Financier and sports fan “Sir Allen” loses Midas touch

MIAMI, (Reuters) – Allen Stanford, the high-flying  Texas billionaire with a Caribbean knighthood and a penchant  for publicity and cricket, has been brought down to earth with  a thud by U.S. fraud charges against him and his companies.

In a self-congratulatory posting on the Stanford Group’s  website, its founder and chairman credits his grandfather with  giving him “the inspiration to dream” and “an unwavering desire  to build a business that is second to none.” He speaks of “a  passion for service and the values that hold us together”.

Allen Stanford
Allen Stanford

Yesterday, as U.S. marshals swooped down on Stanford’s  U.S. headquarters in Houston, federal authorities charged the  flamboyant 58-year-old mustachioed financier and three of his  companies with a “massive ongoing fraud.”

Accusing him of far less altruistic aspirations than those  trumpeted on his website, the U.S. Securities and Exchange  Commission alleged Stanford and two fellow executives  fraudulently sold $8 billion in high-yield certificates of  deposit.

The SEC said they and the bank reported “improbable” high  returns and gave “false” assurances to investors.

The SEC’s revelation that Stanford’s business empire —  stretching from the Caribbean island of Antigua to Houston,  Miami and Caracas — was exposed to losses from the alleged  Ponzi scheme run by financier Bernard Madoff completes the  picture of a finance king who somehow lost his Midas touch  along the way.

Before the SEC civil charges were announced, Stanford  dismissed the U.S. federal probe as “routine” and triggered by  complaints from disgruntled former employees. He said his  company was fully compliant with all U.S. regulations and that  he would “fight with every breath to continue to uphold our  good name.”      Only months ago, Stanford, known as “Sir Allen” in Antigua  whose authorities knighted him in 2006, was providing fodder  for the British tabloids by flying in by helicopter to bankroll  international cricket matches in a blaze of publicity. Now he is out of sight, as his harassed staff in plush  company offices from Memphis to Atlanta fend off queries from  panicked investors and posses of probing journalists.\

CARIBBEAN POTENTATE

Once described as “haughty, arrogant and obnoxious” by  Antiguan Prime Minister Baldwin Spencer, Stanford, America’s  205th richest man according to Forbes magazine, has often  walked a fine line between critics and admirers in a business  and sporting empire that reaches well beyond Texas to Europe  and across the Caribbean.

Spencer said at the weekend he feared the Stanford scandal  would hurt the image of the tiny Caribbean state of Antigua and  Barbuda, which has undergone scrutiny in the past for alleged  money laundering by Ukrainian and Russian Mafia bankers.

But many local islanders expressed support for the  country’s biggest investor. “He is the best investor to come  into the Caribbean, not only Antigua, but the region,” said  islander Julian Exeter. “He puts food in the mouth of everyone  in Antigua and money in their pocket,” he said.

Friends say the financier is as genial as he is  thick-skinned.

“Allen enjoys life and is the kind of person that doesn’t  worry about what other people think,” said David LeBoeuf, a  Texan who went to school with Stanford. “Larger than life is  one way to describe him, but he’s also an extremely talented,  unique and hard-working individual,” he said.

A fifth-generation Texan, Stanford made his first fortune  in Houston, snapping up distressed real estate in the early  1980s before inheriting the insurance and real-estate company  his grandfather founded in 1932.

Forbes put his personal wealth at $2.2 billion last year  and said his list of wealth-management clients includes pro  golfer Vijay Singh. He credits his recent success in part to  avoiding investments in subprime mortgages that snowballed into  a global financial crisis.

Asked by CNBC television in September if it’s fun being a  billionaire, he smiled and replied, “Yes, yes, yes. I have to  say it is fun being a billionaire. But it’s hard work.”

Back in the United States, he stirred controversy by  claiming family ties to Leland Stanford, who founded Stanford  University in the 1890s. The university says there is no  genealogical connection between the two and sued Stanford Group  in October for infringing on its trademark.

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