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February 19, 2009Missing Stanford and His Destructive Path
Allen Stanford is missing.
The Texas-born banker, formerly No. 205 in Forbes's list of 400 Richest Americans, managed to scam hundreds of investors while keeping a very high profile. The resident of St. Croix and holder of dual US-Antigua citizenships supported cricket, golf and tennis tournaments and even managed to get knighted by the government of Antigua while reportedly being investigated for fifteen years by American authorities. In spite of those investigations, it wasn't until yesterday that a US District judge signed a temporary restraining order in Dallas federal court freezing the Stanford companies’ assets and property.
Bloomberg reports,
Stanford said on his company’s Web site that his firm was started more than 70 years ago by his grandfather. U.S. court records show that his offshore bank was formed in 1985 on the Caribbean island of Montserrat and moved to Antigua in 1990.According to the Wall Street Journal, Antiguan officials at that time dismissed allegations of conflict of interest and said that they were implementing world-class money-laundering regulations. Incidentally, the move to Antigua was precipitated by Allen Stanford losing his banker's license in Montserrat in the late 1990s.In 1999, Stanford Financial tried to take over Antiguan International Business Corp., which regulated offshore companies on the island, said Jonathan Winer, then a deputy U.S. assistant secretary of state.
State Department cables sent from the U.S. Embassy and provided to Bloomberg described a “power grab” and criticized the Stanford’s company’s hiring of U.S. consultants to revise Antigua’s offshore-banking rules.
‘Hired Guns’
“The high-powered legal and investigative hired guns from the U.S. are likely being tasked with cleansing the files to make sure there is nothing in them that could damage or implicate the American offshore banker,” one cable read, without mentioning Stanford by name.
The U.S. advised financial institutions to be suspicious of transactions with Antiguan banks, a notice lifted in August 2001 after the country took steps to fight money laundering. The alert didn’t specifically mention Stanford’s bank or any others.
Venezuela's Diario de la Economia (via Noticias 24) claims that Allen Stanford allegedly "wields absolute power in Antigua, where practically one quarter of the population works for his enterprises." It's impossible to guess whether this might affect the outcome of the upcoming March 12 elections in Antigua-Barbuda. Antiguan Prime Minister Baldwin Spencer and the governor of the Eastern Caribbean Central Bank (ECCB), Dwight Venner, had reassured investors on Tuesday that their money was safe while hundreds of clients lined up outside Bank of Antigua, making withdrawals for fear they might lose their money if US authorities shut down all of Stanford's companies. Venner stated,
there is no way, shape or form that any United States authorities can come on shore and seized the deposits of Antigua and Barbuda.The Bank of Antigua is not an offshore institution, instead it is a domestic bank licensed under the Banking Act of Antigua and Barbuda and regulated by the ECCB. The Stanford International Bank, however, is an offshore bank registered in Antigua and Barbuda with international affiliates; those investors walked out empty-handed.
In Panama, La Prensa quoted Stanford Financial's administrative manager Carla Roggero assuring clients that their operations would not be affected by the fraud investigations. All the same, Stanford Bank (Panama) SA, an affiliate of Stanford Financial Group, was taken over by government regulators. La Prensa reported that clients will be allowed to withdraw funds and the bank’s assets will be placed under administrative control of the country’s bank superintendent.
In Colombia, banking authorities suspended all activities of the local brokerage unit of Stanford International Bank.
In Ecuador, government regulators are investigating the operations of two local units of Stanford Financial Group.
In Venezuela, it didn't take long for the government to take over the local Stanford Bank Venezuela. Last year Hugo Chavez had promised to expropriate any failed banks. Stanford Group Venezuela's spokesman Rocio Fernandez told the Wall Street Journal that
"Stanford is operating normally in Venezuela. Our commercial bank is not affiliated with Stanford in Antigua and remains completely solid."In Mexico, the Stanford Fondos office is closed,
a note posted on a shuttered office door in the capital's wealthy Polanco neighborhood announced that all accounts "are temporarily frozen."Latin American investors were attracted to Stanford investments as a way to safeguard their savings in dollar-denominated accounts. CBS News reports that the investigation involves 131 countries.
Allen Stanford's problems may run deeper than that,
But now the SEC's fraud charges may be the least of Stanford's worries. Federal authorities tell ABC News that the FBI and others have been investigating whether Stanford was involved in laundering drug money for Mexico's notorious Gulf Cartel.While the investigation went on, Stanford contributed $150,000 to underwrite a convention-related forum and party put on by the National Democratic Institute last year.Authorities tell ABC News that as part of the investigation, which has been ongoing since last year, Mexican authorities detained one of Stanford's private planes. According to officials, checks found inside the plane were believed to be connected to the Gulf cartel, reputed to be Mexico's most violent gang. Authorities say Stanford could potentially face criminal charges of money laundering and bribery of foreign officials.
Authorities say the SEC action against Stanford Tuesday may have complicated the federal drug investigation. The SEC had been prepared to move in earlier, but was asked to hold off because of the FBI's undercover investigation. But this week, when officials realized Stanford was moving huge amounts of cash out of his bank, they had no choice to move in, even if it jeopardized the drug money case.
Considering the hole he's dug himself in, it's not surprising Allen Stanford is missing. If he was involved in money laundering cartel moneys, SEC and FBI investigations are the least of his troubles.
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