It is interesting that more emphasis - outside the context of liability calculus - isn't placed on the so-called "feeder firms" which funneled money into these schemes. In particular two aspects seem to be neglected in the reporting relative to both Madoff and Sanford. First, there exists the issue of how (and according to what standard of dilligence) feeder firms are to be assessed as being integral to these Ponzi operations. Precious little of this kind of analysis appears in the financial press - traditional and electronic - and it is curious why this is so. Concededly, in the absence of a body of decisional law guidance informing as to where criminal and civil liability might reside (and what, in particular, criminal liability would consist in), this kind of reporting/analysis might consist largely in speculation. But speculation, at least arguably is what most financial reporting (including the best of it) comprises anyway. So it is unclear to me why these firms feeding money into the Madoff and Stanford scams haven't received greater scrutiny.

Second, nowhere have I seen analyzed the effects of compensation to firms for feeding dollars into the Madoff scam on the calculus of what real investment gains would be (or have been) necessary for Madoff to have promised consistent results on the order of returning 10% -12% to the parties invested with him. In particular, it seems to me as though one MIGHT be able to believe in a scheme where consistent low double digit returns were in the cards ex costs and expenses associated with compensating entities who were fueling the fire. After these expenses are taken into consideration, however, it seems not merely implausible, but literally impossible, for any investment vehicle or model to attain consistent returns on this order.

I guess it comes back to the old saw in currency between professional fraudsters: you can't con an honest man.

"Sniffed out the fraud"? After press reports in Latin America revealed the fraud, and three days before Stanford went on the run, his lawyer suddenly got a conscience, and that is "sniffing out the fraud"? How many years did he represent Stanford while the fraud was occurring and why did he not reveal it for all those years?

A copyright suit between two entities names "Stanford"? That would be quite a coincidence. I suspect it's a trademark suit.

Would somebody explain this to me, a poor non-lawyer?

How can Sjoblom be praised for "doing the right thing" when right up to the last minute he seems to have been aggressively defending his now-arrested client?

The day before he "disaffirmed" all knowledge, as reported in the Memphis News FEb. 23, here's what he was doing:

"For almost four hours, the SEC officials quizzed Pendergest-Holt, who in 2006 was named to the Memphis Business Journal’s Top 40 under 40, a ranking that honors the area’s local business leaders. In the room with her was Thomas Sjoblom, an attorney with the international law firm Proskauer Rose LLP who represented the Stanford company.

"Whether the testimony he heard Pendergest-Holt give that day influenced an action he took the next day is unclear. But with little explanation, Sjoblom officially quit representing Stanford Financial’s affiliated companies the day after Pendergest-Holt’s testimony, according to court records the SEC filed last week along with its complaint against Stanford.

Before entering private practice, Sjoblom had worked for the SEC for 20 years. From 1987 to 1999, he was an assistant chief litigation counsel in the SEC’s Division of Enforcement – the same division of the agency whose representatives were peppering Pendergest-Holt with questions Feb. 10.

After she was put under oath, Sjoblom immediately got down to business.

Pre-empting the SEC officials, according to a transcript of the day’s testimony, he asked: “First of all, has there been a criminal referral in this matter?”

King told him that he and his client had been provided with an SEC Form 1662. Among other things, that form reads, “The commission often makes its files available to other governmental agencies, particularly United States Attorneys and state prosecutors. There is a likelihood that information supplied by you will be made available to such agencies where appropriate.”

At press time, criminal charges had not yet been filed against the three executives who were the subject of SEC civil charges last week.

Sjoblom followed that up with another question about whether the SEC is currently working with the U.S. Attorney’s office in the Northern District of Texas or elsewhere.

“Mr. Sjoblom, I just referred you to SEC Form 1662,” King replied.
Objections

Sjoblom pressed on. Before Pendergest-Holt began her testimony, he brought up a question of whether the SEC had authority to probe matters related to Stanford’s banking arm, which operates on the Caribbean island of Antigua.

The SEC complaint alleges that most of the bank’s investment portfolio was purportedly monitored from Memphis.

“OK,” Sjoblom said. “Next, before you start asking questions ... there’s certainly an issue here whether or not the certificates of deposit are securities. So I have an objection to the purported jurisdiction of the SEC over this instrument.

“Secondly, it’s my view that the bank is located – that’s Stanford International Bank – is located outside the jurisdiction of the United States and there is no jurisdiction by the SEC over that bank and its product lines and, hence, over the information that, I’m sure, you’re going to seek to elicit today.”

"Nevertheless, the testimony proceeded.

So here's my simple-minded question:

--if he already knew about billion dollar fraud schemes, what was he doing the day before aggressively pursuing claims about jurisdictions, and the meaning of "certificates of deposit" relative to securities law? Sounds very much like a mob lawyer if that's the case.

--alternatively, if his clients' testimony in the following few hours was so shocking to him--then what the heck was he doing for years before to earn his presumably large fees? Where was his curiosity? Or his vaunted ethics?

Unless the 'wow what a white knight and ethical guy' people know something I don't, then I must be missing something obvious. What is it?

The only conclusion I can eke out of these facts is that Sjoblom was either willfully ignorant, or complicit until the very bitter end.

What am I missing?