James Davis, formerly the CFO of the Stanford Financial Group, pleaded guilty in August to fraud and conspiracy charges in a deal with federal prosecutors. The Stanford Financial Group was either a $7 billion financial-management company or a "massive Ponzi scheme," depending on who you believe. Unfortunately for Davis and former CEO Allen Stanford, the SEC believes that second thing.
In the plea agreement, Davis claimed that Stanford and a bank regulator in Antigua, where the scheme was based, had become "blood brothers":
At a meeting in 2003, they became blood brothers, cutting their wrists and mixing their blood in a “brotherhood ceremony” that Mr. Stanford’s chief financial officer said promoted an elaborate scheme to hide a multibillion-dollar fraud from American and other regulators.
Also binding the regulator closely to his blood brother: frequent bribes.
As we have seen before, agreements do not get more legally binding just because blood is involved in the deal.
Link: WSJ Law Blog
