CONTENTS
I. Introduction 2
II. Allen Stanford Ponzi Scheme 3
III. The victims 4
IV. Arraignments 5
V. Forfeitures by the Government 5
VI. Conclusions 5
Works Cited 7
Introduction
The concept of white-collar crime refers to financial and nonviolent criminally punishable action, which is perpetrated by the business or by the government officials (Friedrichs, 1992, p. 21). This term was coined by one of the most renowned modern sociologists Edwin Sutherland, who used this term to describe a crime, which is committed by ‘a public employee or a high-ranked business man by using his occupation’ (Shapiro, 1990, p. 348). Nowadays, the most common examples of white-collar crime are bribery, embezzlement (both in the private and in the private sector), insider trading, especially on the stock markets and large-scale copyright infringement (Koller, 2012, p. 53). Many analysts explored this concept and its impacts on the community, inferring that white-collar abuses of the highest-ranked officials from the corporate and public sector can destroy economies of the entire countries (Friedrichs, 1992, p. 18).
White-collar collar crime has especially devastating impacts when coupled with corruption, what is a very popular practice in the developing countries of the third world. Yet, even the most highly developed countries of the western world are not safeguarded from this social woe. Thus, recent scandal, involving Sepp Blatter, a renowned football administrator from Switzerland, recently burst out in Europe. As a result of this scandal, more than fifty highest-ranked officials of FIFA, which was thought to be one of the most protected organizations in the world, were dismissed.
Even the United States is vulnerable to this sort of crime. One of the most notorious examples in this regard is the bankruptcy of Enron Corporation, which at those times was one of the biggest energy companies in the United States of America. As a result of different machinations of the C-ranked officers of the company, the shareholders lost more than $40 billion, making this scandal the largest on the American corporate agenda (Friedrichs, 2007, p. 42). Despite the fact that the United States Congress adopted many laws to prevent potential white-collar abuses, the situation in future. Yet, a 2013 Allen Standford fraud revealed that the protective system is far from perfect.
Furthermore, the recent advancement in the technological segment broadened the scope of white-collar crime. Thus, today it includes cybercrime, fraud in the public and private healthcare segments, digital money laundering and tax evasion crimes (Warwick, 2014, p. 13).
The purpose of this research is to analyze the case of Allen Stanford, and to understand how committing his fraud was possible. This research also examines victim profiles, the losses inflicted on the community, the nature of the crime and the way the government responded to this crime.
Allen Stanford Ponzi Scheme
Before engaging in the criminal activities, Robert Allend Stanford was a prominent financial analyst, a philanthropist and one of the most outstanding American sponsor of professional sport activities. The IRS and other law enforcement authorities discovered that Stanford masqueraded a typical Ponzi scheme under an investment company. The money he obtained as a result of his activities was used to provide funding to the opposition politicians in Antigua and Barbuda and in the United States of America.
In 2009 the nature of his activities was discovered by the United States Securities and Exchange Commission and other law enforcement agencies of the United States. Among other charges, Mr. Stanford was indicted of issuing fake certificates of deposits on more than $7 billion. In particular, the Financial Industry Regulatory Authority of the United States reported that the returns, declared by Stanford International Banks, were substantially higher than the average on the market. The inquiries made by the specialists of the Securities and Exchange Commission revealed that hypothetical outcomes of the investments were presented as real financial performance of the company in the promotional materials, which the company demonstrated to the clients. Earlier in 2006, Embassy of the United States in the Bahamas reported that the companies, which were under control of Stanford, were engaged in money laundering activities, as well as attempted to influence the local politicians.
The FBI agents ransacked the offices of Stanford in 2009, finding that the assumed financial fraud was real. The same day, when the suspect’s offices were raided by the federal agents, he tried to escape to Antigua on a private jet. The attempt failed, and the judge ruled to surrender the passport of Mr. Stanford. Finally, on June 2009, Stanford was taken into custody by the agents of the Federal Bureau of Investigation, and the discovery process started (United States Securities and Exchange Commission, 2010, p. 57).
Finally, in 2012 the jury declared that Stanford was solely and entirely responsible for masterminding a Ponzi scheme. The judge sentenced him for a hundred and ten years of incarceration (Warwicj, 2014, p. 12).
The victims
The victims list of Stanford case contains more than a thousand of names and legal entities. The list of investors is classified and cannot be disclosed to the public. In general, the damaged parties can be categorized into the following groups:
Individual investors. It is the largest group of the damaged parties, which contributions amount for 95% of all fraudulently obtained gains.
Private investment funds makes up around 3% of the damaged parties.
Finally, the Eastern Caribbean Central Bank suffered the remaining 2%.
The Securities Exchange Commission declared that the scheme was so sophisticated, that the identification of all investors is not possible.
Arraignments
Allen Stanford was indicted of commission of bank financial fraud 18 U.S. Code § 1344, the commission of the fraud and false statement 18 US Code Chapter 47 as well as of commission of fraud by wire, radio or television 18 U.S. Code § 1343.
In addition, Allen Stanford was charged with laundering of money instruments 18 U.S. Code § 1956 due to his connections with the Gulf Cartel in Mexico.
Forfeitures by the Government
The number of victims, which suffered from the actions Stanford, is virtually incalculable. Yet, it is always an important obligation of the government to compensate the victims, as well as to face some form of punishment.
Thus, the judge ruled that $5.9 billion of his assets should be forfeited. On April 2013, a federal district judge Godbey supported ordered that the companies, which were owned by Stanford, should sell their assets and surrender $6.8 billion. This amount encompassed both the illegal profits and the interest. In addition, his private assets were sold $5.8 were paid as a fine. The receivership administration has been appointed to sell the released funds and to indemnify the aggrieved parties.
Conclusions
Secondly, the case of Stanford indicated that the SEC and other authorities should be more vigilant in monitoring the financial landscape of the United States. Declaration of the unnaturally high profits should signal that their reaction and intervention is necessary.
Works Cited
Antonie Warwick. (2014). Recognizing and Responding To Red Flags: The Stanford Ponzi scheme. Web. Retrieved from http://www.aabri.com/NC2011Manuscripts/NC11020.pdf
Friedrichs, David O. ‘White Collar Crime and the Definitional Quagmire: A Provisional Solution’, Journal of Human Justice 3(3): 5-21. 1992. Print
Friedrichs, David O. Trusted criminals: white collar crime in contemporary society. Belmont, CA: Thomson Higher Education, 2007. Print.
Koller, Cynthia. White-collar crime in housing mortgage fraud in the United States. El Paso: LFB Scholarly Pub, 2012. Print.
Shapiro, Susan P. (1990). "Collaring the Crime, not the Criminal: Reconsidering the Concept of White-collar Crime", American Sociological Review, 55: 346–65.
United States Securities and Exchange Commission. (2010). Investigation of the SEC’s Response to Concerns Regarding Robert Allen Stanford has Alleged Ponzi Scheme. Web. Retrieved from https://www.sec.gov/news/studies/2010/oig-526.pdf
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