Trustworthiness and Jurisdiction in the Stanford Financial Group Fraud.

Abstract

From 1986 to 2009, the Stanford Financial Group sold billions of dollars’ worth of fraudulent certificates of deposit to a mostly U.S. and Latin American clientele. Although the firm looked safely “American” to its customers, its bogus CDs were issued from its offshore affiliate, Stanford International Bank, on the Caribbean island of Antigua. Stanford “succeeded”—becoming history’s second largest Ponzi scheme—despite a wealth of damning, often public information circulating about the firm. This dissertation, titled “Trustworthiness and Jurisdiction in the Stanford Financial Group Fraud,” attempts to solve this puzzle. Toward that end, I develop a novel account of “trustworthiness” that takes a distinctly relational and processual approach to the question of trust. My study draws on a range of data: regulatory materials, court filings, trial transcripts, journalists’ accounts, and 100 semi-structured qualitative interviews with defrauded investors and ex-Stanford salespeople, divided equally between the firm’s two largest markets, the U.S. and Venezuela. I conducted these interviews over a seven month period, in Caracas, Mérida, and Valencia (Venezuela); and Houston, Baton Rouge, and Miami (U.S.). Most approaches to trust pose the same question: what causes trust? This study takes a different tack, asking not “why did Stanford’s clients trust Stanford?” but rather “how and from whom did Stanford gain the advantage of being deemed trustworthy?” It thus shifts our focus from trust to the explication of trustworthiness. The “trustworthiness” of a given actor, I submit, does not describe that actor’s inner character, nor is it an attribute that trustors impute to a trustee. It is, instead, an emergent social effect—a construction of multiple actors working together, if unwittingly—that attaches to that trustee. I define the “trustworthiness” of a given trustee as “the balance of ‘worth claims,’ or evaluative statements, in circulation regarding the ability and the normative posture of that actor in matters relevant to a class of actual or potential trustors.” Given this definition—and as evidenced by the Stanford firm—a trustee may display trustworthiness without being, in the usual normative sense, “worthy” of trust. This mode of inquiry decenters the “subject” of trustworthiness, highlighting instead the collective production of their apparent virtue.