By Terrence McCoy
By Scott Fishman
By Deirdra Funcheon
By Allie Conti
By New Times Staff
By Ryan Pfeffer
By Deirdra Funcheon
By Kyle Swenson
A thin, 48-year-old Caracas native, Dalmady grew up doing balance sheets for his dad, who worked for the accounting firm Price Waterhouse. He spent most of his adult life in the Venezuelan capital, where he analyzed the small national stock exchange in a subscription newsletter he published.
Six years ago, he moved with his family to Weston after getting American residency. Last fall, a friend in Venezuela phoned him after the Madoff scandal and the global banking crisis began, asking him to take a look at his investments.
"Five minutes after I looked at Stanford ... I said, 'This just doesn't smell right,' " Dalmady told New Times in late February of this year. "I said, 'Get your money out. Now.' "
"It wasn't just the balance sheets; there's one fishy thing after another," he said. "I looked up their board of directors, and I see it's Stanford, his dad, and some other old guy in Mexia. I looked up his address, and it was on this cattle ranch in the middle of nowhere."
Dalmady never talked to a single person at Stanford. He based his research solely on public filings and the company's website. Yet after just a few weeks of reading up on the company, he was so certain Stanford was a fraud that this past December, he called a Caracas business paper and asked if they would publish a story laying out his suspicions. The editor agreed. In January, Dalmady's piece ran in two Venezuelan newspapers and on their websites.
"I expected some kind of outrage," Dalmady says. "Instead, they send us this beautiful collection of P.R. bullshit. And then it's absolute silence, which was the final confirmation for me. Stanford was running a Ponzi."
Executives in Italian suits and lawyers with accordion files slump in their cushy leather chairs as sunlight streams through the boardroom's windows. The walls are crashing down around them.
It's Wednesday, February 4, 2009, and Laura Pendergest-Holt is running a PowerPoint presentation at the Stanford Group office in Miami. James Davis stands next to her. She flips to a pie chart showing the breakdown of the largest tier of the $8 billion invested in the company's Antigua bank — the funds controlled directly by Sir Allen. More than $3 billion, she says, is tied directly into real estate, much of it in Antigua. She pauses.
"Another $1.6 billion have been loaned to a shareholder," she says. "Sir Allen."
There is shocked silence in the room. "Stanford International Bank is insolvent," one executive says in disbelief.
The SEC has asked for top executives to testify in five days, and Pendergest-Holt already has agreed to testify on behalf of the company. The group meets again the next day in the same room, this time with Stanford himself in attendance. Two of the executives say they plan to tell the SEC everything they learned in the previous day's meeting.
Stanford grows livid.
"The assets are there!" he screams, pounding the table. "The assets are there!"
Less than two weeks later, thanks in part to the testimony of the two executives who were in that Miami meeting, the SEC formally files charges that claim Pendergest-Holt, Davis, and Stanford orchestrated a "massive Ponzi scheme" worth $8 billion.
According to the 25-page complaint, Stanford's company claimed its investments lost only 1.3 percent in 2008 — a year when the S&P 500 dropped 39 percent. Stanford and Davis kept 90 percent of the company's supposed $8 billion in investments in a "black box" shielded from outside scrutiny. In essence, the regulators charge, Stanford never invested any of that money except in a few land deals and pet projects. The rest he used for himself and to pay interest on the older investments.
In the weeks since the SEC brought charges against R. Allen Stanford on February 17, 174 of his Florida employees have lost their jobs. Tens of thousands who used Stanford Group in the States — including dozens of familiar names, such as Yankees star Johnny Damon — have had their accounts frozen until the case is resolved. The 30,000 investors worldwide who sank money into Stanford International Bank CDs, meanwhile, have lost life savings, retirement funds, and charitable endowments — probably forever.
"It's sad and upsetting to realize how little you can do. It kind of hit me in the face," says Pieter Dahler, a Colorado dentist who invested his life savings and the $750,000 endowment for a charity he founded that provided free dental and health care to poor families throughout Latin America. "I worry every day about these families who depended on us."
Antigua has been thrown into chaos. Stanford was the island's second-largest employer, and hundreds have gone unemployed for the past few weeks. Panicked residents have made a run on the island's banks and government financial centers since the charges were filed.
Police found Stanford hiding in one of his girlfriends' homes in rural Virginia. He had tried to pay a private pilot to fly him to Antigua, but his credit cards had already been frozen. He surrendered his passport and remains free today.
Stanford, who so far faces civil charges but no criminal ones, hasn't commented about the SEC's case against his company. But his lawyer, Dick DeGuerin, a well-known Texas attorney who defended cult leader David Koresh, has denied the claim that Stanford ran a Ponzi scheme.