The Poor Victims of "Sir" Robert Allen Stanford—Really?

Just when the press had some downtime in covering the Madoff scandal, comes another story of financial misdeeds, this one involving the almost-mythical character of one "Sir" Robert Allen Stanford. Apparently, Mr. Stanford has swindled investors out of around $8 billion. Now, about the only thing the press loves more than a good Ponzi-scheme story is covering the poor, poor victims of these alleged frauds. The Stanford story is ripe with "victims."

A Reuters article on Stanford had this to say:

Investors such as Kelly Dehay, a realtor, showed up at the office in Houston on Tuesday to ask about their funds, only to be turned away at the door.

Dehay said his Stanford broker sold him a CD held by SIB, promising returns above 8 percent. "I started planning for my retirement a long time ago," Dehay said. "I feel very betrayed."

Now, I'm not simply a nihilist (well, not simply), but it's pretty hard to feel any sympathy for the people who've invested with Stanford, Madoff, and others to be named later (thanks, George W. Bush and Republicans for ramming deregulation down our throats!). Why did these people choose to invest their money with the disreputable financial wunderkinds? Likely, Ms. Dehay—and probably everyone else who invested in Stanford's insanely high-yield certificates of deposit—believed that investing her money with SIB would get her even more profit than going with a traditional bank or investment firm. Thus, what we see at the root of these "victims" is greed, plain and simple.

Instead of following a conservative business model and investing their money with solid returns over a finite period of time, the "victims" thought they could usurp traditional rules of investing and thereby make more money; they thought they knew more than the average person, that they were savvier than their neighbors who were investing with TD Ameritrade or JP Morgan Chase.

Rather than doing their homework and looking at Stanford's returns and realizing the yield was totally out of whack with typical CDs, they decided to put blinders on and make as much cash as possible out of their investment, rules and legality be damned. Why make 3 percent when you can make 8 percent illegally?

Now, is Stanford to blame? Sure he is. He's nothing but a common thug (oops, "allegedly" a common thug). But let's not fall all over ourselves weeping about the "victims" of this Ponzi scheme, or any other. If Standford's investors weren't aware of the illegal activities going on, they should have. Some hints? Uh, his claim that he's related to the founder of Stanford University; the school has denied that he's of the same family. Personally, I'm the grandson of famous artist Louise Bourgeois, so all of you out there, please kiss my ass.

All these investors really needed to do to avoid being swindled was to look at SIB's rate of return.

"Hmmm. Wow, Mr. Stanford, dude, this chart looks like it was made by Wile E. Coyote. The rate of return just goes up and up. Whatever. Seems awesome to me. Where do I sign?"

The poor saps were lured into this Ponzi scheme with the elixir of unrealistic riches; their thirst for off-the-charts financial gains blinded them to the obvious scam going on right under their noses.

If we really want to weep for victims of financial chicanery, how about we start with the thousand of workers losing their jobs due to extreme financial mismanagement?

Comments

[hey0there]

i think these ponzi schemes were just fronts for the rich to make their money 'disappear' into offshore bank accounts. The "lower" investors had their money stolen but i bet the ones at the top haven't lost anything. Its just been moved.

[rastignax]

David,
Your article is tasteless.
These investors were only trying to maximise their legal profits.
Remember that Stanford was a respected Banker till last week.
The fault lies with The IRS and SEC and the Treasury department rather than these individual investors.
What do you want them to do? Invest in a fund that keeps losing money because losing money seems realistic?

[David Bourgeois - Huffpost Blogger]

People make bad investing choices based on greed, among other things. There's lots of blame to go around for sure. Christopher Cox, the former "head" of the SEC, should be jailed for life (a Republican operative who gladly allowed these kinds of scams to exist). But my point is less about blame and more about an investor making a terrible decision, and then expecting the public to feel sorry for him or her. People chose to invest with Stanford, even though his rates of return were unrealistic; a 5-year-old could have told you that. What do I want them to do? I don't really care about them. My only piece of advice stems from a very old cliche: "If it looks too good to be true, it probably is." These investors took a risk and put their faith in one guy. A simple look at him and his track record would have alerted anyone with half a brain that at best he was liar; at worst a common criminal. If an investor isn't able to see through this guy's bullshit, then I have no sympathy for him or her.

[Henry]

David,
I agree with rasti here, you are a bit obtuse on this. You don't conclude that Lance Armstrong is gulty just because his performance in Le Tur belittles Frenchmen, ... now do you? I do think it's time for the time honored aphorisms to surface. A fool and his money soon go separate ways!

[satyriasis]

This Stanford guy is well connected in GOP circles. Which leads me to the conclusion most of his victims were Republican financiers. If this is indeed the case I'm glad the swindlers got a taste of their own medicine.

[rtks]

It seem to me that this article is empty, because the reason the one guy that they mention of being , turned away, coud not ascertain where he have been defrauded.

[absolomsfolly]

Well said!