From Vanity Fair:
With little more than laserlike ambition and a brash Texas charm, Allen Stanford built an $8 billion Caribbean banking empire, exposed in February as perhaps the second-largest Ponzi scheme (after Madoff’s) in history. How did a bankrupt Waco health-club owner vault onto the Forbes Four Hundred, while the S.E.C., the F.B.I., and others mounted investigation after investigation of his shadowy business? From Stanford Financial’s Antiguan headquarters, the author follows Stanford’s improbable trail, complete with multiple families, a moated Miami mansion, and a passion for cricket.
In 2006, a Miami attorney named Milton M. Ferrell Jr. boarded a private plane bound for the Caribbean island of Antigua. Ferrell had a meeting there with the country’s top private banker, R. Allen Stanford, a muscular, boisterous Texan billionaire whose $8 billion Stanford Financial Group had grown so profitable he had attained the No. 205 spot on the Forbes Four Hundred. Ferrell represented a number of wealthy Latin Americans, and Stanford had invited him for a tour of his Antiguan bank, hoping to attract money from Ferrell’s clients.
With Ferrell that day was a security consultant I’ll call Trevor, an expert on the shadowy world of Caribbean banking. Trevor had heard the rumors about Stanford Financial—the suspiciously high returns on its certificates of deposit, the money-laundering investigations—but wanted to see Stanford’s offices up close. Stanford himself—six feet four, with a mustache, close-cropped brown hair, wide-set eyes, and a crushing handshake—was waiting at his hangar when they landed. After a tour of the adjacent complex some called Stanfordville, which included three bank buildings, a vast cricket field, and a restaurant called the Sticky Wicket, Stanford ushered the men into his crown jewel, Stanford International Bank, an imposing structure that resembled a columned mansion, overlooking the airport. Inside, the company’s gold-eagle logo was everywhere—on doors, walls, coffee mugs, and lapel pins. It even appeared, it was whispered, on the toilet seats.
“The first thing Allen says is how they use all these sophisticated financial techniques to get such good returns on these C.D.’s, which consistently didn’t make sense to me,” Trevor recalls today. “So I said, ‘Can I see your trading desk? Is it in London, New York?’ Allen says, ‘No, we do it right here in Antigua.’ So he takes us into this room with a big desk, full of computers. There’s a bunch of 300-pound Antiguan women in there, you know, like these women who sell fruit in the market. Milton and I looked at each other like, ‘No way.’”
At that point, Trevor asked to meet the bank’s compliance officer, the executive tasked with making sure the firm’s trades conformed to securities regulations. “So Allen takes us back to a corner of this room,” Trevor goes on. “And I swear, the door was creaking on its hinges, and out comes this 70-year-old guy who clearly had nothing to do with banking. I mean, he looked like a janitor. Milton and I, we said to ourselves, This is just a giant Ponzi scheme. Clearly this outfit doesn’t have the facilities to support this kind of business.”
They were right: it didn’t—though it took an awfully long time for American authorities to realize it. On February 17, 2009, after years of rumor and several weeks of intense investigation, U.S. marshals raided Stanford Financial’s Houston headquarters. Even as camera crews filmed them toting out boxes of paperwork, the Securities and Exchange Commission filed a suit charging Stanford and his two top aides with fraud, freezing all of Stanford Financial’s assets and shutting down a financial empire that catered to 30,000 customers in 131 countries, though the bulk of its business was in Latin America. The company, the S.E.C. charged, was in fact little more than an $8 billion Ponzi scheme—the second largest of the era, it appears, after Bernard Madoff’s. Billions of dollars in deposits, the agency alleged, were simply missing. Nine days later Stanford’s chief investment officer, Laura Pendergest-Holt, was arrested for lying to the S.E.C. (Stanford and Pendergest-Holt deny any wrongdoing.)
Full article can be found here.
With little more than laserlike ambition and a brash Texas charm, Allen Stanford built an $8 billion Caribbean banking empire, exposed in February as perhaps the second-largest Ponzi scheme (after Madoff’s) in history. How did a bankrupt Waco health-club owner vault onto the Forbes Four Hundred, while the S.E.C., the F.B.I., and others mounted investigation after investigation of his shadowy business? From Stanford Financial’s Antiguan headquarters, the author follows Stanford’s improbable trail, complete with multiple families, a moated Miami mansion, and a passion for cricket.
In 2006, a Miami attorney named Milton M. Ferrell Jr. boarded a private plane bound for the Caribbean island of Antigua. Ferrell had a meeting there with the country’s top private banker, R. Allen Stanford, a muscular, boisterous Texan billionaire whose $8 billion Stanford Financial Group had grown so profitable he had attained the No. 205 spot on the Forbes Four Hundred. Ferrell represented a number of wealthy Latin Americans, and Stanford had invited him for a tour of his Antiguan bank, hoping to attract money from Ferrell’s clients.
With Ferrell that day was a security consultant I’ll call Trevor, an expert on the shadowy world of Caribbean banking. Trevor had heard the rumors about Stanford Financial—the suspiciously high returns on its certificates of deposit, the money-laundering investigations—but wanted to see Stanford’s offices up close. Stanford himself—six feet four, with a mustache, close-cropped brown hair, wide-set eyes, and a crushing handshake—was waiting at his hangar when they landed. After a tour of the adjacent complex some called Stanfordville, which included three bank buildings, a vast cricket field, and a restaurant called the Sticky Wicket, Stanford ushered the men into his crown jewel, Stanford International Bank, an imposing structure that resembled a columned mansion, overlooking the airport. Inside, the company’s gold-eagle logo was everywhere—on doors, walls, coffee mugs, and lapel pins. It even appeared, it was whispered, on the toilet seats.
“The first thing Allen says is how they use all these sophisticated financial techniques to get such good returns on these C.D.’s, which consistently didn’t make sense to me,” Trevor recalls today. “So I said, ‘Can I see your trading desk? Is it in London, New York?’ Allen says, ‘No, we do it right here in Antigua.’ So he takes us into this room with a big desk, full of computers. There’s a bunch of 300-pound Antiguan women in there, you know, like these women who sell fruit in the market. Milton and I looked at each other like, ‘No way.’”
At that point, Trevor asked to meet the bank’s compliance officer, the executive tasked with making sure the firm’s trades conformed to securities regulations. “So Allen takes us back to a corner of this room,” Trevor goes on. “And I swear, the door was creaking on its hinges, and out comes this 70-year-old guy who clearly had nothing to do with banking. I mean, he looked like a janitor. Milton and I, we said to ourselves, This is just a giant Ponzi scheme. Clearly this outfit doesn’t have the facilities to support this kind of business.”
They were right: it didn’t—though it took an awfully long time for American authorities to realize it. On February 17, 2009, after years of rumor and several weeks of intense investigation, U.S. marshals raided Stanford Financial’s Houston headquarters. Even as camera crews filmed them toting out boxes of paperwork, the Securities and Exchange Commission filed a suit charging Stanford and his two top aides with fraud, freezing all of Stanford Financial’s assets and shutting down a financial empire that catered to 30,000 customers in 131 countries, though the bulk of its business was in Latin America. The company, the S.E.C. charged, was in fact little more than an $8 billion Ponzi scheme—the second largest of the era, it appears, after Bernard Madoff’s. Billions of dollars in deposits, the agency alleged, were simply missing. Nine days later Stanford’s chief investment officer, Laura Pendergest-Holt, was arrested for lying to the S.E.C. (Stanford and Pendergest-Holt deny any wrongdoing.)
Full article can be found here.
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