Wednesday, May 5, 2010

Former SEC Investigator (and former Ethics Follies speaker!) May Have Known of R. Allen Stanford's Ponzi Scheme

Is Spencer Barasch the man who single-handedly let alleged Ponzi schemer R. Allen Stanford (pictured left) off the hook three times, costing investors more than $7 billion? Yikes!

Mr. Barasch gave a humous talk at Ethics Follies 2008 about business ethics right here in the River City. I guess Ethics Follies was even more in touch with current ethics issues than it even realized! Who would have guessed that a guest speaker at Ethics Follies could be responsible for a $7 Billion dollar Ponzi scheme?

Or is he an honest Dallas defense attorney unfairly blamed for the failings of a government regulator? Yeah...I have no idea. He seemed like a nice guy when he was at the Empire Theatre and he understood ethics issues which relate to SEC investigations.

The Securities and Exchange Commission's Inspector General has issued a 151-page report that says he was the former. It skewers Barasch, former head of the SEC's enforcement efforts at its Fort Worth office, as a poster child for an agency critics say missed one of the biggest investor scams of our generation. Mr. Barasch and his law firm deny his culpability.

Here's an interesting quote from the Executive Summary of the SEC Inspector General's Report of Investigation on the Allen Stanford debacle:

"Finally, the OIG investigation revealed that the former head of Enforcement in Fort Worth, who played a significant role in numerous decisions by the Fort Worth office to deny investigations of Stanford, sought to represent Stanford on three separate occasions after he left the SEC, and represented Stanford briefly in 2006 before he was informed by the SEC Ethics Office that it was improper to do so.

This former head of Enforcement in Fort Worth was responsible for: (1) in 1998, deciding to close a MUI opened regarding Stanford after the 1997 broker-dealer examination; (2) in 2002, deciding to forward the [redacted] complaint letter to the TSSB and deciding not respond to the [redacted] complaint or investigate the issues it raised; (3) in 2002, deciding not to act on the Examination staff's referral of Stanford for investigation after its investment adviser examination; (4) in 2003, participation in a decision not to investigate Stanford after receiving [Confidential Source]'s complaint letter comparing Stanford's operations to the [redacted] fraud; (5) in 2003, participating in a decision not to investigate Stanford after receiving the complaint letter from an anonymous insider alleging that Stanford was engaged in a "massive Ponzi scheme;" and (6) in 2005, informing senior Examination staff after a presentation was made on Stanford at a quarterly summit meeting that Stanford was not a matter they planned to investigate.

Yet, in June 2005, a mere two months after leaving the SEC, this former head of the Enforcement in Fort Worth e-mailed the SEC Ethics Office that he had been "approached about representing [Stanford] . . . in connection with (what appears to be) a preliminary inquiry by the Fort Worth office." He further stated, "I am not aware of any conflicts and I do not remember any matters pending on Stanford while I was at the commission."

After the SEC Ethics Office denied his request in June 2005, in September 2006, Stanford retained this former head of Enforcement in Fort Worth to assist with inquiries Stanford was receiving from regulatory authorities, including the SEC. He met with Stanford Financial Group's General Counsel in Stanford's Miami office and billed Stanford for his time. Following the meeting, he billed 6.5 hours to Stanford on October 4, 2006, for, inter alia, "review[ing] documentation received from company about SEC and NASD inquiries." On October 12, 2006, he billed Stanford 0.7 hours for a "[t]elephone conference with [Stanford Financial Group's General Counsel] regarding status of SEC and NASD matters." In late November 2006, he called his former subordinate, the Assistant Director who was working on the Stanford matter in Fort Worth, who asked him during the conversation, "[C]an you work on this?" and who in fact told him, "I'm not sure you're able to work on this." Near the time of this call, he belatedly sought permission from the SEC's Ethics Office to represent Stanford. The SEC Ethics office replied that he could not represent Stanford for the same reasons given a year earlier and he discontinued his representation.

In February 2009, immediately after the SEC sued Stanford, this same former head of Enforcement in Fort Worth contacted the SEC Ethics Office a third time about representing Stanford in connection with the SEC matter - this time to defend Stanford against the lawsuit filed by the SEC. An SEC Ethics official testified that he could not recall another occasion in which a former SEC employee contacted his office on three separate occasions trying to represent a client in the same matter. After the SEC Ethics Office informed him for a third time that he could not represent Stanford, the former head of Enforcement in Fort Worth became upset with the decision, arguing that the matter pending in 2009 "was new and was different and unrelated to the matter that had occurred before he left." When asked why he was so insistent on representing Stanford, he replied, "Every lawyer in Texas and beyond is going to get rich over this case. Okay? And I hated being on the sidelines."

The OIG investigation found that the former head of Enforcement in Fort Worth's representation of Stanford appeared to violate state bar rules that prohibit a former government employee from working on matters in which that individual participated as a government employee. Accordingly, we are referring this Report of Investigation to the Commission's Ethics Counsel for referral to the Office of Bar Counsel for the District of Columbia and the Chief Disciplinary Counsel for the State Bar of Texas, the states in which he is admitted to practice law."

1 comment:

Iviewit / PatentGate / Eliot Bernstein said...

Do not forget Sjoblom of Proskauer & his hand in lying to FBI & SEC officials or Madoff's Wood who buried it at the SEC yrs ago then left for Proskauer or Gowan trustee in Dreier, a Proskauer emp & you get my point.
Check out Inventor Eliot Bernstein Testimony @ The New York Judiciary Committee & John L. Sampson @
Investors burned in these scams should seek redress from the lawyers & law firms involved they have plenty of money & insurance. I have been trying to notify regulators & authorities of a ONE TRILLION DOLLAR scam that is putting states like NY & FL at risk, as well as, shareholders of companies including Intel, Lockheed, SGI, Warner Bros., Time Warner, AOL & IBM. The states & companies involved in the fraud fail to acknowledge the risk exposing shareholders and citizens to impending MASSIVE liabilities. Investigators, courts, Judiciary Committees & fed agents investigating the crimes & evidence, including a car-bombing attempt on my life. I know how Harry Markopolos felt trying to expose Madoff in a world without regulation.
Proskauer Rose is involved in Madoff (involved many clients too) and acted as Stanford's attorney. First, Proskauer partner Mashberg claims Madoff is a financial 9/11 for their clients, if they directed you to Madoff sue them. Then, partner Thomas Sjoblom, former enforcement dude for SEC and Stanford attorney, declares PARTY IS OVER to Stanford emps & advises them to PRAY, two days before SEC investigates. Then at hearings, Sjoblom lies with Holt to SEC saying she only prepared with him but fails to mention Miami meeting at airport hanger. Then Sjoblom resigns after SEC begins investigation and sends note to SEC disaffirming all statements made by him & Proskauer, on fire. If you were burned in Stanford sue Proskauer. Both damning SEC reports on failures of Madoff & Stanford find Proskauer partners mentioned throughout!
Proskauer / Foley & Lardner are also named Defendants in my TRILLION dollar FEDERAL RICO & ANTITRUST LAWSUIT now marked legally related to a WHISTLEBLOWER LAWSUIT also in FEDERAL COURT. Marc S. Dreier, brought in through Raymond A. Joao of Meltzer Lippe after putting 90+ patents of mine in his own name, is also a Defendant in my Federal Case.
My suit, according to Judge Shira Scheindlin, is one of PATENT THEFT, MURDER & CAR BOMBING (images of car bombing @
The Fed Lawsuits
NY Second Circuit
08-4873-cv US Court of Appeals for the Sec Circuit - Bernstein v Appellate Division First Department Disciplinary Committee
Capogrosso v NY State Commission on Judicial Conduct
Esposito v The State of NY
McKeown v The State of NY.
US District Court - SDNY
07cv09599 Anderson v The State of NY - WHISTLEBLOWER LAWSUIT (other cases have been marked legally “related” to this by Judge Shira A. Scheindlin
07cv11196 Bernstein v Appellate Division First Department Disciplinary Committee
07cv11612 Esposito v The State of NY
08cv00526 Capogrosso v NY State Commission on Judicial Conduct
08cv02391 McKeown v The State of NY
08cv02852 Galison v The State of NY
08cv03305 Carvel v The State of NY
08cv4053 Gizella Weisshaus v The State of NY
08cv4438 Suzanne McCormick v The State of NY
08 cv 6368 John L. Petrec-Tolino v. The State of NY
Eliot I. Bernstein
Iviewit Holdings, Inc.
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