Hundreds seek their money as Stanford fallout spreads

ST. JOHN’S/CARACAS, (Reuters) – Hundreds of people  rushed yesterday to withdraw money from banks in Antigua and  Venezuela linked to Texas billionaire Allen Stanford, as the  fallout from U.S. fraud charges against him rippled across the  globe.

Stanford, a flamboyant 58-year-old financier and sports  entrepreneur, remained out of sight a day after the U.S.  Securities and Exchange Commission (SEC) charged him and two  top executives with an $8 billion fraud.

Allen Stanford
Allen Stanford

The SEC said it did not know where he was.

In Miami, the local NBC television station reported that  Stanford Group offices in the city were raided by federal  officials, a day after a similar raid at its U.S. headquarters  in Houston.

The U.S. Attorney’s Office and an FBI spokeswoman in Miami  said their agencies had not been involved in the latest raid  and referred calls to the SEC.

Stanford’s operations in Miami and Baton Rouge were being  shut down by a court-appointed receiver, a source briefed on  the matter said.

From the tiny Caribbean island of Antigua, a key outpost in  Stanford’s business empire, to Andean nations Venezuela,  Colombia and Ecuador, investors and depositors — most angry,  some in tears — besieged his banks and companies to try to  redeem funds or seek information about their savings.

After the shock generated by the alleged $50 billion Ponzi  scheme fraud by Wall Street veteran Bernard Madoff, regulators  sought to calm public fears about another major financial  scandal at a time of global recession and banking failures.     In Colombia, a local affiliate of Stanford halted its  activities on that country’s stock exchange.

In neighbouring Ecuador, the local Stanford affiliate was  suspended for 30 days from operating in the Quito stock  exchange, the bourse said.

While mystery surrounded Stanford’s whereabouts, CNBC  television reported that he tried to hire a private jet to fly  from Houston, the site of his U.S. headquarters, to Antigua,  but the jet lessor refused to accept his credit card.

In a civil complaint, the SEC accused Stanford of  fraudulently selling high-yield certificates of deposit from  his Antiguan affiliate, Stanford International Bank Ltd (SIB).

Asked by reporters whether there would be more fraud cases  of the scale and scope of Madoff and Stanford, U.S. Attorney  General Eric Holder told reporters: “It’s hard to say. I’d like  to think that those are going to be the largest.”

He declined to comment on why the Justice Department has  not filed criminal charges against Stanford.

Asked if Stanford may be outside the United States, SEC  spokeswoman Kimberly Garber said: “Certainly that’s a  possibility, but we don’t know.”

In the twin-island Caribbean state of Antigua and Barbuda,  where Stanford is the biggest private employer, Prime Minister  Baldwin Spencer said the SEC charges could have “catastrophic”  consequences, but urged the public not to panic.

In Antigua’s capital St. John’s and the Venezuelan capital  Caracas, hundreds besieged Stanford banks and offices.

“I heard the news and came straight down. We’ve had money  here for two years and I want it back,” said Caracas resident  Josefina Moreno, who added her son had about $10,000 invested.

A Venezuelan official estimated that people in that country  have invested about $2.5 billion in SIB.

Antiguan police officers stood watch at Stanford-controlled  Bank of Antigua were hundreds turned out yesterday.

“I’d like to get my money out,” said Andrea Lamar, 28.

Bank of Antigua, with three branches in Antigua and  Barbuda, is part of Stanford’s global business interests, but  separate from SIB, the offshore affiliate at the heart of fraud  charges lodged by U.S. regulators.

In Mexico City, some 40 mainly middle-aged and elderly  people waited outside a Stanford office for information.  Tempers frayed. “I demand to be let in,” one woman shouted.

Peruvian regulators sent an inspection team to local  Stanford offices.

In its civil complaint, the SEC said SIB sold $8 billion in  CDs by promising returns “that exceed those available through  true certificates of deposits offered by traditional banks.”

Stanford Group claims to oversee $50 billion in assets.

In Houston, the first of what lawyers think may be a flood  of lawsuits against Stanford was filed in federal court on  Tuesday, hours after a U.S. judge froze the company’s assets.

Four investors who each put in between $250,000 and  $600,000 with Stanford will seek “consequential damages” in a  trial where they will lay out how the company’s army of  financial advisers managed to sell $6.7 billion in CDs.

In Florida, Michael A. Gross, acting director of the  division of securities at the Florida Office of Financial  Regulation, said the office still had “an open examination” of  Stanford’s business in the state, conducted through a trust  office in Miami and broker-dealers in Miami, Longboat Key, Boca  Raton and Vero Beach.
The SEC said Stanford had failed to respond to subpoenas  seeking testimony.

Since Tuesday, Stanford company officials have been  referring requests for comment to the SEC.

There were no signs of imminent criminal charges against  Stanford, whose personal fortune was estimated by Forbes  Magazine last year at $2.2 billion.

A federal judge appointed a receiver on Tuesday “to take  possession and control of defendants’ assets for the protection  of defendants’ victims.”

Stanford, who holds dual U.S.-Antiguan citizenship, has  donated millions of dollars to U.S. politicians and secured  endorsements from sports stars, including golfer Vijay Singh  and soccer player Michael Owen.

Singh, wearing a golf shirt with a Stanford logo, told  Reuters in California he was “just surprised by it all.” He  said Allen Stanford had donated large sums to charity.

But other public figures scrambled to pull back from any  ties with Stanford.

British brokerage and investment house Blue Oak Capital  said it had canceled a deal to distribute research from  Stanford Washington Research Group.

Former Swiss President Adolf Ogi said he would resign from  the board of Stanford Financial Group.

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