Allen Stanford, the billionaire financier accused of perpetrating a $12 billion fraud, has finally been found by US justice officials, two days after investigators put his company, Stanford International Bank, into receivership.
The US Federal Bureau of Investigations has located Stanford in Richmond, Virginia and served him with papers relating to civil fraud charges. There had been fears Stanford had fled the country, but the FBI says he will not be held as he does not face criminal charges.
The US Securities and Exchange Commission has accused him of conducting “a massive ongoing fraud” over the sale of $US8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. The SEC says Stanford and two other executives sold the certificates of deposit “by promising high return rates that exceed those available through true certificates of deposits offered by traditional banks”.
Standford International Bank has been placed in receivership, but US regulators were keen to track down Stanford himself.
The scandal has spread throughout central and south America, where Stanford’s banking and financial services empire was concentrated.
After a run on Stanford Bank Venezuela, the Venezuelan Government has stepped in to seize and sell all Stanford financial companies in that country. In Peru and Ecuador, securities regulators suspended operations at the local offices of Stanford Financial Group, while the Stanford affiliate in Colombia agreed to suspend its activities on the Bogota stock exchange.
On the Caribbean island of Antigua – where Stanford himself has been based for two decades and built a reputation as a cricket patron – hundreds of people queued up at the Stanford-owned Bank of Antigua to withdraw funds.
Back in the US, more information is coming to light about prior investigations into Stanford’s affairs.
In 2007, Stanford Financial Group paid a $US20,000 fine for having insufficient capital to act as a broker dealer and $US10,000 the same year for misleading investors about its certificates of deposit. Last year, it was fined $30,000 by the SEC for failing to disclose how it was valuing securities.
But some fraud experts have said Stanford’s operations were under suspicion since 1995.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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