San Antonio, TX – Report: Stanford Took Advantage Of Latin Jews In Mass Ponzi Scheme

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    Allen Stanford arrives at court in Houston to plead not guilty to charges of defrauding investors of $7bn June 26 2009 [Photo Getty]San Antonio, TX – It is well known by now that Bernard L. Madoff’s multi-billion dollar Ponzi scheme victimized thousands of his fellow American Jews.

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    But now an investigation from GlobalPost Passport reports that the Great Recession’s other major Ponzi scheme — orchestrated by the Stanford Financial Group — also hammered Jews, this time in Mexico City’s highly insular Jewish community of about 40,000 people. The investigation has found that Jewish schools and charities are struggling to stay open. Retirees have lost everything. Widows once comfortable are broke. Huge capital losses are being felt in every corner of Mexico City’s tight-knit Jewish community. And a similar story appears to be emerging from the smaller Jewish community in Venezuela, although to a lesser degree.

    These communities are rife with individual stories of loss and heartbreak because of Stanford.

    In February, the Securities and Exchange Commission charged Stanford with operating a “massive” fraud. All told, regulators believe Stanford attracted an estimated $8 billion from about 30,000 victims in Latin America, Europe, and the U.S., for purportedly-safe investments like certificate of deposit (CD), albeit with a high return. About $6 billion is believed to be missing.

    Many more non-Jews than Jews lost money in the Stanford theft. But the scam hammered Mexico’s Jewish community disproportionately. Attorneys representing victims estimate that nearly half of the billion dollars lost in Mexico originated in the country’s 40,000-strong Jewish community. Those numbers pack an outsized wallop for such a small, insular community.

    Taken together, the Madoff and Stanford frauds beg the question, why have Jews been so prominently vulnerable?

    A few years ago, while Madoff and Stanford were still raking in their victims’ nest eggs, the SEC released a fact sheet entitled “Affinity Fraud: How To Avoid Investment Scams That Target Groups” (http://www.sec.gov/investor/pubs/affinity.htm). It warned that Ponzi and pyramid scheme fraudsters had been exploiting the ethnic, religious, and other bonds they shared to gain the confidence of their victims. Koreans had ripped off fellow Koreans. African-American hucksters hit black churches. And elderly con artists have ripped off fellow retirees.

    One reason the Stanford fraud wasn’t — until now — pegged as an affinity scam is that Stanford himself isn’t Jewish. On the contrary, the former Waco Texas health club owner turned financier, who was knighted in Antigua, was a devout Christian (outwardly, at least). A graduate of a Baptist university, he was reportedly active in his church and led prayers at business meetings.

    But as GlobalPost Passport has found, Stanford was able to take advantage of Jewish ethnic affinity in Mexico City by hiring native-born Mexican Jews with deep ties in the community to run his local sales operations.

    Doing so was akin to a scientist placing a single strain of bacteria in a gel-filled petri dish. The infection spread quickly.

    Mexican Jews, like Jewish minority communities scattered throughout the global Diaspora, tend to share bonds of trust born from enduring organized persecution and genocide in adopted lands. Over the centuries in different nations, Jewish people have become almost genetically inculcated with the idea that help will only come from other Jews. A trust, then, born of shared culture, identity, religion, and external threat over time made these tight-knit communities easy prey once they were infiltrated.

    In explaining why he trusted Stanford’s sales force with his synagogue’s assets, a Venezuelan rabbi told GlobalPost Passport, “They were Venezuelan Jews. They worked for a bank. He didn’t have to convince me; I called him. This was made easier, so to speak, by the fact that he was Jewish.”

    Taken in that context, it’s easy then to see how Stanford, like Madoff, spread in these communities.

    There is a warning in their story, implicit to any Jew or non-Jew living in America or abroad who is considering solicitations by one of their own kind to invest life savings. Stanford and Madoff are hardly coincidental. On the contrary, they pose a teachable moment.


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    2 Comments
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    Tachlis
    Tachlis
    14 years ago

    Hey, where’d he get such nice pj’s

    Ein Chochom K'baal Hanisayon
    Ein Chochom K'baal Hanisayon
    14 years ago

    Heres what happened to me a little while back.

    Someone approached me to invest in a certain real estate venture that promised a 30+% return. This was in the good days, so naturally it peaked my interest, and having made such returns in the past, I took the plunge. I approached a colleague-a very smart man, to see if he too wanted to get involved. Before I even got to explaining the deal, he said ” 30% ?, Bring me sonething that makes 10-15%, then I will consider it. 30%, I dont want to hear of.”

    I need not tell you the outcome of this deal. How I wish I would have taken his advice at the time. I now have it as advice to live by, albeit a little too late.