Saturday, February 28, 2009

Get Your Fresh Duck Here! (El Pato Servido Aqui)

Apparently the link to Duck Tales and El Pato, the original Veneconomy articles has now been restricted somehow, as bandwidth limits were exceeded.

So you can find Duck Tales and El Pato here, I guess until I see the bill for my server.

I also have the Stanford Annual Reports and at some time I will be posting those to the net, since for some reason the Stanford International Bank website is no longer showing them. But they are I'll keep them on my hard drive for a while.

These are important historical documents and could be part of case study for accountants/auditors sometime in the future.

EDIT: Stanford International Bank Annual Reports and December Letter have been uploaded to SCRIBD and avaliable HERE.

Thursday, February 26, 2009

In Defense of Stanford

Several media outlets have now upped the tally on the alleged Stanford fraud from $8 billion (which is approximate) to $9.2 billion. We must come to the defense of Stanford on this one. It's really just $8 billion from the Antigua Bank (so far).

The other $1.2 billion arise from another part of the SEC Complaint which refers to a Mutual Fund Wrap program that Stanford Financial started in 2005. For those who don't know, a mutual fund "wrap" is like a Fund of Funds for mutual funds. Invest in one and you diversify over a series of mutual funds, each of which is supposedly also diversified. Double your diversification and double the fees you pay also.

Stanford Financial isn't accused of missappropriating (stealing) that $1.2 billion, but of misrepresenting the performance of the program. The program started in 2005, but Stanford already had a track record, which apparently was carefully "made up". And as they operated this program, they also "enhanced" the returns they were actually made. So the $1.2 billion should still be there for investors, but the $25 million they collected in fees...that maybe they shouldn't have.

This is also what the "disgruntled employees" were complaining about. (I was always wondering about that)

So why would Stanford set up a program like that and fudge the numbers to make a measly $25 million. Well, they brought a lot of advisors on board with it and those advisors were encouraged guessed it...sell Antigua CDs.

I guess it shows where Stanford's real strength lied: in making up numbers.

Someone joked that the much ballyhooed "Stanford Investment Model" (SIM), actually stood for SIMulated.

Show Time

I'm back to talking to the media. Thank you for your patience. I've already talked to some print and radio and will be doing CNN in a few mintues.
I've been trying to get back to everyone who emailed originally...and I really want to talk to some of the print people and internet blogs.

So here's an email:, if you still want a piece of this story or if I left you out and that other email you sent was unaswered..
I know it will blow over soon enough and then we can all get back to our respective jobs.
Any help with Stewart is seriously appreciated.

Wednesday, February 25, 2009


That's the approximate number of depositors who were left hanging in Stanford International Bank when it went into recievership by the Antiguan authorities. The receivers plan to get a statement out to every one of these clients so they can check their claim.

That's good news. It would seem that the data integrity has been preserved, at least on the liability side.
It tells us a few more things also. The bank was probably under some stress for redemptions and losing clients, as it had stated back in December 2007, that it had over 50,000 clients and as recently as December 2008 the figure was stated as "over 30,000".
You have to think if we can believe those numbers or not, but assuming they were correct you can see the drain.

What is now being determined is what remains on the asset side. At this point the receiver has already stated that there is "nothing like $8 billion" in the portfolio. Plus the fact that the bank was having trouble with redemptions, and scrambling for cash makes it clear that there weren't many liquid assets left.

But lies work both ways and one can only hope that the bank has some assets also "off the books" which can be seized and used to satisfy creditors. Even if they are illiquid ones. We know from SEC documents that the bank that "Doesn't do loans" actually had lent money to eLandia. There could be more of these deals out there.

Then of course, there are Mr. Stanford's assets, some of which have been seized or frozen. But there is a problem with that also. You see, Stanford International Bank never paid a dividend. So, if Mr. Stanford was receiving compensation from the bank in some other fashion, he needed to report that on his 1040. And while the IRS in normal circumstances can only go back three years to conduct an audit, if there is evidence of fraud, they can go back further. If Mr. Stanford owes US taxes (and apparently he does), the IRS gets first dibs on the seized assets. So, I'd say it's a pretty good bet that Mr. Stanford's filings are no longer gathering dust in the IRS's archives at this point.

Monday, February 23, 2009

Starving the Beast

Ponzi schemes aren’t necessarily born that way. They can start off legit, as long as the model works. They can run with a gap between the value of the assets “in the books” and their “real” or “market” value (is the “market” really “real”?) for a while as long as the assets are performing and there is cash in the bank. For that to happen deposit growth only has to equal or exceed expenses minus investment income.
In a good year the gap may even narrow some. But there comes a point when the gap becomes too large, too obvious and it is filled in with a lie. And the “bank” becomes a beast.

The beast gets hungry. It needs money to cover the lie and it needs souls to bring it that food. So it stretches its tentacles into the world in search of the unsavvy, the trusting, the needy and food. More food. To enlist those souls it gives them what they crave: belonging, self-importance, and material wealth. And it becomes a cult. A cult with a leader, blind faith, and a golden shield.

On CNBC, analyst Mike Holland was reviewing Stanford material and said wisely “This doesn’t pass the smell test”. He’s right. It doesn’t. Mike’s a smart guy and knows this stuff. But the beast doesn’t want Mike’s money. It will never get Mike Holland’s money, so its tentacles never touch him. They go around him and find Johnny Damon. And Johnny isn’t stupid or foolish or even greedy; he doesn’t know what LIBOR is and he shouldn’t have to know; because he’s busy playing ball and earning his deserved rewards. So he sees the smartly dressed woman with the golden shield and the word “bank” and he signs the check. And the beast is fed.

So I wrote “Duck Tales” and I wrote it the way I did because it wanted it to be read. By Mike Holland. And Johnny Damon. And particularly the lost souls. To starve the beast. And maybe spare Mike or Johnny from this beast, or the next.

You see “Duck Tales” isn’t about Stanford or the SEC or how smart I am. It’s about forgiveness, and not judging, and about opening your eyes and seeing through the façade. Because we are all Mike Holland, and Johnny Damon and even Allen Stanford sometimes. So I wrote it for them. And I wrote it for me.

Saturday, February 21, 2009

Dirty Job

On “Discovery” there is a program called “Dirty Jobs”, where host Mike Rowe explores people who unblock sewers, shovel manure and other similarly distasteful ventures. It’s quite entertaining and I’ll watch as much as my stomach allows. Invariably, I come to the conclusion that it’s a job I DON’T want. But someone has to do it. Because if not, the sewers back up, the manure piles up, the roaches run free and things get messy and smelly real quick. The cleanup is normally costly and painful. So dirty as they may be, these jobs are important.

In the financial world, the dirty job is the auditor. He’s the maintenance man, he’s the cop. It’s the job I DON’T want. It’s the dirty job. But someone has to do it.

Drilling things down to basics, the auditor doesn’t do the books. That’s the accountant. The auditor checks things. That the money that’s in the books, is actually in the bank (Satyam – talking to you); that the inventory is IN the warehouse, that the portfolio actually EXISTS and so on. There’s a lot more to the auditor than just the accounting, so they’ll also check that the delivery guys don’t have a side business, that the purchasing guy is looking for the best deal out there and so on. You get the idea. They don’t only look for fraud, they also check that things are being done right, so they normally go around asking a lot of questions. Oh, and least I forget, the petty cash. These guys LOVE to check the petty cash till. It’s almost OCD. They usually work in teams, so one guy checks the other, and they rotate from task to task. You get the idea; no one gets too “chummy” or too familiar with any single aspect. It also makes it a bit more interesting for the auditors. They still do the petty cash thing, though.

One thing these guys love is third party confirmation, so they’ll send out little envelopes to the bank, the broker, clients, etc., just to make sure the bank and broker statements, the invoices and the delivery notes are actually correct and not some wild or fraudulent fabrication. Those little envelopes have to be sent back to the AUDITOR and not the company. The reason should be quite obvious, but they still put it all over those envelopes (and people STILL send it to the wrong place).

The “boss” auditor in the organization reports not to the CFO or the comptroller, but to highest level of the organization, usually the board of directors. I think we can understand why. They’re checking everybody else.

However, these guys usually don’t get paid like top-level executives, because it’s just a dirty job. They’re not out there making groundbreaking corporate decisions or on the front line with customers. Maybe it’s not fair, but that’s the way it is.

The “external” auditor checks that the things that the “internal” auditors are doing is right. And they’ll recheck stuff, usually the important stuff – money in the bank (PWC talking to you- Satyam), portfolio at the broker, etc. They do the little envelope thing, too.
And of course, the petty cash. They usually report back to the shareholders, which makes sense ‘cause that is one step UP from the board, in what is called an “audited” report.

They rotate “teams” from client to client and yes; it’s even a good idea to rotate external auditing firms every few years. You get the idea, fresh eyes, and fresh perspectives constantly.

When all this is working correctly, it’s like a smooth running machine humming the background.

Except for one thing: these guys are a PEST. They’re always snooping around asking stupid questions, wasting your time, sending those envelopes and checking the petty cash.
Managers and execs don’t report to these guys and most make a ton more money than they do. So when they come around, you’ll roll your eyes and think what do these guys want now? And you’ll make them wait outside, while you do your “real” job, the one they pay you to do, and the one that reports back to your boss and defines your bonus. Or you’ll let those stupid envelopes pile up on your desk, because you’re swamped and have better things to do. Most of the time this stuff doesn’t matter, just little blips in the background whirr.

So it’s humbling for the auditor, he knows his place in the pecking order and probably who makes what. So when the “big man” says “later” or “don’t worry about that” or “that’s the way we do things around here”, the auditor thinks “what the heck” or “it’s not really important” and “it’s their problem anyway”. And most of the time nothing happens, but sometimes stuff does. It happens. STANFORD happens.

So here’s the thing: auditor guy. It’s your job. It’s a dirty job. I don’t want it. But it’s yours. So do it. And do it well. And if you can’t do it: don’t do it. And if they don’t let you do it: QUIT. And if something smells funny: TELL. Be discerning though, you know what’s important. It’s not the account with $30 in it. Bug us with important questions, interesting questions. And knock it off with petty cash already (ok, ok, we’ll do it sometimes).

Because when the sewers back up and the manure piles up, and everything spills over, you’re going to know why. And you’re not going to like it.

So do your dirty job, do it with pride, do it with honor. It’s important. You guys are the front line of defense against the Stanfords of the world.

And clip this column and take it to your superior. This might be the time to ask for a raise.

P.S. Never been an auditor, so if I messed up the description, forgive me. But I still don’t want your job.

Thursday, February 19, 2009

Shutting it Down

Time for me to get back to work. Thanks guys. I'm declining all audio and video requests. That's radio, TV and telephone. I can't. It's too much. I know at this point I'll be getting questions that maybe I don't want to answer honestly or just can't answer 'cause I didn't do that part of the research. I'm a really bad liar.

I do want everyone who's interested to actually READ "Duck Tales", the first part much more than the second part. The second part we already know about. I didn't write "Stanford International is an $8 billion Ponzi" or "How to catch a thief"; I wrote "Duck Tales" and if you read it you will know the difference.

I'm going to pick up a nice copy of the "Emperor's New Clothes" and display it prominently somewhere around the house. I know I'm going to read it to my grandkids (not yet...PLEASE..LOL).

The story as far as I'm concerned is over. It's moved on. In a number of directions. If you want to read about the story, this is not the place to come. If you want to read some of the crap I've got going through my head, you're more than welcome. I've gotten some accolades for my writing these days (somebody actually called it a "gift" LOL), so that's something I will do. But not about Stanford, specifically. Other stuff. Related or not. It's my blog. LOL. I'll try to make it entertaining, Promise.

I'll also advise here when I'm going to be doing interviews, IF anyone is still interested after a while (I'm thinking a week). That will allow me to catch up on my work (did I say I love my job?) and why not...the story too. Then whatever.

The stuff on this blog, as far as I'm concerned is copyright-free. Feel free to use it. Copy/paste etc. I really don't know how that works. I don't know about the stuff that's linked out to other blogs, I'll check with my friends, new and old. Some will tell me I'm crazy, I guess.

I've found this to be a great way to communicate. I get to tell my own way. Not within someone else's context. Personally, I think it's groundbreaking...and I hadn't realized up to now.
I will be writing about that.

I know you don't get opportunities like this in life very often. I really want to take advantage of it in a constructive way.

Shut Down...

P.S. But know I'm waiting for you! (I am SO full of myself).

Wednesday, February 18, 2009

Media Blitz

Calling all media. It's getting just a bit too much. I love you all, but you're getting a bit too close. Calling the home phone is a no-no and showimg up at my house is a huge no-no. Most of you have been real nice and I want to be really nice back. I'll figure something out and maybe the story will move on.

I've been trying to put things up here so people could understand. TRANSPARENCY. No secrets.

There's an email on the article. That's the way to contact me. Honest. I answer those emails. But the idea is that you READ the article first, please.

Except Jon Stewart, of course...he can have his people call my people. LOL. (this is getting SO ridiculous).

Stanford: Who Knew What When

I hope this is my last “inside” story about Stanford. The story is moving ahead, as it should, and this is yesterday’s news.

I finally got around to reviewing the SEC complaint about the Stanford group and IMHO it is excellent work. It’s all there, the numbers add up, the language is unequivocally strong, and they have many facts I didn’t have. Plus there is a whole different angle to it also, with marketing and mail fraud, if I understand the complaint correctly (I’m not fluent in legalese). Please don’t discard that angle. Mail fraud is a serious offense and multiple counts will put you away for a long time. Those may turn out to be the only charges that actually stick. I think we all recall what Capone went down for. Does anyone have a problem with that?

So where and when they got their leads on this is irrelevant. They were obviously on to this operation in some form or fashion. If they were on to the Ponzi lead independently, kudos. If they plucked the “duck” off the net, recognized the value of the work I did, ran with it to complement their case in a few days, well double and triple kudos. Trolling for tips is exactly what these guys need to do. Kudos for that, too. There is a LOT of stuff going up right on the web right now. Pull it in, check it out, and get these guys.

Unlike Markopoulos, I did not take my data to the SEC. Hence; I have no grounds to judge their performance regarding the investigation. I threw it out there to see where it would stick and maybe save somebody some money or grief this time or next.

A few more issues here. This is NOT Madoff. Stanford International Bank is not a US company. They don’t list securities on US markets. They are not FDIC or SIPC insured.
They have NO obligation to file their financials with the SEC, as far as I know. And even if they do, the SEC cannot run an inspection in Antigua or request documents unilaterally. We’re talking borders, here, governments and jurisdictions. And even “cooperating” can be dicey, you don’t know who is with whom.

As it concerns my research, if SIBL hadn’t brazenly put their financials up on the web, I’d have nothing. There are actually banks out there that show nothing. Who knows what that is about? So transparency is the key to stopping these things.

Like all scams, there is KNOW, SAY and PROVE. I KNEW. I wasn’t just fishing out there with “Duck Tales”. I had what was there, which was plenty, but I also had lots of little subtle clues that didn’t go into the article. Stuff you get from reading hundreds of these things. I’m proud of that. I SAID, in my own ducky wimpy way, hiding behind Heisenberg. I’m proud of that. VenEconomy SAID without knowing everything I knew and that is why Toby Bottome is a great man. The SEC KNEW and moved to PROVE. That’s their job. Well done.
(I have a REAL problem with KNEW and SHUT UP, but that’s another rant).

The Madoff story blew the cover off all of our eyes. The SEC’s too. Maybe you haven’t noticed all the mini-Madoff’s running around out there and ditching their Cessnas to hide. I have. Who exactly do you think they are running from? It’s not from “disgruntled employees” I can assure you. Go get ‘em, guys.

These guys need help to whisk these guys out and clean this up. Sounds like a job program for ex-Wall Streeters if you ask me. Anyone see the epilogue to “Catch Me If You Can?”

P.S. Food for my big head. My daughter says I am now World Finance’s “Man of the Year”. Something about an “Elder Wand” that Harry Potter fans will get. LOL

Tuesday, February 17, 2009

Back Up and Running

I'm back. Sorry I went down. I saw popups all over my page and freaked out. I promise I WILL get this blogging thing down (now more than ever).
I think this blog can be an important historical archive. Maybe I can field some questions too and write a few things if my day job allows it. I know a couple of things and people used to say I could explain complicated things in simple terms. I'll try. 

As for now, I'm glad to see that some regulators and law enforcement "got it" as I thought they had and hopefully they find "Sir Allen" (when can we stop calling him "Sir"?), his inner circle and delve into his dealings. I'm pretty sure there is wide web of fraud and corruption. Please don't try to put ME on the record for it, OK? I took down the WSJ article. I don't take back a word I put there, but that wasn't me speaking, that was frustration and anger and the haunting pleas of that lady from Venezuela. I'm not like that. My wife called me out on it. I was almost thinking they were going to pin it all on the dead auditor and the press was part of the cover up. Paranoid, like Markopolous. I can relate.

I have not been swamped by Journalists. I have answered everyone who went through the appropriate channel. Those who didn't, I ignored. Thank you for the congrats...particularly those who actually READ my article. It's an honor to be called a "journalist" by people who really are...and put their cojones on the line for stuff more important than money. A Jamaican radio show wanted me on. I would have gone on...honest, but they wanted someone to talk about the investigation, and I'm just a guy who does numbers.
I've been invited to "guest-blog" at some very important blogs and I'll probably do some of that, especially at the blogs who backed me up during this thing.
The "Daily Show" hasn't called. DANG!

Monday, February 16, 2009

How I Know, What I Know

You're probably asking yourselves how I know what I believe is going on in Antigua. I don't. But I do. That is nobody has spoken to me, but the numbers have. And here is why:

I established quite clearly in Duck Tales, SIBL has its own particular "business model". Investments, rather than loans. Highly liquid ones, supposedly.

Now if we all go to note 3.7 of SIBL 2007 financials (yes, the "official set"), called "liquidity risk" you will see that of $7.0 billion assets (the last column), $6.3 billion is listed as "up to 1 month assets". That's 90%, children.

What does that mean, boys and girls? Well if they have cash troubles NOW and even have to pull liquidity out of their investments like Transwitch (TXCC) (thanks Peabody...I'd link...but I'm a novice), they have no liquid assets. So figure it out...there's NOTHING (except those penny stocks and piecemeal here and there).

It also follows that it this wasn't a 2008 thing. Even if their portfolio was down 40% this year, according to model, they should have plenty of cash and be able to deal with redemptions.

So, our friends in Antigua are looking at the vault right now, and it's empty. Sorry kids.

Linking up and filling in the blanks.

I'll make it easy for everyone by putting my stuff up on the web. Don't call me, I'm on the donotcall list and I will report you. LOL.

I promise to get this blogging thing better. My kids will help. Bear with me.

Here's the Original Article "Duck Tales". As I'm told it's already linked at Sir Allen's wiki bio. Quite poetic, I'd say.

Here's the inside story of "Confessions of a Reluctant Whistleblower" on DiabloCaca's site.
Here's the follow up: QUACK! on Inka Cola's site and QUACK! on DiabloCaca's site.

Let me fill in the blanks about me and the story. These are questions the reporters asked and are probably floating around anyway.

I'm 48. Happily married (sorry girls...and err you too, sir). I'm from Venezuela, but English is my first language (long story you don't need to know). I'm a financial analyst. They're writing "Florida-based" and "independent". Both good. I work out of my house. I like that a lot. I live in Florida and Yes I did come here LEGALLY. 

About the story. I have NO inside information. I found out about this as stated in "confessions".
I'm not gruntled or disgruntled ANYTHING and Sir Allen doesn't owe me money. I don't know any Stanford employees past or present. I have NOT been contacted by regulatory or law enforcement agencies BEFORE or SINCE. I don't have a lawyer, though I'm told I might need one.
I don't know Mr. Markopolous, but from what I've seen he's a pretty smart guy. However, I would much prefer to party with Sir Allen. 
I did not contact the Stanford group before writing "Duck Tales". A reporter actually asked me that. But I guess the fact that I'm not dead, maimed or suddenly filthy rich should clear that up. 
I did not contact or try to file something with the SEC. After seeing Markopolous' deposition, that was probably the best. I can just imagine..."File this in triplicate...sign here, we'll get back to you after we check with the company". 

Now I'll actually find some news to blog about. Like Joe the Plumber, and unlike Markopolous, I have an opinion about EVERYTHING. 

Is anybody reading this?

Sunday, February 15, 2009

Still on this Stanford Thing

It’s Sunday night. Almost a week since DiabloCaca put “Duck Tales” up on the web. This should help get things out there. The bloggers and reporters are still finding details and new edges on stories. There’s the mistress CIO…a bunch of SEC filings to go through. There are some “whistles” from the past, which suddenly fell silent (jammed with benjamins?).

It’s over guys. Thank you all. It was over when the WSJ said “FBI”. Probably WAY before that. The FBI does not investigate “accounting discrepancies” or even “disgruntled employees”. The WSJ does not say “FBI” and “bank” in the same sentence unless they are sure. The FBI does not work 9 to 5 Monday through Friday. They have pulled files, put people on this. The same as the SEC. These guys have “expert” auditors who can sniff out schemes much more complicated than this one. They’re NOT STUPID, they just weren’t looking at this. Any 10-year old could read “Duck Tales” and tell something was fishy. Heck, “Duck Tales” is already linked on Sir Allen’s wiki bio.

The financial statements were on the website and still are. Let’s give these guys some credit. They’re on it and with a TON of face to save, so you can be sure there is some overtime and more than a few plane tickets to Antigua.

Today I stopped talking to reporters. I don’t want to seem rude or pretentious but...they need to take the story forward…not back. There are ton of angles. Some of you are a WEEK behind. Where’s Sir Allen? He’s already at least a week ahead of everybody. And he has his own means of transportation. Still reporting on that letter? C’mon, that was a “parting shot” to cover his retreat. Who are these directors? Where are they? They left that poor Mr. Bertsch behind to now “decline to comment”.
You’re a good man, Mr. Bertsch. I hope you find a job soon.

The odds of the bank opening for business tomorrow (or Tuesday, don’t know about the holiday) are not good. In Antigua, the PM is saying, “It is out there now that things may not be as rosy as they ought to have been with the Stanford Empire…” That’s Reuters reporting, not me speculating.

People are going to lose money. Some deserve to. I was told today of someone who sent $50k to Stanford Friday AFTER reading “Duck Tales”. Maybe that will make “Stupid investment of the week”. Many will be innocent. Some may never come forward admitting it was theirs. But if the hole is as big as I believe it is, we’re talking many times the GDP of Antigua (like 5). Antigua will NOT bail them out. They have no obligation to do so, either. Forget the US, too. That “Excess FDIC” insurance that SIBL talks about in its December letter? That’s for the Bank’s US deposits…not the money of depositors in SIBL. The money is NOT insured.

The hotspots will be easy to find. Just check the Stanford map at In the US: Florida, Texas, and most of the South, Montreal in Canada. The Caribbean, (of course). Venezuela, Colombia, Ecuador.

People are going to lose their jobs. Some deserve to. Some people are going to feel really bad about losing other people’s money. You know who you are. Think hard about it when you’re driving around in your Mercedes convertible. Think about what you really knew. But PLEASE, don’t do anything rash. Your life is valuable and you can turn it around.

All for now. I’m already worse than Joe the Plumber.

Patience. I will figure this blogging thing out.

Starting Blog

I can't really depend on my friends' blogs forever. They have important issues to write about and I'm just going to blog a bit the Stanford case here until it winds down.
If I learn how to do this maybe I can post everything here and it can be an archive for future reference. 

Alex Dalmady