The Forgotten Ponzi

This Week In Blunders – Jan. 26-31

“Memory is the mother of all wisdom.” — Aeschylus

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The best thing that you can do with a convicted swindler is lock him up – but don’t forget about him.

In 2009, Robert Allen Stanford was arrested for allegedly defrauding more than 30,000 investors in 113 countries. He stole more than $7 billion and he received a 110-year prison sentence after his 2012 conviction.

I’d written about his crimes several times, but I scantily remembered them until Thursday when a federal judge finally slapped Stanford with a $5.9 billion civil fine.

The judge also ordered Stanford Financial Group's former chief financial officer James Davis to pay $17.66 million and former chief accounting officer Gilberto Lopez to pay $3.42 million for their contributions to this massive global fraud.

What took the justice system so long? Who cares? None of this money is likely to be paid, especially with Stanford all brokey and in the pokey.

Who? Allen Stanford should be famous for the billions he stole. (Photo Credit: Mug shot, U.S. Marshalls Service.

Stanford convinced his mostly foreign investors that their money was safely deposited in CDs while he spent it with abandon, destroying lives wherever he went.

Stealing as many billions he did, he should have been recognized as a Ponzi scheme superstar, but as I wrote in 2009, he was upstaged by Bernie Madoff, who was initially alleged to have stolen as much as $65 billion.

Because of the limelight on Madoff, Stanford was never able to achieve the infamy he deserved. In fact, everyone called him a mini-Madoff.

We still read about “mini-Madoffs” today because the Ponzi schemes keep coming. But you will never read about “mini-Stanfords” even though Stanford’s grift was truly enormous.

One of the greatest actors of our time, Robert De Niro, played Madoff in the May 2017 HBO film, The Wizard of Lies, based on the best-selling book by New York Times reporter Diana Henriques. Who played Stanford? Nobody. Not even Gary Busey.

Yet Stanford was far more colorful as a brash Texan with a name that was often mis-associated with a prestigious university. Madoff, by contrast, kept a low profile and described himself in media interviews as “this little Jewish guy from Brooklyn.”

At one point, Stanford was said to have a personal net worth of more than $2 billion. Madoff, by contrast, was said to be worth only about $800 million.

Stanford used his ill-gotten gains to create an international cricket league and name sporting venues named after himself. Madoff, who managed money for owners of the Mets, just had a few seats at the game.

Stanford also used his loot to take over the Caribbean island nation of Antigua and Barbuda, where he was officially knighted in 2006. Until he was finally stripped of his knighthood, people had to call him “Sir Allen.” Nobody had to call Madoff “Sir Anything.”

Madoff bought yachts and planes, but he leased space at marinas and airports. Never in his wildest schemes did he imagine taking over entire islands for his personal fleet.

Stanford also owned two newspapers in Antigua. And he was named “2008 Man of the Year” by London-based World Finance magazine. The magazine decided to forge ahead with this honor, dismissing the mounting allegations against Stanford as unproven rumors. Madoff never commanded this kind of love.

Madoff died in prison on April 14, 2021. Stanford is still kicking at age 74. He’s slated to be released in 2103 – plenty of time to build his brand and claim the infamy he deserves.

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Artificial Insolence

Enough has been written about DeepSeek already, be I’d be remiss if I didn’t mention the biggest techno blunder we’ve seen in decades.

All the billions pouring into artificial intelligence suddenly looked like a waste after the broader market heard that a Chinese company has developed AI that competes at a fraction of the price.

It’s called DeepSeek and it deeply sunk chipmaker Nvidia, which lost $600 billion in market value on Monday – the biggest one-day plunge for any company in market history.

The development proved U.S. efforts to limit advanced chips and technology to China were futile. Turns out Chinese companies can innovate without us. DeepSeek has become the top most-downloaded app and its capabilities leaves many in awe.

It was a huge humiliation for President Donald Trump, Silicon Valley, and Wall Street investors who’ve been running up AI stocks like Nvidia in a frenzy reminiscent of the dot com bubble.

Days before the DeepSeek market plunge, Trump announced Stargate, an effort to preserve U.S. AI dominance. SoftBank, Oracle and OpenAI pledged $500 billion to this plan for a massive AI infrastructure that may not be entirely needed.

As fellow Substacker Herb Greenberg noted earlier this week, DeepSeek highlights the absurdity we’re getting from the boisterous tech bros who appear to be taking over our nation.

A Guardian columnist called the feuding boy geniuses, Elon Musk and Sam Altman, “two of the world’s most powerful, overhyped and self-satisfied men.”

Don’t be fooled: These guys may be geniuses within a certain bandwidth, but their arrogance can only lead to more blunders. And at this point in history the stakes are high with AI threatening to end humanity as we know it.

Can I take a leak, or do I have to buy a Frappuccino?

Starbucks recently paid Brian Niccol $96 million upfront to become its new CEO and the guy can’t even make up his mind about who gets to use the bathroom.

Earlier this month, Niccol announced that only paying customers could use Starbucks’ bathrooms. Last week, he reversed himself.

Starbucks gave Niccol a fortune to leave his successful gig running Chipotle in August. But is any CEO really worth $96 million up front?

Not so far. Any top executive who makes a controversial decision and then swiftly reverses it leaves the impression he has no idea what he’s doing. Let’s hope Niccol has enough sense to check his zipper.

Another big reversal

President Donald Trump changed course on federal pay freezes this week. Some called it idiocy.

Others called it “genius.”

“This is Donald Trump. He throws hand grenades in the middle of the room, and then cleans it up afterwards,” Sen. Kevin Cramer of North Dakota told the Associated Press. “I just think the guy’s a genius.”

Yeah, sure. And whether you’re at Starbucks or the White House, don’t forget to flush.

Trumpflation

Trump somehow shocked the world by doing exactly what he said he was going to do: Impose steep tariffs on U.S. trading partners.

In the last edition of Business Blunders, I noted that Trump has abandoned his promise to end inflation on day one. I noted that his policies, including tariffs, are expected to be inflationary as they disrupt $21 trillion in trade.

The tariffs take effect today. And on Friday Trump said the disruption would be short-term. Reminds me of the promise Federal Reserve Chairman Jerome Powell made in 2021 calling inflation “transitory.”

Hedge fund from hell

Patrick Halligan, who served as chief financial offer of an imploded “Christian” hedge fund, received an eight-year prison sentence on Monday.

The collapse of Archegos Capital Management cost the world’s largest banks – including Nomura Holdings and Credit Suisse (now part of UBS), Morgan Stanley, and Goldman Sachs – a combined $10 billion.

At it’s peak, the firm managed $36 billion as its founder Bill Hwang boasted that he invested “according to the Word of God and the power of the Holy Spirit.”

Hwang was sentenced to 18 years in November. He and Halligan remain free on bond pending appeals.

It’s like the Bible says: “It’s easier for a camel to get to heaven that it is for a rich man to go to prison.” Or something like that. I’ve been missing Sunday school lately.

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We all know what the Bible says: “It’s easier for a rich man to go to prison than it is for a camel to go to heaven.” Or something like that. I’ve been missing Sunday school for a long time.