Silver Medal Ponzi Schemer- Allen Stanford — Transcript

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1. 0:02Wall Street veteran Bernard Madoff has
2. 0:04been arrested and charged with running a
3. 0:0650 billion dollar Ponzi scheme Congress
4. 0:09wants to know what caused the Enron
5. 0:11meltdown and while the collective range
6. 0:13currently is focused on Worldcom Tycho
7. 0:16CEO Dennis Kozlowski was convicted of
8. 0:18looting hundreds of millions of dollars
9. 0:20this is one of the biggest fraud cases
10. 0:22ever care president is a crook well I'm
11. 0:25not a crook find out more on this week's
12. 0:28episode of white collars red hands
13. 0:34we've covered some big Ponzi schemes on
14. 0:36this show before with the largest
15. 0:38obviously being the fraud perpetrated by
16. 0:41Bernie Madoff when he stole over 60
17. 0:43billion dollars from investors may not
18. 0:46however kept his dealing just in the
19. 0:49United States and managed to do the
20. 0:51whole thing without the support of an
21. 0:53international organization something
22. 0:55that can't be said for today's topic
23. 0:58Alan Stanford was the sole owner and
24. 1:00leader of a multinational Bank the
25. 1:02Stanford International Bank that over
26. 1:05the course of decades grew to a huge
27. 1:07size but the whole time the institution
28. 1:10and many others were being orchestrated
29. 1:13in a tangled and complicated web that
30. 1:16was designed solely for one purpose to
31. 1:18separate hard-earned money from people
32. 1:20and fund the lavish lifestyles of those
33. 1:22at the top not only did the bank utilize
34. 1:26shell companies but it was one almost
35. 1:28entirely learn more about the silver
36. 1:31metal holder for Ponzi schemes and
37. 1:32white-collar crime convictions in
38. 1:34America on this week's episode of white
39. 1:36collars red hands you know what else has
40. 1:39grown large inside of size over the past
41. 1:41few decades
42. 1:42uh obesity rates in America absolutely
43. 1:45oh I got it you got it hell yeah I love
44. 1:49when that happens yeah it almost never
45. 1:50happens yep
46. 1:52uh also my dick [ __ ]
47. 1:55we were like we were like a quarter of a
48. 1:57second for me getting into the next line
49. 1:59and just leaving that in the bath and
50. 2:02here we are it's on the table not your
51. 2:04dick
52. 2:04but that nope my giant [ __ ] sword
53. 2:08this is how we start podcasts huh
54. 2:11we do this whole intro
55. 2:13talking about white collar crime and
56. 2:15Ponzi scheme that's the only place
57. 2:16you'll get a dick joke immediately after
58. 2:18all that seriousness about white collar
59. 2:20crime that's why you asked me to do this
60. 2:22well that's our guarantee here we we
61. 2:25have the earliest dick jokes in white
62. 2:26collared crime podcasting history and we
63. 2:29will stay that way yes we will we will
64. 2:31stay that way I'm not changing
65. 2:34no but so but you if you're here you
66. 2:38already know that so welcome back to
67. 2:40another episode of white collars red
68. 2:41hands I'm kashan and I'm Nina and we're
69. 2:43back at it with Ponzi schemes again they
70. 2:47keep happening
71. 2:49people love Ponzi schemes they do uh
72. 2:53it's it's funny though because you ever
73. 2:54hear of a successful one
74. 2:56well those are the ones we don't know
75. 2:58about
76. 2:58um yes yes
77. 3:01uh there will be more
78. 3:04so yeah
79. 3:05um and there was
80. 3:08this one uh it's a little bit older it
81. 3:11actually ran um in conjunction with the
82. 3:13Bernie Madoff scheme like they both came
83. 3:16down and around the same time so uh if
84. 3:19you were alive at that point and older
85. 3:21than us because this was I was like 14.
86. 3:25and I would have been 17. yeah so we
87. 3:27were we were teenagers and weren't super
88. 3:29worried about what was going on in the
89. 3:30financial Market I wasn't more worried
90. 3:33about if uh what what's her name Zoe uh
91. 3:37if Zoe was actually pregnant from Zoe
92. 3:39101 oh yeah Jamie Lynn Spears Jamie Lynn
93. 3:41Spears and she was and she was and now
94. 3:45they're rebooting it
95. 3:47ugh you see that yeah I don't know why
96. 3:50they're doing that because they did
97. 3:51iCarly and people are actually watching
98. 3:53it I watched the first five episodes and
99. 3:55was like
100. 3:57is her brother still hot
101. 3:59Jerry Trainor you thought Jerry Trainor
102. 4:02was hot I thought he was kind of cute uh
103. 4:05maybe he's like in an adorable way let
104. 4:07me look him up not in a [ __ ] like you
105. 4:10know bend me over a barrel kind of way
106. 4:12for sure
107. 4:14Cherry Trainor yeah I never knew his
108. 4:17name oh yeah he had something about him
109. 4:20he's the producer actually he's the one
110. 4:22oh yeah there's something about this guy
111. 4:25what yeah
112. 4:27all right he looks like Aaron Hansen
113. 4:30from Game Grumps and you won't even get
114. 4:31that reference with someone out there
115. 4:32will dude looks like the guy from your
116. 4:36hometown
117. 4:38that's like moved back
118. 4:41he like went away and joined a
119. 4:43motorcycle gang and he moved back
120. 4:46because his mom is terminally ill you
121. 4:48think Jerry Trainor looks like a guy who
122. 4:50joined a motorcycle gang
123. 4:52kinda in this picture or like that's
124. 4:55[ __ ] come on like right here or a
125. 4:57rock band a rock band he joined a rock
126. 5:00band and then his mom got sick and he's
127. 5:03back in town to help take care of her
128. 5:05while he's not on tour and then you run
129. 5:07into him while you're visiting home and
130. 5:09you're like oh my God Jerry Trainor what
131. 5:12happened to you and he was like what
132. 5:14happened to you and then he saved for a
133. 5:18fanfic okay I don't want to hear anymore
134. 5:20put it in writing and get back to me we
135. 5:22got to get to Alan Stanford
136. 5:26I broke out with this podcast so let's
137. 5:28just jump right into it
138. 5:31it's five minutes later sorry this is
139. 5:34Jerry Trainor rant uh
140. 5:37Robert Allen Stanford
141. 5:40who would drop the robber pit and just
142. 5:43go by Alan was born in 1950 the son of
143. 5:47James Stanford the mayor of his small
144. 5:49town of Mexia Texas
145. 5:52and also to a mother Sammy a nurse
146. 5:56middle class
147. 5:58because you might you might think oh his
148. 6:01dad was the mayor he has to be affluent
149. 6:03there are six thousand people in Mexia
150. 6:05Texas no I've never heard of it all
151. 6:07right so they could basically just like
152. 6:08spin a bottle and choose a guy oh yeah
153. 6:10your mayor you look like you ever go do
154. 6:14some mayor stuff they're like oh you
155. 6:16don't have a DUI you can be married yeah
156. 6:17no do you think you think someone in a
157. 6:19small town Texas is voting for someone
158. 6:21who doesn't have a DUI absolutely not uh
159. 6:25at the right young age of nine years old
160. 6:27uh Stanford's parents decided to split
161. 6:29which definitely wasn't his fault
162. 6:32[Music]
163. 6:33uh which saw Alan move in with his
164. 6:35mother in Fort Worth Texas
165. 6:38um Allen eventually graduated high
166. 6:40school and attended Baylor University oh
167. 6:42he's smart this guy did not want to
168. 6:43leave Texas is Baylor University a smart
169. 6:46person University yeah it's a good
170. 6:48school
171. 6:49I've never heard that
172. 6:51it's not like it's ivy league what the
173. 6:53[ __ ] is Baylor no but it's a good school
174. 6:55okay well uh you couldn't leave Texas uh
175. 6:58and that's where he would receive his
176. 6:59bachelor's degree in finance in 1974 and
177. 7:03now what do all douche young men with a
178. 7:06finance degree decide to do immediately
179. 7:08upon graduating
180. 7:11tell us
181. 7:13that's right start a business almost
182. 7:15completely independently because they
183. 7:18think they've learned everything wrong
184. 7:19with the system in four years and think
185. 7:21they're going to be the one to mount
186. 7:22capitalism and make it their [ __ ] hell
187. 7:24yeah uh they almost never do though
188. 7:28that's the funny thing unless they steal
189. 7:30a bunch of money and end up on the forge
190. 7:3230 under 30. and all of those people are
191. 7:36fraudsters basically yeah yeah um the
192. 7:38business which Alan was trying to mount
193. 7:40was a string of gyms uh turns out Alan
194. 7:44was a bit of a muscle junkie he was six
195. 7:46foot five inches tall and weighed in at
196. 7:49a staggering 330 pounds of mostly muscle
197. 7:53and for a completely terrible comparison
198. 7:55that is four inches taller and 80 pounds
199. 7:57heavier than the WWE sensation John Cena
200. 8:01John Cena is definitely on my list
201. 8:07oh
202. 8:09yeah he can break my collarbone [ __ ]
203. 8:12yeah
204. 8:14you need help
205. 8:16so I want to look up this guy Alan
206. 8:19Sanford uh
207. 8:21he kind of looks like Ed Kemper the
208. 8:24murderer oh I have a friend who looks
209. 8:26like it in Kemper what yeah absolutely
210. 8:29because Ed Kemper was also just like a
211. 8:31huge guy yeah they just kind of like
212. 8:33they look similar he looks like a guy
213. 8:35from Texas if we're being honest he
214. 8:37really does he really does he's got that
215. 8:39Texas bite
216. 8:41um
217. 8:42but so he big all right yeah um so of
218. 8:46course Alan wanted to start a series of
219. 8:48gyms operated out of Waco Texas uh but
220. 8:51after a few years in the business he had
221. 8:53to divest the gyms because he had racked
222. 8:55up like 12 million dollars in personal
223. 8:58life how do you do that I don't know man
224. 9:01you run gyms really poorly I guess I
225. 9:04don't know and I guess you can say that
226. 9:06the gyms just really didn't
227. 9:08workouts
228. 9:14good those good mornings weren't so good
229. 9:16after all
230. 9:19what that's a gym move good mornings
231. 9:22what gym move is that they're like rdls
232. 9:25kind of
233. 9:28how is it like a reverse deadlift which
234. 9:30I know what it is so don't you know I
235. 9:32think it's just like the opposite
236. 9:35of a reverse deadlift so it's a deadlift
237. 9:36no I gotta look it up oh my God but it's
238. 9:39called a good morning I thought you were
239. 9:41saying some like sun salutations
240. 9:42[ __ ] no and I was like what do you
241. 9:45do this isn't a pilates class it's a
242. 9:46[ __ ] like he's dead like a Gold's Gym
243. 9:48kind of thing
244. 9:50um after his first failed business he
245. 9:52decided he needed daddy's help and the
246. 9:55two got together to enter the business
247. 9:56uh for which most dumb people get rich
248. 9:58real estate hell yeah uh you see the
249. 10:02price of oil
250. 10:04had dropped substantially in the 1980s
251. 10:06and what is Texas known for besides
252. 10:08terrible racism and truck nuts
253. 10:11oil Longhorns oil big boobs or the rodeo
254. 10:16oil so the Alamo oils never forget uh so
255. 10:21with the price of oil tanking the Texas
256. 10:23economy and thereby the price of real
257. 10:25estate was in a nosedive
258. 10:29and that was for the whole beginning of
259. 10:31the 1980s uh which just happened to be
260. 10:34when Stanford and son decided to buy a
261. 10:37bunch of real estate that's kind of like
262. 10:39that show Sanford and Son that's the
263. 10:41joke then when they sold all of it later
264. 10:44after the price had bounced back they
265. 10:47both made a considerable profit on the
266. 10:50Investments they had made like I think
267. 10:52they said
268. 10:53no it was a little bit after this he
269. 10:54made his first 100 million
270. 10:57but he would be a billionaire someday
271. 10:59damn so
272. 11:00um
273. 11:01and they really did make a small fortune
274. 11:05on these deals because the company that
275. 11:07they had thrown together to manage the
276. 11:09business employed 500 people by 1993.
277. 11:12also in the early 90s uh Stanford
278. 11:15founded an investment group known as
279. 11:17Stanford Financial Group he loved
280. 11:19putting his name on stuff loved it uh
281. 11:21but Stanford realized that if he kept
282. 11:23running operations out of Texas then he
283. 11:26was going to have to keep paying taxes
284. 11:29so Alan decided that the best course of
285. 11:33action to live the libertarian dream is
286. 11:36to move instead to the Caribbean uh
287. 11:39firstly moving to the British Isle of
288. 11:41Montserrat but unfortunately this was
289. 11:44kind of the exact same time that the
290. 11:45British government had decided to crack
291. 11:47down on Offshore Banking within the
292. 11:49territory uh so Alan packed up and moved
293. 11:52one more time to the place that he would
294. 11:54largely operate out of for the coming
295. 11:55decades Antigua and Barbuda well
296. 11:58specifically Antigua Antigua yeah
297. 12:01um while in Montserrat he created a
298. 12:03banking subsidiary of the Stanford
299. 12:05Finance group originally known as
300. 12:06guardian International Bank
301. 12:08uh but fully branded the bank when he
302. 12:11moved it to Antigua as Stanford
303. 12:13International Bank uh Stanford already
304. 12:16had ties to many different investors uh
305. 12:19and he had managed money of people like
306. 12:22the world round after he started real
307. 12:23estate he became he became like an
308. 12:25investor and like a money manager for
309. 12:26people so he knew a lot of people he was
310. 12:29already managing a lot of rich people's
311. 12:31money but he realized that people across
312. 12:33the world uh were worried about
313. 12:35governments not being as stable as they
314. 12:37used to be especially probably around
315. 12:39the 80s like in the Cold War right or
316. 12:41yeah right at the end you know that
317. 12:43makes sense yeah people were probably
318. 12:44worried about the collapse of countries
319. 12:46right because USSR just went away
320. 12:48um so he realized that uh these people
321. 12:52these investors wanted not only to
322. 12:54diversify their portfolios within their
323. 12:57home countries but also wanted to
324. 13:00diversify them uh internationally so buy
325. 13:02stuff from all all across the world
326. 13:05um and this was the motivation behind
327. 13:06the creation of the Stanford
328. 13:08International Bank uh but as soon as
329. 13:10Alan was behind the wheel of the company
330. 13:12he scored straight for the bush taking
331. 13:14it for a multiple decade Joyride off the
332. 13:18beaten path I don't know when you people
333. 13:20say they're like I'm just going to start
334. 13:23my own bank that just doesn't sound like
335. 13:24it's gonna end well
336. 13:26yeah Banks seem fake right like how can
337. 13:30you just be like I'm gonna start a bank
338. 13:32I think I'm just gonna be a bank
339. 13:34yeah you know you can start a bakery
340. 13:37yeah and you can start a hair salon my
341. 13:41hair salon you can't just start a bank
342. 13:43no
343. 13:45that seems fake I guess at some point
344. 13:47you get rich enough right and you're
345. 13:48just like
346. 13:49okay you want to start a bank
347. 13:52sounds fun
348. 13:54no I don't think I'll ever be that rich
349. 13:56and that me either bro I already started
350. 13:59too late if I got rich now I'd be rich
351. 14:02as like my 50s
352. 14:04I mean depending on how it happened yeah
353. 14:07not unless you guys blow it up you guys
354. 14:10blow up this podcast I think the richest
355. 14:12podcaster just probably still doesn't
356. 14:13get a lot of money from the podcast not
357. 14:15like comparatively to these guys how
358. 14:17much does Joe Rogan get
359. 14:20second time we've referenced Joe Rose
360. 14:21that's your fault God damn it well you
361. 14:24got one I got one that's it he's
362. 14:26blacklisted no more Joe Rogan unless he
363. 14:29wants us on his podcast
364. 14:31no I'm putting my foot down we will not
365. 14:34go on The Joe Rogan Experience
366. 14:37heard he can come on our podcast and
367. 14:39that's that's the only way we're doing
368. 14:41it that's fair all right Joe Rogan's
369. 14:43people you hear that you heard it here
370. 14:45uh so the Stanford International Bank
371. 14:48was an interesting one when it came to
372. 14:51business because most banks make a bulk
373. 14:53of their money through issuing loans uh
374. 14:55Stanford International Bank on the other
375. 14:57hand did not their main asset that they
376. 15:00sold was something called a certificate
377. 15:03of deposit or a CD and not like the CDs
378. 15:06that you were used to buying in the 90s
379. 15:08right
380. 15:10right all right different one yeah this
381. 15:14is no this is no metamorphosis by
382. 15:16Hillary oh my God that was one of my
383. 15:18first CDs it was one of all of our first
384. 15:21cities did you had a copy of
385. 15:22metamorphosis
386. 15:26wow you're don't even [ __ ] know it
387. 15:29it's Let the Rain Fall Down no those are
388. 15:32not the words I wanna scream CD
389. 15:39a CT is basically a high-yield savings
390. 15:42account that comes with a few more
391. 15:44strings attached the most important of
392. 15:47which is that there is a certain amount
393. 15:48of time that you agree to leave your
394. 15:50money in the account until you can take
395. 15:52it out without penalty uh kind of like
396. 15:55how many retirement accounts are set up
397. 15:57uh to not pay out the full amount if you
398. 16:01liquidate them prior to retirement oh my
399. 16:04aunt said that yeah it's a highly
400. 16:07advised against right uh yeah my grandma
401. 16:10was not happy with her when setting up
402. 16:12the CD you get to choose how long you
403. 16:15want to leave your money in and uh the
404. 16:17longer you leave it in the higher your
405. 16:19return on the account will be
406. 16:22Stanford International Bank was not the
407. 16:25only one selling these of course uh as
408. 16:27CDs were and still are offered by almost
409. 16:30all banking institutions uh the
410. 16:33difference was that the rates that
411. 16:34Stanford International Bank was saying
412. 16:36that they would pay to Holders of their
413. 16:38CDs uh was way higher than promised or
414. 16:42way higher than competition they
415. 16:44promised rates well above uh
416. 16:46consistently anywhere between like five
417. 16:49to high seven percent ranges usually on
418. 16:52CDs that were like three to five years
419. 16:55in length uh they did require an initial
420. 16:57investment of a hundred thousand dollars
421. 16:59though that is becoming more and more
422. 17:00popular in these episodes lately what
423. 17:04that you gotta invest like a hundred
424. 17:05thousand dollars supposedly I guess this
425. 17:07this was a normal thing like if they if
426. 17:11they paid higher rates they obviously
427. 17:13wanted you to put more in to begin with
428. 17:15that makes sense and leave it in but but
429. 17:17five to seven percent is uh crazy like
430. 17:21to put that in per into perspective
431. 17:22JPMorgan Chase right now uh probably is
432. 17:26it the biggest bank I think it's the
433. 17:28biggest bank
434. 17:29um right now quotes a fraction of a
435. 17:31percent return point zero five percent
436. 17:34for a 10-year CD
437. 17:36so these rates were astronomical and
438. 17:40obviously would be preferred by clients
439. 17:42if the option was available
440. 17:44they also showed the historical
441. 17:46underlying investment growth uh through
442. 17:49the mid 90s to the mid 2000s when
443. 17:52attempting to recruit Brokers and these
444. 17:55this growth data showed that the
445. 17:57Stanford Investment Bank portfolio
446. 17:59consistently beat the market by 13
447. 18:02percentage points every single year it
448. 18:04was operating
449. 18:06uh because of these figures many Brokers
450. 18:09decided to get on board selling CDs for
451. 18:12Stanford International Bank bringing
452. 18:13most of their existing clients with them
453. 18:16so they were getting a lot of investors
454. 18:18who wanted to buy CDs or who wanted to
455. 18:20invest in general and they also pitched
456. 18:22these like great performance numbers to
457. 18:24Brokers to get them on and bring
458. 18:26everyone with them
459. 18:28um it helped that the Brokers that sold
460. 18:30the CDs made it one percent commission
461. 18:32on sales which is pretty high for things
462. 18:34like this with the opportunity for an
463. 18:36additional one percent commission if
464. 18:38certain criteria if certain criteria
465. 18:40were met
466. 18:42this all meaning that the people selling
467. 18:45them were extremely incentivized to
468. 18:47switch as many of their clients
469. 18:49investment portfolios over to Stanford
470. 18:51International Bank as possible
471. 18:54these Brokers most of the time looked at
472. 18:56the pitch book with the incredible
473. 18:58returns and saw how much money other
474. 19:00Brokers and clients had made and left it
475. 19:02at that but some of them asked a few
476. 19:05more questions
477. 19:06really interested in what kind of
478. 19:09portfolio Stanford and Associates had
479. 19:12put together that could generate these
480. 19:15kind of too good to be true returns and
481. 19:18most of these questions were absolutely
482. 19:19stonewalled by executive management of
483. 19:22the business
484. 19:24they just told them or just told the
485. 19:26Brokers rather that they were encouraged
486. 19:28to state that the investment was just
487. 19:30done smarter at Stanford International
488. 19:32Bank and that is why they could generate
489. 19:36these kind of returns yeah we just do it
490. 19:38smarter yeah and it was like work
491. 19:39smarter not harder that's why we get
492. 19:41these good returns it was a black box
493. 19:42dude dude Allen Stanford it's funny
494. 19:44that's exactly what he did he'd be like
495. 19:46he'd be like
496. 19:50all the time but uh but like no proof
497. 19:52yeah one broker
498. 19:55like started asking so many questions
499. 19:57that they were like we'll fly you out to
500. 20:01Antigua to see our headquarters and he
501. 20:04got there and he talked to like the
502. 20:05branch manager and was like this guy
503. 20:07doesn't know anything about pancake
504. 20:11uh and yeah if you asked they would just
505. 20:14be like
506. 20:15secret they said it was like proprietary
507. 20:17like
508. 20:18we can't tell you
509. 20:21Secret
510. 20:23that's a good marketing strategy anyway
511. 20:26go sell millions of dollars worth of
512. 20:28these
513. 20:29Jesus Christ on the fact that it's
514. 20:31secret
515. 20:33um terrifying they also uh
516. 20:37the oh sorry the Brokers were also told
517. 20:40to say that the Investments were largely
518. 20:42liquid meaning that the money was safe
519. 20:44to be pulled out of CD when CDs were
520. 20:46complete like like it was going to be
521. 20:48easy to get the money back out once it
522. 20:50goes in they're highly liquid assets
523. 20:51that are sold on the market
524. 20:53um additionally when people raise
525. 20:55concerns that Alan could just run away
526. 20:57with their money because you know policy
527. 21:00schemes were happening right now uh they
528. 21:01told clients that the Investments were
529. 21:03oversaw by a 20-person analyst team that
530. 21:06was always looking for better and safer
531. 21:09opportunities additional that's just a
532. 21:11lie well you're gonna find out uh
533. 21:14additionally they noted uh that in
534. 21:17Antigua the regulatory body uh the
535. 21:19financial services regulatory
536. 21:21commissioner the fsrc led by Leroy King
537. 21:24at the time conducted a thorough audit
538. 21:26of the bank's Holdings every year to
539. 21:28ensure that they were worth what
540. 21:31Stanford International Bank was saying
541. 21:33they were worth like we have all these
542. 21:34assets they're worth what they say we
543. 21:37have a governmental regulatory body
544. 21:38behind us that says so
545. 21:41all of this was incredibly appealing and
546. 21:44mostly through CDs at its height the
547. 21:47Stanford Financial Group had about 50
548. 21:49000 individual investors from 140
549. 21:52countries and managed assets of 50
550. 21:55billion dollars damn the bank alone
551. 21:57managed around 8 billion but it was
552. 22:00pretty big for the time still uh but all
553. 22:03of this profit seemed to go straight to
554. 22:06Allen's already large Texan head
555. 22:09everything's bigger in Texas baby
556. 22:11including egos uh another a safeguard of
557. 22:15this however the yin to Allen Sanford's
558. 22:18Yang uh was the appointed CFO Jimmy
559. 22:22Davis Jimmy Davis was the cool-headed
560. 22:25businessman that gave people peace of
561. 22:27mind uh when they worried about Alan
562. 22:31Stanford's bigger than life personality
563. 22:33that was only growing bigger originally
564. 22:36Allen Stanford displayed the outward
565. 22:38Persona of a down-to-earth Small Town
566. 22:41Texas Christian who just happened to
567. 22:43live on a tropical island and manage
568. 22:45billions of dollars in wealth while
569. 22:47simultaneously being a billionaire
570. 22:49however starting in the early 2000s he
571. 22:53started getting wild spending more and
572. 22:56more money on the lavish lifestyle in a
573. 22:58three-year span he spent a hundred
574. 23:00million dollars on Transportation just
575. 23:03on Transportation alone including a
576. 23:06helicopter multiple private jets and he
577. 23:09also spent 12 million dollars extending
578. 23:12his yacht by six feet
579. 23:15is that really Gonna Make a Difference
580. 23:17that's what I'm saying if it's gonna be
581. 23:19that expensive just sell it and buy a
582. 23:22new yacht yeah what the hell like you're
583. 23:25six feet it's just if you would lay on
584. 23:28the edge of the boat like is it gonna
585. 23:29give that much more of a difference it's
586. 23:31literally it's shorter than he is tall
587. 23:34yeah and they added that they were like
588. 23:37well also
589. 23:38what are you put in like a bed I don't
590. 23:41know yeah well I don't have a yacht no
591. 23:44he spent 12 million dollars on it he
592. 23:46also spent so much money in Antigua that
593. 23:50he basically became integral in their
594. 23:53economy through donations and how many
595. 23:56people he employed on the small island
596. 23:58nation that's like that other guy that
597. 24:01we had talked about who went to Costa
598. 24:04Rica
599. 24:05oh the guy who was always on the run oh
600. 24:08yeah yeah like he became so integral to
601. 24:11their economy that they wouldn't let him
602. 24:14go it was only until like he tried to
603. 24:16pull a fast one on them were they like
604. 24:18you gotta go I think the Stanford
605. 24:20International Bank was probably the the
606. 24:22highest valued company in Antigua for
607. 24:26sure oh probably at this time and this
608. 24:28was obviously there were a lot of like
609. 24:30foreign like offshore Banks here but I
610. 24:32think this one was the most popular
611. 24:34and yeah like I said he employed a lot
612. 24:36of people there too so he was just like
613. 24:38yeah he very integral to their society
614. 24:42um he had so much influence that in 2006
615. 24:44he was knighted by the country and could
616. 24:47legally be addressed as Sir Allen
617. 24:49Stanford which people say he liked to
618. 24:52use a lot they're knighting people in
619. 24:55Antigua well I'm pretty they're British
620. 24:57yeah well I think I think they're like
621. 24:59descended from like the British Monarchy
622. 25:02but now separate so they hold a lot of
623. 25:03the same values but I don't know that
624. 25:05for sure I'm not really up to Dane on
625. 25:06Antiguan history knighted but yes he was
626. 25:10knighted in Antigua sir Allen Stanford
627. 25:13um Stanford also used to Proclaim that
628. 25:17God and family came first but it was
629. 25:20around this time that he also divorced
630. 25:23his wife and fathered six children with
631. 25:25four different women over the country
632. 25:27that he's making a lot of families and
633. 25:30putting them all first
634. 25:33but first until we found another one to
635. 25:35make and then well get in line I got a
636. 25:38new family to be first wow he's a he's a
637. 25:40he's like Nick Cannon oh Nick that guy
638. 25:43needs to stop he's a breeding I finally
639. 25:46get a vasectomy no he's not gonna have a
640. 25:48second
641. 25:51like 12 kids I know he's got to stop and
642. 25:54everyone seems cool with it too they're
643. 25:55all like like all of his like baby mamas
644. 25:58are like that's the weirdest part
645. 25:59they're all like
646. 26:01stop you know like maybe maybe that's
647. 26:04what they're doing they're just like I
648. 26:04just want a kid and obviously again it's
649. 26:08very fertile so let's go
650. 26:12um Jimmy Davis the CEO was seen as the
651. 26:15one still in the business uh while
652. 26:19Stanford sewing his uh 40 year old Wild
653. 26:22Oats
654. 26:23um but of course he was also maintaining
655. 26:26multiple Affairs including one with
656. 26:28their Chief investment officer Laura
657. 26:30Pendergast Holt who was put into that
658. 26:33position while not being a certified
659. 26:35public accountant or being certified as
660. 26:37an analyst but what Laura was there to
661. 26:40do was to train all of the Brokers on
662. 26:42how to sell the CDs to potential clients
663. 26:44and put out many of the pitch books with
664. 26:47their past earnings in them she was the
665. 26:48one who developed those and she was like
666. 26:51um Jimmy Davis's Protege who was also
667. 26:53sleeping with him
668. 26:54um and she like never went to school for
669. 26:56any of it and they made her their Chief
670. 26:58investment officer was that so was
671. 27:01did they say what the purpose was behind
672. 27:03that because like a real Chief
673. 27:04investment officer would like not be
674. 27:06okay with this
675. 27:08I think most people would be like why
676. 27:10would you make your Chief investment
677. 27:12officer someone who has absolutely no
678. 27:13background no but I'm saying like for
679. 27:15her to do the CDs and stuff like for her
680. 27:17to sell these she's actually not
681. 27:18qualified in this so she's like oh I
682. 27:20don't care whereas a person who would be
683. 27:22qualified and this would be like hey
684. 27:23it's against my moral judgment to do
685. 27:25this yeah I mean that's fair totally I
686. 27:27don't even we haven't even gotten into
687. 27:29the illegal stuff yet but but it's
688. 27:31coming don't worry uh so with Alan
689. 27:34Stanford on the decline both in the
690. 27:36office and at home and surrounded by
691. 27:39Executives that seem to be equally
692. 27:41unqualified and debaterous as he do you
693. 27:44think that the two could to be true
694. 27:48Returns on the CDs were simply because
695. 27:50they invested smarter than everyone else
696. 27:54no yeah it turns out no Alan Stanford
697. 27:57always said that much of the money
698. 27:58invested went into proprietary in secret
699. 28:00portfolios but where it really went was
700. 28:03right into the pockets of the executives
701. 28:06it turns out that around nine percent of
702. 28:09the money invested was in cash
703. 28:11or cash-like equivalents around 10
704. 28:14percent was invested through outside
705. 28:16money managers into portfolios that were
706. 28:18not fully selected or influenced by
707. 28:20Stanford International Bank and 81 of
708. 28:24the money was overseen by Stanford and
709. 28:27Davis themselves with almost no other
710. 28:30input from anyone else
711. 28:33out of the 8 billion dollars said to be
712. 28:35invested in CDs in 2009 4.3 billion was
713. 28:40held in real estate and unsecured loans
714. 28:42to Stanford himself awesome so over half
715. 28:46and remember uh when they said that most
716. 28:48of the money was liquid and easily
717. 28:50movable and in Market
718. 28:52Securities that's already a lie it's
719. 28:55mostly in real estate and in loans to
720. 28:57the CEO ah nice well real estate like I
721. 29:01said not liquid at all additionally uh
722. 29:04an SEC investigation showed that the
723. 29:06real estate assets held by Stanford
724. 29:08International Bank were also falsely
725. 29:10inflated
726. 29:12uh their values were falsely inflated
727. 29:14through something called round tripping
728. 29:16basically another Stanford company would
729. 29:20buy the asset from Stanford
730. 29:21International Bank and then sell it back
731. 29:23to them at a ridiculously inflated price
732. 29:25to artificially add zeros to the balance
733. 29:28sheet say well we bought this asset for
734. 29:29this amount here's what it's worth but
735. 29:31they had already owned it
736. 29:33previously they just sell it to someone
737. 29:36else for a for a price and then buy it
738. 29:38back at like
739. 29:39a lot more uh one property alone had its
740. 29:43value raised from around 50 million
741. 29:45dollars to two billion dollars by this
742. 29:48method what kind of property is this
743. 29:51oh it was it was uh property in Antigua
744. 29:56and I I don't know it just said Island
745. 29:58properties that sounds like all the
746. 30:00buildings in that Island would be two
747. 30:01billion dollars yeah well the thing is
748. 30:03it's not worth two billion dollars yeah
749. 30:05but that's how much they could say it
750. 30:07was worth when they said well we have
751. 30:09two billion dollars of assets that's
752. 30:10where all your money went was buying
753. 30:12this
754. 30:13but it was just a lie um over one
755. 30:16billion dollars I think was 1.3 billion
756. 30:19dollars was in personal loans to Alan
757. 30:21Stanford and they were these unsecured
758. 30:23like loan slips that can be ridden on
759. 30:26the books also as an asset like oh we're
760. 30:29gonna get this money back how did they
761. 30:31when it collapse
762. 30:34well they went on for 17 years damn
763. 30:38um and that was in this money is what
764. 30:40was going to fund his private jet
765. 30:42addiction and also Cricket tournaments
766. 30:45which a little aside I don't go much
767. 30:46into this uh but Alan Stanford was a
768. 30:49huge cricket fan and funded tournaments
769. 30:51all across the world and there's
770. 30:53actually a documentary about him uh
771. 30:55that's more focused on this aspect
772. 30:57called the man who bought cricket
773. 31:00so if you're really into cricket and
774. 31:01that's why you clicked on this you can
775. 31:03go see that because we're not going to
776. 31:05talk about it I didn't even know people
777. 31:07still played that sport yeah because
778. 31:08this is the fourth of July and this is
779. 31:10America baby and we don't talk about
780. 31:12Cricket on this podcast no we do not we
781. 31:14talk about the American cricket baseball
782. 31:16that's right
783. 31:19just like how the American Freedom Ring
784. 31:21[ __ ] the American tea is coffee and the
785. 31:25American uh Pastime is having a dentist
786. 31:27those are three main differences from
787. 31:30Britain yeah uh the SEC in their
788. 31:34complaint filed after a early 2009 raid
789. 31:36of the Stanford offices alleges that
790. 31:38almost no money was made from actual
791. 31:40Investments and rather the money coming
792. 31:43in from new CD purchasers was used to
793. 31:46pay off the interest on the old ones
794. 31:48making this a Ponzi scheme that operated
795. 31:51for 17 years and separated people from
796. 31:54over 7 billion dollars by their
797. 31:57deception
798. 31:59um all of the graphs and Pitch book
799. 32:01numbers that were used to get Brokers
800. 32:03and clients on board had been knowingly
801. 32:06falsified by Executives with Jimmy Davis
802. 32:09admitting that his entire job was to
803. 32:12make up numbers awesome
804. 32:14um the 20-person analyst team
805. 32:17had been a complete lie as you astutely
806. 32:20noticed
807. 32:22um as the assets were only truly known
808. 32:24by Davis and Stanford and the country of
809. 32:27Antigua had obviously failed its duties
810. 32:30to audit the company completely they're
811. 32:33probably scared well it turns out
812. 32:36that last one was not just sheer
813. 32:38incompetence or fear however as it turns
814. 32:42out Stanford over the course of years
815. 32:44had paid over one hundred thousand
816. 32:46dollars to Leroy king the head of the
817. 32:49fsrc that insured the company would
818. 32:52never get audited to its full extent
819. 32:56and when the SEC asked the Antiguan
820. 32:59regulator for documents related to
821. 33:01Stanford International Bank he actually
822. 33:03denied their request saying it would be
823. 33:06unlawful for the fsrc to disclose such
824. 33:08information to a foreign body a
825. 33:11statement that was later proven to be
826. 33:13false
827. 33:14King then immediately tipped off
828. 33:16Stanford that the SEC was investigating
829. 33:19him and they had thought something was
830. 33:22up at the company since at least 1997.
831. 33:25oh [ __ ] that's when they started
832. 33:26investigating that was in 1997 all the
833. 33:28way up until the raid in 2009.
834. 33:31um
835. 33:32and this all came to light in 2009
836. 33:35largely because of the 2008 financial
837. 33:37crisis as we have seen multiple times
838. 33:40before all of the criminals get exposed
839. 33:43as soon as the good times run out the
840. 33:45Stanford International Bank reported
841. 33:47that they had only taken a 1.3 percent
842. 33:49loss in 2008 which you might say they
843. 33:52even reported a loss well other
844. 33:54financial institutions including the Dow
845. 33:56Jones Lost around 40 percent that year
846. 33:59um so that was kind of sketchy and they
847. 34:01were like hey we only lost 1.3 yeah
848. 34:04um
849. 34:05additionally they denied any losses
850. 34:08either directly or indirectly linked to
851. 34:10the Bernie Madoff Scandal which had come
852. 34:12to light also that year in 2008
853. 34:15um
854. 34:15although it would be revealed that they
855. 34:17actually lost about four hundred
856. 34:19thousand dollars from their 10 percent
857. 34:21of the assets that were actually
858. 34:22invested
859. 34:23so they also lost money there
860. 34:27um this caused a lot of people to try to
861. 34:28withdraw their money from the CDs even
862. 34:31before they had ended
863. 34:33um which was met with Stanford
864. 34:35International Bank trying to liquidate
865. 34:36assets quickly but not quick enough the
866. 34:39SEC after a lengthy investigation rated
867. 34:41the business in January of 2009 and
868. 34:44slapped civil charges on Stanford and
869. 34:46Associates that would then morph into
870. 34:48criminal charges handed down by the
871. 34:50Department of Justice indictment just a
872. 34:52few months later causing all of the
873. 34:54companies owned and managed by Stanford
874. 34:56to become insolvent
875. 34:58and I guess uh he got tipped off that
876. 35:01they were going to arrest him and he was
877. 35:02in America at the time so he was like
878. 35:04[ __ ] I gotta get out of here so he
879. 35:07contacted a private jet company and was
880. 35:09like Hey get me out of here and he
881. 35:12wasn't charged with a crime or anything
882. 35:13yet so he could have left
883. 35:15but they wouldn't accept a credit card
884. 35:16only a wire transfer and at this time
885. 35:20wire transfers between Stanford
886. 35:23International Bank and all of his
887. 35:24companies had been frozen by processing
888. 35:26companies because they were already like
889. 35:30they had done it before the SEC stuff
890. 35:32came out because they were like this
891. 35:34can't be true like they kept seeing
892. 35:35their numbers and finally were like when
893. 35:37they saw the loss for like 2008 they're
894. 35:39like can't be true right and that's what
895. 35:41you get for being an idiot yeah man so
896. 35:43you're gonna get out he got arrested he
897. 35:45went to jail by the way also lost the
898. 35:47Knighthood he was stripped of he was
899. 35:49strict of his Knighthood of the title
900. 35:51absurd when you lose your Knighthood
901. 35:54they cut off your balls
902. 35:56they don't make you a eunuch yeah they
903. 35:58do
904. 36:00do you know nothing about history
905. 36:02I don't know I don't know about the
906. 36:04cutting the balls off
907. 36:06I feel like you have a history book
908. 36:07that's just about cutting balls off
909. 36:09somewhere in your house I do so I know
910. 36:11how to castrate well and it's it's bound
911. 36:13completely in testicle skin oh yeah
912. 36:15absolutely oh great I'll have to see it
913. 36:17sometimes I stretched it myself
914. 36:18disgusting uh everyone except Stanford
915. 36:21pleaded guilty almost immediately to the
916. 36:24charges but Alice Stanford had one more
917. 36:27trick up his sleeve he pled not guilty
918. 36:29knowing that he had some
919. 36:31friends in the SEC just like he had a
920. 36:35friend in the antiquin regulator
921. 36:37regulation regulating body there we go
922. 36:41um one of these friends actually
923. 36:43released a report that the SEC had made
924. 36:46a mistake in their claims leveled at
925. 36:48Stanford but the chief investigator at
926. 36:51the SEC was questioning of this report
927. 36:53and hired a third-party external review
928. 36:56of the commission's findings which
929. 36:59supported their original claims of a
930. 37:01large-scale fraud and actually was the
931. 37:03one who came up with the number of set
932. 37:04over seven billion dollars because the
933. 37:06SEC didn't even have that before
934. 37:08King
935. 37:10uh Davis and Pendergast Holt and other
936. 37:13accountants who helped perpetuate the
937. 37:15fraud were sentenced to anywhere between
938. 37:173 to 20 years in prison for the crimes
939. 37:21including additional charges for
940. 37:22obstructing justice as they had all made
941. 37:25false statements to the SEC during the
942. 37:27original investigation and also
943. 37:28conspired to make false statements that
944. 37:30they like discovered emails or they were
945. 37:32like Laura you're going to say this
946. 37:34stuff to the SEC and you're gonna lie
947. 37:37um which by the way a little sidebar
948. 37:39Laura Pendergast Holt as far as I could
949. 37:42tell did the same crimes as everyone
950. 37:43else and they only gave her three years
951. 37:45and I was like
952. 37:47come on man what the [ __ ] like the other
953. 37:49three got 20 years well King got 10 so
954. 37:52the regulator got only 10 years and then
955. 37:54the other two accountants got 20 years
956. 37:57and she only got three she got three and
957. 38:00then supervised released for three years
958. 38:02after that it's still not that long yeah
959. 38:04I was like that's weird I I didn't see a
960. 38:07good reason why like she she wasn't even
961. 38:08like the main informant or anything oh
962. 38:11you feel like she should have gotten
963. 38:12less no she should have gotten more oh
964. 38:13yeah 20 years she should have got more
965. 38:16so no that's what I think I don't know
966. 38:19but I just wanted to bring it up because
967. 38:20it was unfair but because Alan Stanford
968. 38:24pleaded not guilty and over 400 Victim
969. 38:28Impact letters were submitted detailing
970. 38:31how normal people lost their entire life
971. 38:34savings because of the collapse of the
972. 38:35bank in 2012
973. 38:38he was sentenced to 110 years behind
974. 38:42bars and a money injunction of 5.3
975. 38:45billion dollars damn which is second
976. 38:48only to Bernie madoff's 150 year
977. 38:51sentence for his Ponzi scheme
978. 38:54so 2009 great year great year for
979. 38:58justice in in white color cry because
980. 39:00they actually handed out sentences you
981. 39:01know yes
982. 39:03um he remains obviously in prison to
983. 39:05this day at the age of 78 with the only
984. 39:08other notable thing happening to him
985. 39:10being that he was once severely beaten
986. 39:12by his cellmate
987. 39:14um
988. 39:15and although his injuries uh were severe
989. 39:19they were not life-threatening there
990. 39:22were pictures too I saw those yeah you
991. 39:24got beat up he did he got beat up pretty
992. 39:26bad he got Peter bring good and he's uh
993. 39:28he's a big guy too that's why I was like
994. 39:29who beat this guy up
995. 39:32the other big guy the other big
996. 39:35good idea
997. 39:37um so today we had the story of a Ponzi
998. 39:41scheme but on an absolutely otherworldly
999. 39:44level orchestrated through a corporate
1000. 39:46network of Banks and finance groups that
1001. 39:48spanned the entire world but at its
1002. 39:51heart it is the same as all others
1003. 39:54before it although Stanford
1004. 39:56International Bank held some tangible
1005. 39:57assets it was almost entirely smoke and
1006. 40:00mirrors with people's entire jobs being
1007. 40:02to make up figures to deceive others to
1008. 40:05get more investors to pay off the old
1009. 40:08Alan Stanford became corrupted by greed
1010. 40:11and the desire for six more feet on his
1011. 40:14yacht led him to defraud thousands of
1012. 40:17grandmas out of their safe retirement
1013. 40:19additionally he left a lasting impact
1014. 40:22upon the entire nation of Antigua which
1015. 40:24without his influence and employment
1016. 40:26felt a noticeable recession in their
1017. 40:28economy after the collapse of Stanford
1018. 40:30International Bank
1019. 40:31and who knows
1020. 40:33maybe when he gets out at the right bold
1021. 40:35age of 156 he can try to open up another
1022. 40:39gym although my bet is that he spends
1023. 40:43the rest of his days behind bars and may
1024. 40:45his case be a warning for all such
1025. 40:47fraudsters in existence today
1026. 40:49I'm looking at you Elon Musk you see
1027. 40:51they're doing that boxing match yeah
1028. 40:53Elon Musk and Mark Zuckerberg if that
1029. 40:55happens I I'll suck both their dicks
1030. 40:58personally I don't think that I don't
1031. 41:00think they're gonna fight I don't think
1032. 41:01they will either I was gonna say him
1033. 41:03leaving the country of Antigua it
1034. 41:05probably really did screw over so many
1035. 41:07residents of Antigua because it's like
1036. 41:09the fire Festival when they employed all
1037. 41:11those people and then didn't pay them
1038. 41:13like those economies depend on those
1039. 41:15people and it's really shitty when they
1040. 41:18screw everybody over yeah such a big
1041. 41:20company too you want to talk about like
1042. 41:21too big to fail if this was an American
1043. 41:23Bank they would have gave him a slap on
1044. 41:24the wrist and not arrested anyone
1045. 41:25because they would be too afraid about
1046. 41:27what it would do to the American economy
1047. 41:29yep
1048. 41:30but they're like fine ruining another
1049. 41:32one yeah and I'm not saying what he was
1050. 41:35like I'm not saying that he shouldn't
1051. 41:37have gotten in trouble however no I well
1052. 41:39here's the thing I think that like
1053. 41:40taking down the bank is the right thing
1054. 41:42to do because it's not our fault now
1055. 41:44it's his fault for causing for running a
1056. 41:46fraud that lasted almost two decades
1057. 41:49and taking all these people's money and
1058. 41:52then buying mansions and [ __ ] with it
1059. 41:54yeah you know and having that stupid
1060. 41:57little mustache he has stupid little
1061. 41:59mustard you know just like bad choices
1062. 42:01all around for this guy I agree that's
1063. 42:03all I'm gonna say and yeah he [ __ ]
1064. 42:06over he [ __ ] over an island nation he
1065. 42:08[ __ ] over a bunch of old people here
1066. 42:10and uh he [ __ ]
1067. 42:12over six baby mamas he did oh sorry four
1068. 42:17baby mamas six children still plus his
1069. 42:19original kids I don't know how many he
1070. 42:21had
1071. 42:22I don't know wow it's a lot of kids
1072. 42:28Christians am I right my family's
1073. 42:31Christian and they are not that fertile
1074. 42:32am I right well I'll tell Betty to get
1075. 42:35better eggs
1076. 42:38I'm not gonna talk about that that would
1077. 42:39make her so sad
1078. 42:41why does she want more kids she had two
1079. 42:43she wanted three
1080. 42:46okay
1081. 42:47she's got two I know some people get
1082. 42:49zero it's true you know right Betty
1083. 42:52count your blessings
1084. 42:55anyway thanks this is a touchy subject
1085. 42:57well she's not listen to the podcast I
1086. 43:00hope not oh my God you give her a heart
1087. 43:01attack really I don't think she's
1088. 43:03listening heart attack
1089. 43:04um and if we gave you a a good heart
1090. 43:07attack
1091. 43:09we made your heart skip a beat your
1092. 43:12heart race if we give you a hard time
1093. 43:15ha ha
1094. 43:17then go ahead and
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1111. 43:57um you can also email us if you have any
1112. 43:59suggestions uh that we do have a fan
1113. 44:01submitted episode this week it's going
1114. 44:03to be our finale like we've said before
1115. 44:04so if you want to
1116. 44:06this season not this week this season
1117. 44:09sorry yes it's not the finale all right
1118. 44:12it's not not yet we're only three
1119. 44:13episodes deep it's only episode three we
1120. 44:15gotta we got a few more to go um but you
1121. 44:17can send suggestions to white collars
1122. 44:19redhands gmail.com uh or you can drop us
1123. 44:22a line at our website why
1124. 44:23collegeredhands.com through the contact
1125. 44:25us page uh that's on the very front and
1126. 44:27hey while you're there you might as well
1127. 44:29check out the merch at T public the link
1128. 44:31to that's in the show description or if
1129. 44:32you're on that website you can just uh
1130. 44:34click the button that says check out our
1131. 44:35merch it'll take you straight to the the
1132. 44:38store Page you can buy a sweater or a
1133. 44:41coffee mug t-shirt or a laptop case or a
1134. 44:46sticker
1135. 44:47sticker I hardly know her
1136. 44:52um so you can do all that and the best
1137. 44:53thing you can do tell a friend you have
1138. 44:56friends right you're a cool person
1139. 44:59you're listening to pocket you gotta
1140. 45:00have friends oh yeah so tell all of them
1141. 45:02be incessant about them say it so much
1142. 45:04that you stop having friends all right
1143. 45:06and we'll we'll love you forever
1144. 45:08and I think that's I think that about
1145. 45:11does it just about it so thank you so
1146. 45:12much for listening to this week's
1147. 45:14episode and we'll see you next week for
1148. 45:16another episode of white collars red
1149. 45:19hands
1150. 45:21[Music]
1151. 45:33thank you
1152. 45:39[Music]