Stanford sentenced 110 years in jail

A federal court in Houston has sentenced R. Allen Stanford, Former jet-setting Texas tycoon, to 110 years in prison for his involvement in a $7 billion Ponzi scheme, according to reports on Thursday.

Federal prosecutors had asked the court to sentence Stanford to 230 years. Stanford, the former principal of Standford Financial Group, was convicted of fraud in March.

Stanford guilty of masterminding Ponzi scheme

A federal jury on Tuesday found Allen Stanford guilty of masterminding a $7.1 billion Ponzi scheme, according to smartinmoney.com.

Mr. Stanford has been jailed since June 2009 because he was judged to be a flight risk. He complained of memory loss from the head trauma caused by inmates’ beatings, and a court found that he was so addicted to his prescribed painkillers that he wasn't competent to stand trial. In December 2011, a judge found him competent and the trial commenced in January.

The jury convicted Mr. Stanford on 13 of the 14 charges brought by prosecutors, including conspiracy to commit money laundering, fraud and obstructing investigators. He faces a maximum of 230 years in prison. Mr. Stanford's attorneys told reporters they would appeal but didn't specify on what grounds. Prosecutors declined to comment.

At the peak of his career, he owned banks and residences around the world, had high-placed contacts with the leaders of Libya and other nations, and was a particularly outsize presence in the Caribbean isle of Antigua, where he was knighted in 2006. Mr. Stanford valued other kinds of possessions, too, including a 120-foot yacht and a fleet of aircraft valued at more than $100 million.

In 2008, Mr. Stanford was the 205th richest American with a net worth of $2.2 billion, according to Forbes magazine. His holdings in Antigua, where he held a dual citizenship, included banks, airlines and the country's biggest newspaper. A cricket enthusiast, he rose to international prominence as a benefactor of the sport.

In 2009, the U.S. government accused Mr. Stanford of swindling nearly 30,000 of investors in 113 countries for more than two decades by selling them certificates of deposit issued by the Stanford International Bank he controlled in the Caribbean island of Antigua, representing to clients that the money would be invested conservatively in stocks and bonds. Instead, he funneled the proceeds into risky real-estate assets and his own businesses, a luxurious lifestyle, a secret Swiss bank account and business deals that consistently lost money.

For the prosecution, the Stanford case was a Ponzi scheme in which he and five conspirators had given investors false financial statements indicating that the certificates of deposit were invested in conservative assets when $2 billion was actually lent to Mr. Stanford. (Read full article “Stanford Convicted in $7.1 Billion Ponzi Scheme” on smartinmoney.com)

Madoff goes to jail for running Ponzi scheme

Bernie L. Madoff pleaded guilty to all charges against him for running the largest Ponzi scheme at a hearing in Federal District Court on Thursday, Mar. 12. He also said he was deeply sorry and ashamed.

Mr. Madoff delivered a plea allocution, essentially an explanation of his crime and an acknowledgment of guilt. “I am painfully aware that I have deeply hurt many, many people, including the members of my family, my closest friends, business associates and the thousands of clients who gave me their money,” he said in his statement. “I cannot adequately express how sorry I am for what I have done.”

Madoff was also pulled away to jail, after the judge Denny Chin refused to let him remain free until sentencing. “I don’t need your statement,” the judge told prosecutors, who were waiting to argue against setting Madoff free until his sentencing time in June. “It is my intention to remand.”

Here's the AP's list of the government’s 11 counts and possibly penalties:

Count 1: Securities fraud. Maximum penalty: 20 years in prison; fine of the greatest of $5 million or twice the gross gain or loss from the offense; restitution.

Count 2: Investment adviser fraud. Maximum penalty: Five years in prison, fine and restitution.

Count 3: Mail fraud. Maximum penalty: 20 years in prison, fine and restitution.

Count 4: Wire fraud. Maximum penalty: 20 years in prison, fine and restitution.

Count 5: International money laundering, related to transfer of funds between New York-based brokerage operation and London trading desk. Maximum penalty: 20 years in prison, fine and restitution.

Count 6: International money laundering. Maximum penalty: 20 years in prison, fine and restitution.

Count 7: Money laundering. Maximum penalty: 10 years in prison, fine and restitution.

Count 8: False statements. Maximum penalty: Five years in prison, fine and restitution.

Count 9: Perjury. Maximum penalty: Five years in prison, fine and restitution.

Count 10: Making a false filing with the Securities and Exchange Commission. Maximum Penalty: 20 years in prison, fine and restitution.

Count 11: Theft from an employee benefit plan, for failing to invest pension fund assets on behalf of about 35 labor union pension plans. Maximum penalty: Five years in prison, fine and restitution.

How small investors got burned by Madoff

Bernard Madoff, was arrested Dec. 11, 2008 and charged criminally at federal court in Manhattan with securities fraud in masterminding a massive Ponzi scheme.

The alleged fraud of Bernard Madoff has put the heat on so-called feeders, the giant hedge funds that funneled more than $20 billion to the now-disgraced money manager. But it turns out those players depended on another group of smaller funds and individuals to gather money. The largely unregulated crowd, including accountants, lawyers, investment managers, even doctors, opened the exclusive world of hedge funds to more investors and charged exorbitant fees for the privilege.

A lot of small investors got exposure to Madoff through sub-feeders. The system allowed investors to gain entrée to Madoff with far fewer dollars, thereby expanding his clientele beyond big institutions and billionaires to wealthy individuals of more modest means. Many investors had no idea what they were buying since marketing documents rarely mentioned Madoff by name.

Fees were collected at every level. Investors paid layer upon layer of fees with seemingly little regard for how they ate into gains. Those at the bottom paid the biggest tab and realized the smallest returns; and now only see their investments disappear.