GREENBERG TRAURIG & THE STANFORD FRAUD
David Arthur Walters
What we are now calling The Great Recession is teaching us the usual lessons, one being that we cannot trust the highly paid professions to regulate themselves on our behalf according to their professed ethical codes. Status and money are joined at the hip in our culture; many people believe that greed is good and might right, so even the most corrupt professions may be highly esteemed. One highly paid and esteemed profession is that of law, which likes to generally consider itself as a sort of fiduciary for the people, a trustee of the principles of justice that freedom holds dear, although we find lawyers involved in or at least overlooking almost every great deception of their ultimate beneficiary, the people at large. Wherever their organic combination has enhanced their power, say, by the narcissistic submerging of individual lawyers under the auspices or ‘divine blessing’ of powerful law firms, the greater have been the frauds perpetrated. For recent example, take the Stanford Fraud and the involvement therein of lawyers associated with Greenberg Traurig, the most powerful or politically connected Florida law firm – mind you that the Firm takes action to curb misconduct after it is detected and exposed.
According to various 1999-2000 media reports, Allen Stanford’s friend Lester Bird, Prime Minister of Antigua, in response to U.S. pressure, asked him for help in reforming Antigua’s banking laws. Mr. Stanford recruited former customs agent Patrick O’Brien, a Greenberg Traurig lawyer, to help re-write the country’s banking laws. Prime Minister Bird, at Mr. Allen’s urging, appointed two other Greenberg Traurig lawyers as advisors, one being Carlos Loumiet. Mr. Loumiet’s good friend at Greenberg Traurig, Yolanda Suarez, had become Mr. Stanford’s chief of staff. It was also reported that Mr. Stanford recruited former officials with the Drug Enforcement Agency and the Federal Bureau of Investigation as advisors to help with the revision of Antigua’s law.
Greenberg Traurig’s Mr. O’Brien was so pleased with the legal team’s handiwork on behalf of Mr. Stanford’s Antiguan counterparts that he reportedly said that he had no doubt that the result was the “best anti-laundering laws in the world.” U.S. Treasury Department officials, outraged at the American lawyers’ weakening of Antigua’s laws, did not see it that way, and issued an advisory warning urging careful scrutiny of financial transactions involving Antigua. The British government did the same a few days later.
At Mr. Stanford’s behest, Antigua chose Greenberg Traurig’s Mr. O’Brien to lead an Antiguan delegation to Washington to meet with the head of the State Department’s Bureau for International Narcotics and Law Enforcement Affairs, assistant secretary of state and attorney Jonathan Winer. His office subsequently issued a report damning Antigua as the most attractive money-laundering situs in the Caribbean. The State Department’s damnation was even more explicit about the financial influence used to pervert Antigua’s money laundering legislation. Charles Iatrago, the publisher of Miami’s Money Laundering Alert, said at the time that officials were going out of their way to highlight Mr. Stanford’s influence in Antigua – Mr. Iatrago has more recently identified Miami, aka the Magic City, as the most corrupt city in the United States.
Apparently the State of Texas was unwilling to have the U.S. swinging door of the Stanford laundromat set up within its borders. In 1998 Greenberg Traurig lawyers, apparently led by Carlos Loumiet, were collaborating with State of Florida banking regulators to set up a unique, unregulated foreign trust in Miami, which would be, in effect, a laundry facility that would receive funds from unwitting investors and from only God knows whom else, ship the money in bags to Antigua, and shred the related documents with state regulators standing by, hogtied by the antinomian agreement with Florida.
Mr. Loumiet, by the way, was accused of playing a conflict-of-interest and cover-up role in the Hamilton Bank fraud when he helped Greenberg Traurig audit the banks records and allegedly overlooked evidence of purportedly illegal swaps, a device that purportedly turned losses into profits upon which certain bank officers, subsequently jailed, took bonuses. The prosecutor dredged up a smoking gun from the ruins, a faxed document showing a Russia-China swap, which he claimed that Mr. Loumiet had separated to conceal the swap, then destroyed the fax cover letter. Mr. Loumiet claimed that the bank examiners themselves had seen what he saw, that it was perfectly clear that the swap was described in the same fax, and they had also overlooked the evidence. Furthermore, he was only one member of the Greenberg Traurig auditing team. Besides, the particular transactions referred to had actually done no harm to the bank’s stakeholders. The case against him was dismissed by Comptroller or the Currency John C. Dugan in August 2009 because he found insufficient evidence that Mr. Loumiet’s acts harmed the bank, one of three elements necessary to subject him to sanctions. After examining Mr. Loumiet’s side of the story, we may be left with the definite impression that the Office of the Comptroller was gunning for Mr. Loumiet in order to get him for anything that it possibly could fit him with. On the other hand, Mr. Dugan’s discussion seems to indicate that Mr. Loumiet was probably guilty of misconduct, and he faulted Administrative Law Judge Ann Z. Cook, who had tried the case below and found that Loumiet "did not knowingly or recklessly participate in misconduct that caused or was likely to cause more than minimal financial loss,” for excluding expert witness testimony that would have supported a finding of culpability.
Now Jonathan Winer has been quoted in an August 9, 2009 Miami Herald report as saying that the breakdown in the Stanford affair actually occurred when the 1998 deal with Florida was struck. On July 19, 2009 the Herald reported that the “legal justification” for the special arrangement with Mr. Stanford was provided by the State of Florida’s senior banking analyst, David Burgess, a non-lawyer, who reasoned, “The definition of a trust company can be stretched.” His casuistic stretching of Torah into Mishna was apparently conducted under the supervision of attorney Art Simon, the state banking director who approved of the peculiar scheme over the objections of his own counsel. Several Florida attorneys believed the scheme was contrary to banking laws and probably fraudulent. Mr. Stanford had shopped around for attorneys to do the deal before he wound up with Greenberg Traurig, and one who refused and became vocal about his refusal was Bowman Brown. Mr. Brown was recently asked by this writer to file a complaint with The Florida Bar, and I also asked another politically connected attorney, Anthony S. Battaglia, an expert in banking fraud, to do the same.
The citizens of Antigua were exceeding embarrassed when the scandal broke, and called for the resignation or sacking of any Antiguan officials involved. Allen Stanford’s blood brother Leroy King, the former Bank of America official who became Antigua’s chief regulator, was sacked, detained, and arrested – we do not know whether he has broken the vow of silence made to Mr. Stanford when he exchanged blood with him in what has been termed a “bizarre ritual” by reporters, although many red-blooded American men did not think the exchanging of blood under oath was “bizarre” when they were boys.
The blow to Antigua’s economy as a result of the scandal has been devastating. Hugo Chavez of Venezuela has come to the rescue with multimillion-dollar largess. But the public officials on the State of Florida end of the laundry scheme are apparently still in place, and there is some speculation, on the part of conspiracy theorists who believe the Bush Family patronizes evil in Florida, that the most likely suspects, including the influential Greenberg Traurig law firm, are being protected by Governor Bush’s successor Governor Crist, his attorney general, and, as far as attorneys go, by the Florida Supreme Court’s disciplinary arm, The Florida Bar.
We prefer to believe that the conspiracy theorists are mistaken about the Supreme Court of Florida and its disciplinary organ – The Florida Bar is an agency of the Supreme Court. Bar and Bench are united in Florida by virtue of what is called an integrated or mandatory bar that every Florida lawyer must belong to if he would practice law. Several state supreme courts, recognizing the inherent power of the independent judiciary to regulate the practice of law of “officers of the court” free of interference from the legislative and executive departments of government, integrated the profession into self-governing corporatist organs to upgrade and protect the professional order’s integrity in response to public outrage over both real and imagined misconduct of lawyers.
Our “natural” rights would not be worth a whit without lawyers. We prefer not to say that all lawyers are crooks, but to say that in the long run they are not any better than the average client. A decadent culture prefers decadent lawyers, and evolution, call it devolution if you will, worsens the profession. Defaming lawyers in the United States is nothing new, it is a democratic tradition. Many of the best lawyers fled the country or retired at the outset of the Revolution. Lawyers have been denounced from the earliest times of our nation as nuisances, banditti, blood-suckers, pick-pockets, smooth-tongued rogues, enemies of liberty – the mere sight of one evoked a curse. Debtors had good cause to hate lawyers during hard times: cries of “kill the lawyer” were heard. In 1787 John Quincy Adams noted that “the mere title of lawyer is sufficient to deprive a man of public confidence… the most innocent and irreproachable life cannot guard a lawyer against the hatred of his fellow citizens.” Legislators have threatened to do away with the profession altogether in order to rid the country of corruption. The arrogance that judges and lawyers displayed in court was enormously offensive to the people, who considered the judiciary’s struggle for independence to be a power-grab by an elite faction. Courthouses were set afire and propositions to abolish courts and to prevent lawyers from sitting in legislatures were fielded. Laws were passed that permitted any citizen without a criminal record to practice law. The old bar organizations of pre-revolutionary times, which were similar to the integrated bars of our own times, were eventually dissolved.
Most of the new bar organizations did not survive the popular antagonism towards lawyers in the Jacksonian era, but they put up quite a fight to raise the standards of the profession, condemning not only the defamations of rabble rousers but also the malpractice of their colleagues. The high virtues of an educated profession were extolled. Timothy Walker of Cincinnati, in his November 4, 1837 ‘Introductory Lecture on the Dignity of Law as a Profession’ delivered at Cincinnati College, said:
“From the days of the revolution down to the present time, no single class of the community has performed so much of the public service to the country, as the members of this profession…. I would hold up the legal profession, as an end in itself…. In fact there is nothing higher…. Lawyers are said to delight in tricks… to argue as strongly for the wrong as for the right… and to hire out their conscience, as well as their skill, to any client, who will pay the fee…. I, for one, am willing to admit their truth, to some extent…. We lay no claim to superhuman virtue…. If there were no knavish clients, there would be no dishonest or knavish lawyers. Our profession…does but adapt itself to circumstances; and it depends on the community, whether it shall be elevated or degraded….”
Indeed, it depends on our lot to elevate ourselves along with the members of bar organizations. In Florida that would be The Florida Bar. We might begin by begging askance of the Bar as to how the Stanford fraud was perpetrated with the help of Greenberg Traurig lawyers right under the noses of lawyers who smelled the rats and should have been obliged by the Rules of the Bar to report what was evidently a successful attempt to establish an unlawful entity that would bilk people out of billions of dollars and launder money for only God knows whom. Perhaps they did so, but we may never know, if counsel for The Florida Bar decided not to proceed against the lawyers involved back then, for we are informed by the Bar that, “If the matter is closed by bar counsel at staff level (declines to pursue investigation), one year from the date of closure the matter is purged from the attorney’s record. Therefore, we do not have a 10 year history of matters disposed with a finding of no probable cause (closed by staff).”
Well, now, in the July 9 issue of Miami New Times, Miami’s countercultural sidewalk weekly, we are informed that its reporter was able to obtain from city records information that a certain officer of the law, in his 25-year career as a “nightmare cop”, had 22 complaints for excessive force filed against him, 22 for discourtesy, 20 for abusive treatment, and 7 for missing property, that he has been reprimanded 7 times for such things as crashing his cruiser and accidentally firing his gun, that he has killed 4 suspects and cost Miami taxpayers hundreds of thousands of dollars in settlements.
Now that is an officer of the law. Alas, we cannot obtain such detailed information on an officer of the court, not if the matter is closed at staff level, for the inquiries and complaints and the reasons for declining to pursue them are purged after a year, so it would behoove the community to collect all that information somewhere else as it occurs. Why not simply keep it at The Florida Bar? Why not post links to the information on the Bar’s website so everyone can see it?
Of course we may obtain information in cases where The Florida Bar counsel decides to make a formal Complaint. But we have relearned another lesson from the Great Recession: what is not thoroughly investigated can be far more important than what is investigated; in fact it can bring the house down. We do not think The Florida Bar is disposed to hide information, but the public cannot know that for a fact unless it has immediate access to all the information the Bar receives and all the records it creates. Technological advances have made the provision of such information through search engine facilities a matter of course – all public records should be instantly available on the Bar’s website.
The historical criticism of bar organizations does give the public some cause for the sort of suspicion that could now be eliminated with transparency. Bar associations were perceived as unions or factions formed for the purpose of establishing the rule of an elite class over the people at large. A popular writer by the name of Frederick Robinson attacked the bar concept in his Program for Labor (1834). If an investigation of the bar were conducted, he wrote, “We shall discover that by means of the regularly organized combination of lawyers throughout the land the whole government of the nations is in their hands.”
We are reluctant to buy in to conspiracy theories although there may be grains of truth in the rumors. We are not at this time prepared to negatively criticize The Florida Bar, not because we are alarmed by the anonymous warnings sounded, to the effect that we may be prosecuted for the unauthorized practice of law or held in contempt of court for criticizing the Supreme Court’s strong arm, but because we have yet any concrete evidence of a pernicious conspiracy. Of course we may freely speculate on the paucity of information that we do have providing that we do not cause a riot.
It does appear that The Florida Bar, like other integrated bars in the country, naturally tends to go after small fry instead of large firms like Greenberg Traurig, firms that have more than adequate financial resources and political clout to defend their integrity. Perhaps the Bar may soon present information that it has indeed prosecuted a great deal of misconduct at Greenberg Traurig, and that it did look into and is even now examining inquiries and complaints in respect to the Stanford Fraud.
Oddly enough, Greenberg Traurig is a name that is not often pronounced for some reason. Of course the name came up here and there in the Jack Abramoff lobbying scandal. Still, few members of its home state are aware of the indictment signed by the Attorney General of Guam on March 11, 2008 that signified the felonious activities that the defendants Anthony P. Sanchez (Administrative Director of the Superior Court of Guam) Jack Abramoff, and Greenberg Traurig were allegedly up to in Guam: Unlawful Influence, Theft of Property held in Trust, Theft by Deception, Misapplication of Entrusted Funds, and Conspiracy to commit all the above. The Firm was too powerful to contend with for long, so Guam decided to drop the case for a return of some stolen funds, and it was duly noted that the Firm cooperated with the investigation.
Several readers have noticed that McClatchy’s Miami Herald, which has done an excellent muckraking job of exposing the Florida end of Stanford’s fraudulent scheme, has minced words somewhat in respect to Greenberg Traurig, perhaps fearing to name the name too often, the name of what it called a “powerful” i.e. politically connected law firm. Religion worships absolute power while politics distributes it. Jewish scribes were disinclined to scribble the name of the Lord, for to define the Lord is to defame him, and now some superstitious scribes place a hyphen between the consonants of the pagan term: i.e. G-d. Ancient priests tended to reserve the power of holy words for pronunciation by their orders. We recall that Thoth, the Lord of Holy Words, bestowed upon Isis the magic power of words, teaching her the exact pronunciation. But the power of words does not depend on a license to speak. The distribution of “justice” depends on the community itself. The independence of the judiciary must be regulated by the people from whom its “inherent” powers are derived.
It is high time for the community to carefully examine the role that The Florida Bar played, if any, in the Stanford Fraud, as well as the role it should have played, and to make sure any needed reforms are made.
Miami Beach, Florida
August 31, 2009