Allen Stanford was lying to employees and cheating investors as far back as 1987, a court was told yesterday.
The Texan financier produced fake deposit insurance at his Caribbean bank in order to lure investors using a London-based "shell company", the first day of his fraud trial in Houston heard.
One of the people employed to sell financial products for his first bank in Montserrat said Mr Stanford came up with a way to soothe the doubts of potential depositors who were otherwise wary about investing offshore.
The former billionaire, 61, denies 14 counts of fraud, conspiracy and obstructing regulators, and insists that the banking empire he used to sponsor Twenty20 cricket competitions was always a legitimate business.
Because offshore banks are not typically covered by government insurance that guarantees depositors' money, many potential clients refused to put their savings with Mr Stanford's Guardian Bank when it was set up in the late 1980s, said Michelle Chambliess, a former sales representative for the company. That changed when Mr Stanford returned from a trip to London with an insurance certificate from something called "British Insurance Fund Ltd", with an address in Piccadilly.
Brandishing a copy of the certificate, Ms Chambliess said: "If I went +to meet you in Mexico City, I could show you this and say, look, we have insurance."
But the US assistant attorney Gregg Costa, for the prosecution, told the court: "It's a fake insurance policy." He asked if Ms Chambliess would have used it to reassure depositors if she knew that Mr Stanford had personally set up British Insurance Fund as a shell company. "Then it wouldn't have been insurance," she said.
Ms Chambliess was the first of what is expected to be more than a dozen witnesses for the prosecution in a trial scheduled to last six weeks. Mr Stanford, who has been held in custody since 2009, faces up to 20 years in prison if convicted. The trial continues.Reuse content