Tweet
Fraud Case Shakes a Billionaire’s Caribbean Realm
Jewel Samad/Agence France-Presse — Getty Images
The Stanford Superstars cricket team with the club’s owner, Robert Allen Stanford, after a victory in St. John’s, Antigua.
By CLIFFORD KRAUSS, JULIE CRESWELL and CHARLIE SAVAGE
Published: February 20, 2009
This article was reported by Clifford Krauss, Julie Creswell and Charlie Savage.
Skip to next paragraph Multimedia
Map
Times Topics: Stanford Financial Group
ST. JOHN’S, Antigua — When Robert Allen Stanford arrived here in the early 1990s, few locals had ever heard of the Texas financier. Today, he dominates so many aspects of life on this sun-drenched Caribbean island that some have taken to calling it “Stanford Land.”
At one point or another, he has owned an airline that many locals and visitors fly on. A local newspaper that covers their goings-on. A vast residential complex where many live. Two restaurants where they eat. And the national stadium where they go to watch cricket, the island’s favorite sport.
But the crown jewel of his domain has long been Stanford International Bank, an offshore institution that attracted billions of dollars of cash from clients around the world — and especially from Latin America — seeking a haven for their wealth.
All the while, he cultivated a comfortable relationship with Antiguan officials. The bank made loans to the Antiguan government, which often used the money to award his companies lucrative construction contracts. To clean up the nation’s image as a dodgy tax haven, the authorities installed him on a new regulatory authority to oversee its banks — including his own.
To some, it felt too cozy.
“There seemed to be a complete breakdown of the normal barriers between the regulator and the regulated,” said Jonathan Winer, who was, at the time, a deputy assistant secretary of state for the United States State Department. “The relationship between the government of Antigua’s political leaders and Stanford seemed weirdly intimate.”
Despite raised eyebrows and occasional investigations of Mr. Stanford — or Sir Allen, as he is called here since he was knighted by the Antiguan government in 2006 — his sway continued to grow. That is, until this week, when the Securities and Exchange Commission accused Stanford International of orchestrating a huge fraud that may have bilked investors of some $8 billion that regulators say cannot be accounted for. The company is referring all calls to the S.E.C.
Mr. Stanford, 58, who has not been charged with any criminal wrongdoing, could not be reached. On Friday, his troubles mounted, as officials here took over his Antiguan bank, following seizures of his operations elsewhere in the world.
Stanford International claims it had about $8 billion in assets, but the Securities and Exchange Commission has only said it has not been able to account for that money. Most of the key players, including Mr. Stanford, failed to appear to testify after the S.E.C. issued a subpeona.
Seeking Answers
The collapse of Mr. Stanford’s empire has left many questions unresolved. What happened to investors’ money, which supposedly was put into high-quality assets? To what extent did his efforts to curry favors with politicians here — and in the United States, where he made contributions to many congressmen — help him elude serious scrutiny despite suspicions raised about his activities in the past? And what was the nature of the fraud that is being alleged — a plain-vanilla securities fraud, as the S.E.C. has charged; a Ponzi scheme; or, given the history of some offshore Caribbean banks, was money laundering also involved?
It may take months to figure out the answers. Few documents have emerged to shed light on Mr. Stanford’s business dealings, which involved high-yielding certificates of deposits sold to investors and housed in the Antigua bank — or even its exact size.
In numerous interviews with former Stanford employees, former American regulators and agency officials, and individuals who had direct dealings with Mr. Stanford over the years, a picture emerges of a man who had visions of grandeur for himself and his company and who knew the key to his success was aligning himself with politically powerful individuals.
At the same time, much of Mr. Stanford’s true background appears elusive.
Born in Mexia, Tex., a rural town of 6,600 about 85 miles southeast of Dallas, he claims to have based his company, Stanford Financial Group, on an insurance firm started by his grandfather Lodis Stanford during the Depression.
Mr. Stanford’s first foray into business, however, was far from finance. He started with a chain of body-building gyms in Waco, Tex. He later claimed to make much of his fortune in the 1980s buying distressed properties in Houston.
A former Stanford employee said that while some properties, such as ones Mr. Stanford picked up in the chic River Oaks area of Houston, made money, many others ended up as busts.
So when Mr. Stanford decided to start his first offshore bank, Guardian International Bank, on the Caribbean island of Montserrat in 1996, he turned to his father, James Stanford, for about $2 million to $4 million in seed money, according to the employee, who declined to be named because he did not want to be drawn into ongoing investigations.
more: http://www.nytimes.com/2009/02/21/bu...ef=todayspaper
Jewel Samad/Agence France-Presse — Getty ImagesThe Stanford Superstars cricket team with the club’s owner, Robert Allen Stanford, after a victory in St. John’s, Antigua.
By CLIFFORD KRAUSS, JULIE CRESWELL and CHARLIE SAVAGE
Published: February 20, 2009
This article was reported by Clifford Krauss, Julie Creswell and Charlie Savage.
Skip to next paragraph Multimedia
Map Times Topics: Stanford Financial Group
ST. JOHN’S, Antigua — When Robert Allen Stanford arrived here in the early 1990s, few locals had ever heard of the Texas financier. Today, he dominates so many aspects of life on this sun-drenched Caribbean island that some have taken to calling it “Stanford Land.”
At one point or another, he has owned an airline that many locals and visitors fly on. A local newspaper that covers their goings-on. A vast residential complex where many live. Two restaurants where they eat. And the national stadium where they go to watch cricket, the island’s favorite sport.
But the crown jewel of his domain has long been Stanford International Bank, an offshore institution that attracted billions of dollars of cash from clients around the world — and especially from Latin America — seeking a haven for their wealth.
All the while, he cultivated a comfortable relationship with Antiguan officials. The bank made loans to the Antiguan government, which often used the money to award his companies lucrative construction contracts. To clean up the nation’s image as a dodgy tax haven, the authorities installed him on a new regulatory authority to oversee its banks — including his own.
To some, it felt too cozy.
“There seemed to be a complete breakdown of the normal barriers between the regulator and the regulated,” said Jonathan Winer, who was, at the time, a deputy assistant secretary of state for the United States State Department. “The relationship between the government of Antigua’s political leaders and Stanford seemed weirdly intimate.”
Despite raised eyebrows and occasional investigations of Mr. Stanford — or Sir Allen, as he is called here since he was knighted by the Antiguan government in 2006 — his sway continued to grow. That is, until this week, when the Securities and Exchange Commission accused Stanford International of orchestrating a huge fraud that may have bilked investors of some $8 billion that regulators say cannot be accounted for. The company is referring all calls to the S.E.C.
Mr. Stanford, 58, who has not been charged with any criminal wrongdoing, could not be reached. On Friday, his troubles mounted, as officials here took over his Antiguan bank, following seizures of his operations elsewhere in the world.
Stanford International claims it had about $8 billion in assets, but the Securities and Exchange Commission has only said it has not been able to account for that money. Most of the key players, including Mr. Stanford, failed to appear to testify after the S.E.C. issued a subpeona.
Seeking Answers
The collapse of Mr. Stanford’s empire has left many questions unresolved. What happened to investors’ money, which supposedly was put into high-quality assets? To what extent did his efforts to curry favors with politicians here — and in the United States, where he made contributions to many congressmen — help him elude serious scrutiny despite suspicions raised about his activities in the past? And what was the nature of the fraud that is being alleged — a plain-vanilla securities fraud, as the S.E.C. has charged; a Ponzi scheme; or, given the history of some offshore Caribbean banks, was money laundering also involved?
It may take months to figure out the answers. Few documents have emerged to shed light on Mr. Stanford’s business dealings, which involved high-yielding certificates of deposits sold to investors and housed in the Antigua bank — or even its exact size.
In numerous interviews with former Stanford employees, former American regulators and agency officials, and individuals who had direct dealings with Mr. Stanford over the years, a picture emerges of a man who had visions of grandeur for himself and his company and who knew the key to his success was aligning himself with politically powerful individuals.
At the same time, much of Mr. Stanford’s true background appears elusive.
Born in Mexia, Tex., a rural town of 6,600 about 85 miles southeast of Dallas, he claims to have based his company, Stanford Financial Group, on an insurance firm started by his grandfather Lodis Stanford during the Depression.
Mr. Stanford’s first foray into business, however, was far from finance. He started with a chain of body-building gyms in Waco, Tex. He later claimed to make much of his fortune in the 1980s buying distressed properties in Houston.
A former Stanford employee said that while some properties, such as ones Mr. Stanford picked up in the chic River Oaks area of Houston, made money, many others ended up as busts.
So when Mr. Stanford decided to start his first offshore bank, Guardian International Bank, on the Caribbean island of Montserrat in 1996, he turned to his father, James Stanford, for about $2 million to $4 million in seed money, according to the employee, who declined to be named because he did not want to be drawn into ongoing investigations.
more: http://www.nytimes.com/2009/02/21/bu...ef=todayspaper
Comment