Stanford’s bank taken over by state

Texan billionaire holed up in girlfriend’s house as net closes on his operations
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The Independent US

The authorities in Antigua have seized control of Allen Stanford’s local bank, to try to stem a run that threatened to destabilise the island’s fragile economy.

Accusations of fraud against the Texan billionaire, who is the island’s largest private-sector employer, sparked panic this week, and residents have spent the past few days withdrawing as much as they could from the Bank of Antigua’s cash machines.

The authorities took over the bank to avert its collapse, and also appointed British receivers to oversee Stanford’s other operation on the island, Stanford International Bank, where he is said to have orchestrated an $8bn (£5.5bn) fraud. Yesterday, Stanford was apparently holed up in his girlfriend’s house in Virginia in the US, with the world’s media camped outside, while a $50bn business empire that had bankrolled English cricket and American sports stars appeared to be crumbling to dust.

In Peru, a prosecutor began a money-laundering investigation. And in the US Virgin Islands, where he had been building a new home and a new headquarters, the government said it would withdraw tax perks it had offered and would co-operate with a US investigation into his affairs.

At the same time, the England and Wales Cricket Board formally abandoned the $100m five-year sponsorship deal that was inked last year.

Stanford’s fellow directors at the Bank of Antigua asked for the Eastern Caribbean Central Bank to take control, saying the run on deposits had caused an “untenable situation”, according to ECCB governor, Dwight Venner. “There has been an unusual and substantial withdrawal of funds, precipitated by recently published statements regarding the chairman of the board of directors,” he said.

Stanford’s other Antiguan company, SIB, is now under the control of receivers from the British accounting firm Vantis. The US Securities and Exchange Commission alleged this week that Stanford lied to thousands of clients about how he was investing $8bn of their funds at SIB and had been faking investment returns for more than a decade. Federal prosecutors are examining if he was paying existing investors using new client money – a classic pyramid scheme that came unravelled as too many clients asked to pull their money out in recent months.

The FBI is also understood to be examining the provenance of the funds at SIB, which comes mainly from Latin America, amid allegations that the bank may have been used by drug cartels for money laundering.

Stanford was served with the civil lawsuit by FBI officers, while in a car with his girlfriend in Fredericksburg in Virginia, 50 miles outside Washington. A Texan court has frozen the billionaire’s personal assets which, according to court documents filed in a paternity suit in 2007, include a $100m fleet of jets and a $10m castle in Texas. The paternity case was brought by Louise Sage Stanford, who claims to be the mother of two of his children.

Stanford is believed to be holed up at his girlfriend’s house. Television crews maintained a vigil outside the family home of Andrea Stoelker, reputed to be the girlfriend. Food was delivered to the house but there was no sign of Stanford.

The brash Texan has not been arrested and does not face any criminal charges at this point.