May 14, 2010
Chief Financial Officer
STATE OF FLORIDA
Department of Financial Services
200 East Gaines Street
Tallahassee, Florida 32399
Re: Miami Herald "Alex Sink: Probe Allen Stanford Deal"
I am an independent journalist presently working on a series entitled 'As the Press Spins - Anatomy of an Award-Winning Expose' - to wit, the Miami Herald's "watchdog" series on the Allen Stanford affair, for which its reporters won the prestigious Sigma Delta Chi from the Society of Professional Journalists. Your good name occurs in that series, particularly in a July 9, 2009 article entitled 'Alex Sink: Probe Allen Stanford deal,' by Michael Sallah, now investigative editor for the Miami Herald, and Herald reporter Rob Barry:
"Florida's top financial officers blasted state regulators for striking a deal that allowed flamboyant banker Allen Stanford to open a Miami office to sell investments and move vast amounts of money offshore - without government oversight. State CFO Alex Sink said she wants to know why the state approved the arrangement a decade ago that permitted Stanford's Miami office to take deposits for the controversial investments now at the center of the massive fraud case.... Sink said she was disturbed Florida banking officials approved the Miami office, despite concerns by state banking counsel Richard Donelan, who said the arrangement violated state law."
It is my view, having conducted an extensive examination of available documents, that the Herald series is spurious in several regards and even libelous, and that its editors and reporters deliberately and recklessly disregarded the truth and ignored the falsity of its reports. I believe that the reporters and their reports may have deceived you into making statements that would tend to reinforce their political agenda, inducing you to cast blame on the very institution that you head, knowing that one of the major planks in your gubernatorial campaign is anti-corruption. Wherefore I pray that you will comment on this matter, one way or the other, after considering the following:
An examination of the history of out-of-state trust representative offices, and the documentation that lead up to the Memorandum of Agreement between Stanford Trust and the State of Florida, reveals that the MOA was not illegal or contrary to state and federal laws at all, as has been reiterated time and time again by the Miami Herald, whose reporters had possession of that history and the documentation - Mike Sallah, who declined to give me a copy of the MOA, and asked me to stop writing about the scandal lest I scare witnesses away, said the MOA was "ridiculous. If there is anything "ridiculous" about the final agreement, it is the Miami Herald's interpretation of its nature.
In fact, the MOA was superfluous and unnecessary, and merely elaborated the underlying principle set forth in federal banking regulations and discussed with Florida regulators back in the 80s in reference to banking over state lines. Greenberg Traurig lawyers for Stanford Trust did make convincing legal arguments based on federal and state high court rulings that Stanford Trust could open a representative office in Florida according to the statutes at that time, provided that it did not use the word "trust" or phrase "trust company" in the name of that office. It was clear that if the banking division in any way tried to prevent that office from opening, a mandate from the court could be readily obtained for its establishment, and that, in effect, Stanford Trust's attorneys were merely extending the State of Florida a courtesy and expediting the establishment of the office by offering to enter into a MOA for something that it could lawfully do without any such agreement.
Yet the Miami Herald took the facts and spun them to insinuate that the State and its banking division director Art Simon had somehow done something sinister and illegal because Allen Stanford happened to be a crook and the agreement was "unique" - interestingly, I am following up on a lead that the Miami Herald watchdog ignored a Stanford whistleblower long before the story broke. In any event, despite the peanut gallery lawyers the Miami Herald lined up to support the political campaign to blame the state and defame Mr. Simon, it is obvious that the MOA was in no way illegal or contrary to law.
As for the remarks made by the then chief banking counsel Mr. Donelan that he disapproved of the agreement: To the best of my knowledge your good office of financial regulation can provide no documentation whatsoever that he objected to the final draft of the agreement signed by Mr. Simon. If he had any reservations, he certainly would have put them in writing at the time, and if he suspected Mr. Simon of doing anything illegal or unethical, I think he would have been obliged to report Mr. Simon to The Florida Bar for disciplinary board review.
It is my information that Mr. Donelan helped negotiate the agreement, dealing with Greenberg Traurig lawyers, the negotiations being an attempt to draw a conceptual line between acting as a trust company and acting as a merely representative office for a trust company - as I have said, that concept had been drawn years before, but not as clearly as Aristotle would have desired. Furthermore, I understand that he, with analyst David Burgess, made some deletions and revisions to the drafts, and then the final draft was presented to Mr. Simon for his signature. Certainly, if there were any sound reason why the MOA should not have been signed, the bases for any such objections or reservations would have been put in writing and submitted to Mr. Simon by Mr. Donelan.
It is my opinion that Mr. Donelan did have his reservations, and expressed them orally to Mr. Burgess, which prompted the negotiations for an agreement, which he agreed with since his reservations were allayed, and then Mr. Simon signed with his approval, not disapproval. I believe that, as the scandal broke, and given the years that had passed, his memory did not serve him so excellently when he was contacted by the Miami Herald reporter and asked loaded questions, and he had an "I told them so" moment.
Yet the Miami Herald reiterated time and time again that Mr. Simon signed the agreement, so to speak, over Mr. Donelan's dead body. That must seem ridiculous to anyone who knows how the erstwhile comptroller's office and division of banking et cetera worked along its institutional lines of authority. But informed people are few in number and are understandably though regrettably not very talkative, therefore the Miami Herald with virtual impunity could pursue its political agenda and fraudulently misrepresent what actually happened.
The Miami Herald reports were replicated and are still being replicated throughout the world as you read this letter. I regret to say that I myself mistakenly took part in the parroting of the paper's primary falsehood. Consequently, the professional reputation of Arthur Simon is constantly being sullied throughout the world, and ordinary people hardly trust the current regulatory office, the Office of Financial Regulation, because they believe what they read in the papers, and think the OFR must now be as negligent as the SEC in fact was in respect to Allen Stanford.
It is with some urgency that I look forward to your response.
David Arthur Walters
'The Miami Mirror'