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The man sitting across the table is tired. You can see it in his eyes. The deep creases in his brow tell the story of long hours and hard work. But he doesn’t complain.

Bowing his head, he looks down at the ring on his left finger and the tiny cross engraved in the silver band. He always has had faith in people, faith in his friends, faith in his family and faith in people who promised to help him.

But in the blink of an eye—in the time that it takes to turn on the news—his life changed. His entire future, once guarded, safe and secure, vanished into thin air.

Faces like this are the real truth behind the fall of The Stanford Group. Its investors lived in Louisiana. From Slidell to Lake Charles, men and women trusted their retirement, their insurance money, their life savings to a company that originated in Baton Rouge. They invested with Louisiana natives. Now they have next to nothing—if anything at all.

There are, of course, the wealthy investors—those high-profile businessmen and women in Baton Rouge and Lafayette who had a portion of their portfolio with Stanford. No one knows for sure who they all are.

But outside of the cocktail parties and the fundraising dinners with the city’s elite, chances are you know someone who lost money on certificates of deposit that were sold through an offshore bank affiliate and posted consistently above-average returns.

Whether or not they’ve told you, the Stanford investor is your neighbor, your friend. He sits next to you in church. He cheers beside you in the stands. He can no longer buy season tickets to LSU football games. He can’t go fishing on weekends. And when he can’t pay his mortgage or put food on his table, you’ll finally see it on his face. You’ll realize the trust on which Stanford operated has broken much of the face of Baton Rouge.

Behind the glistening marble and rich mahogany frames of Stanford Group Company, there is very little wealth to be found. It’s estimated that $8 billion was lost in what has been described as an elaborate Ponzi scheme—one that might cost the Capital and Acadiana regions as much as $1 billion.

Instead of a portfolio in cash, gold bullion or grand market investments, it’s an operation born wholly of trust. It’s a trust derived from respect, honor and faith. But one that ended in deceit. The tagline for Stanford could easily have been, like the motto on U.S. currency, “In Stanford we trust.” But it would have been just a motto.

It was a trust that ran deep and trickled down from the top. The Stanford inner circle convincing their employees to trust them. The employees convincing their clients to trust them. In a who-you-know city like Baton Rouge, a handshake is the ultimate contract and trust is everything. And it all just worked. It helped build a business bigger and bigger until the bottom dropped out.

And while the television commentators want desperately to compare the Stanford scandal to Bernard Madoff, there was no office on Wall Street. You didn’t have to be someone who knew someone to get in on the deal. All you had to do was pick up the phone and ask about the safe, consistent returns of the Stanford International Bank certificate of deposit. And if you ever had any doubts, your adviser—a kind, humble, charismatic individual—would assure you that everything was perfectly safe, protected and legal.

Those same commentators also want to say these investors ignored supremely high returns because they thought their wealth entitled them to unprecedented interest rates in exchange for large cash deposits. But when the Securities and Exchange Commission and other regulators finally began to talk—and victims started to recover from shock and come out of the shadows—a more intricate history became glaringly apparent.

For Baton Rouge, the scandal might bring into play an awakening of its own mistakes. Because Stanford wasn’t conceived in a New York high-rise. It wasn’t even conceived in a sprawling Houston office building. It was born, in large part, in a building on the corner of Fifth and Laurel streets in downtown Baton Rouge. It was the grand scheme born there that might have laid the groundwork for the Stanford Financial Group and the Stanford International Bank CDs that have devastated entire communities.

Add the possibility of an overwhelming failure of regulatory agencies, including the SEC, Financial Industry Regulatory Authority and Louisiana Office of Financial Institutions, and questions about whether or not the scheme could have been stopped earlier start to fly. If only something had happened. If only someone had cracked—a powerful investor, a leading Stanford employee or even a regulatory agent with the determination to push through bureaucracy. Maybe something could have been done before billions were sucked deep into an Antiguan black hole.

In documenting Stanford’s origin, relationships and ultimate collapse in Baton Rouge, Business Report spoke with numerous individuals close to the company’s advisers, several investors, industry professionals and attorneys. Many of those people who provided information asked they not be named, as they would prefer not to be linked to the scandal.

The Business Report attempted to contact a number of Stanford advisers and employees through both attorneys and personal contacts. All, with the exception of Michael Word, declined to comment.

Birth of a scandal

In the months since Texas financier Robert Allen Stanford was accused of heading up an international Ponzi scheme that totaled about $8 billion, the history of Stanford companies has begun to unfold.

It began in Texas with Stanford’s failed attempt to start a fitness club. The subsequent bankruptcy left him with debtors and a damaged reputation. The man of a modest upbringing was down, but he was not out.

Shortly after the bankruptcy, Stanford acquired—from an unknown source—$6 million in seed money to start a bank in 1985 on the Caribbean island of Montserrat. The bank, initially called Guardian International, operated from the small island—just 10 miles long and 7 miles wide—until the mid 1990s. [In 1995, the eruption of a previously dormant volcano destroyed the capital city, Plymouth, and forced two-thirds of the population to flee].

That timeline is, oddly enough, affirmed in the CD Disclosure Statement despite insistence from marketing materials that Stanford actually was founded 75 years ago. The only affiliation Stanford has to a company founded 75 years ago is an insurance company founded in the 1930s by Robert Allen Stanford’s grandfather. The insurance company has no direct link to any of the entities in Stanford’s fallen empire.

Thousands of miles away, in a modest white building on the corner of Fifth and Laurel, about half of Guardian’s $64 million in assets were invested with a group of financial advisers, led by Jay Comeaux and Alvaro Trullenque, in the Baton Rouge office of Merrill Lynch. And while all might have seemed well, Comeaux and Trullenque were asked to drop the Guardian account by Merrill’s corporate management. That request came late in 1995.

It took only two weeks for Comeaux and Trullenque to gather five more Merrill Lynch employees, clean out their files and turn in their notices on a Friday afternoon in January 1996.

Comeaux and Trullenque didn’t move far. They moved down the street to the new City Plaza building developed by Mike Wampold, an eventual investor. It was a move that apparently had been planned for some time; Merrill Lynch employees saw Trullenque reviewing blue prints on a regular basis. When asked about the architectural sketches being ferried to and from his office, Trullenque rebuffed the questions, saying he was building a new house.

In reality, the plans were not for a new home, but for the elaborate, lush offices of Stanford Group Company.

From the Merrill Lynch staff, Comeaux and Trullenque took with them Jason LeBlanc, Manuel Malvaez, Tony Perez and the team’s two assistants. A few weeks after their departure, they signed Jason Green as the group’s first Certified Financial Planner.

While details regarding the origin of Comeaux and Trullenque’s relationship with Stanford aren’t completely clear, there is one link. At the time, Comeaux’s older sister was working for Stanford as his assistant.

About the same time as the group’s departure from Merrill Lynch, Robert Allen Stanford was making a departure of his own from Montserrat. According to numerous sources from the region at the time, Stanford was hastily ushered out by government officials who were suspicious that money was being laundered through Guardian International Bank.

Instead of closing up shop for good, Stanford moved the bank to Antigua, where he subsequently named it for himself. Stanford International Bank began operating in the largely impoverished country, and the bank began expanding rapidly.

Bank crack

From their new home, it didn’t take long for the brokers with Stanford Group Company in Baton Rouge to peddle their wares in Latin America, according to a source close to the company.

“It was all smoke and mirrors from the beginning,” the source says.

Leaving the United States to seek investors in Mexico, the group began to build a clientele. Instead of using the Stanford name and the promise of “boutique firm”-type services, the brokers told investors they worked for Bear Stearns.

“It is possible a broker could mention the name of a brokerage clearing firm or that they were operating as an ‘independent representative,’” says Lance Paddock, a certified financial planner with Peters Wealth Advisors. “But, generally, an adviser cannot claim to work for a large brokerage house if they are only clearing a product through them.”

Even from the first year of the sale, 1998, the CD interest rates were substantially higher than that of the average U.S.-based CD. The high returns, advisers were told, were possible because of numerous advantages within Stanford International Bank.

The term “certificate of deposit” elicits a commonly accepted definition for investors—a safe deposit made to a bank, with which a bank makes personal and corporate loans and returns to the investor a relatively small interest payment. In reality, a CD is nothing more than a piece of paper verifying that a lump sum of money has been given to the bank or investment firm. Banks might then use that cash as investment capital.

In the case of the Stanford International Bank CD, the cash was, according to Stanford, invested rather than loaned out. Those investments have been reported by officials to be in illiquid private equity and real estate investments. If the SEC’s allegations prove correct, the cash deposits actually were used to pay out other investors’ interest payments in operation of a Ponzi scheme.

Michael Word, an adviser with his own Stanford office in the Bank of Zachary, says when he started with the firm in the early 2000s, “it was just an investment portfolio that produced returns … depending on the year … 11% to 12%.”

“The main [reasons] were zero tax jurisdiction. The bank was not required to pay taxes like U.S. banks were. Low overhead. I’m trying to think. I’d say that was the main [reason]. And the fact that it was an investment portfolio.”

Other industry professionals like Paddock say it’s theoretically possible Stanford International Bank was making higher interest rates on its CDs. But it’s still not likely they were able to generate enough of a return to cover the interest rate being paid to the investor, operating costs and the referral fee given to the advisers.

According to the 2004 Stanford International Bank Annual Report, under the header of Operating Income, interest and noninterest income was $331,889,732, less $161,677,476 in interest paid and $123,387,282 in service fees and commissions, and the net interest and noninterest income before operating expenses was $46,824,974. Stanford was paying out more than $285 million in interest to the investors and fees and commissions to the advisers—more than 85% of the total income of Stanford International Bank.

Then there’s the issue of the referral fee, known as a commission or kickback. Those who pointed fingers early on say it was the prime indicator that something was wrong with Stanford. According to the disclosure statement from SIB last amended in 2007, the 3% commission is paid to “persons who introduce depositors to us.” It explains the 3% is the established rate, in particular, with the Stanford Group Company. Generally speaking, while SGC received the 3% fee, advisers were paid only 1% of that, plus an additional 1% upon renewal annually after the first 13 months.

And that referral fee, that commission, was a sweet deal for advisers, says a source close to Stanford. For example, if an adviser signed a client with a $1 million CD, the adviser received a $10,000 commission. If the client renewed after the first year, the adviser earned another $10,000. No extra work was needed, and no paperwork was shuffled. It only took a few phone calls to the investor, letting them know their money was safe and doing well.

Add in the supremely lavish bonuses, and the CD began to live up to the nickname given to it by many Stanford advisers—“bank crack.” Just like a drug, the promise of a payoff was sweetened by the side effects—in many cases, rewards like a Mercedes-Benz of the adviser’s choosing if they were the first to sell $10 million in CDs over a set time period.

Despite the inclusion of the referral fee and a mention of “additional bonuses” in a later entry of the Disclosure Statement, none of the investors who spoke to the Business Report claimed to know about the pay structure until they found out about it in the news. Several investors said they’d expressed concern over their advisers not being paid at all because there wasn’t a direct fee associated with the instrument. One investor—who was used to managing his own $6 million portfolio—lost upwards of $1 million on the CDs.

“I had no clue they were getting this kind of commission,” he said. “If I had seen that in the paperwork, I would have known there was something fishy going on.”

And many smaller investors, like those retirees from ExxonMobil, said their advisers told them they weren’t making any money at all on the CDs.

A few good men

No matter how enticing the CDs might have been, they couldn’t have been sold without the charisma of advisers. The men and women of Stanford came across as intelligent, kind, caring and Christian. They volunteered. They served on boards for local nonprofits. They attended church regularly, and they weren’t ashamed to pray with their coworkers or clients.

The generosity of Stanford’s companies in Baton Rouge helped further the belief that it—and the advisers—were empathetic, concerned members of the community. Stanford gave money to the Baton Rouge Symphony Orchestra, LSU cheerleaders, the arts and other nonprofits—donations that might now be in danger of clawbacks as the court-appointed receiver, Ralph Janvey, decides whether or not to recoup the cash for defrauded investors.

One attorney representing a number of advisers said the trend is distinct. Stanford employees were cut from the same cloth. Or, as Green told Bloomberg, they are all made from the same “yoke.”

Whether or not they were as wholesome, honest and hardworking as they were portrayed will be left to the regulators and to the courts. But there is an overwhelming air of disgust from many investors regarding the “faith” of their advisers.

“I don’t pretend to judge anybody,” said Troy Lillie, an ExxonMobil retiree who lost slightly more than $1 million with Stanford. “But when Michael [Word, his adviser] called to talk to me after the Stanford story aired on CNBC, he just kept saying, ‘I’m praying for you. I’m praying for you.’ And it just didn’t feel right.”

It is also known that James Davis, Stanford’s director and chief financial officer, was an outspoken Christian. He started company meetings with a prayer, and it was his connection to a Baptist church in Mississippi that led him to meet and befriend Stanford Financial Group’s chief investment officer, Laura Pendergest-Holt.

Robert Allen Stanford also was said to be incredibly religious, carrying with him a vial of blood from a priest, suffering from the wounds of stigmata, whom he met and flew to a hospital for treatment.

It could hardly be denied that Davis and Stanford selected their employees based upon a certain level of faith and character. And that faith then translated into a comforting and reassuring quality that engendered trust in the investors of the Stanford CD.

Green was known as a member of the Bethany World Prayer Center in Baton Rouge. He’d often been photographed with his family in front of the towering trinity of white crosses visible from Interstate 10 near Siegen Lane. And as with most businesses in small-town environments, church was more than a place for prayer. It was a place to find trustworthy business partners, experts and clients.

But according to sources close to the Stanford Group Company, not only did Green meet some investors through Bethany, but a portion of the church’s funds were invested with the company.

Close encounter

In the dim light of an upscale restaurant, Word sat with his wife, Catherine, and their attorney, Michael Stanley. Word, who had as many as 400 clients, spoke with a hesitant candor about his experience and role in the scandal—an apparent violation of the gag order on Stanford employees imposed by the court-appointed receiver.

Leaning back in his seat, arms folded across a neatly pressed blue oxford, Word appears nervous. He is a classic Louisiana gentleman, with sandy brown hair, clear blue eyes and a slow drawl that is distinctly from the northern part of the state.

Word’s wife, with her shoulders turned toward him in support, has a delicate frame and a soft presence. It’s easy to see how they met and fell in love through a church-related organization at LSU.

As Word describes his “due diligence” on the CD, it’s clear he took value in Stanford International Bank operators as part of the method of examining its soundness. “We went to Antigua to do a due diligence on the bank,” he says. “My trip down to the bank, meeting the people that were involved with the bank, the annual reports, the quarterly reports that talked about the different allocations of the bank. I’d say those are what I relied on the most—the annual reports, the quarterly reports and the people, the conversations.”

But Word’s statements contrast with the CD’s Disclosure Statement. While the first page of the Stanford International Bank document says the CDs “involve substantial risk to potential depositors,” Word says quite the opposite. “I would have said that it was a low risk, not a no-risk investment, but a low risk. That the bank had been around for years, had produced solid returns. I guess when I would explain it to a client, it was not a no-risk investment. The fact that it was not insured, and it was a portfolio of investment classes, I would say that it was low risk.”

The conflict over risk was part of a scathing report by CNBC that took Word to task for his scheme to recruit clients from the chemical manufacturing and oil and gas industry in south Louisiana. The majority of his clients were working or middle-class investors who relied heavily on the advice given by their adviser to manage their stock and their company pension plan as they retired.

On Word’s advice, clients like Lillie placed their entire pension plan from ExxonMobil into the CDs, and subsequently lost everything. This was done with confirmation the clients were “accredited investors.” Now, however, rumors swirl within some victims’ coalitions that many of Word’s clients might not have met that standard.

According to industry professionals, placing a retiree’s entire portfolio into one high-risk instrument is a failure on Word’s part since it fails to meet the “suitability standard.” Because the instrument itself was diversified, Word insists it fulfilled the clients’ needs and the consistent returns were ideal for a fixed-income situation.

But Word says faith in the CDs and in Stanford International Bank faltered last fall.

“Hearing about things like Madoff, seeing the environment made me think that I want to get more control of investing the assets,” he says. “I wanted to do my own allocations. Not that I knew anything was wrong with SIB or anything. I just wanted to take control.”

Despite his confirmations now that he didn’t know anything was wrong, some of his clients suggest otherwise.

Debbie Dougharty, whose husband’s ExxonMobil retirement was invested with Word in the CDs, remembers a phone conversation with Word in the week after Stanford’s shutdown. “‘Ms. Debbie,’” she recalls him saying, “‘I knew something was wrong, but never in my wildest dream.’ But I don’t believe that. My question is, why didn’t he know? I paid him to know. He was my broker.”

In late 2008, Word began telling his clients to take the penalty for early withdrawal and let him put their money elsewhere. Dougharty and Lillie were some of those clients. And while their money was pulled from Stanford International Bank, it’s still frozen, awaiting a decision from the court-appointed receiver.

Still, Word and his wife are obviously affected by the situation. When asked about the angry and frustrated clients who have called him, he begins to tear up. “I never cried more in my life than that first week,” he says as Catherine excuses herself from the table, tears streaming down her cheeks.

“Just crying out, ‘Why me?’ Finding out that I was lied to. I can’t help and be very suspicious about everything I’m hearing right now,” he says as his voice waivers. “I’m very mad because it’s hurting, and I’m not looking for sympathy. No doubt it’s totally destroyed our lives. But friends and clients … seeing what it’s done to them.”

High end

In quiet corner tables, on tennis courts and on the golf course, talk still swirls about those investors on the top rung of Stanford’s client list. At the core of Stanford Group Company’s operations were the big clients, the ones with $5 million or $10 million or $20 million to invest with the private client group.

Many of those people engaging in the gossip had heard about Stanford’s high-return CDs throughout the years. And with a few conversations about the minimum purchase and some inquiries regarding Stanford International Bank, clients from Baton Rouge’s business elite locked in.

One investor met a young Stanford associate at a tennis tournament. Frustrated with managing his own money, the thought of a well-respected boutique firm handling his portfolio when the market was tanking sounded promising—far better than spending his days and nights watching stocks plummet and banks cry for help.

And like numerous investors, he performed some due diligence, but not an intense amount. He read the annual report and asked questions of his advisers.

Others, like Wampold, were given the full depth of the pomp and circumstance. Put aboard one of Stanford’s private jets, they were flown to Antigua to see the bank—to know their investments were legitimate and the advisers’ claims were true.

Of course, they knew other investors who were working with Stanford and could speak of the benefits of being offshore. “I hired a local tax attorney,” Wampold says of his review of Stanford’s bank and his inspection.

But the common denominator was their understanding the CD was not your typical U.S.-based bank CD. Other companies and individuals were not receiving loans from their cash. The CD, as Wampold explained it, was a high-risk instrument. Those investments were only a portion of the overall investment strategy. If they lost that capital, it wasn’t the best thing in the world, but also it wasn’t the worst, either. It was a calculated risk.

“It wasn’t a CD like you would buy in the U.S.,” Wampold says. “It was really a set of international funds.”

But knowing that there was risk involved still hasn’t lessened the feeling of being fooled. Wampold won’t say how much he lost, only that it didn’t hurt his business. He—and other investors—might have to face the receiver in an attempt to recoup fraudulent interest payments if the receiver decides to execute clawbacks.

And aside from a civil lawsuit in which he is engaged for damages and insurance coverage from the advisers, he and other investors at his level say they are moving on.

They are letting go.

Salt of the earth

Letting go of $1.5 million isn’t easy to do when it is the total sum of your retirement, earned after 30 years of working for ExxonMobil. Dougharty’s husband, Kenny, was one of those investors. He attended the seminars held by his employer [every five years approaching his retirement], learned “best practices” for investing wisely and made a plan for how to live off of their ExxonMobil stock and their pension plan.

Word approached Dougharty and her husband through a friend and coworker’s recommendation. “It was a trust issue from the very beginning,” she says. “They made everything look absolutely beautiful. Michael’s demeanor was extremely low key. … They’re schooled in that, from what I understand. And the religious tones were overwhelming.”

Dougharty and Lillie say Word’s evident faith was a large part of their relationship.

Ultimately, the most resounding pleas from investors like Dougharty, Lillie and Kim Scullin—who invested her money for her sons from their father’s life insurance policy—was that they were buying from an American company.

“I bought from an American citizen in a small American town, in Baton Rouge, Louisiana,” Dougharty says. “Stanford Trust was Louisiana-chartered. That’s my state.”

Whether those investors were intentionally misled is difficult to say. As is common in any securities arbitration, it’s a matter of he-said, she-said. Still, Dougharty insists, “As we sat across the table from him. I looked him in the eye and asked him, ‘Are these insured?’ He said, ‘yes.’”

As for the Disclosure Statement, Paddock says most investors don’t even read it. It’s like the brochure of legal jargon that you receive when you secure a line of credit, buy a car, sign a hospital waiver form, buy a house or invest in actual U.S.-based securities. Investors trust their advisers to tell them the truth and to help them make the decisions. After all, it’s the advisers, not the investors, who are the financial experts.

Now, investors like Dougharty, Lillie and Scullin aren’t sure what to do. Dougharty, a retired deputy sheriff, has gone to work at Baton Rouge Community College. Her husband has taken a construction job with Turner Industries. Lillie lives off the proceeds of his remaining ExxonMobil stock and looks for a job—albeit one that, because of numerous health issues, he will have a difficult time finding. Scullin still has her retirement, but her safety net for her two biological children and three adopted children is gone.

“We’re just before the brink of liquidation,” Dougharty says.

Early warning signs

Stories of devastation from Stanford’s alleged Ponzi scheme have started to emerge. Like that of a South American man in need of a life-saving bone marrow transplant who has no money with which to pay for the treatment. Or that of a retired college professor who, with no money for expenses, sleeps on a worn-out mattress in the corner of a relative’s trailer.

There are just as many stories of the early warning signs. The SEC file on Stanford, acquired through the Freedom of Information Act, reveals a torrid history of complaints and allegations regarding the company.

One of the earliest was part of an annual supervisory review conducted on the Baton Rouge branch. The investigation found that of 68 accounts held with Stanford Group Company in August 1999, several were “engaged in investment activities that appeared to be inconsistent with clients’ stated financial background as indicated on the new account form.”

And in 2001, the claims of inordinately high brokerage fees, the 3% referral, were reported to the SEC. Even when the same claims were repeated to federal regulators, the complaints were settled with the SEC saying it was the state’s responsibility to regulate fees.

Documents obtained from the Louisiana Office of Financial Institutions show that regulatory agencies fined Stanford and, in particular, Stanford Group Company for operating practices in 2007 and 2008. Violations included the failure to report customer transactions properly, failure to maintain proper compliance practices and failure to accurately portray the risks of the Stanford International Bank CD. The documents also include censures and fines for the failure to disclose the advisers’ compensation in published research reports.

Numerous red flags were raised regarding the company, all by the Financial Industry Regulatory Agency and the National Association of Securities Dealers [the agencies merged in 2007]. It is not evident that regulatory actions or penalties were imposed on the state level.

The consistent accusations began in 2002. Letters from insiders in Antigua were sent to the SEC. Allegations about involvement with the Drug Enforcement Agency and U.S. Embassy officials swirled, and talk of the Antiguan government’s strong link to possible “terrorist networks” in Libya through cash loans entered the picture.

Controversy over a possible Royal Commission investigation into possible money laundering resurfaced in August 2002, and continued complaints regarding “excessive sales fees or commissions” were also continually ignored.

In 2003, a complaint filed with NASD alleged “misleading advertising materials” with “inaccurate or incomplete disclosures.” NASD forwarded the complaint to the SEC, but no immediate action was taken.

In 2006, regulators surveyed Stanford clients, requiring them to change some of the documentation language regarding the CDs, but allowing them, Stanford Group Company, Stanford Financial Group and Stanford Trust Company, to continue operating as usual.

Ultimately, the SEC had little authority [or capacity] for regulation of the Stanford entities. Because its primary client base consisted of “accredited investors,” the company was not subject to the same kinds of limitations and filing requirements. And because the CD was a foreign-based instrument, it was outside U.S. jurisdiction—as are all foreign-based stocks, bonds or management portfolios.

U.S. Sen. Dennis Kucinich, an Ohio Democrat, has confirmed the Department of Justice told the SEC to step down from investigating Stanford nearly 10 years ago. Details of that decision have not yet been released.

Despite that Stanford letterhead boasted FDIC, FINRA and Securities Investor Protection Corporation registration titles, the companies themselves were only registered. And that registration was useless, since those organizations didn’t have the same authority or guarantee that a U.S.-based security would allow.

The tipping point, which allowed the SEC to storm the Houston offices, is unclear. Maybe it was simply the calculations of blogger Alex Dalmady’s Duck Tales, which last year explained in great detail how and why Stanford possibly was operating a Ponzi scheme.

Or maybe an insider with knowledge of Stanford International Bank’s operation stepped forward and blew the whistle.

The fallout

As investors scramble to make ends meet and advisers seek legal counsel, a groundswell of frustrated investors gathers under the title of the Louisiana Stanford Victims Group. And they are, with the support of hundreds in the region, in pursuit of a “political solution.”

Jean Anne Mayhall, a volunteer helping to organize the Louisiana investors, says, “I am not a victim, I am a doer. In my entire life, I have never asked for anything. I have always worked and achieved.”

Mayhall, a single mother, started her own company in her mid-20s, from which she lost her employees’ pension plans and her own personal savings in the Stanford scandal. “And now I find myself with nothing. And we can’t get any help. So we banded together to say we’re not going to accept this.”

Janvey, the court-appointed Stanford receiver, recently met with a committee from the state’s victims group and told them to “expect nothing back, or pennies on the dollar.” The potential clawbacks of interest payments made over the years could mean that even if they were to receive some of their money in the recovery process, it could be even less.

That has left the group working to change the laws. On the state level, the group is working with Rep. Bodi White, a Denham Springs Republican, on legislation to increase the penalties for securities fraud. On the federal level, they are working with the Louisiana delegation on legislation and possible claims for Troubled Asset Relief Program funding.

“We need our politicians,” Mayhall says. “When the politicians, even our governor, can’t even make a statement,” it’s embarrassing. “He [Gov. Bobby Jindal] has made not one comment about this.” Of the 35 states with Stanford victims, Mayhall says Louisiana’s government officials have been the quietest in the bunch. “People just look at Louisiana and say it’s politics as usual.”

In the coming months, the court-appointed receiver and federal prosecutors will have to decide whether Stanford management and advisers knew about the CD scheme. If so, to what extent? Were they ignorant of Stanford International Bank’s operations? How could they ignore the exorbitant commissions? Did they fail to perform thorough due diligence on the bank and the CDs?

“They kept telling us that the more conservative you are, the CD is the way to go,” an investor says. “It was all very safe, very secure, very low risk, better than anything you can get there.”

The company earned the trust, faith and hard-earned money of working- and middle-class retirees as well as those few wealthy investors who still conduct business from a who-you-know perspective. It’s not hard to see how this trust existed. They passed the offering plate to one another on Sunday mornings, and they kept in touch through the tumultuous ups and downs in the market. All the while, advisers kept reassuring investors their money was safe, liquid and secure.

“I feel raped. I feel violated,” one investor says. “You feel like you trusted someone implicitly. The fact that I just blindly turned it all over to them and failed to monitor what they were doing … ”

Click here to view the Stanford timeline.

Click here for a Regulatory Agency Glossary.

Click here for a Financial Terms Glossary.