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Sir swindler? Stanford's past rants against corruption apparently didn't apply to him.

For outsiders trying to comprehend the seeds of the current fraud-plagued meltdown, the case of once high-flying financier R. Allen Stanford--known as "Sir Allen" in Antigua--connects the dots between power, influence and extravagance--before the billionaire's fall from grace.


Snapshots show Stanford at the West Indies cricket matches he financed or at Inter-American Economic Council events that allowed him to rub shoulders with Washington lawmakers and hemispheric leaders. Stanford's largess put him in the spotlight and burnished his image as a bona fide businessman, which critics say kept regulators from looking too closely at what they now allege was a billion-dollar Ponzi scheme.

In the wake of the Bernard Madoff financial scandal, the SEC got tough and slapped Stanford, his Stanford International Bank in St. John's, Antigua, and his Houston-headquartered Stanford Group with a complaint that alleged he executed a fraudulent, multibillion-dollar investment scheme.

Scenes of panicked clients lining up for a run on the institutions in Venezuela and Antigua forced financial regulators across the region to confront turmoil imported from the United States. Authorities in Antigua, Venezuela, Panama, Colombia, Mexico, Peru and Ecuador either seized control of Stanford entities or forced the entities to suspend activities. It was a far cry from the financial contagion that used to spread from Latin America to the rest of the world. "We are the ones infecting everybody," said Charles A. Intriago, president of in Miami.

A court-appointed receiver in Dallas has identified 175 Stanford entities and said the group oversaw 35,000 customer brokerage accounts with assets in excess of US$6 billion. No one knows yet how many of those accounts belong to Latin American investors, but one figure speaks to the sway of the 6'4" tall Texas financier in the Caribbean. Stanford employed 10 percent of the population of Antigua, the country that bestowed on him the title of "Sir Allen" in 2006.

The receiver's early March report offers no comfort to anyone in the U.S. or Latin America who put money in certificates of deposit issued by Stanford International Bank or a Stanford mutual fund. The report described the financial conditions of the group as "dire" and said investigators had found tens of millions of dollars of unpaid bills and almost no available cash. The Antigua bank was not into lending, except to one person, a US$1.6 billion loan to Stanford himself, authorities allege. Attorneys for Stanford have called the allegations false and said no evidence of a Ponzi scheme has been offered.

Beyond the heavy losses for investors, the Stanford scandal further tarnishes the U.S. reputation as a safe haven. It may take some time for the U.S. to recover its standing among international investors, said Jan Atlas, a partner with Adorno & Yoss in Miami. "Initially maybe there will be some trepidation," said Atlas, who is monitoring the situation for clients. "The United States still represents the best place to place their money."

For all his gold-plated helicopters, the US$20 million he pledged to British cricket and his 57-room mansion in Coral Gables, Florida, Stanford's larger-than-life manner has been knocked down to size in the past. In June 2005, Stanford posed with then Florida Governor Jeb Bush and Organization of American States Secretary General Jose Miguel Insulza for a picture at the start of an Inter-American Economic Council meeting in South Florida. Later Stanford launched into a verbal tirade about persistent corruption in the region. After a coffee break, the subdued financier apologized for being too outspoken before a Caribbean and U.S. audience, including former U.S. lawmaker Bob Ney, who later served 18 months in federal prison on corruption charges.
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Title Annotation:radar
Author:Bussey, Jane
Publication:Latin Trade
Date:Mar 1, 2009
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