DAY 7: Ex-regulator talks financial reports, Cricket

By Patsy R. Brumfield / Daily Journal

11:45 POST

HOUSTON, Texas – Former Antiguan bank regulator Althea Crick resumed her testimony this morning in fallen financier R. Allen Stanford’s federal fraud trial.
Crick said Monday that Stanford urged her to cooperate with his Stanford International Bank Ltd. on the Caribbean island and ultimately brought enough political pressure to cause her to walk away from the job.
She was replaced by Leroy King, who’s fighting extradition there as a co-defendant in the government’s case that Stanford, King, former chief investment officer Laura Pendergest-Holt and two other executives were part of a $7.2 billion Ponzi scheme on SIBL investors in certificates of deposit.
The trial started Jan. 23 in Houston, where Stanford based his financial empire. Everything came crashing down in 2009 after a U.S. agency made public the fraud charges.
Prosecutors are Gregg Costa and Andrew Warren. Defense is led by Ali Fazel and Robert Scardino.
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10:20: Court’s a little late, judge handled guilty-plea, sentencing hearing just before.
(Warren – Ms. Crick – familiar with Antiguan banking laws?) Yes, what can be released. Generally, all info can be released. Pieces available to public, for fee. Information shared with regulatory authorities around world under circumstances of MOA or legal assistance treaties. If info relates to customers, court order is required. (What customer info?) Info that would outline customer’s business transactions with the bank. Per SIBL, customer deposits or accesses services. (Any problem with SIBL releasing info disclosing assets?) (Judge- how long been in banking biz?) Over 20 years. Nothing that prevents bank to reveal assets. (If SIBL wanted to tell customers about every single asset, could it?) Yes, nothing to prevent. (Who’s decision to disclose?) Bank’s. (Does FSRC say can’t do it?) No. (Form IB5?) Form designed by commission. Info that regulated entity required to submit on investment portfolio quarterly. Includes … details bank’s investment portfolio. Companies and amounts, balances with investment houses. (Did SIBL produce IB5s?) Yes.
(Info in their IB5s, SIBL?) Contain listing of all investment houses, balances, date of balances relate to… can’t remember all. Quite a compact. Those essential. (Investment houses?) Bank would at intervals within its own decisions determine where it wants to invest resources, with companies. Schedule lists all these institutions. (Other banks? has assets?) Could range from other banks to investment firms, wide range. (Prohibition for SIBL to take IB5 with info and releasing to customers?) Nothing that prohibits that.
(Exhibit – manual from SIBL with Q&A about bank’s operations and portfolio. Pg 21, asks her to read on screen?) A little difficult. Better. (Q- can client see investment in portfolio?) She reads that SIBL can’t discuss specifics, blames bank regulators. Reads SIBls not allowed to discuss positions but can discuss its investment philosophy. Reads disclosure would put banking license in jeopardy. Says statements are not accurate. (Q – top positions in portfolio?) Reads that SiBL can’t disclose because of banking regs. Says it’s not accurate. (Any type of dlsclosure about where accounts held put license in jeopardy?) No, it would not.
10:29 – (Cross-examination by John Parras) (Asks her if he and I discussed the case?) No, we never discussed the case. (Asks her about people who were with her when he said hello to her in the corridor. Afraid will be charged criminally about FSRC and SIBL?) No, (Why have lawyer with you?) Simply someone I could connect with here. (Look at govt. exhibit – see small print – says Confidential. Not for distribution.) Never seen that. (When first saw document?) This morning, here in court. (Do you know if document drafted for customers in U.S. or outside?) Don’t know. (If just for U.S., might be different laws?) Possible. (May well be that U.S. distribution, investments info could a security threat?) Given that I’m not familiar with U.S. laws, I can’t answer that. (Judge – asks Parras to use mic) (Parras – first time saw was today, to convey what?) In response to questions asked.
(Parras – exhibit – letter to Stanford from Montserrat. About proposing to revoke bank’s license. You said first time saw was night before testified?) Correct. (Number of questions about why important to know that?) Yes. (Were you shown legal opinion that license was not revoked and that the news was improper?) I have not seen such a document. (Shows her Exhibit 214 – Judge says he doesn’t have it.) (Parras – what is it? Colony of Montserrat 1994 – case with AG of Montserrat. Heard 1994. Judgment of the court. Pg 20. Do you know what this lawsuit was about?) Never seen this document. (Govt. never showed you this document before talked about proposing to revoke license?) No. (Important to know if license revoked or not?) Yes, it would be.
(Parras – says it’s lawsuit that Guardian bank’s license was revoked. Bank directors sue AG of Montserrat to say license was not revoked. Understand?) Yes, I understand. (Shows her document – reads from document… RAS testified that GB would leave Montserrat, before he received letter of 1990. Judge says RAS testified GB planned to move to Antigua. Asked if bank needed to do anything before it left. Does it sound like they wre making sure everything OK?) On that reading, would appear it would. I’m not sure what I have is judge’s opinion. (He shows her tags and signature on document, Judge Albert Redhead.) Sections were not the opinion of the judge. (Continues to read to her – dispute about what was said between RAS and Mont. official?) Appears so. (Reads – meeting purpose for letter of good standing so say GB was in good standing with us. I did not issue such a letter. Some difficulties issuing such a letter. AG says did not tell RAS that GB had no problems in Montserrat.) Appears so. (Reads – Judge says GB same people as those with bank in Antigua. Same people who came to antigua to be governed by you?) Appears so. (Judge’s letter – says Antigua needed letter, says would have been simple to obtain… that Antigua could have requested from Montserrat. Ma’am, you could have asked Montserrat for documents?) I can’t answer yes or no. I am chairman of board of FSRC. (If you wanted info today about bank in Montserrat, couldn’t you ask?) Yes. (Begins to read judgment again – says letter to Antigua not request. Says assumes was not necessary. Accepts RAS’ evidence. This is a judicial finding? Says he gives more credit to RAS than AG?) It would appear that way. (That RAS did not request letter of good standing and purpose of meeting was to inform AG that bank intended to move to Antigua. Testified went to different meeting with chief minister’s office to surrender bank licenses so could move to new location, thank him for time we operated here. Handed minister envelope with licenses and letter. Said to RAS, sorry you’re leaving because I’ve always heard good news about your bank.)
(Parras – said judge probably had on a wig. Hittner said they’re hot – I’ve tried them on. They’re horse hair. Short ones civil matters. Criminal matters are long ones. I did not guy one.)
(Parras – continues to read Montserrat judgment – can’t remember RAS handing licenses to secretary. Says no doubt RAS handed over licenses. Says no doubt bad blood between RAS and a Mr. Roe… that Roe was banking adviser, not a lawyer. See that?) Yes. (Is it true, at times as regulator, you either don’t have legal answers or need to seek legal advice, or need an opinion, frustrated that law doesn’t allow you to do what you want to do?) All, except the last one. (Your experience that your law has everything needed, never frustrated?) Not frustrated. Laws can always be improved. (Last page of judgment – judgment 12/20/1994 – Justice Redhead, finds for plaintiff, RAS and others … that GB ceased to do biz, licenses could not be revoked, that revocation referred to in letter is null and void and of no effect. See that?) Yes, yes 1994. (Long before you had any occasion to regulate SIBL on Antigua?) Yes.
(So, if it’s necessary to learn of bank’s history, important to have this other exhibit?) Yes. (Cleared up matter?) Not necessarily. (Take it up with Judge Redhead?) Don’t know how it all fits together cohesively, I’ve been given sections of a document.
(1998-99, an effort in Montserrat to make these offshore banking laws, international busines laws better? Antigua, sorry?) Yes. (Efforts to toughen money laundering laws, because of drug wars?) Don’t think I know that. (New laws in Caribbean to shut down money laundering?) Yes, 1996. (As time progressed, govts realized had to regulate financial services better?) Yes. (You were asked to join Antiguan govt to make offshore bank regs better, right?) Yes. (To join govt to make offshore banking a business on the island?) Not correct. (Asked to compare Antiguan laws with other Caribbean islands, to compete with them for business?) Not correct. (Remember writing operating plan?) Yes, authored it. (As exec director of international authority. Commissioned to give quick plan for hyper-growth of offshore sector?) Yes. (Govt looking to expand offshore banking business?) It’s the international financial sector, applies to a range of services. International insurance, trusts, non-financial businesses, cooperatives, wide range.
(You wrote a report to the board, late 1998. At that time, group called Offshore Financial Planning Committee?) Yes. (Not a govt entity, made up to help govt to strengthen its financial laws and regs, same as you were doing?) Yes. (RAS was chairman?) Yes. (YOu objected to that?) No, I didn’t object to that. (You didn’t object?) This is a civil body, why would I object to that? No need to object. Don’t know if it was a good thing. (Agree on that committee, former FBI agent Roy Harold?) Maybe (Former DEA Tom Cast, Customer agent Pat O’Brien?) Yes. (Accountants from big firms?) Don’t recall. (Lawyers?) Know of A Lawyer. (Carlos Nunez?) No, name recalled Pat O’Brien. (O’Brien was a lawyer too?) Yes. (Gentleman, had been head of Puerto Rico agency, Diaz. Former East CArribean ….?) I can’t recall that gentleman. (Committee helping you to establish a regulatory framework for international corporations?) (She pauses ….) I cannot recall that committee doing that.
(What do you recall?) In fact, the names you mentioned I know of them as a team working on operation Clean Slate. This committee was Sectorial Committee. I’m not familiar with the planning committee,why I’m confused. (Help me with this. Committee of private individuals helping government with regs?) That was Sectorial Committee when I came on board. (Then you and team developed a plan in 1998, resulted in second report in 1999?) Yes, possible. (Report, what about?) So long ago, report outlined what I saw as the need of the body to develop the sector, to strengthen the regime of the sector. (Were thre concerns about financials in Antigua?) Some concerns. I did not work with that group. (You were working to addess international concerns about Antigua?) I was brought on board to develop a regime to make the jurisdiction effective to regulate the sector. Involved a lot – administrative, legislative, range of things. Team you’re describing I know as Operation Clean Slate.
(You turned in report. They said good but we need you to do more quicker. Gave you a memo, 29-30 items with timeframe. Upset you?) I was somewhat disturbed. Some of timelines were unreasonable. Because some of things asked to do were things that could not reasonably be done in time set. (Memo- when?) Can’t say for sure. (April 1999, US/UK sent message to world about biz on Antigua?) Yes. (What was it?) Don’t recall exactly, gist to alert constituents that there were certain weaknesses within Antiguan regime. (Here’s where we get to Clean Slate. As a result, individuals undertook job to scrub the island of all its banks, basically?) Never knew what really was its task. (Group asking for your files or something else?) Team but some of the names aren’t familiar to me, not to say they were not. Remember Lloyd Harold, Pat O’Brien, Sandra Jeffrey, Ivan Diaz, Cynthia Roach.
(Telling us, as reg director, you don’t know what Clear Slate was doing?) Sounds strange but it ws the case. (Know that eventually it scrubbed the banks, drop number from 50 down to 25 or less?) Operation Clean Slate, its actions, results were never revealed to me. Any knowledge I had might have ome after. Don’t know what accomplished. (After. GB still on Antigua?) Yes, or SIBL. (You were successful to get reg framework up and running? Just you?) Yes. (Started sending examiners to different international banks? Report back?) Began that exercise, yes. (Sidenote – were you aware that GB or SIBL in spring 1999 wrote $3M check to US Marshals Service about moneylaundering by a customer?) Aware of that. (GB and RAS cooperated about that?) I don’t know that.
(Bank secrecy issue – Is it good to give customer info to anybody who asks?) Customer info, no. (Good or bad to give competitors about how you’re investing money?) Depends on infor and its nature. (True, different laws may apply?) Yes.
(Want to talk about your island.) Sure. (Govt Exhibit – map of the Caribbean … points to Barbuda/Antigua. Wher eyou were born?) Yes. (College in Florida/) Yes. Been to other Caribbean islands, basically was my extent. (When we say West iNdies, what talking?) Islands from Trinidad all way up to Anguilla. (True, but one thing that unites them is Cricket?) Yes. (There was a time when Cricket players … it’s like baseball) Not quite like baseball. (Time in ‘70-80s when WEst Indies teams were the premier for 15 years. Known as The Legends. Islands rise and fall with success of Cricket teams?) Rise and fall in what respect? (Islands really come together behind them?) Yes. (During that time, The Indies, they traveled to places that were other colonies – Australia, New Zealand etc. – whipped everybody for years. Went to London and did that in London?) (Judge says to make his point) (Parras – Cricket something RAS attempted to revive in the Indies?) I don’t know that was the case.
(Shows her series of photos – asks her if she recognizes any. ) Not all of them. (Asks her which she recognizes. Generally, what it is that you recognize in thos pictures?) Pictures of buildings that housed RAS’ businesses, some of them. (Shows pix) SIBL (Not apartment in a strip club, oops, strip mall.) It’s a building on island. (Is it nice?) You could say that. (Next) Aircraft hangar, think it’s owned by Stanford. (Do you fly out of area next to this?) We hve one airport. (When you fly out, this airport?) Yes. (You didn’t recognize this? shows pic) (Shows her another) Bank of Antigua. (Serves Antiguans that SiBL, part of Stanford entity?) Yes. (Net) Aerial view of Cricket field. (This field is one of best in world?) I don’t know that. I’m not a Cricket field expert. Hsn’t been there. (All of buildings, to your knoweldge continue to exist.) Buildings exist. (Antiguan receiver in control of those buildings?) KNow there’s liquidation, not sure if that person had control. (See any here?) No. (Second receiver, in U.S., in legal dispute with Antiguan about ownership of SIBL assets?) Know dispute, not details.
(Said Hewlett offered job to audit Bank of Antigua?) Partner with him, don’t recall year. Maybe late 1980s or early 90s. (Did he have good reputation?) I don’t know … in respect of what? (To partner with him?) No concern to partner with him. (You and Hewlett on same auditing organizations?) Yes. (Asked about annual reports, that Hewlett signed every single reports?) Annual reports? Auditors? Yes, he would have signed them. (Let me show you … exhibit …sig at bottom?) Hewlett’s. (Document – opinion – reads it … true and fair view of state of affairs with bank as of Dec. 31, 1988. Is this annual report subject to Antiguan regulatory agency?) It would have been submitted, yes. (Was ever professonal complaint about Hewlett?) Not that I can recall.
(Going through report – 1999, when you were head of reg agency?) Yes. (Could you ahve looked at report? Asked people to go in?) We could have, hesitating for a reason. (Sig and address?) Hewlett’s. (Another report, trying to get opinion, year?) 2000 (You were exec dir of agency?) Yes. (Page 37 – reads 2 graphs …Auditor’s Report to the Members. Responsible to give independent opinion. Assessments of financial statements. Opinion – true and fair view of company’s affairs.) (Have you looked at all these annual reports for GB and SIBL on Antigua?) That would have been one … accountants have gone through all the reports but I know reviews were made prior to the examination in 2001. (You’re saying, that once regulatory regime was set up, you asked bank to give annual reports in preparation for your ageny’s examination.) I think we might ahve been in possession of them. (Other info?) Other documents, info we would ahve requested. (Provided?) I don’t know, I can’t be sure. (Wouldyou have correspondence about it, if not provided?) Yes. (Bring any records from Antigua for testimony?) No. (Any reports, notes, memos, exams in writing to help you prepare?) I do have a document I made some notes on. In my possession.
(JUDGE- Time to take a break) (Warren – Annual reports entered, not for truth but for information it contains. 15 min break.
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