US politicians refuse to hand back Stanford campaign cash

Obama on list of those who received money from Texan financier on trial for fraud

Stephen Foley
Wednesday 15 February 2012 01:00

American politicians including Barack Obama are refusing to hand over $1.8m in campaign donations to the alleged victims of Allen Stanford, the cricket-loving Texan financier who is on trial for fraud.

Thousands of Mr Stanford's investors lost their savings in what prosecutors say was the second-biggest pyramid scheme in history after the one engineered by Bernard Madoff, and the receiver charged with getting back some of their money wants politicians to return contributions made by the financier and his companies.

In a move calculated to shame the Obama campaign into co-operating, a lawyer for the receiver said the President had no more right to the money than someone who was given it by "a guy who goes into a 7-Eleven and robs the store".

Mr Obama was given $4,600 by Mr Stanford for his presidential campaign at the same time that the freshman Senator was intent on introducing reforms to offshore banking laws.

Stanford Financial Group and its founder showered money on lawmakers and political parties, it has emerged, and in particular on Congressmen from his home state of Texas and those on powerful banking committees.

The receiver says a small number of beneficiaries of Mr Stanford's largesse have paid back the money – House Speaker John Boehner and Senator John McCain among them – but the $154,000 returned is dwarfed by the $1.8m (£1.2m) still outstanding.

The $4,600 sought from the Obama campaign reflects only direct contributions from Mr Stanford himself. The total may be up to $31,000, when his contributions to Mr Obama's other campaign committees are included, along with money from Stanford executives, and the Stanford Financial Group's now defunct political action committee.

The $4,600 was donated to charity days after Mr Stanford was charged with fraud in 2009, but the receiver says the money should be handed over to compensate victims. Kevin Sadler, lead counsel for the receivership, told Reuters: "The money was never theirs to begin with."

Last year, a court ruled that the receiver can claw back money from political campaigns, but the decision is being appealed and the law in this area has never been clarified.

Mr Stanford's trial in Houston is entering its fourth week, with prosecutors building their case that his financial empire was built on lies. What Mr Stanford said was a $7bn savings pot in fact had reserves of just $88m, it is claimed.

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