BusinessWeek’s Matthew Goldstein also has the news that Charlesworth A.S. Hewlett, the eponymous CEO of C.A.S. Hewlett & Co., Stanford International Bank’s auditor for the past 20 years, recently died, although his office manager reports that there "plenty of qualified people" still doing auditing work.
Goldstein gets more out of Stanford’s spokesman, Brian Bertsch, than I’ve seen anywhere else, even going so far as to characterize his defense of the company as "vigorous". (Which certainly can’t be said about all of his no-comments to me.) So, for the record, here’s the latest from the company itself:
Stanford’s Bertsch says: "Although we were saddened by the death of [Hewlett's] principal, our year-end audit is on track." He adds: "Our clients have confidence in us."
More damningly, Goldstein gets a former Stanford salesman, Charles Hazlett, on the record:
Stanford brokers who sold at least $2 million of CDs in a quarter kept 2% of the assets, says Hazlett… The high yields "never made any sense to me," he adds. "I never understood how they could generate the performance to justify those rates."
This jibes with an anonymous comment left on my own blog:
I had the dubious honor of briefly working as an analyst at the Stanford Group during the last decade… Although I never went so far as to go to the Feds with my suspicions, I was always skeptical about how the “Bank” generated its returns. Inquiries to the bank staff went unanswered. I made a lot of inquiries around the company HQ in Houston, and was usually rebuffed. And of those persons who would discuss the matter with me – including individuals who were very, very highly placed in the company – nobody seemed able to explain exactly how the “Bank” operated and how it generated the returns to the CD’s. The whole thing was as clear as mud. At the worst, it was a fraud. And even at the best, the “Bank” was actually a hedge fund, and if so, then the CD holders were being woefully undercompensated for their “deposits”…
I did mention my concerns to several of them, but was told by my principal to in no uncertain terms to STFU and stop interfering with his bonuses (Stanford Group rewarded their brokers VERY handsomely for generating new deposits and for persuading CD holders to roll over their deposits).
This does sound awfully like what was going on at Madoff, no?
Meanwhile, the banter over at Alphaville reveals that their crackshot Caribbean expert Stacy-Marie Ishmael is already on a plane to Antigua and that the FT’s lawyers have finally allowed it to start reporting on this story. Now that the UK press has the story in its teeth — the cricket angle alone is irresisitible for them — expect this to go genuinely mainstream very quickly.