Bipartisanship! Republicans and Democrats Both Want to Keep Allen Stanford’s Money

Allen Stanford ran a massive Ponzi scheme. But his political donations will be tough to unwind, Aram Roston reports

Aaron M. Sprecher / Bloomberg via Getty Images

In happier days, R. Allen Stanford used to fly powerful American politicians to Antigua on his private jet. The members of Congress, Democrats and Republicans, landed at the airport Stanford operated on the Caribbean-island nation, had their pictures taken by the Antiguan newspaper he owned, visited the Antigua bank he ran, and dined at the restaurant he’d built and stocked with the finest wines.

Things have changed since then. Stanford was convicted yesterday in Houston federal court of running a giant $7 billion Ponzi scheme, selling bogus CDs from his Antiguan bank to customers around the world. Stanford, who was arrested in 2009, has lived in a jail cell in Texas since then. His mansions are gone and so are his restaurants, his newspaper, the bank, and the brokerage. Same with the cricket team he owned. He used to call himself “Sir Allen,” because the Antiguan government had knighted him in 2006, but even the Texan’s knighthood was been stripped away.

The politicians he used to wine and dine have long abandoned him, too.

But in a rare show of bipartisanship, the chief Democratic and Republican fundraising machines of congressional races, who are used to battling it out with each other, are now fighting back together in federal appeals court against the receiver assigned to settle Stanford’s affairs. They are the biggest names in the political business: the Democratic and Republican Senatorial Campaign Committees, the Democratic and Republican Congressional Campaign Committees, and the Republican National Committee. Together, they are demanding the right to keep the $1.6 million Allen Stanford gave them over the years.

To understand how and why this is happening, even as Stanford finds himself convicted of 13 of 14 counts and facing decades in prison, you have to consider how hard it is to untangle Stanford’s business affairs from politics. In 2009, Ralph Janvey, the court-appointed receiver tasked with gathering up the remnants of the Stanford mess, asked individual politicians to return money Stanford had doled out in Washington.

“Stanford was spreading money all around, almost to keep up appearances as much as to obtain some special political favors in return,” Janvey’s lawyer Kevin Sadler tells The Daily Beast.

Among the politicians who accepted Stanford’s money were Barack Obama, then running for president, John McCain, John Boehner, Bill Nelson and plenty more.

Some politicians did significant favors for Stanford, while others apparently did nothing. One of the less well-known of those favors: When Stanford wanted a banking license in Venezuela in 2004, Rep. Pete Sessions (R-Texas) joined with two other members of the House of Representatives to write on his behalf to the Venezuelan government. Sessions had been one of the congressmen who had taken trips to Antigua on Stanford’s dime.

“We personally know Mr. Stanford to be a man of great strength, character and financial stability,” says the congressmen’s 2004 letter, which was provided to The Daily Beast by Sandler. “Over the last few years we have had the opportunity to establish and maintain a very positive relationship with R. Allen Stanford and Stanford Financial Group, and have come to know that he conducts all of his business in a professional manner.”

Sessions's office did not return emails requesting comment.

(One of Sessions’ co-authors on the letter was Ohio Republican Bob Ney, who resigned in 2006 after pleading guilty in the Jack Abramoff lobbying scandal. Another was Congressman John Sweeney (R-N.Y.), who lost an election in 2006.)

Janvey’s office says $153,835 has been returned by politicians. But a lot hasn’t, including $10,000 received by Sessions and $4,600 by President Obama, according to Janvey’s office. (Obama’s office and Sessions have said they gave the equivalent amount to charity.)

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The Democrats received more than $1.15 million from Stanford between 2000 to 2005, while the Republicans got $450,000 during the same period.

The largest chunk of change was the “soft money” donations Stanford made to groups like the DNCC and RNC. And that’s where the Democrats and Republicans became strange bedfellows. In 2010, Janvey sued the DSCC, DCCC, RNC, NRCC and NRSC for nearly $1.7 million. It wasn’t Stanford’s money to give away to politicians, Janvey argued, contending that the donations were “fraudulent transfers” since the money was obtained as part of a Ponzi scheme in the first place.

But the political parties said they didn’t have to give it back: too much time had passed, they said.

“Both the Democratic committees and the Republican committees litigated very very hard,” said Sadler, “and have been quite adamant that they are not going to pay money back unless ordered to.”

In October 2011, after a federal judge in Dallas ordered the parties to pay it back, the Republicans and Democrats together filed a joint appeal with the United States Court of Appeals for the Fifth Circuit.

“Bipartisanship exists,” says Sadler, “only in a very odd place.”

The committees themselves did not return calls and emails. After the verdict was announced, I emailed a lawyer for the Republican National Committee, National Republican Senatorial Committee, and National Republican Committee. Now that Stanford had been convicted, would they drop the appeal?

“We have no plans to drop the appeal,” he emailed back.

A lawyer for the Democratic parties, reached by phone, simply said, “It’s on appeal and it’s still pending and I can’t comment.”

Stanford has yet to be sentenced. As for the victims of his fraud, Janvey says there is only a small fraction left of the estimated $5 billion that “depositors” trusted to Stanford’s care.