Obama, Dems and Repubs Decline to Return Ponzi Scheme Donations

National fundraising committees for President Obama, the Democratic and Republican parties and other major politicians have declined to return $1.8 million in campaign donations from Houston financier R. Allen Stanford. Stanford is now on trial for allegedly masterminding a $7 billion Ponzi scheme.

Ralph Janvey, a court-appointed receiver has been placed in charge of returning the money to investors defrauded by Stanford. Janvey obtained a federal court order last June against five Democratic and Republican campaigns, but they have not as of yet returned the money.

The Democratic Senatorial Campaign Committee received $950,500; the National Republican Congressional Committee (NRCC), $238,500; the Democratic Congressional Campaign Committee, $200,000; the Republican National Committee $128,500, and the National Republican Senatorial Committee (NRSC) $83,345.

The contributions to the campaign committees and candidates were given by Stanford himself, Stanford executives, and a political action committee associated with the financier.

Mr. Janvey, is also trying to get back money Stanford donated to individual politicians. The list of recipients includes President Obama – who received $4,600 from Stanford in his 2008 election campaign, Rep. Pete Sessions (R-Texas), the chairman of the NRCC, and Sen. John Cornyn (R-Texas), the chairman of the National Republican Senatorial Campaign Committee. Janvey is seeking these funds informally, and has not filed lawsuits.

Money has already been returned by House Speaker John Boehner, Senate Majority Leader Harry Reid and Sen. John McCain, among others. But the roughly $154,000 recovered from elected officials is a fraction of the $1.8 million still outstanding.

The $4,600 Janvey is seeking from the Obama campaign only reflects contributions that Stanford himself personally made. The actual total amount may be as high $31,000 when taking into account Stanford’s contributions to Obama’s other campaign committees, along with money from senior Stanford executives, and the Stanford Financial Group’s now defunct PAC, according to campaign finance records and an analysis by the Center for Responsive Politics. The Obama campaign donated the $4,600 to charity on February 18, 2009, just days after Stanford’s alleged fraud came to light.

The Obama campaign officially has no comment on the matter, but a source familiar with the campaign says that it does not intend to return the money to the receiver or Stanford investors.

Kevin Sadler, lead counsel for the Stanford receivership, condemned the failure by the Obama campaign to turn over the contributions to the receiver. He said “the money was never theirs to begin with,” so they have no more right to the money than an ordinary person who was given it from “a guy who goes into a Seven Eleven and robs the store.”

Ralph Janvey wrote to the Obama campaign five days after it gave the money to charity in 2009, asking that it instead be returned to investors.

“If you have already donated such amounts to charity, we request you consider donating an equal amount to the Receivership,” Janvey wrote back on February 23, 2009. “By returning such amounts to the Receivership Estate, you will help reduce the losses suffered by victims of the alleged fraud.”

This is not the first time the president’s campaign contributions have come under scrutiny. Just recently Obama’s reelection campaign returned more than $200,000 in contributions from the American brothers of a Mexican casino magnate who has been in trouble with the law. Juan Jose Rojas Cardona jumped bail in the U.S. in 1994 after being charged with drug trafficking and fraud, according to the New York Times. The campaign said it did not know the background of the Cardona brothers when it accepted the contribution.

According to former U.S. State Department and federal law enforcement officials, Stanford spent considerable sums of money on lobbying members of Congress with the goal of blocking legislation and regulations that would have strengthened money laundering laws relating to offshore banking.

As a U.S. Senator from Illinois, Obama was one of three senators who in February 2007, along with Sen. Carl Levin (D-Mich.) and then Sen. Norm Coleman (R-Minn.), sponsored their own version of offshore banking legislation.

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