Wealthy investors across Latin America are believed to be among the main victims under the $8 billion fraud case which the US Securities & Exchange Commission has brought against the financial empire of Allen Stanford.
At the centre of the flamboyant Texas-born billionaire’s alleged swindle is the Antigua-based Stanford International Bank. The bank, in an echo of the high and steady returns offered by $50 billion swindler Bernard Madoff, aroused suspicions after offering high-yielded certificates of deposit despite sharp declines in global interest rates.
Stanford’s financial advisers targeted wealthy investors in Venezuela, Peru, Colombia, Mexico and Ecuador with promises of high returns. In Venezuela alone, Stanford clients may have invested up to $2.5 billion in offshore accounts as they attempted to shelter money offshore from the leftist policies of president Hugo Chavez.
The US Federal Bureau of Investigation is attempting to find out how many investors have become enmeshed. However, many Latino investors may be reluctant to come forward in case publication of their identities may open them to targeting by kidnappers.
Stanford himself has invoked the Fifth Amendment in the US courts, which allows him to remain silent to avoid incriminating himself. The plea was in response to a civil case filed by the SEC that accused the entrepreneur and two of his employees of conducting a large-scale investment scam over many years.
Laura Pendergest-Holt, his company’s chief investment officer, and James Davis, its finance director, are accused by the SEC of paying investors returns from money placed with Stanford Financial Group by new customers.
Unwinding the extensive international empire is likely to prove messy and may result in years of court action, US lawyers forecast.
Ralph Janvey, a Dallas lawyer, got US courts this month to unfreeze 28,000 customer accounts – or about half of the estimated 50,000 accounts that Stanford had worldwide – in a bid to calm investor anger over their sequestered assets.
In London, joint receivers Nigel Hamilton-Smith and Peter Wastell from Vantis are handling the receivership of Stanford International Bank and Stanford Trust Company.