The Miami Herald has a great investigation on the Allen Stanford scandal, reporting that a Florida regulator allowed the conman to set up an office to sell certificates of deposit with no regulatory supervision.

Lucy Komisar, Michael Sallah, and Rob Barry report that the leeway Stanford’s office was extraordinary, “sweeping powers never given to a private company.”

Through this office, Stanford sold hundreds of millions of dollars of CDs to Americans and sent their money to Antigua, avoiding money laundering rules that require disclosure and shredding records once the money got to the island nation.

The Herald zeroes in on the state official responsible for this mess: A guy named Art Simon, who admits he screwed up, but doesn’t seem to know how or why:

The office was only supposed to provide information for people interested in the offshore trust’s services — not offer CDs and accept money, he said.

But in clear language, the agreement reached between Stanford and state regulators allows money to flow to and from the center.

Simon, 63, now retired from state government, said he didn’t recall the language until he was e-mailed a copy by The Miami Herald.

This is solid, deep reporting. The Herald has done a lot of digging here, finding, for instance, a lawyer who turned Stanford down because his plan “didn’t seem right.”

”He wanted to set up an office in Miami to serve a business operation in the Caribbean,” said Brown. “The idea was to attract a Latin American clientele as a platform to sell securities.”

But Brown said Stanford “was not interested in undergoing any substantive banking regulations or submitting to government examiners.”

At the time, the Caribbean basin had a ”bad reputation as a pirate banking jurisdiction, and I just wasn’t interested in taking part in this,” Brown said.

And an ex-employee who questioned how Stanford could pay so much on its CDs:

However, Hazlett says he raised concerns in 2002 about the legitimacy of the CDs with the Miami office’s executive director, Nelson Ramirez.

”I remember very clearly saying the math didn’t add up, that I needed more information on the background of these CDs,” said Hazlett, who pressed the issue with Stanford supervisors during a compensation suit in 2004.

It’s incredible that Florida allowed anyone to sell securities with no regulatory oversight, much less to send the money to a notorious money laundering island on CDs that somehow were outrageously remunerative. And it gets worse:

Records show that state examiners visited the office three times over the past 10 years, but only to ensure that the 1998 agreement was kept.

During one of those visits in 2001, state agents noted that office employees routinely would send purchase records to Antigua and then destroy the local documents.

I would have liked to have seen more exploration of the circumstances around the decision to grant Stanford this one-off deal. The Herald does report that the state’s top banking lawyer objected to the deal at the time, saying it wasn’t legal. But how did this deal get approved and why? That may have been impossible to get much detail on—there’s a pretty clear possibility of corruption here.

But this is a great effort by the Herald. You can bet there’s more to come here.

(h/t Chris Whalen)

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.