Sunday, July 05, 2009

R. Allen Stanford and Miami-based Greenberg Traurig: why is it always Greenberg Traurig? by gimleteye

In the 1990's, Greenberg Traurig's behind-the-scences influence as a lobbyist in Miami zoning and permitting decisions began to attract my interest. The firm, for instance, was the key organizing force for the Homestead Air Force Base fiasco. Whenever a zoning decision involving South Dade was on the county commission agenda, founding partner Bob Traurig was in the audience and frequently on behalf of converting farmland to sprawl. Environmental land use attorney, MIguel De Grandy-- formerly of Greenberg-- remains an influential player in county politics, mainly related to zoning and also an advisor to the unreformable majority of the county commission. Both Marvin Rosen and Jack Abramoff represented Greenberg Traurig, as well.

Today's Miami Herald runs an excellent story on R. Allen Stanford-- charged with multi-billion fraud-- and a new angle: the stage was set for Stanford's multi-billion fraud in 1998, the year Stanford persuaded Florida banking regulators to grant his company special rights to open a Miami office outside the scrutiny of federal banking regulators. In this unique instance, Sanford was represented by Greenberg Traurig. "There was no lawful way that office should have been opened,'' said Richard Donelan, the state's chief banking counsel who opposed the deal."

On Eyeonmiami, I've written a lot about 1998, the year Jeb Bush was elected governor of Florida. That year and that election set the stage for the the biggest boom in housing and construction in Florida history, now in ruins. Jeb won in South Florida, and primarily through the coordination of his base constituency-- builders and developers-- and as a result, Miami is the epicenter of the housing bust. This is the place the gears of the machine all lined up to mesh Wall Street financial motive with political levers at the most intricate level of decision making, from state authority to local zoning allowing unsustainable growth. The boom, based on unsustainable foundations and fraud, destroyed South Florida's quality of life and environment, minting millionaires through the reciprocal arrangements of campaign contributions and politicians. And Greenberg Traurig attorneys seem to pop up everywhere.

Stanford obtained authority to do offshore banking-- an exclusive arrangement-- with the help of Greenberg Traurig lobbyists from a Democratic administration in Tallahassee during the 1998 campaign for governor. Stanford does not begin to show up, according to a brief and cursory review of campaign contribution lists, as a prolific political donor until 2000. His contributions appear to be weighted to Democrats. Whose chains did Greenberg Traurig help to pull, during 1998, for Stanford in Tallahassee?

It is part of the story that the Herald might have considered more carefully. There was a huge amount of political pushing and pulling in 1998. Although Bill Clinton had won Florida in 1996, Lieutenant Gov. Buddy McKay, who served out the term of the late Gov. Lawton Chiles, lagged Bush badly in the polls.

"Earlier, (Stanford) went to Miami attorney Bowman Brown, who said he declined to represent Stanford. A longtime banking lawyer, Brown said there were several elements that didn't seem right about Stanford's plan. ''He wanted to set up an office in Miami to serve a business operation in the Caribbean,'' said Brown. "The idea was to attract a Latin American clientele as a platform to sell securities.'' But Brown said Stanford "was not interested in undergoing any substantive banking regulations or submitting to government examiners.''... Brown said. By the time the state approved the trust office in December 1998, Stanford was already hawking his top product: certificates of deposit."

Could McKay Democrats, who were fish out of water when it came to understanding the Hispanic politics of South Florida, have been persuaded by Greenberg Traurig to help Stanford, based on their near perfect understanding of local politics? It is a key point avoided in the Herald story and a question the Herald should pursue.

Posted on Sat, Jul. 04, 2009
State aided suspect in huge swindle


Years before his banking empire was shut down in a massive fraud case, Allen Stanford swept into Florida with a bold plan: entice Latin Americans to pour millions into his ventures -- in secrecy.
From a bayfront office in Miami in 1998, he planned to sell investments to customers and send their money to Antigua.

But to pull it off, he needed unprecedented help from an unlikely ally: The state of Florida would have to grant him the right to move vast amounts of money offshore -- without reporting a penny to regulators.

He got it.

Over objections by the state's chief banking lawyer -- including concerns that Stanford was laundering money -- regulators granted sweeping powers never given to a private company.

The new company was also allowed to sell hundreds of millions in bank notes without allowing regulators to check for fraud.

Over the next decade, the Miami office was among Stanford's busiest in the sale of controversial investments now at the heart of the federal government's sweeping fraud case against Stanford and his lieutenants.

''There was no lawful way that office should have been opened,'' said Richard Donelan, the state's chief banking counsel who opposed the deal.

Donelan said he argued that the Stanford plan violated state law, and that there were concerns about money laundering in the Caribbean and ``whether Stanford's bank was in conformance with the law.''


Represented by a powerful Florida law firm, Stanford got approval to create the first company of its kind: a foreign trust office that could bypass regulators, according to records obtained by The Miami Herald.

The Florida banking director who signed the agreement, Art Simon, now admits he made a mistake.

``Upon reflection, would I have liked to have done it differently? Would I have liked to stop them from doing what they currently did? Yes, of course.''

The state's decision allowed Stanford to expand his banking network by offering his prize investments -- certificates of deposit -- without reporting the purchases, according to state and court records.

In the first six years, the office -- known as Stanford Fiduciary Investor Services -- took in $600 million from customers, state records show.

Now, with Stanford indicted on sweeping fraud charges last month, the Miami office poses serious challenges for federal agents trying to find assets from the demise of his vast banking fortune, legal experts say.

In all, prosecutors say Stanford diverted nearly $7 billion from customers who purchased his CDs, long touted for their high returns.

Some of the millions went to support Stanford's lavish lifestyle, including private jets, expensive cars and mansions, including a $10.5 million home in Gables Estates that he has since torn down, records show.

Investors who flocked to the luxury offices on the 21st floor of the Miami Center to buy the CDs are clamoring for their money, saying they were fleeced of millions.

''It's not fair that so much money has gone down the drain,'' said Margie Morinaga, whose 84-year-old father lost $400,000.

Former customers are sending letters to the court receiver, pleading for help; others are angrily organizing to press for the recovery of their money.

At least 2,100 customer accounts were set up at the Miami office in the first six years, state records show.

Unlike other Stanford companies around the country, the Miami office was exempt from reporting the amounts of money sent overseas -- bypassing anti-laundering laws.

In fact, employees shredded records of the trust agreements and CD purchases once the original documents were sent to Antigua, state records show.


For years, the high-rise offices -- adorned with marble floors, Oriental rugs and expensive artwork -- provided privacy for investors, but few protections.

Because trust officers weren't required to keep records, investigators will have to rely on investors and the Antiguan bank to trace the money that moved through the office, say lawyers for customers.

Officials for the Florida Office of Financial Regulation are now reviewing the decision made a decade ago, but they refuse to comment.

''All I can tell you is that there was no one that specifically regulated the office,'' said Linda Charity, director of the state's Division of Financial Institutions.

Simon, the Florida banking director who approved the agreement, says he should have banned the office from handling money.

''It raised serious questions in my mind after the fact as to whether we should have had tighter provisions,'' said Simon, a former state representative who helped draft much of Florida's modern banking legislation.

The office was only supposed to provide information for people interested in the offshore trust's services -- not offer CDs and accept money, he said.

But in clear language, the agreement reached between Stanford and state regulators allows money to flow to and from the center.

Simon, 63, now retired from state government, said he didn't recall the language until he was e-mailed a copy by The Miami Herald.

But several lawyers who reviewed the documents for The Herald said much of the responsibility rests with Simon. ''In this case, he was responsible for having an effective system of enforcement,'' said Jeffrey Sonn, a Fort Lauderdale securities attorney. ``The state didn't do the kind of reviews it needed to do.''

Miami banking lawyer Jose Sirven said the state may have been able to approve the office, but questioned the state's decison to let employees transfer money.

Donelan, the state's chief banking counsel, said he did not believe Stanford had the right to open the satellite office in the first place.

``It was not an American financial institution. I had expressed that opinion. There was no regulation. It was as if they had an office that could be selling shoes or ice cream.''


Now an attorney with Florida's Department of Financial Services, Donelan, 58, said he had other worries. ``There were regulatory issues about the role that Mr. Stanford was playing as far as the circulation of money in the Caribbean.''

Seven years earlier, Stanford had run into problems while owning a bank on the Island of Montserrat, voluntarily giving up his license during a British money laundering investigation.

But during negotiations with the state, lawyers for Stanford argued there was nothing in Florida law that banned the kind of company Stanford wanted to create.

They also said the new company would abide by an agreement with the state, including the right to transfer money for clients, but not operate as a bank.

The agreement also barred employees from giving financial advice to customers.

Carlos Loumiet, a former Greenberg Traurig lawyer who helped draft the deal, declined to comment, citing ethical concerns.

In the end, the Miami company was allowed to open under a unique category: a foreign trust representative office -- the only one in Florida.

While the state allows out-of-state trust companies to set up satellite offices in Florida -- catering to snow birds loyal to their hometown banks -- there are no provisions in Florida law for similar foreign offices.

Stanford's negotiation with the state wasn't the first time the flamboyant tycoon tried to open a local office to serve his offshore venture.

Earlier, he went to Miami attorney Bowman Brown, who said he declined to represent Stanford. A longtime banking lawyer, Brown said there were several elements that didn't seem right about Stanford's plan.

''He wanted to set up an office in Miami to serve a business operation in the Caribbean,'' said Brown. ``The idea was to attract a Latin American clientele as a platform to sell securities.''

But Brown said Stanford ``was not interested in undergoing any substantive banking regulations or submitting to government examiners.''

At the time, the Caribbean basin had a ''bad reputation as a pirate banking jurisdiction, and I just wasn't interested in taking part in this,'' Brown said.


By the time the state approved the trust office in December 1998, Stanford was already hawking his top product: certificates of deposit.

One of the attractions of the CDs were the competitively higher yields than other banks -- often by two points.

The Miami office was a big draw for foreigners jetting to Miami, said Charles Hazlett, a stockbroker who worked for another Stanford firm -- a brokerage -- on the same floor.

''The trust office was one of the busiest in the Stanford operation,'' said Hazlett. ``Compared to us, they were a big office, 30 to 40 people, everyone selling CDs.''

Hazlett said the Stanford stockbrokers were also pushed to sell the company's signature product.

Rosa Mejia says word of the Miami office spread throughout the hemisphere. She recalls escorting her father to the Miami office four years ago.

Their trust representative, Saraminta Perez, offered a five-year, $300,000 CD at higher returns than most banks, said Mejia.

Her father, 69, a retired banker from the Dominican Republic, signed a trust agreement and a check. The money was to go to Stanford's bank in Antigua, which issued the CDs.

''We thought the money would be safe,'' Mejia said.

Perez referred questions to her lawyer, saying her career was cut short by Stanford's collapse.

Miami attorney Jeffrey Tew said trust officers didn't know money for the CDs was allegedly being stolen by Stanford and others. ''There were people [in the Miami trust office] managing $100-million-dollar portfolios,'' he said. ``They thought they were helping their clients.''

However, Hazlett says he raised concerns in 2002 about the legitimacy of the CDs with the Miami office's executive director, Nelson Ramirez.

''I remember very clearly saying the math didn't add up, that I needed more information on the background of these CDs,'' said Hazlett, who pressed the issue with Stanford supervisors during a compensation suit in 2004.

Ramirez, who left Stanford three years later, did not return phone messages.

Ultimately, Hazlett said he was given information about the Antiguan bank's investments -- the foundation of the CDs -- but the data was so minimal ''it made me even more suspicious,'' he said.

Federal agents now say the bank's investments were vastly overvalued and, in many cases, fabricated.

After the Miami trust office was created, Stanford lawyers approached Texas to open a similar office there. In 2001, the state agreed, but with a key difference: The Texas office wasn't permitted to handle money.

''Basically, all they could do was market,'' said Deborah Loomis, assistant general counsel for the Texas Department of Banking.

But the Miami office was busy taking in money from customers -- and growing, from 18 employees in 2001 to 46 by 2005.


While the state agreement barred the office from giving financial advice to clients, several experts said the state should have been monitoring the sale of Stanford's CDs.

''I can tell you that CDs are securities and are supposed to be regulated,'' said Sonn, a securities attorney.

Sonn also cautioned the high yields offered by Stanford's CDs were ''huge red flags'' that should have prompted state investigators to challenge claims the products were rooted in legitimate investments.

Andrew Stoltmann, an adjunct professor of securities at Northwestern University, said the state failed by not performing routine examinations.

''You have to put yourself in a position to at least try to catch people committing fraud,'' said Stoltmann, who practices securities law in Chicago.

Records show that state examiners visited the office three times over the past 10 years, but only to ensure that the 1998 agreement was kept.

During one of those visits in 2001, state agents noted that office employees routinely would send purchase records to Antigua and then destroy the local documents.

It wasn't until February that the office was finally shut down -- along with Stanford's bank network -- when the U.S. Securities and Exchange Commission filed fraud charges against Stanford and his top officers.

The office furnishings, including cherry-wood desks and company credenza, are now for sale.

Rosa Mejia, whose father lost $400,000 in worthless CDs from the Miami office, said investors were impressed by the staff and offices on the 21st floor. ''Everything was first class,'' she said. ``We thought our money was safe.''

© 2009 Miami Herald Media Company. All Rights Reserved.


youbetcha' said...

Blogger youbetcha' said...

Once upon a time, there was a young reporter at the Miami Herald. Once upon a time, this young reporter was leaving the paper and heading out to the West Coast to seek greener pastures...

Being infinitely wise beyond his youthful years, as he left Miami, he sent me a package with one of his most valuable books and a message --- the book was the Florida Ethics Code Guide book and the message was short, but long on meaning.

He said three things in his note:

1. Keep the book, you will need it.

2. Trust NO one.

And finally he said:

3. Every time you start to think fondly of Joe and Juan at Greenberg Traurig, hop in your car and drive down Kendall Drive and remember how it got that way. Put things back into perspective.

I lost touch with that young reporter. I am sure that he does not realize the impact he made on my life. He probably doesn't even recall the note or me. But, he was spot-on with all three comments. He knew where Miami was heading years before I picked up on it and warned me. He had been in the belly of The Beast and got out.

It makes me sad that in retrospect, maybe I could have done more to help make Dade County a better place to live when it was do-able. However, I am thankful, that I have had Angels on my shoulder over the years such this young man who touched my life in an important way.

And yes, I drive through Kendall, down Kendall Drive, cursing all the way.

Anonymous said...

The reason Allen Stanford was able to get Greenberg Traurig to represent Stanford Financial Group ("SFG") was because Yolanda Suarez was recruited by Allen from that law firm. She became General Counsel for SFG in the 90's and then became Chief of Staff. Mauricio Alvarado was hired to replace her. Ms. Suarez and Carlos Loumiet were very close friends and she relied heavily on him, and Greenberg Traurig, for legal advice and guidance. If it wasn't for Ms. Suarez's influence and ties with her former law firm, many things would not have gotten done the way Allen wanted.

Anonymous said...


Greenberg Traurig could have taught Sanford how to do banking legally. Instead Greenberg aledgedly aided and abetted...a massive ponzi scheme.

Greenberg is the law firm for Jorge Perez...

Eliot Bernstein / Iviewit / Patentgate said...

To those asking what happened to the auditor at Stanford, he was found dead, perhaps Stanford et al. including their lawyers Proskauer and Thomas Sjoblom should be investigated for murder as well.
Another Stanford Group associate died without much notice in January
By Wayne Madsen
Online Journal Contributing Writer Mar 5, 2009, 00:19(WMR) On February 27, WMR reported on the death in January of this year of Charlesworth Shelley Hewlett, the accountant who audited the books of Stanford International Bank from a small office between fish and chips shops in north London. Hewlett was 73 and his lawyers said only that he died “peacefully.” WMR has learned from a state government source in the United States that Hewlett’s death was “unusual,” however, little more is known about the circumstances of Hewlett’s death
Thomas Sjoblom of Proskauer Rose is pointed to in both the SEC and FBI filings as the man behind the scenes, directing employees to lie to the SEC re the financial condition of the companies. Why was Proskauer and Sjoblom not directly named by the FBI and SEC to give the victims full disclosure of how the scheme was worked with the SEC former enforcement dude Sjoblom. Holt has sued Proskauer and Sjoblom but why has the receiver not seized their assets and firm, how can the firm continue to operate with liability insurance unless their carrier is unaware and Proskauer failed to notify them of their integral part and massive pending liabilities??? The FBI and SEC investigators should formally charge Proskauer and the victims should demand Proskauer to fully disclose their role in ripping off their money.

Eliot Bernstein / Iviewit / Patentgate said...

Investors who have been burned in these scams should start to seek redress from the lawyers who were involved. I personally have been trying to notify regulators and authorities of a ONE TRILLION DOLLAR+ scam that is putting states like New York and Florida at huge risk, as well as, companies like Intel, Lockheed, SGI and IBM. The states and companies involved in the fraud fail to acknowledge the risk exposing shareholders and citizens to impending massive liabilities. Investigators, courts and federal agents all ignoring the crimes and evidence, including a car-bombing attempt on my life while patents are suspended at the US Patent Office pending investigation of law firms for FRAUD ON THE US Patent Office. I know how Harry Markopolos felt trying to expose Madoff in a world without regulations or regulators, the fox in the henhouse.

Did I hear Proskauer Rose is involved in Madoff (involved many clients too) and acted as Allen Stanford’s attorney? Investors who lost money in these scams should start looking at the law firm Proskauer’s assets for recovery. First, Proskauer partner Gregg Mashberg claims Madoff is a financial 9/11 for their clients, if they directed you to Madoff sue them. Then, Proskauer partner Thomas Sjoblom former enforcement dude for SEC and Allen Stanford attorney, declares PARTY IS OVER to Stanford employees and advises them to PRAY, this two days before SEC hearings. Then at hearings, he lies with Holt to SEC saying she only prepared with him but fails to mention Miami meeting at airport hanger where they prepare to lie to the SEC. Then Sjoblom resigns after SEC begins investigation and sends note to SEC disaffirming all prior statements made by him and Proskauer, his butt on fire. If you were burned in Stanford sue Proskauer.

Proskauer Rose and Foley & Lardner are also in a TRILLION dollar FEDERAL LAWSUIT legally related to a WHISTLEBLOWER CASE also in FEDERAL COURT. Marc S. Dreier, brought in through patent attorney Raymond A. Joao of Meltzer Lippe after putting 90+ patents of mine in his own name, Dreier is also a defendant in the Federal Case.
The Trillion Dollar suit according to Judge Shira Scheindlin is one of PATENT THEFT, MURDER & A CAR BOMBING and where Greenberg Traurig acted as patent counsel with Foley and Proskauer and now represents many of the public officials and Florida courts sued in those matters. For graphics on the car bombing visit
08-4873-cv United States Court of Appeals for the Second Circuit Docket - Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al. - TRILLION DOLLAR LAWSUIT
Cases @ US District Court - Southern District NY
(07cv09599) Anderson v The State of New York, et al. - WHISTLEBLOWER LAWSUIT
(07cv11196) Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al.
(07cv11612) Esposito v The State of New York, et al.,
(08cv00526) Capogrosso v New York State Commission on Judicial Conduct, et al.,
(08cv02391) McKeown v The State of New York, et al.,
(08cv02852) Galison v The State of New York, et al.,
(08cv03305) Carvel v The State of New York, et al., and,
(08cv4053) Gizella Weisshaus v The State of New York, et al.
(08cv4438) Suzanne McCormick v The State of New York, et al.
(08 cv 6368) John L. Petrec-Tolino v. The State of New York

South Florida Lawyers said...

What's the old Dylan line, "I can't help it if I'm lucky"?

Anonymous said...

Waiting to see just how much luck Yolanda Suarez and Mauricio Alvarado have left.

Anonymous said...

The way the Herald handled the role of Greenberg Traurig in this story was interesting. Here are two excerpts from the story:

"Represented by a powerful Florida law firm, Stanford got approval to create the first company of its kind: a foreign trust office that could bypass regulators, according to records obtained by The Miami Herald."

Later in the article:

"Carlos Loumiet, a former Greenberg Traurig lawyer who helped draft the deal, declined to comment, citing ethical concerns."

The article nowhere states directly that Greenberg Traurig was the firm that got Stanford the approval. You have to put the two passages together to figure that out. Perhaps a line was inadvertently omitted, perhaps the Herald was trying to be tactful. In any event, to its credit, the Herald ran an editorial two days later calling for an investigation.

Anonymous said...

Why isnt the SEC questioning Yolanda Suarez, who was 2nd or 3rd in command?

Unknown said...