ALEX SINK, RICK SCOTT, ALLEN STANFORD, AND THE MIAMI HERALD

In Whom Can We Trust?

October 18, 2010

Miami Beach, Florida

By David Arthur Walters

An obscure banking executive by the name of Alex Sink may become the next governor of Florida if her campaign manages to convince a sufficient number of voters that donut salesman and mergers-and-acquisitions lawyer Rick Scott is a crook.

Floridians have never trusted lawyers very much, but they certainly place scant trust in them since the most trusted and highly esteemed lawyers in the state were convicted of fraud in the handling of trust accounts and for selling interests in fake legal settlements. And lawyers with powerful Florida-based firm Greenberg Traurig of Abscam fame have apparently gotten away with helping Allen Stanford set up his fraudulent operations.

Neither do Floridians trust bankers very much, not after they stuffed millions and millions of dollars in their pockets while their banks were participating in the subprime milking of America, and then got the government to hazard billions of dollars to bail them out of the results of their financial turpitude.

The impressions we have gotten from media is that billionaire Rick Scott is convinced that every poor slob can get filthy rich if s/he works hard enough, therefore very little if any financial support of poor slobs from the government should be forthcoming; then there would be billions more dollars to be earned by hardworking fellows such as himself.

Whether or not Mr. Scott is a Medicare fraudster we cannot say for sure simply because he took the Fifth Amendment seventy-five times in a civil suit. He may have taken it not to avoid criminal charges but simply to excuse himself for withholding information that might have helped the plaintiff hold him financially liable; however, although an admission of guilt cannot implied by jury or judge when the Fifth is taken in a criminal case, an admission of guilt may be implied when someone takes the Fifth in a civil suit.

Mr. Scott has not been convicted of a crime even though the most recent political advertisements employ law enforcement officials to imply that he is a criminal. Ultimately, the majority of voters may not care if a candidate is a crook providing he has gotten away with his crimes. After all, many are the crooks who have held high private and public offices.

Alex Sink does not give us the impression of a confidence woman who rolled up her sleeves and helped her bank engage in mortgage fraud before she became Florida’s chief financial officer. Her statement, published October 17, 2010 on the front page of the Miami Herald, which we take slightly out of context as a Freudian slip, characterizes her executive style:

“I’ve sat back for the last four years and watched the state that I love fall into an economic abyss.”

Banking was very much a man’s world when our possum-eating Carolina farm-girl candidate for Florida’s first female governor got a bank job. A mouse does not rise to the top by confronting elephants and getting underfoot. She studied mathematics and accounting and did every job methodically. The newspaper gossip gives us cause to believe that she is an old fashioned accountant- and banking-type, cautious and risk-averse, therefore seemingly indecisive and evasive, hardly the sort of person who would hustle junk loans and lead her bank into an unforeseen economic abyss. We get the impression that she went along for the heavily mortgaged ride, as most Americans did, without bucking the tide or making waves; she happened to be positioned on the crest of the latest craze hence was paid handsomely for it.

Her campaign certainly presents her opposition as a crook; Mr. Scott does not have anything incriminating on her although crimes are suggested; but her excuses are troubling for they suggest that she was not watching the ball as it bounced up to the edge of the economic abyss. In fine, the charge is carelessness, negligence, and lack of foresight.

The gossip informs us that Alex Sink likes to keep a low profile under which she studies and analyzes subjects. She obviously did not pick the right subject and dig into it until she got to the bottom, where she would be confronted with the fact that the bottom was bound to fall out of the market she was riding to her own fame and fortune.

That she just goes with the flow or goes along with whatever might advance her career providing that it is popular, and ignores or neglects anything to the contrary, was evident in her response to the Miami Herald’s libelous and fraudulent coverage of the Allen Stanford fraud. She was quoted in a 9 July 2009 article entitled 'Alex Sink: Probe Allen Stanford deal,' penned by Michael Sallah, now investigative editor for the Herald, and Herald reporter Rob Barry:

"Florida's top financial officer 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."

Alex Sink was apparently suckered by the morally corrupted rag as were many other credulous readers including myself. The Herald called itself a “watchdog” in its series covering the fraud, but that slumbering dog did not wake up until well after the house was looted, and then it knowingly and repeatedly defamed Arthur M. Simon, accusing the former bank regulator of signing an illegal agreement with Stanford Trust to open a foreign trust representative office in Miami; the spurious Herald defamed as well the Banking Division of the Department of Banking and Finance, accusing it of perpetuating the Stanford’s massive fraud.

Dr. Simon, by the way, was instrumental in restructuring Florida’s regulatory agencies. Alex Sink is presently the Chief Financial Officer of the Department of Financial Services in the new regulatory structure. Dr. Simon, in an exclusive May 2010 interview at the University of Miami, where he lectures on government, explained the restructuring as follows:

SIMON: You should know that, as the director of the banking division, I was not the ultimate authority over banking regulation. That authority was an elected official. The possibility for corruption is obvious when you have elected officials regulating banks, securities and insurance companies. But under the new regulatory scheme that I came up with – a plan for government reorganization which was nurtured to fruition by the Comptroller, the Treasurer, and the Governor – which is the regulatory structure in place now, the setting of policy is in the hands of the governor and cabinet, sitting as the Financial Services Commission, but the actual regulation, the implementation and enforcement of public policy, is entrusted to appointed officials, experts in their fields. This scheme in effect depoliticized financial regulation in Florida.”

WALTERS: One wonders, then, why the Herald did not go up the hierarchy and blame your superiors.

SIMON: I don't think anyone was to blame, however, for the agreement was legal. Keep in mind that I signed it after the lawyers, including Mr. Donelan, had negotiated and agreed on it. In fact, as I remember it, the Stanford agreement was for the most part negotiated over my head, and I attended only a couple of meetings with the counter-party attorneys. I mentioned it in passing to Donelan one day, asked him how the negotiations were going, and he said well, noting a few issues that had been resolved.

WALTERS: But the Miami Herald insists that he objected to it several times, and you signed it anyway - apparently that is what he told the reporters.

SIMON: Nonsense. Donelan is a fine lawyer, and I worked closely with him on many issues. If he had had any objections to the agreement with Stanford Trust, if he felt it was contrary to the public interest, he would have put his objections in writing to his superiors, not only to protect the public, but to....

WALTERS: Cover his own ass?

SIMON: Correct. That is first-year law school.

WALTERS: But why would he tell the Miami Herald that he objected to the agreement on multiple occasions, and that you signed it anyway?

SIMON: Believe me, if that is what he said to the reporters, I cannot explain it. When I read the newspaper report on the scandal, I said something is wrong here. Donelan did not object. He's the counsel that approved it before it was sent to me. That was almost a dozen years ago, so I wondered to myself: Was there some email, something I have forgotten, something the paper has that they think is their smoking gun on this?

The frequent Herald claim that Florida banking regulators approved of an illegal agreement over the objections of Richard Donelan is patently false, as the Herald editors and reporters have been repeatedly advised to no avail – Mr. Donelan has not responded to our inquiries. Yet the Herald stands behind its story for which its reporters were given prestigious awards, despite their obvious violation of the journalism ethics published by, for example, the Society of Professional Journalists, the society from which they received the first of several awards; thus have the editors, journalists, and journalism institutions – who have been apprised of the unethical behavior – publicly disgraced themselves.

The fact of the matter is that Florida law at the time did not prohibit anyone from operating a foreign trust representative office nor did it require such an office to be approved of or regulated by Florida banking regulators; after all, a representative office was merely representative, and would not conduct actual trust business; the trust it represented would be regulated in its home state. What a representative office could do without actually doing the out-of-state business it represented had been long established by federal and regulatory regulatory custom, so it had better not step over that line; still, representative offices would not be inspected by regulators unless someone brought a complaint to their attention.

A red flag automatically arose when Stanford Trust tried to register itself with the Division of Corporations as a trust representative office business in Florida with the word “trust” in its name. The use of that term was specifically prohibited by law unless the so-named company obtained permission from banking regulators to operate as a trust. Corporations kicked the application over to Banking for examination – the name registered with Corporations would ultimately be “Stanford Fiduciary Investor Services.” Allen Stanford’s lawyers from Greenberg Traurig stepped in to adamantly insist that a representative office does not require regulatory approval, that any such requirement would be illegal. Banking noticed with raised eyebrows that the trust representative office was purportedly foreign i.e. was headquartered in Antigua; thanks to Greenberg Traurig lawyers, Antigua’s banking laws had been rewritten in such a way that it appeared that the Stanford Trust’s operations there were adequately regulated. Although Stanford Trust could not be legally prevented from doing business in Florida as a trust representative office, the Banking Division persisted with its questioning, and the lawyers on both sides negotiated a Memorandum of Agreement that basically expressed long-standing guidelines, which had been handed down from federal regulators for out-of-state banking and trust offices.

The principles of that Memorandum of Agreement between Florida and Stanford Trust, after the scandal broke, were legislated into law so that there would be no confusion in the future. Yet the self-serving Miami Herald and politicians heralded the very legislation incorporating the principles the Herald had called illegal before as a boon to the citizens of Florida, never mentioning that the entire fraud perpetrated by Allen Stanford would have taken place without the so-called illegal agreement, for the issue was not trust or banking fraud but securities fraud.

Alex Sink, if she knew her business as Chief Financial Officer of Florida who oversees regulation of Banking, Insurance, and Securities, if she was the careful student and analyst she is rumored to be, would have looked into her Securities division instead of making a public knee-jerking reaction to the newspapers malicious coverage. Of course it was convenient of her to go along with the rabble-rousing story based on the popular notion that someone in government colluding with crooks is to blame for everything – we predict that the Herald will endorse her candidacy for governor.

We addressed Alex Sink on this subject on 14 May 2010, as can be seen below. She did not respond.

May 14, 2010

Alex Sink

Chief Financial Officer

STATE OF FLORIDA

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

Alex.Sink.myfloridacfo.com

Re: Miami Herald "Alex Sink: Probe Allen Stanford Deal"

Dear Madame:

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 officer 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.

Sincerely,

David Arthur Walters

Independent Journalist

'The Miami Mirror'