Allen Stanford is a 59 year-old Texas billionaire - worth about $2.2 billion according to Forbes - with homes in Texas, Florida, St. Croix, and Antigua. He's a golf and cricket promoter. He's a dual citizen of the United States and the nation of Antigua and Barbuda, and he's the first person knighted by Antigua and Barbuda (in 2006). And... he's currently sitting in a Houston jail.
Last Thursday, June 18, he surrendered to the FBI and on Friday, he was in court in Richmond, Virginia to face criminal charges in a sealed 21-count indictment. Following that court appearance he was transferred to a federal prison in Conroe, Texas, an hour north of Houston, to await a hearing on June 25th.
Stanford was already facing civil charges, based on an SEC investigation that has been ongoing since 2005. The Securities and Exchange Commission accuses him of misappropriating about $1.6 billion in investor funds over a period of a decade. Officials say he spent investor money to buy yachts, jets, and homes. Based on the lengthy investigation, last February the SEC filed a civil fraud complaint against him and two high-level employees of the Stanford Financial Group, Chief Financial Officer James Davis and Chief Investment Officer Laura Pendergest-Holt. Until recently Holt was the only one who was also facing criminal charges. She was arrested in February and later freed on bail. The civil charges allege that Stanford fraudulently sold more than $7 billion in certificates of deposit with "improbably high" interest rates from Antigua-based Stanford International Bank Ltd.
The investigation also focused on Leroy King, the former chief bank regulator of the nation of Antigua and Barbuda. The SEC believes that King helped Stanford by conducting fake audits and misleading investigators in exchange for $100,000. The SEC says King's actions helped lure more than 30,000 investors â many from the United States - into what they are calling a "massive Ponzi scheme."
Rather than investing the money paid in by new clients as promised, those funds were used to pay "profits" to earlier clients. When the SEC contacted King to inquire about Stanford's business dealings, the SEC alleges that King showed the inquiries to Stanford. In one instance, King submitted a response to an official inquiry that had been prepared by Stanford, according to the Securities and Exchange Commission. Because of these charges, King has been suspended from his post. The United States is currently seeking his extradition.
On Thursday, June 18th, the stakes got higher for Stanford when he was indicted on charges of fraud, obstruction, money laundering, and conspiracy. Also arrested were Pendergest-Holt and Gilberto Lopez (Stanford's CAO) and Mark Kuhrt (global controller of an affiliate). James Davis was charged in a separate indictment.
In an interview with Reuters last April, Stanford denied any wrongdoing, asserting that the Securities and Exchange Commission acted improperly.
"If the SEC had not come in and disemboweled a living, breathing strong organization the way they did, there's no question on God's green earth that everyone would have been made whole and we would have had a lot of money left over."