Witness says IRS didn't oppose Stanford loans

The Internal Revenue Service knew R. Allen Stanford was taking loans from his Antigua bank and found nothing wrong with the arrangement, the Texas tycoon’s tax lawyer testified at Stanford’s fraud trial Tuesday.
“The IRS always treated those as loans to Mr. Stanford,” said Larry Campagna, who represented Stanford in personal and business tax disputes with the IRS in 1998 and again in 2003.
The IRS did change its position, however, about the correct way to characterize payments from Stanford to his Houston-based Stanford Financial Group, the parent company of Stanford’s scores of business operations. He was sole owner of Stanford Financial and its subsidiaries.
Although the tax agency ruled that those should be listed as loans on 1998 tax returns, it said the payments should be recorded on 2001 and 2002 returns as dividend payments to Stanford, Campagna said.
Defense attorney Robert Scardino asked Campagna if anything about the returns prompted the IRS to ask criminal investigators to initiate a fraud probe.
“No,” Campagna said before he was dismissed from the witness stand.
Stanford, a native of Mexia, is accused of leading a fraud that prosecutors allege took $7 billion from clients who bought certificates of deposit in Stanford’s bank in Antigua. They were led to believe their money was invested conservatively, according to prosecution testimony, while much of it really went to personal loans to Stanford for his pet business projects and luxurious life.
Two other defense witnesses testified Monday. However, U.S. District Judge David Hittner decided Stanford’s coughing from an apparent cold needed medical attention and stopped the trial early.
Osvaldo Pi, an accountant who went to work in 2001 for Stanford Venture Capital, spent much of his time on the stand explaining venture capital, private equity and other financial terms to jurors.
Private equity firms often seek investments, on their own behalf or for well-heeled clients, in ventures that aren’t publicly traded and seek to raise capital by selling ownership shares. Private equity firms also may arrange buyout deals that take public companies private.
Pi said his job included identifying investment opportunities for Stanford Venture Capital, and that it raised millions of dollars for companies Pi and others vetted for risk and potential.
In the trial’s fifth week, the defense is attempting to show that Stanford was interested in legitimate investments, that he was consolidating his companies to make them more manageable and that the companies would have remained solvent if the U.S. government hadn’t filed a fraud suit and shut them down in February 2009.
Pi testified that the receiver who took over the assets of Stanford Financial Group and its subsidiaries didn’t seem interested in pursuing investments that remained viable, but in liquidating the companies’ assets. He said he stayed with the firm for seven months after it went into receivership.
Karen Pittman, a librarian for Andrew College, a private junior college in Georgia, testified that Stanford hired her to research whether he was related to Leland Stanford, founder of Stanford University in California. Stanford touted the relationship in his promotional brochures although university officials deny any kinship.
Pittman said she found a common relative, but after two years of research could not say for sure that Leland Stanford and Allen Stanford were related.
Defense witnesses have portrayed Stanford as the company visionary who left details to others – notably Chief Financial Officer James Davis. Davis pleaded guilty to three felony charges and testified that he and Stanford knowingly misled investors and misused their money.
Stanford and others were indicted in June 2009. He has been held without bail as a possible flight risk since his arrest that month.
Three other Stanford executives indicted separately and scheduled for trial later are free on bail, and an Antiguan regulator accused of taking bribes is fighting extradition from that Caribbean nation. Davis was charged separately in connection with his guilty plea and is cooperating with the government.
terri.langford@chron.com
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OPIC Records Net Income of $269 Million in FY2011, Helping Reduce U.S. Budget Deficit for 34th Consecutive Year

WASHINGTON–(BUSINESS WIRE)– The Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, generated net income of $269 million in Fiscal Year 2011, helping to reduce the federal budget deficit for the 34^th consecutive year.
In addition to generating revenue for the U.S. taxpayer, OPIC recorded a three-fold increase in the amount of capital the agency’s financing mobilized, rising to $4.4 billion.
In fiscal year 2011, OPIC committed $3.2 billion to companies expanding into emerging markets and supported 92 new investment projects in the power sector, hotels and housing, telecommunications and other infrastructure, as well as many other sectors like agriculture, education and microfinance. Consistent with its focus on supporting U.S. small and medium-sized enterprises, in FY2011, 78 percent of OPIC’s projects, representing nearly $1 billion in commitments, involved American small and medium-sized businesses.
OPIC responded quickly to the events of the Arab Spring, targeting up to $3 billion in financial support for investment and job creation in the Middle East and North Africa. Since setting that goal, the agency has already approved $657 million in transactions for the region, mainly to support investments in small business.
This year, OPIC also lent powerful support to U.S. companies seeking investment opportunities in the high growth renewable resources sector in emerging markets. Its commitment of $1.1 billion in financing and insurance to the sector in FY2011 represented a roughly three-fold increase over last year’s figure. Financing was provided to companies investing in a wide range of projects and regions: solar projects in Peru, India and Thailand, hydropower in Georgia, geothermal in Kenya and biomass in Liberia, among many others. Projects supported by OPIC in FY2011 will generate nearly 728 megawatts of electricity from renewable energy sources, more than a ten-fold increase from FY2010, and help avoid nearly one million tons of CO₂ emissions annually.
“OPIC generated net income and contributed to the reduction of the budget deficit for the 34th consecutive year,” said OPIC President and CEO Elizabeth Littlefield. “We did this while out performing on our core mission of mobilizing U.S. private capital to catalyze markets and support development in developing countries. OPIC’s work tangibly and profitably advances both U.S. interests and economic development abroad.”
“OPIC projects delivered important economic, environmental and developmental benefits to local populations that will make both the partner countries and the United States more secure and prosperous,” Ms. Littlefield said.
OPIC’s earnings were generated through financing and insurance provided to support U.S. private investment overseas, as well as interest earned on reserves. Those investments helped foster economic development in new and emerging markets, advance U.S. national security, and support growth in U.S. jobs and exports.
OPIC’s financial statements were audited by an independent accounting firm in accordance with Generally Accepted Accounting Principles (GAAP) as well as government audit standards specified by the Comptroller General of the United States and the Office of Management and Budget.
OPIC is the U.S. Government’s development finance institution. It mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.
Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers. OPIC services are available for new and expanding business enterprises in more than 150 countries worldwide. To date, OPIC has supported nearly $200 billion of investment in over 4,000 projects, generated $74 billion in U.S. exports and supported more than 275,000 American jobs.


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