One last bizarre turn in Stanford case

On page 15 of a settlement document with the government, James Davis, the financial chief of the operations controlled by Allen Stanford, says that Stanford and the chief bank regulator of Stanford's bank in Antigua sealed a blood oath in 2003 by cutting their hands and mixing their blood. After that, the two men were brothers of a sort, at least in Stanford's mind.

Stanford and the government official helped cover up Stanford's frauds for years. Davis, who helped build and maintain the Stanford Ponzi scheme, faces as much as three decades in prison after pleading guilty to assisting Stanford in manipulating the money in his funds and hiding the results from clients.

The news of the blood ceremony will probably dominate the coverage of Stanford's deceit, which is too bad. The Madoff news was temporarily side-tracked by a book written by a woman who claims she was his mistress. Perhaps the public tires of the relentless and repetitive coverage of the frauds and needs some distraction.

The story that has been covered less than it should be in the two frauds is how they continued for so long. Investigators are looking into that question, which is really at the heart of the matter. But no one within the regulatory community has been punished in public. Some defendants in the cases have expressed contrition and apologized for their acts. Government agencies have simply said that their monitoring systems need to be improved.

Stanford may have been a weirdo, but he was one that it took years for the government to catch. It is another example of how taxpayers got less than they paid for from the agencies that were supposed to keep track of the financial system.

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