kuhf news for houston
live blog
live blog
May 21, 2012
74°/70% humidity
Stanford Trial, 2/22/12
- One juror is missing from building. Marshals looking for him. #Stanfordtrial
- Juror found. Jury called in. Next defense witness, John Mezzanotte. #Stanfordtrial
- Mezzanotte obtained BA in accounting from UConn in 1979, MBA in finance from UConn in 1981. #Stanfordtrial
- In 1980s, worked at Touche Ross (now DeloitteTouche) on real estate syndication. #Stanfordtrial
- Founded real estate development firm and venture capital firm, involved in Caribbean, 1983-1991. #Stanfordtrial
- Founded own accounting firm, merged with Markham last year. #Stanfordtrial
- Conducted feasibility studies regarding real estate development in Caribbean. #Stanfordtrial
- One such, the Asian Village in north of Antigua. Project introduced to Antigua in 1996. Well underway by 1997. #Stanfordtrial
- Funding of the initial developer, a Malaysian, dried up as result of George Soros' arbitrage of Malaysian currency. #Stanfordtrial
- JM brought in in Nov. 2002 by Mr. Tan (orig. developer) to restructure, help scale down Asian Village. #Stanfordtrial
- Objection over relevance. Scardino says shows other people had same idea as Stanford, in same place, to develop high end resort. #Stanfordtrial
- Scardino says this shows Stanford's development of resort was not pipedream, part of fraud. #Stanfordtrial
- Costa says this may have been Stanford's idea for years, but no work on Stanford's resort ever done. #Stanfordtrial
- Dato Tan, the Malaysian developer, ultimately unable to come up with adequate funding, even with Chinese govt support. #Stanfordtrial
- Project ultimately fell through. Witness passed to prosecution. #Stanfordtrial
- JM's firm, Markham, engaged by Stanford defense. Over $1M in billing so far. #Stanfordtrial
- Are you aware Tan ultimately sold the island for resort, in 2008, to Stanford Int'l Bank. #Stanfordtrial
- Yes. You aware that Tan never able to get the $1 Billion he needed for financing? Yes. #Stanfordtrial
- Costa: You aware that Stanford claimed it would take $2 billion to finance project? JM: No, was not aware. #Stanfordtrial
- Letter 2/05, from RAS, says spent last 20 yrsdreaming of creating resort in Caribbean for world’s wealthiest families #Stanfordtrial
- You visited Guiana Island? Yes. Any roads? No. Electricity? No. Any communications? No. Any sewage? No. #Stanfordtrial
- Witness passed back to defense re-direct. #Stanfordtrial
- Govt of Antigua really wanted project built. Most extensive concession package he’s ever seen. No taxation. #Stanfordtrial
- Because of blending of Asian and Caribbean cultures, would have allowed half employees to come from Asia. #Stanfordtrial
- Fees for import of expat workers all waived, significant savings to developer. #Stanfordtrial
- You were asked how much Markham paid. Any idea how much govt paid for its work on case? No. #Stanfordtrial
- Witness excused. Mike Callaghan, next defense witness. #Stanfordtrial
- Michael Callahan started in securities business in 1968 in St Louis. #Stanfordtrial
- Moved to Philadelphia to work for Drexel Firestone, predecessor of Drexel Burnham. #Stanfordtrial
- Moved to NASD (National Assn of Securities Dealers, now FINRA) in 1973. Worked there till 1993. #Stanfordtrial
- NASD/FINRA: Self-regulatory body of broker-dealers. #Stanfordtrial
- Part of job to make sure companies made adequate disclosure of financial products, Conflicts of interests #Stanfordtrial
- After NASD, hired to become Chief Compliance Officer for New York Life. 5 years. Then VP, corp compliance, Met Life, 2 yrs. #Stanfordtrial
- From there, part owner/investor in brokerage firm Fulcrum Global Partners, since gone out of business. Now a consultant. #Stanfordtrial
- Scardino hired MC to provide expert testimony on financial products and their regulation. #Stanfordtrial
- MC reviewed numerous documents with regard to Stanford Group Co’s sale of Stanford Int'l Bank's CD products. #Stanfordtrial
- Testifies Stanford Group sales of SIB were in compliance with regulations. Says commissions to broker dealers to sell CDs 3%. #Stanfordtrial
- MC testifies guidelines provide for commissions of 5%. #Stanfordtrial
- Scardino presents Stanford Int'l Bank disclosure document, entered in evidence by govt. #Stanfordtrial
- Addressed to potential US investors. “Involves substantial risk to potential depositors.” #Stanfordtrial
- Informs “We have not registered the CD deposits provided in connection with the US Accredited Investors" (IE, not registered with SEC) #Stanfordtrial
- Document also discloses no govt insurance through FDIC, Govt of Antigua or any other govt insurance program. #Stanfordtrial
- “May lose your entire investment (principal & interest) under circumstances where we may be...unable to repay those amounts.” #Stanfordtrial
- Defense passes witness. Judge Hittner calls 15 min break.
- Court back in session. Andrew Warren cross-examining MC for govt. Questioning on commissions on CD sales. #Stanfordtrial