Miami Herald is Loeb finalist for story on how state aided Ponzi schemer

By Rosland Gammon on May 27, 2010 in Best Practices, Featured, Investigation

By Flickr.com user Photos8.com

: Rob Barry

Michael Sallah, Rob Barry and Lucy Komisar are finalists for a Gerald Loeb Award for Distinguished Business and Financial Journalism. The team produced a Miami Herald story looking at the role Florida regulators played in allowing a banker to open an unregistered office, which eventually led to a $7 billion Ponzi scheme. Here’s the lede on their July 6, 2009, story, which won a Sigma Delta Chi Award from the Society of Professional Journalists:

“Years before his banking empire was shut down in a massive fraud case, Allen Stanford swept into Florida with a bold plan: entice Latin Americans to pour millions into his ventures — in secrecy.

From a bayfront office in Miami in 1998, he planned to sell investments to customers and send their money to Antigua.

But to pull it off, he needed unprecedented help from an unlikely ally: The state of Florida would have to grant him the right to move vast amounts of money offshore — without reporting a penny to regulators.

He got it.

Over objections by the state’s chief banking lawyer — including concerns that Stanford was laundering money — regulators granted sweeping powers never given to a private company.

The new company was also allowed to sell hundreds of millions in bank notes without allowing regulators to check for fraud.”

Today’s Tip: Read public documents very carefully, Rob says.

Rob says there was a clause in the agreement Stanford struck with the state saying the Miami office could move money offshore without oversight. He says the line could have been easily overlooked, so reporters have to read carefully.

“When I read that line, I realized the implications,” Rob says. He called a lawyer to confirm his understanding, and the story moved forward.

About the Author

Rosland Gammon is a former business journalist turned college instructor. Her newsroom experience includes reporting for The Philadelphia Inquirer, and reporting and editing at Bloomberg News. Gammon currently teaches communications at Alverno College in Milwaukee. Follow her daily posts. | E-mail: Rosland Gammon

Comments (3)

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Rob Barry says:

June 25, 2010 at 3:46 pm

Just for some background, Lucy Komisar, who runs an excellent investigative blog (The Komisar Scoop) came to The Herald in May 2009 with the original tip and documents that showed Florida regulators had granted Stanford the extraordinary arrangement. I’m afraid that fact may have been lost in translation, and I certainly want to give credit where credit is due. Lucy also had several key interviews, including a Q&A with the state’s chief banking counsel, coupled with a pivotal document that showed he was opposed to the state’s agreement.