Archive for February, 2009

Alex Dalmady goes from whistleblower to blogger

February 16, 2009

Guest-ghost blogger Alex Dalmady of Duck Tales fame, has decided to start his own blog. I think it’s great, he can tell us lots of stories in the upcoming days, including his view on the mainstream media approach to avoiding suits and rough edges. The best part is that having his own blog will force him to write often and we will all enjoy it.

I can’t believe it has only been a week since I first posted on his Duck tales article, it seems like eons. I am still amazed that this has made so little noise in Venezuela where so many victims live, only El Nacional had a blurb on it last Saturday.

The topic is not over for me, I will let Alex blog about the overall picture as the duck explodes, but will write about the local effects, which I always believed would lead the way. I never imagined it would begin outside Venezuela. This has been one of my most interesting blogging experiences. I have blogged a lot about things that  people began to learn and understand slowly like corruption in the Chavez Government and arbitraging the official exchange rate, but never about something that moved so fast and reached so far. The blogosphere is indeed an amazing vehicle.

In the meantime, kudos to all the bloggers that participated in this, particularly in the early stages: Gringo in Venezuela, Inca Kola News, Felix Salmon and Venepiramides.  Venepiramides was already onto the story, but being in Spanish gave it a limited reach.

So, referendum over, duck over, what do I blog about now?…I have an idea…


Some final (I hope) thoughts on the results of today’s referendum

February 16, 2009

As expected the amendment proposed by Chavez, which is completely illegal was approved. I was sorry that I was right, but after being sure of a No win for seven out of the eight weeks the proposal was on the table, the numbers became simply uphill in the last seven to ten days. Pollster Datanalisis can claim now to be the only pollster to get it right in the last five elections, Datos, Hinterlaces and Consultores 21 simply blew it. They were all predicting a No victory.

My turning point came about ten days ago when I saw a presentation with a poll saying it was a tie technically between Si and No, but that Chavez with 10% points more in approval rating than he had right before the 2007 referendum.

That, together with the massive abuse of power in overwhelming all media and the people with the SI campaign and knowing that Chavez would scare or drive his supporters to vote told me we were going to lose. The whole thing was manipulated too much. It was not a level playing field.

But as I said, Chavez wasted two precious months, the economy has deteriorated further and I get the feeling that we will see a new Minister of Finance in the next few days, which implies that there will be no proposals for over a month. Because what’s coming requires a team of Major League Economists and Chavez has a bunch of amateurs looking to make a local buck for their pockets. And you can be sure they will screw it up big time. Look for inflation to reach 60% easy in 2009 and GDP to collapse. Not a pretty sight.

The opposition did not do well. Yes, they had no money versus and adversary full of it, but it seems as if it were not for the energy and organization of the students, we would have done worse. Kudos to the students. It was quite a sight to see them today going door to door with white shirts with a white hand in front and “Mobilization” on their backs, calling on people to go and vote. The opposition parties have never done anything like that.

And this is also the fault of all of those Venezuelans that had the supernatural belief that somehow there would be a miracle. That in some way, God or Allah or a Genie will protect them from Chavez like it did in 2007. Why bother to organize, participate or get involved if the miracle was coming?

So, in the end, maybe the irrelevant result is exactly what the opposition and democratic Venezuelans needed: A wake up call to get involved, work together, get organized and participate or everything will be lost, your hopes, your country and your freedom. Because Chavismo pushed the envelope to incredibly new levels, spending your money, bypassing your laws and liying its way to victory while you stayed home until today. And all with absolutely no scruples.

And even the Parliamentary elections of 2010 seem so far away. because there will be so much pain and suffering before then, that it is even hard to envision what the Venezuelan political landscape may look like by then. We are going to see too much pain and suffering before then and you can be sure many will split from the autocrat. Money will become scarce for everyone.

Chavez should be worried about completing his current term, because if oil price stay near where they are, even achieving that may be quite a feat. You can’t lie about shortages, about recession, about inflation and about incompetence. And least of all, you can’t leverage that into getting reelected after twelve wasteful years in power.

Si wins, Chavez can run again, good luck to him

February 16, 2009

With 94.2%  of the vote counted the Electoral Board announces that the Si vote, in favor of the amendment that allows the indefinite reelection of all elected positions was approved with 54.3% beat the No option with 45.3 %. The opposition gets more than five million votes. Chavez can run again in 2012. Wish him luck given the economy.

Let the rumors begin…

February 15, 2009

8:47 PM Well, the best plans don’t work, my new blog is not working, I can’t access the editor, hope it comes back. In any cae the Government is breaking the law by having Ministers appear on the official TV station saying the SI won. Nobody stops them, we are in a lawless country. My good sources say the NO won by 5%, but don’t believe anything until the CNE announces it.

7:20 Cabinet members appear on TV celebrating the victory, Globovision cuts them off, but Government TV station broadcasts it.

6:00 PM. Rumors have begun and as expected the Si supporters say the Si won by six points and the No by four points. Despite the fact that it is illegal for exit polls or results to be broadcast, Minister of Finance Ali Rodriguez said on TV the trend towards the Si vote was irreversible. Had he been opposition, he would have been jailed by now, but since he is pro-Chavez it is ok for him to say whatever he wants. Reportedly, the student computer center where the students gather the results was raided by the intelligence police.

Some pictures from this morning around Caracas

February 15, 2009



On the left, I tried to take a picture of this guy voting with the wooden cross behind him, but when I was about to take it the guard said I could not, I did anyway, but the guy had moved. I vote in a Catholic school, thus the cross. You can interpret it either way, the cross will protect the vote or we will be crucified.

The second picture is from a voting center in the highly populated area of Los Dos Caminos, a middle to lower middle class area.

The third picture on is a voting center off the Redoma de Petare in the extreme East of Caracas. In the fourth one, a voting center in Montecristo a lower middle class area. (I clearly have problems arranging the pictures and the text in this new software)

I will report later today as needed, I think it is going to be a long night with polls closing at 6 PM.

Voting proceeding smoothly, abstention seems high

February 15, 2009

I voted this morning without much of a wait, took my mother and waited for her and then voted and took her home.

As I was going in a girl in front of me had a University sweater from Simon Bolivar University, yellow in color, said USB in the back and front and had the slogan of the University. The National Guardsman told her she could not go in wearing it because it was propaganda. She complained that it was only her university’s logo and a higher ranking guardsman came out and told her she had to take it off to go in. She had a t-shirt under it and took it off. What was funny was that by the end of her vote she was carrying around her waist and you could see the logos any way. I guess being a university student has become a no no, you are subversive, opposition, oligarch and enemy of the State.

The second problem I saw firsthand is that the voting machines are not programmed properly. When you press on your choice, a check mark appears. But, for example, my mother kept her finger on her choice (guess?) and the check would appear and disappear. When she first removed her finger, the check was not there and she had to press again. This caused problems and those that pressed “VOTE” without the check present their vote was void and there was no going back. However, major Chavista political figures that had this happened to them, like Tarek William Saab and Aristobulo Isturiz, were allowed to vote twice in another sign of Government advantage.

In my polling table there were 520 voters, of which 182 had voted by noon, which is a sign of high abstention. In that table, 5 people (1%) had already voted void because of this problem and were not allowed to vote twice.

I went around the city and saw no lines anywhere, the procedure is simple, but only in 2007 have there been no lines like this.

Venezuelans set to vote on a wholly illegal referendum, but does it really matter?

February 15, 2009

Venezuelans are spending a non-alcoholic Valentine’s day (as required by the electoral law) prior to tomorrows wholly illegal referendum to amend the Venezuelan Constitution, so that Chavez can run for President again in 2012. (And again and again!)

Illegal for too many reasons. From the fact that this was already voted on (Is he a democrat when he does not abide by the voter’s desires?), that a referendum can not take place until after two years after the last one (which was on Dec. 2nd. 2007), or because the question is worded in such a fashion that it deceives voters and finally, because the whole State and its money has been manipulated to promote Chavez’ SI vote.

But Chavez’ revolution is showing increasing signs that it has by now lost all of its scruples, as it lies, intimidates and even twist facts to fit Chavez’ views and needs.

The Government has carried out an overwhelming campaign on all fronts, outspending the opposition by a factor of 7 to 8 (even on the Internet!), using all of the Government’s resources and yes, intimidating and lying to the people about the meaning of the outcome tomorrow.

To me, the most significant impact of this vote may be that for the last two months, the Venezuelan Government has ignored the crisis that is about to hit us in the face, devoting itself completely to the promotion of the Si vote to perpetuate Chavez in power. Because not only have no decisions been made, but the last two months have been spent insuring that the voters don’t feel any sign of the crisis.

But in the end tomorrow’s outcome may not be that relevant anyway. If oil prices continue at current levels and Chavez continues managing the economy with amateurs, his popularity may drop to such low levels that 2012 may seem far away even to the autocrat himself when things get really bad and much higher inflation and shortages hit the people. And  no matter which side wins, Chavez’ international reputation, or what was left of it, has been further damaged by his obsessive abuse of power and his undemocratic ways. Today’s New York Times Editorial is a clear sign that Chavez can no longer fool people into thinking he is a democrat or is even trying to do the best for the people. How times change! And how Daniel says, I certainly feel bloggers have contributed to changing international minds and beating Chavez’ huge resources on international lobbying just with our time and dedication.

And we are now here, ready to vote and sober, and I am sure you all want me to say what I think may happen.

Polls have been rather confusing in the last two months. As Chavez proposed the referendum, all major and reliable pollsters indicated the NO was way ahead. However, withing four weeks and without anything major happening, the SI had recovered significantly, closing the gap in most polls. This has been due mostly the the intense pro-SI campaign by the Government and its focus on the undecided, painting the race between Chavez and a faceless opposition that is about to take everything away from them.

At that point, after the gap narrowed, pollsters that have been rather consistent in prior elections, began to diverge. As of today, of what I consider to be the reliable pollsters, there are differences of as much as 12 percentage points in their final predictions.

Pollsters themselves indicate that there are some strange things in the data. All of them register levels of commitment by the voters that have never been seen in any Venezuelan election and least of all on a referendum, which typically turn off the voters on both sides. Running at 15% on average, abstention may be the key into understanding the final result.

Because in the end, it was Chavista abstention that gave the opposition its victory in the 2007 Constitutional referendum, as three million voters that had cast their ballot for the President in 2006, decided to stay home. The intense campaign of the last two months and the organization of tomorrow’s vote is all focused in guaranteeing that this may not happen again.

Opposition optimists want to interpret the differences in the polls on fear, but pollsters think that this fear may be reflected in who is going to vote rather than how they will vote.

And the Government has loaded the dice to insure abstention is as low as possible. Despite the fact that the law says that voting should end at 4 PM if nobody is in line, the CNE unilaterally decided to bypass it, changing it to 6 PM. This guarantees that if exit polls indicate the pro-Si vote is on the low side of things, the Chavista machinery can go and get the voters at their homes and bring them in.

Up to about ten days ago, I was thinking that the No would win, believing that the violence and intimidation would work against Chavez in the last few days. But after seeing the internal numbers of some of the polls, I have changed my mind. In 2007, Chavez approval rating was down, it is up between 8 to 10 points from that level among voters, even if they say they will vote No tomorrow. That number, combined with the resources of the Government and my belief that there is no major  “hidden” or “fear” vote lead me to conclude that the Si is going to win. Only huge abstention levels or Chavismo blowing the drive to get voters out (like it blew the Si march on Thursday) could turn the tide against Chavez.

Sorry to rain on your parade, that’s the way I see it, even if my “feelings” tell me otherwise.

I will, of course, be reporting during the day, will make my usual spin through the city as soon as I finish voting. I will visit the same centers I did in 2006, 2007 and 2008 which will give us some sense of abstention levels to see if I blew my prediction (Hope I did!). I do hope that lines will be smaller than in the regional elections when it took me all day to take my mother to vote and return for my own. I will update both blogs, but the new version (wordpress) appears much faster than the old version (Radio Userland or

But in the end, this all may be a waste of time even for Chavez. If running the country absorbed his time and effort like elections and referenda do, maybe he will actually have some more accomplishments to show in the last ten years and would not even have to waste so much money and effort on promoting his indefinite reelection.

Not your usual democratic state: Intolerance in Venezuela always goes against the opposition

February 15, 2009

We have seen weeks of abuse of power as Chavez and his Government have overwhelmed the media and the country with advertising in favor of the SI vote on Sunday’s referendum. This is not new, we have seen it before but never of the magnitude of the last six weeks.

But what is particularly bothersome (and irksome) is how intolerance against the actions of the opposition have become outright discrimination and the slightest excuse is used to create obstacles in not only and unfair way, but clearly undemocratic and in violation of people’s rights:

  • This week, the municipal Government of the Libertador District denied the opposition students permits for two marches in favor of the No vote on the referendum. Marches that favor the Government’s side are never banned or their path corrected, only the opposition’s. But what is worse is the conflict of interest whereby the mayor of the Liberatodor Municipality happens to be Chavez’ Head of campaign in favor of the SI vote Jorge Rodriguez. Rodrigues was Head of the Electoral Board before becoming Vice-Presdient of the country in that nothing-is-a-conflict-of-interest attitude that Chavismo has. Rodriguez was elected Mayor in Novemeber but ahs devoted all of his time since then to his current resposibility of making the SI win tomorrow.
  • A concert by singer Soledad Bravo, “A chant for love” which was supposed to take place today (Valentine’s Day) at Central University was canceled at the request of the union of that University which argued that given that it was an “opposition” concert, this created the possibility that there could be riots (for love?). Of course, if the union says no, that’s it as the workers will not show up.
  • And then of course, Spanish Deputy Luis Herrero was kidnapped and put on an airplane for saying that whiel he was not promoting a Yes or No vote, people were being threatened and you can only vote in freedom. He then said, and this irked the Government: ” Never vote led by the fear that in a premeditated way a dictator is trying to translate into the spirit of the people”. Of course, when Evo Morales, Daniel Ortega and Rafael Correa come and support Chavzea nd particiapte in an election rally, it is fine, but when a Deputy that can see clearly that Venezuela is no longer a democracy speaks, he is “insulting the dignity of the country”. The President of the EuropeanHans-Gert Pottering Parliament called the expulsion “unacceptable” and a disdain towards democratic institutions.
  • And then of course, the members of the Electoral Board (CNE) continue acting as Government agents in overt fashion, it was actually the Head of the CNE that ordered the deportation of the Spanish Deputy and another member of the CNE “challenged” the opposition to give an opinion about what the Deputy said. As if the opposition did not recognize Chavez’ dictatorial tendencies. Of course, Chavez came out and citicized the Deputy insulting him in his customary fashion.
  • And then, of course, Lech Walesa never came to Venezuela despite denials by the Government that it was not stopping him from coming, but it is now twice that the Polish leader has been unable to come due to the intimiadtion of the Veneuzelan Government.

QUACK!* by Alex Dalmady

February 14, 2009

It’s over. Regulatory bodies have caught on. WSJ just announced that the FBI is investigating. “Duck Tales” is in the hands of dozens of analysts who “get it”, including many with ties to the MSMs (that’s Mainstream Media for you, Toby LOL). The press is flowing more freely. The MSMs have sent guys to Antigua. It’s big. They “get” it. THE EMPEROR HAS NO CLOTHES. Stanford has no answer. “Sir Allen” has been silent since over three days ago, as that spokesman who was beginning to look a lot like Jim Carrey at the beginning of “Fun with Dick and Jane”.

Hope he gets even like Carrey did.

The Antiguan regulators are on it. They made a complete “about face” on Friday, going from “not probing Stanford” to “to quiz Stanford” and “its not a Friday afternoon cocktail anymore”. It’s obvious that someone told them to “wake up and smell the guavaberry”.

They are still in denial, however. A Mr. King says “I know Allen Stanford personally put close to half a billion dollars of his own money to beef up the capital structure of the bank.” Did you see the check, Mr. King?

NO ONE and I mean NO ONE has disputed the facts in my article. The central issue of Show me the money! has not been addressed by Stanford or anyone else. Some MSMs have asked me how I got to my figures and I’ve sent them my dinky little spreadsheet. No questions. Maybe I should pretty it up a bit.

Now comes the ugly part. The Antiguan regulators with perhaps some special “help” are going to go see about those assets. I hope for the best, but I’m afraid for the worst. There may not be much there. If there’s a broker statement showing $2-3 billion in T-bills somewhere, you can be sure it’s false. Better confirm that with the brokerage company, guys. My best guess is that those assets are going to be stuff like eLandia, which Stanford poured like $100 million into, only to lose it. HSSO, which was trying to become “something” by buying EMAG, Transwitch (TXCC), which some guy named “Peabody” on the BW blog turned up. Seems that Stanford, grasping for cash, sold $15 million of short-term notes back to the company for $9.5 million back in December. Talk about “liquidity crunch” (it works to about a very high yield, for those mathematically challenged). I guess then there are the movies, the restaurant in Memphis and other “market-beating” investments. I can imagine the ledger now…one coffee pot: $50,000.00, one helicopter: $500,000,000…one corrupt politician: priceless! The human part is going to hit home really quick. I already had a taste, and my blood is boiling. I’m MAD and I’m SAD. Yesterday, I get a call on my home phone from a lady in Venezuela. She was desperate. She tells me her 99-year-old aunt’s money, the income from which she uses for her medical needs, is in a Stanford CD. “Can you help me, Mr. Dalmady?” What do you say? “Should I redeem, Mr. Dalmady” Yes, “redeem” I said…broke my heart.

It’s becoming painfully obvious that this was in a death spiral anyway and the story was going to blow really soon. Matt Goldstein had plenty of research he was ready to go forward with, as was Allison Fitzgerald at Bloomberg. They were googling for Stanford regularly when my stuff came up. More stuff will come forward anyway. I’d say if not for “Duck Tales” this had maybe a week or two more to go, before it blew itself up (ran out of money) or the press blew it up.

That’s really bad if you think about it. Ponzi schemes live off liquidity. If these guys are strapped for cash, after pulling in $2 billion in fresh money in 2008 and “injecting fresh capital” in December…well. It’s obvious that this isn’t just a product of the 2008 market crash, stuff has been going on for a while. If I had to guess, I’d say this might have been legit until 2000 or at least a “viable model”, since the markets were doing well, but somewhere back it took a bad turn and a little hole grew into a crater. They were filling it in and perhaps trying to build up a business on the side (Stanford Group?). But its just speculation here and we won’t know unless an insider talks.

So…there it is. It’s my 15 minutes. Thanks for lending me your blogs (I really should get my own).

*A simultaneous blogcast exclusive of the Devil and Inca Kola News

Post 2 by Alex Dalmady: Confessions of a Reluctant Whistleblower Or how the Blogosphere took on Stanford

February 13, 2009

It started back in October when my long-lost friend Roberto (I’ll save his last name) called wanting me to help him with his portfolio. I said: “sure I’ll look it over”. He commented that he had a good chunk of his assets in CDs at Stanford International Bank.

I knew the Stanford name. I had heard mention of people holding CDs there. The rates were good. Assumed they could do that because as an offshore bank there was no taxes, no FDIC insurance and they could plow the money into T-bills and high-grade corporate paper and live off the spread.

But it was also mentioned in a murkier sense. People in the financial world have been questioning the deposit rates for quite a while. How could they pay those rates?

So when I went over to the bank’s web site, I was stunned. First, it looked so simple, so unsophisticated. The language used wasn’t quite right. I downloaded the financial statements and to my surprise the “business model” jumped out at me: investing in Stocks, Bonds, Hedge Funds and the like. That’s OK if you’re managing a fund, but not a bank, which is leveraging its balance sheet 15 or 20 to 1. Just a 5% drop in the portfolio, completely wipes out any equity.

“Roberto”, I said, “take your money out YESTERDAY”. He did, albeit slowly, but by December he was out. In the meantime, I found myself lured to the site over and over, my browser would wander to the SIBL and Stanford Financial site and I was googling the words “Stanford International Bank Antigua” over and over.

I saw that the SEC had been investigating since July. “How could these guys not be found out by now?” ANY trained pair of eyes looks at that audited report and says “whoa”.

Then the Madoff case blew, and it became obvious. No one was looking at stuff like this. The SEC had its head up its butt. So I dug deeper and put some numbers on a spreadsheet (took me about 30 minutes). It just got worse. Where was the portfolio? What were they invested in? 20%+ returns on their hedge funds? No way. Outperforming the S&P in stocks? No way. With 30% deposit growth (i.e. money constantly coming in)? No way.

I sat down and wrote “Duck Tales” in January. I showed it to my wife, who didn’t like it much, but was more afraid of my naming names. She didn’t want to see me gunned down by the Jamaican mob or something. A banker friend read it and said, “I agree, but if I were you, I wouldn’t publish that”.

So I sent it to Robert (Toby) Bottome, long time friend and ex-partner at Veneconomy. He said “I love it and just in time for our January issue”. “Do you want to sign it or should we just put Veneconomy Editors” “I’ll sign it”, I said.

There was the question. Why me? Putting my name out there in the firing line. It’s scary. I didn’t want a repeat of my Mercantil experience (nothing really happened) and I certainly didn’t want to get sued. However, it was probably the best. I had nothing at stake. I wasn’t a disgruntled employee, I wasn’t looking for business, I wasn’t plugging my website…heck, Toby didn’t even pay me for the article (LOL). I haven’t written for years, after my InvestAnalysis newsletter with some a little Veneconomy on the side and a brief foray online. Still, people in the financial sector in Venezuela remembered me and I had a ton of credibility with those who remembered. Toby, for his part, is an INSTITUTION in Venezuela and doesn’t take crap from anyone, not even Chávez.

Off it went. It took awhile to get the magazine out. Production problems, it seems. So it is with print. In the meantime I caught wind of blog raising some red flags about SIB also. A start-up called venepiramides, run by someone who calls himself Bernardo Madoff (LOL). It was good to see I wasn’t alone and at least had an “imaginary” friend.

But there is also a sense of confidence from something that is solid, on paper and can’t change with a click. I sent an electronic copy to family and a few friends. I was expecting some kind of reaction or outroar from Venezuela. The article was reproduced in Descifrado, a local financial “insider” weekly, and the audience grew.

All along, the feedback was the same; nobody questioned my conclusions or asked but what if? The whole thing just made too much sense.

I really don’t know how things played out in Caracas, but I know the article got around. However, the local press didn’t pick up on it. I presume that more than one “investor” made their way to Stanford’s offices to ask for their money back.

The Duck enters the Blogosphere

While the “The Duck” took flight in Caracas, it really exploded once it hit the blogs. Miguel Octavio’s “Devil Excrement” took up the story on Monday the 9th as did Caracas Gringo. Miguel, of course, is a financial veteran, (ex-kooky scientist, like me) so he understood the gist and the details of the article all too well. He came up with some more evidence of trouble in a company named Elandia, where SIBL had to give up control in exchange for not having been able to fund a $28 million dollar loan commitment.

Miguel’s blog entry was quickly picked up by Inca Kola News, a really fine Latin American blog with a sarcastic twist to it. What I liked about the way Miguel and Inca’s takes was that they said: “Here’s this, look at Alex’s report and look at Stanford’s information…decide”

Both blogs get plenty of hits…here from Inca Kola:

“2) So far today this humble blog has had several visits from major newswires, three visits from the US Federal Reserve and one from the SEC, all using combos of “Alex Dalmady”, “Stanford”, “Madoff” etc as keyword entries*. Not to mention all those people from some island called Antigua and plenty from a company called “Stanford Eagle” in Houston. Hi guys, having a nice day?”

The first mainstream reporter to call was from Businessweek. He apparently was working on a Stanford article already, but more from the angle of the “bank excesses” to show how the bank was rewarding its advisors. Bloomberg was next. Also had been working on a story and had other sources.

The next day a couple of more mainstream US blogs picked up the story and things began to get interesting. Felix Salmon at did his homework, read the article and saw it pretty much the same way I (and everyone else) did. That put the mainstream media on alert as well as the arb traders in EMAG, who briefly crushed the stock (it incredibly bounced back).

What I enjoyed the most was a hilarious blog called “I’m Bernie Madoff”. It ran a spoof with Andy Madoff writing to his dad about the deposit they had in Antigua. They linked my article. “Andy” calls me a “another nutcase like that guy Markopolos”. The next day Sir Allen wrote back to Bernie that I was “more ornery than an porcupine in heat”. I’m still ROFL. Although humorous…the blog was dead-on with facts about SIBL.

That took us to Wednesday. The EMAG deal was supposed to close during the day, but before the open EMAG informed that HSSO was telling them that SIBL wouldn’t fund the deal. How can a bank with an $8 billion portfolio NOT find $62 million –twice! You call up your broker and tell them…send it. You don’t have sell a share (or bond). Eight billion worth of securities is a fine collateral. But we sort of expected that to happen. Previously, I even lurked at the EMAG yahoo message board and posted some links to the elandia deal to see if people would “get it” and not lose more money. It was useless; I was insulted off the place.

Clusterstock at came out with a summary of Felix’s assessment and an unequivocal “Whistleblower Alleges $8 billion fraud at Sir Allen’s Offshore Bank”. Businessweek’s take was a bit lame asking if “Stanford Financial’s Offer was Too Good to be True?” without naming our report, me, Veneconomy or anything else. Our little write-up was only good enough to validate their previous report. I was disappointed (I used to read BW). They did offer me some props later, though. The calls were coming in now. Bloomberg, Reuters, Forbes. I was talking to everybody. Some of the reporters understood what I was talking about. Others might have been a bit out of place.

Bloomberg broke the story early Thursday. Well-documented, they even had another analyst back me up (or me backing the other analyst up either way, it’s good). It was obvious that the story was “in the works”. The Financial Times story on Alphaville was excellent also. The reporter had called me late Wednesday and you could tell she knew her stuff. As the “Caribbean” reporter she knew the political connections of the bank. I sent her my spreadsheet. Why not? It’s about as simple as can be. Like I tried to tell everyone, this isn’t rocket science…it’s COMMON SENSE. Apparently she was shuttled off to Antigua to follow up.

Stanford had no answer to this. Some spokesperson was saying stuff like “it’s only one analyst” or “our clients trust us”. Sure, but how about “Show me the money!” Nothing. Reporters had found me. Stanford had not. Better by me, frankly. Their best strategy is to obviously ignore the “obvious”. If they make too much noise, people will actually look…and that’s not good for Stanford.

I also received a somewhat disheartening call from David Marchant who runs He’s gone deep into Stanford for years and gave me the explanation of how Stanford lost his banking license in Montserrat. It’s obvious this guy has a lot of inside stuff. Why aren’t regulators talking to him and guys like him? But he also told me he had spent over $500,000 just to defend himself against crooked offshore bankers. Ouch. It must be hard to know all that stuff and not be able to say it.

As I write this the story gains traction. A reporter just called from the WSJ. I gave her every thing I had, including my dinky little spreadsheet. She has some Venezuelan roots and apparently knows Miguel and Toby, so there is a ton of credibility right there. Reuters called. They’re calling my home phone now…that’s a bit scary.

As this hits the mainstream media, it’s the in the hands of the lawyers. They can decide what goes and they don’t want to step on any toes. Have they been emboldened by the Madoff blowup or do they still want to go with the “official version” and let Stanford skirt the issues? We’ll see.

You have to wonder how deep the rabbit hole actually goes. I don’t know. There’s Stanford Financial Group and then there’s Stanford International Bank. I only know about the latter. How it relates to the former…not sure. Then there’s politics and philanthropy and cricket. This could go anywhere.

The guy from Reuters asked me if I was going to publish anything further. I don’t want to. I really think that inquisitive reporters and analysts from around the world can put two and two together and take it from here. I think I’ve done my part. But this little journal can help. I can get things off my chest and maybe gain some sympathy for the “little guy”.

I have an idea about how this SHOULD end. In my dreams, Stanford gives up and Jon Stewart invites me to the “Daily Show” (which my kids love) and then I can get back to my work. I have a ton of emails to answer and reports to write.  In my nightmares, I get dragged into court or the FBI shows up at MY door (understand the paranoia…I’m from Venezuela).

My friend just sent me Sir Allen’s letter to the bank’s clients. They are now retorting on Bloomberg.They appear ready to fight this. Money and plenty of influence against some good ol’ common sense. Not an even fight, I’d say and I wouldn’t expect these guys to fight clean.

But Stanford still hasn’t “shown the money” and that has to be the issue. How do you hide an $8 billion portfolio? How can you have an $8 billion portfolio and not enough liquidity for pre-determined deals/needs? Why can’t anyone answer this easy question?

I wonder what the SEC and the like are doing. It’s really hard for me to grasp that they have been at Stanford since July and haven’t come across those financial reports. Maybe they were building a case and just waiting for the right time to pounce. Hope so.

Great. Got that off my chest. Rant.