The inestimable Murray Waas uncovers the fact that Wall Street’s “favorite private eye” engaged in a systematic spying and character assassination in support of Alan Stanford’s Ponzi scheme:

In 2006, Allen Stanford had yet to be identified as the mastermind of one of the largest and longest-running Ponzi schemes in U.S. history, but he faced mounting pressure.

Federal securities examiners were pushing for an investigation into his investment operation, which tens of thousands of soon-to-be victims had entrusted with nearly $7 billion. Some of the Texas financier’s own employees were threatening to tell authorities what they knew about his fraud.

Stanford was so concerned that a former senior State Department official named Jonathan Winer might expose his colossal con game that he ordered an investigation into Winer’s private life, according to Stanford’s previously secret records obtained by McClatchy.

Kroll Inc., an international corporate intelligence firm that Stanford had retained for over a decade, obliged. Tom Cash, a Miami-based a managing director of Kroll, soon informed Stanford in an email that he was looking into whether Winer’s ex-wife was a lesbian, according to the internal documents obtained by McClatchy.

………

They looked into the sexual orientation of Winer’s ex-wife, and Stanford used the information collected to blackmail regulators, politicians, and journalists.

What’s more, it worked:

SEC examiners concluded as early as 1997 that Stanford was running a massive Ponzi scheme, agency records show. But Stanford was able to stall the opening of any formal inquiry for a full decade, much like the man behind the only bigger U.S. Ponzi scheme, Bernard Madoff.

The biggest whopper told by Kroll, when a representative says that “its employees had no clue they were helping to conceal the second-biggest Ponzi scheme in U.S. history.”

No, they were told to collect information so that Stanford could blackmail people, and it’s clear from the emails from Stanford that this was what he charged them to do.

Sorry, but that dog don’t hunt.

Even if they did not have specific information about Stanford being a fraud, they had to have known from what he wanted that he intended to use this information for to extort silence from people.

H/t Felix Salmon.