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A US jury found Allen Stanford guilty of 13 of the 14 charges he faced following a six- week trial in Houston Photo: Reuters


June 10, 2010 Miami Beach, Florida


"If you shut up truth and bury it under the ground, it will but grow, and gather to itself such explosive power that the day it bursts through it will blow up everything in its way." Dreyfus: His Life and Letters

I have already demonstrated in my anti-award-winning series, 'As the Press Spins - Anatomy of an Award-winning expose' that 1) former Florida bank regulation director Arthur M. Simon was repeatedly and unfairly defamed by the Miami Herald, as he did not, over the objections of the banking department's chief counsel Richard T. Donelan, approve of an agreement with Allen Stanford et al to open an international trust representative office in Miami; 2) contrary to Miami Herald reports, the agreement he

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signed was in no way illegal or contrary to state or federal law; 3) contrary to Miami Herald reports, Dr. Simon did not permit Stanford Trust Company Limited d/b/a Stanford Fiduciary Investor Services to violate Florida law during his tenure as director of the banking division; 4) contrary to Miami Herald reports, Florida law did not prohibit such an office from opening; 5) contrary to the Miami Herald reports, Stanford could have otherwise legally proceeded to open such an office, but decided to submit to criteria proposed by the Department of Banking, criteria that in principle was already standard in respect to out-of-state domestic trust representative offices; 6) contrary to the Miami Herald reports, the agreement did not exempt the Florida representative office of Stanford Trust Company from state and federal anti-money-laundering laws or any other laws whatsoever including securities violations; 7) contrary to Miami Herald reports, the actions brought against the Stanford Group entities and related persons are for securities violations and not for trust representative office activities per se, therefore the regulatory responsibility for that would not have been with the state banking division but with the state securities division and the federal regulatory agency.

Yet for its spurious, inaccurate and defamatory reports, more of which will be dissected later in this series, Miami Herald writers Michael Sallah, Rob Barry, and Lucy Komisar received "the Society of Professional Journalists' prestigious Sigma Delta Chi award for

exposing sweeping government failures

Reporters Michael Sallah, Rob Barry and

.... Lucy Komisar were recognized for their stories revealing how Florida regulators

permitted the now disgraced banker - over the objections of the state's chief banking

counsel - to open an unregistered office in Miami a decade ago


The reporters



how lawyers



protect Stanford from government scrutiny while he was expanding

his fraudulent banking network around the world



(Miami Herald, May 4, 2010)

Indeed, it is my opinion that the whole issue of what was done or not done in respect to Stanford Trust Company Limited d/b/a Stanford Fiduciary Investor Services, as an international trust company representative office in Florida, is moot, and that the representative trust function in itself is a red herring inasmuch as it draws attention away from the interest the newspaper business had in selling papers by any means possible including blatant misrepresentation of facts, or disregard of readily available facts, according to the ideological prejudice of the reporters and editors, who should have known, given the evidence on hand and available to them, that they were blaming the wrong public official and regulatory division, just for starters.

That is, the Miami Herald writers and editors got themselves a scapegoat to blame instead of getting to the bottom of the story. It remains to be seen why they did not select the head of the securities division as their scapegoat, or better yet, the elected official with ultimate discretion over financial regulation at the time. It was all too convenient to attack Arthur M. Simon and smear a man whose many years of distinguished public service they knew all too little about.

Indeed, if Michael Sallah, Rob Barry, Lucy Komisar, and their investigations editor Ronnie Greene had been true to the objective reporting standards professed by professional journalists, they would have focused their investigation on the securities

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fraud and the state and federal agencies responsible for regulating securities instead of making false allegations about Mr. Simon and the banking division, thereby feeding into the hatred of bankers and fear of a general banking collapse at the time.

I referred my honest opinion to Dr. Simon at the University of Miami, because I know that he, due to his basic support of a democratic and free press, does not fully appreciate my little crusade against Miami's established press. In any event he would give a newspaper considerable leeway to make mistakes due to stupidity - though he would draw the line at perpetuating falsehood. He responded via email on May 27, 2010 as follows:

"Unfortunately, it appears that Stanford’s trust representative office was used to facilitate the sale of a huge volume of Stanford International Bank CDs to foreign investors. Although the central issue is the fraudulent nature of the underlying security – and, from a public policy perspective, the failure of federal and state SECURITIES regulators to commence more timely enforcement action, certainly as events unfolded the Stanford Fiduciary Investor Services office in Miami did help to exacerbate Stanford’s Ponzi scheme; and the international trust company representative office was sanctioned by the Memorandum of Agreement (which I signed). So, personally, I do not fault The Miami Herald for raising public awareness about the Stanford Fiduciary Investor Services office or “digging for dirt” with regard to the Memorandum of Agreement. A lot of people lost a lot of money, at least in part because of business conducted by Stanford Fiduciary Investor Services in Miami. If in fact Stanford Fiduciary Investor Services was (in your words) a 'red herring' it was certainly a big one (perhaps $1 billion or more). Although Allen Stanford could have, would have, and did in fact mainly perpetuate the Stanford International Bank CD Ponzi scheme by and through Stanford Group Company and Stanford’s legion of registered investment advisors, it seems obvious that Stanford also used the prestige of a Miami office of the Antigua-based trust company, Stanford Trust Company Limited, to further the massive financial fraud.

"Nonetheless, as you have concluded, based on your own independent research and impartial consideration of the attendant facts and governing law, some premises of The Miami Herald series are patently incorrect. In 1998 there was no law in Florida prohibiting the establishment of an international trust company representative office. This is confirmed by the House of Representatives and Senate bill analyses of legislation passed earlier this year to subject international trust company representative offices in Florida for the first time to state regulation. Likewise, it is erroneous for The Miami Herald to repeatedly state that I signed the Memorandum of Agreement over the objections of Richard Donelan, the department’s chief banking counsel. Indeed, after a diligent search of its records the Office of Financial Regulation has recently affirmed that Mr. Donelan never issued a legal memorandum in opposition to the Memorandum of Agreement. Likewise, records produced by the Office of Financial Regulation pursuant to comprehensive public records requests reveal no document whatsoever by attorney Donelan written to me (as Banking Division Director) or my supervisor (the Deputy Comptroller), or Donelan’s supervisor (the Department of Banking and Finance General Counsel), or the Department head (the state Comptroller) in opposition to the

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Memorandum of Agreement. The simple truth of the matter is that attorney Donelan negotiated the Memorandum of Agreement with opposing counsel over a period of weeks, and then the agreement was presented to me for signature. Although I was not compelled to sign it, I was never presented with any substantive legal argument why the Memorandum of Agreement should not be signed.

"Hopefully, the truth will out."

The Miami Herald's response to requests for the substantiation of its allegations and to address our findings is silence. There has been no apology and retraction. Knowing they have concocted and disseminated falsehoods, one might expect an apology and retraction, but here we have award-winning journalists who can do no wrong, and are apparently equipped with casuistic ethics to smooth over hypocrisy with silence. Furthermore, here we have a watchdog bred in arrogance. Its bark is all too late, and it willingly takes the credit for what already has been done even when that amounts to nothing. Nevertheless, the bulk of its readers are deceived by its prestige - the etymology of 'prestige' appertains to the extinction of judgment and obscuration of truth, as in illusion, fascination, and enchantment. What does the Miami Herald care about any accusations of its own wrongdoing when it has, as Miami's only daily newspaper, a monopoly on the printed news, ample finances, and a bank of lawyers prepared to persuade judges that their forefathers intended to constitute the legality of falsehood?

In the next article in this series, I shall address the Miami Herald's misleading assertions about the bank division's examinations of Stanford Trust’s international trust company representative office, and show that the whistleblower they cultivated was no whistleblower at all, that the red flags the paper supposedly identified were not red flags. I shall show that, in fact, the bank examiners as well as the editors and reporters missed an obvious indicator that Stanford personnel were engaged in an activity that was prohibited of a trust representative office, although it might have been legal if a different hat was donned; in any case it was an activity which might have warranted a further investigation by the appropriate authorities to determine its legality. That is not to say that the State of Florida in any way “aided” Allen Stanford in his “swindle” – as the Miami Herald shamefully screamed in one of its headlines.


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