Accused $8 billion fraudster Allen Stanford is making headlines today, but he’s no stranger to D.C. politics. After government officials caught wind of Stanford’s cozy relationship with the government of Antigua, where he maintained his offshore banking operations, the flamboyant Texas financier worked hard to make friends in Congress.
Between July 2000 and July 2001, Stanford was the single largest contributor to the unregulated “527” fundraising groups run by then-Senate Democratic leader Tom Daschle (SD) and then-House Democratic Caucus Chairman Martin Frost (TX), according to the watchdog group Public Citizen.
Stanford’s company “gave soft money to Daschle, Frost, and the party committees at a time when it had only one lobbying objective,” Steve Weissman, who was Public Citizen’s legislative representative during that period, told me. “The people who received the money basically did nothing to advance the money laundering bill that was from the Clinton administration. Even if they were Democrats and it was the Democratic Clinton administration that wanted to push the bill, they complied with what the donor wanted.”
Frost, now a lobbyist in D.C. and president of America Votes, recalls meeting with Stanford as well as taking no action on his fellow Texan’s concerns. Their interaction was wholly routine, as the former lawmaker described it.“He was interested in the money-laundering legislation because he thought it was going to sweep up a lot of practices that weren’t directly involved in money laundering, but which he said were his legitimate business – I never took any action one way or another,” Frost told me.
But Frost did take action as chairman of the Texas delegation to the 2000 Democratic convention in Los Angeles. His team told Public Citizen that Stanford’s contributions were used to help pay for travel to the convention, meals, and a party featuring the popular Lone Star State band Asleep at the Wheel.
“It was pre-McCain-Feingold, before the law was changed,” Frost said. “We were permitted to take soft money contributions to do things like put on a concert at the convention, and that’s what we did … it was a very nice event.”
After the Bush administration took office, things were looking even nicer for opponents of the money-laundering crackdown. Then-Treasury Secretary Paul O’Neill said he would conduct a “cost-benefit analysis” of the new rules that Stanford was opposing, signaling a slowdown — if not a complete stop in the process.
Then September 11 changed everything. No amount of political giving from Stanford to Democrats, who took back control of the Senate in June 2001, could prevent strong money-laundering rules from moving forward.
“The Bush administration was really hostile to anti-money laundering legislation [during the early months of 2001] – after 9/11, they flipped,” former senior State Department official Jonathan Winer, now a senior vice president with APCO Worldwide, told me.
The money-laundering measure ultimately became law. Still, “if there had not been a 9/11, nothing probably would have happened,” as Weissman put it.
And a second proposal to help the government track down financial fraudsters, a bill called the Financial Services Anti-Fraud Network Act of 2001, managed to dissolve into oblivion in the Senate, on the Democrats’ watch, as Stanford’s company poured more than $800,000 into the coffers of the party’s senatorial campaign committee. That bill would have streamlined domestic financial fraud enforcement, making it ostensibly less of a concern to Stanford, but its ultimate fate is significant nonetheless.
So by the beginning of 2002, Stanford was already a veteran of Washington legislative combat. What was he up to more recently on Capitol Hill? We’re looking into it.