug money laundering ring.
By the way, great scoop, MO. I read you last night after finishing some writing here and thought it interesting, then promptly forgot about it today. Good stuff, kudos to you, and blogs showing the way yet again.
The ECB (guys in blazers that run cricket) has just broken off talks with Cur Allen Stanford over a new sponsorship deal. Apparently it just is not the right thing to do business with cads and bounders.
Felix Salmon has done a nice overview of the SEC complaint with a list of salient points. He calls it "quite astonishing" and after reading it through carefully your humble correspondent has to agree. Go take a look a Salmon's post and while you're there give him the kudos he deserves in the comment boxes. He was the only high traffic blogger with the balls to run with this, he chided MSM all week about being so wishy-washy and he got the story out there and noticed by the larger world. While you're reading Salmon, read the full SEC complaint which you can download right here.
Duck Tales, the excellent report that started all this ball rolling, can be found right here, so go download it now and read a piece of financial history. The SEC moves today would not have happened, repeat would NOT have happened without the initial momentum caused by this brave and insightful report. Alex Dalmady is the unsung (so far) hero of the hour. May his star rise in the firmament.
The Devil's Excrement deserves special mention, as blog owner MO made the Duck Tales report available and wrote an impressive post that allowed Dalmady's note to finally catch the attention of the wider world.
The power of quality econoblogging has been definitively vindicated.
Yes indeed, the author of 'Duck Tales', experienced analyst, banking whistleblower extraordinaire and some time guest blogger on IKN and Devil's Excrement has taken the plunge and started his very own blog. This is good news for people who want a one-stop place to keep informed about all things Stanford International Bank, Cur Allen, bank redemptions etc.
GUEST BLOG GUEST BLOG GUEST BLOG GUEST BLOG GUEST BLOG GUEST BLOG GUEST
Yes indeedy, the guy who started all the fuss has kindly allowed IKN (along with The Devil's Excrementand also here at the Devil's ExcrementWordpress version) to publish his thoughts on how the Stanford International Bank story has developed over the past week. So enough from me; here's Alex Dalmady on SIB, Allen Stanford, regulators, media and all things concerned.
It’s over. Regulatory bodies have caught on. WSJ just announced that the FBI is investigating. “Duck Tales” is in the hands of dozens of analysts who “get it”, including many with ties to the MSMs (that’s Mainstream Media for you, Toby LOL). The press is flowing more freely. The MSMs have sent guys to Antigua. It’s big. They “get” it. THE EMPEROR HAS NO CLOTHES. Stanford has no answer. “Sir Allen” has been silent since over three days ago, as that spokesman who was beginning to look a lot like Jim Carrey at the beginning of “Fun with Dick and Jane”.
Hope he gets even like Carrey did.
The Antiguan regulators are on it. They made a complete “about face” on Friday, going from “not probing Stanford” to “to quiz Stanford” and “its not a Friday afternoon cocktail anymore”. It’s obvious that someone told them to “wake up and smell the guavaberry”.
They are still in denial, however. A Mr. King says “I know Allen Stanford personally put close to half a billion dollars of his own money to beef up the capital structure of the bank.” Did you see the check, Mr. King?
NO ONE and I mean NO ONE has disputed the facts in my article. The central issue of Show me the money! has not been addressed by Stanford or anyone else. Some MSMs have asked me how I got to my figures and I’ve sent them my dinky little spreadsheet. No questions. Maybe I should pretty it up a bit.
Now comes the ugly part. The Antiguan regulators with perhaps some special “help” are going to go see about those assets. I hope for the best, but I’m afraid for the worst. There may not be much there. If there’s a broker statement showing $2-3 billion in T-bills somewhere, you can be sure it’s false. Better confirm that with the brokerage company, guys. My best guess is that those assets are going to be stuff like eLandia, which Stanford poured like $100 million into, only to lose it. HSSO, which was trying to become “something” by buying EMAG, Transwitch (TXCC), which some guy named “Peabody” on the BW blog turned up. Seems that Stanford, grasping for cash, sold $15 million of short-term notes back to the company for $9.5 million back in December. Talk about “liquidity crunch” (it works to about a very high yield, for those mathematically challenged). I guess then there are the movies, the restaurant in Memphis and other “market-beating” investments.
I can imagine the ledger now…one coffee pot: $50,000.00, one helicopter: $500,000,000…one corrupt politician: priceless!
The human part is going to hit home really quick. I already had a taste, and my blood is boiling. I’m MAD and I’m SAD. Yesterday, I get a call on my home phone from a lady in Venezuela. She was desperate. She tells me her 99-year-old aunt’s money, the income from which she uses for her medical needs, is in a Stanford CD. “Can you help me, Mr. Dalmady?” What do you say? “Should I redeem, Mr. Dalmady” Yes, “redeem” I said…broke my heart.
It’s becoming painfully obvious that this was in a death spiral anyway and the story was going to blow really soon. Matt Goldstein had plenty of research he was ready to go forward with, as was Allison Fitzgerald at Bloomberg. They were googling for Stanford regularly when my stuff came up. More stuff will come forward anyway. I’d say if not for “Duck Tales” this had maybe a week or two more to go, before it blew itself up (ran out of money) or the press blew it up.
That’s really bad if you think about it. Ponzi schemes live off liquidity. If these guys are strapped for cash, after pulling in $2 billion in fresh money in 2008 and “injecting fresh capital” in December…well.
It’s obvious that this isn’t just a product of the 2008 market crash, stuff has been going on for a while. If I had to guess, I’d say this might have been legit until 2000 or at least a “viable model”, since the markets were doing well, but somewhere back it took a bad turn and a little hole grew into a crater. They were filling it in and perhaps trying to build up a business on the side (Stanford Group?). But its just speculation here and we won’t know unless an insider talks.
So…there it is. It’s my 15 minutes. Thanks for lending me your blog (I really should get my own).
Matthew Goldstein at BusinessWeek has got his teeth into the Stanford International Bank story now and he's not letting go. As well as giving deserved props to the instigator of the investigation in this note, Goldstein has just published this excellent report that shows even more shady details emerging. It's a must read, especially about the "whistleblower lawsuit" that was settled by Stanford just before going to trial in late 2007. However the part that caught my eye was early on in the story. Here it is:
"For months now, securities regulators have interviewed dozens of former employees of Stanford Financial, trying to get to the bottom of the firm's staple investment product..."
Why do I like this little line? Well, basically because it's bullshit. The SEC had done a bit of looking around but hadn't moved on Stanford in any way. Then suddenly the Madoff affair hits and people are shouting "where was the SEC?" and now they're suddenly in danger of being upstaged by a single (albeit very smart) individual who had the guts to go public on this story which then combined with the collective power of the blogosphere (like it or not, suckaz..we're here to stay and showing the way).
So in that little quote we see the first chapter of "The SEC Get Out Clause". We're going to be told how the SEC had been carefully collecting its data over the last few months and how they were building a case and how it was only a matter of time before yada yada blah blah. Well, if their bruised egos need it that's ok by me because it's now pointing to something far more important to the greater good, namely that the SEC are going after Stanford right here and right now. And frankly I don't care how this ends and what spin is used by the guys in suits as long as justice is done.
A last word: The MSM and "serious" business publications are all over this story. Reuters has a crack guy on the scene in Antigua. Bloomberg, DJNW, WSJ, NYT, FT, all the UK dailies (to cover the cricket angle) and there are plenty of names missing from that roster for sure. The major biz media are moving and shaking. This is all good and the more we hear from the established outlets the better. Also note the scramble between bullshit analysts, bankers and financial advisors in New York, Miami, Antigua, Houston Caracas and all points between is now on to get a place in the sun and a quote on the news saying, "Yeah, well I knew there was something wrong at Stanford years ago blah blah....." like the bunch of hangers-on they were, they are and they always will be.
And so it goes. Because of all that and more this will probably be my last post on the issue, but remember where you saw it first, yeah? And whoever says whatever in the days and weeks to come, be absolutely clear that the whole thing has happened because of the momentum produced by a quality report written by a smart, independent analyst named Alex Dalmady.
".............As Dalmady dug deeper, he found lots of problems with Stanford's products, documented them in a report called "Duck Tales" (if it looks like a duck, walks like a duck, and quacks like a duck...), then uploaded that report to the 'net for public consumption. Dalmady published the report in a Venezuelan econo-mag, but noticed that his work on Stanford only "really exploded once it hit the blogs. Miguel Octavio's The Devil's Excrement [at Salon.com] took up the story on Monday the 9th, as did Caracas Gringo."
Salon's Octavio noted at the time: "For many years, I have been hearing stories about SIB. When most banks paid 3% in deposits, SIB paid 6-8%. No amount of digging or understanding would clarify what it was they were doing, much like Madoff did in the US, where he managed to trap some very smart people."
Latin American blog Inca Kola News carried the torch further on Tuesday: "I really stopped what I was doing and pulled the Stanford filings...and looked again. The fact that the bank has missed two relatively small recent payments while supposedly boasting a large liquid asset base is rather strange..."
Allen Stanford looking cool, calm and relaxed. A photograph that was not taken this week.
Over at Devil's Excrement there are two new posts up and both are required reading for all you people looking into the Allen Stanford / Stanford International Bank story (and that's a heap of you by the looks of my Google search hits).
1. This story by DiabloCaca himself that gives a pretty accurate timeline of how the story has gone from bubbling under in the Venezuelan blogosphere to hitting the world business (and sport for that matter) headines. M.O. is even kind enough to link this humble corner of cyberspace (and I hear ya MO on the H man).
2. Alex Dalmady, author of the report Duck Tales that is at the centre of the whole media turmoil, has written a post too. This is an unmissable post that shows how Alex stumbled upon the SIB story and how it moved from the Venezuelan inside biz circle to where it is today. And sincere thanks for writing a kind word about IKN, Alex. Appreciated. Finally, there's this: An extensive December 2008 interview with Allen Stanford in World Finance Magazine. Stanford is named "World Finance Man of the Year". The interview starts on page 32. Well worth a read.
