HOUSTON, Texas-MULTI-BILLIONAIRE businessman and major Caribbean cricket contributor Robert Allen Stanford was charged today (Feb. 17) at his Texas headquarters for fraud related to $8 billion in investment deals.
According to an eyewitness report in Reuters, “about 15 federal agents, some wearing jackets identifying them as U.S. marshals, entered the lobby of Stanford's office in the Houston Galleria area”.
The U.S. authorities charged Stanford, his Stanford International Bank Chief Financial Officer James Davis and Chief Investment Officer of Stanford Financial Group, Laura Pendergest-Holt with “massive ongoing fraud”, largely based on the sale of high-yield certificates of deposit (CD) under false pretenses.
A 25-page document on the case compiled by the U.S. Securities and Exchanges Commission (SEC) claims that the CDs were sold to investors “by promising high return rates that exceed those available through true certificates of deposits offered by traditional banks”.
It was further reported that the SEC will be freezing the assets of the Stanford Financial Group in order to “take possession and control of defendants' assets for the protection of defendants' victims”.
A sign taped to the door of the Houston-based office said that the Stanford Financial Group would remain open for business to its customers, but would only do so “under the management of a receiver” appointed by the SEC.
Other allegations levied against the prominent investor include 90% of the Antigua-based Stanford International Bank’s investment portfolio being “shielded from independent oversight”, Stanford falsely telling clients they could not withdraw their CDs because the SEC investigation had frozen their accounts and using “false information to promote a mutual fund wrap program separate from the CDs” to yield “improbable” profits.
A lawyer speaking for investors who bought CDs from the Stanford Financial Group said that he would be “drafting a complaint now” and may file suit as early as next week.
News of the arrest sent a shockwave through the Caribbean, particularly in Antigua where Stanford had based his Stanford International Bank, Bank of Antigua and Stanford Twenty20 Cricket operations.
SKNVibes was reliably informed by those living in Antigua that “panic hit right after the news broke” and those who had money in Stanford’s banks made a mad dash to their local branch for immediate withdrawal.
The Stanford International Bank is said to have 30,000 customers and over $50 billion in assets, while the Bank of Antigua was reported in December 2005 to have customer accounts totaling in excess of EC $366M and total advances around EC$176M.
Meanwhile, both the English and West Indies Cricket Boards have officially suspended their sponsorship negotiations with Stanford, which had already been on shaky ground since turmoil at last year’s Stanford Super Series Twenty20 for $20 million nearly led to the cancellation of the event.
Both boards said that any future Stanford Super Series and the quadrangular meets that had been planned in England this May are “now unlikely to happen”.
Other assets controlled by Stanford include endorsement deals with golfer Vijay Singh and England footballer Michael Owen, investment in polo and The Sun newspaper, which has affiliates in Antigua and St. Kitts-Nevis.
