American authorities have been suspicious of Allen Stanford’s financial dealings for 15 years but only accelerated their investigation after the Bernard Madoff fraud was exposed, it was claimed today.
As investigators continued to hunt Mr Stanford and the $50 billion (£35 billion) of assets connected to him, a financial expert said that the Texan had been on “everybody’s radar” for more than a decade.
– FBI tracks down Texas financier in $8 billion fraud case (AP):
Stanford is not under arrest and is not in custody.
– Texas-Sized Fraud Spreads To 131 Countries (CBS News)
– Stanford lies low as clients count cost of fraud (Reuters)
The claim, made by the journalist and author Jeffrey Robinson, came as a link was made for the first time between the cricket impresario and a feared Mexican drugs cartel.
The allegations will raise new questions about the due diligence carried out by the England and Wales Cricket Board into Mr Stanford’s finances before agreeing to tie up with the billionaire for 20/20 matches.
Mr Stanford is being sought by the US Securities and Exchange Commission (SEC), the Wall Street regulator, after being charged with a multi-billion-dollar fraud, boasted of having customers in 140 countries.
As the charges against him became clear, panicked investors in the Caribbean and Latin America rushed to withdraw their savings from banks linked to his financial empire. Baldwin Spencer, the Prime Minister of Antigua, where he was the island’s largest employer, said that the ramifications for the island in terms of investment and jobs could be “catastrophic”.
Today, both Peru and Venezuela intervened in the running of their branches of Stanford’s banks, as the mass of withdrawals by investors appeared to threaten them with collapse.
Speaking this morning, Mr Robinson said that the Stanford case could have “huge ramifications” for the world of offshore banking and could be as significant as the Madoff scandal.
“I know, personally – because I have discussed it with them – a number of law-enforcement agencies in the United States, plus a number of prosecutors who have been looking at Mr Stanford for the past 15 years,” he told BBC Radio 4’s Today programme. “He has been on everybody’s radar for a number of things.”
Some people involved in the offshore industry would be keen for Mr Stanford to remain silent about his Antiguan-based banking empire, he added. “What’s going to happen now is they will ask to talk to him. If he doesn’t appear, I suspect an arrest warrant will be issued by the FBI on criminal charges,” he said.
It was also claimed today that the years-long investigation into Mr Stanford accelerated significantly after Madoff allegedly admitted to his sons that he had been operating a $50 billion fraud in December.
Revelations of fraud on such a massive scale acted as a wake-up call to US federal investigators, the Wall Street Journal claimed, and ensured that they focused on Mr Sanford and co-ordinated their actions.
Previously, the newspaper said, such a lack of co-ordination plus obstructiveness on behalf of his bank in Antigua had slowed the investigation’s progress.
Today, as the flamboyant billionaire – who funded sports such as golf, cricket, tennis and polo – continued to elude investigators, the SEC continued to try to trace him in connection with defrauding investors of $9.2 billion.
ABC News this morning claimed that Mr Stanford was also being investigated on suspicion of laundering drug money for the Gulf cartel, reputed to be Mexico’s most violent gang.
The station claimed that, as part of the investigation, Mexican authorities detained one of his private planes after finding cheques and documents connected to the cartel. It said that the investigation had been ongoing since last year.
The Stanford scam is the second large-scale fraud to hit America in three months after Bernard Madoff confessed that his $50 billion investment firm was “just one big lie”. In particular, it is a blow to the Obama Administration which is trying to persuade investors to trust their savings to American institutions.
The FBI is convinced that the two huge frauds are just the tip of the iceberg. John Pistole, the Deputy Director, told politicians on Capitol Hill last week that the agency was investigating 530 corporate fraud cases, including 38 directly related to the current economic crisis.
The SEC believes that Mr Stanford duped investors who bought bonds from Stanford International Bank in Antigua, and lied about the performance of their savings. The regulator also accuses Mr Stanford of lying to investors about their exposure to Mr Madoff. He lost about $400,000 to the New York financier’s Ponzi scheme.
A judge in Dallas has frozen Mr Stanford’s business activities and his personal fortune.
February 19, 2009
David Byers, Suzy Jagger in New York, and James Bone in Antigua
Source: The Times