Charged with fraud, man who bankrolled cricket

US police raid Sir Allen Stanford’s offices as depositors pull money from Antigua bank

Federal regulators in the United States have charged Sir Allen Stanford and two associates with a “massive” $8.5bn (£6bn) fraud at his Antigua-based bank, sending fresh shock waves through Wall Street as well as the world of cricket where he had emerged in recent years as a generous – if controversial – sponsor.

Agents with the FBI and other federal departments raided the Houston headquarters of the Stanford Group, demanding documents and interviewing staff about the alleged fraud. The bank in Antigua, the Stanford International Bank, is part of the group.

The Texan-born billionaire and two of his aides failed to answer subpoenas to testify about the fraud, and last night the US government said it was unable to comment on Sir Allen’s whereabouts. The Securities and Exchange Commission, which filed the criminal charges, began investigating the bank some months ago in response to suspicions it was paying rates of return to its clients on so-called certificates of deposit far in excess of what was considered realistic.

When news of the inquiry surfaced last week, some anxious depositors flew to Antigua to withdraw their money, fearful that Sir Allen might emerge as the next Bernard Madoff, the New York money manager who ran a $50bn Ponzi scheme.

Sir Allen, who lives in the US Virgin Islands, had been “orchestrating a fraudulent, multibillion dollar investment scheme”, the SEC said. As well as filing the charges, the SEC froze his assets and appointed a receiver to protect clients’ assets. The bank is listed as having $8bn in assets and 30,000 clients.

Rose Romero, a regional director for the SEC in Texas who oversaw the raids in Houston, said: “We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world.” Also charged yesterday were the Stanford Group’s chief financial officer, James Davis, and chief investment officer, Laura Pendergest-Holt.

The prospect of an unravelling of the Stanford empire could be deeply destabilising for Antigua. Aside from Stanford International, the Bank of Antigua is also owned by the tycoon, who is worth about $2.2bn.

Sir Allen has long been a key benefactor of West Indies cricket. Last year, however, he burst on to the international scene as the promoter behind the so-called Twenty20 for Twenty Tournament, pitting a West Indian team, the Stanford Superstars, against England players. He offered $1m for each member of the winning team and a $20m prize fund in total.

While the tournament went ahead as planned, it was seen by some in the sport as breaking new ground in unwelcome commercialism, if not tackiness. In one of his more flamboyant moments, the billionaire landed at Lord’s cricket ground in London in a gold-plated helicopter trailing a clear chest stuffed with $20m in banknotes.

The England and Wales Cricket Board (ECB) said yesterday that it was suspending all further talks with Sir Allen on future sponsorship. The ECB has a five-year deal to play against the Stanford Superstars. In Antigua last November, the Superstars won the inaugural tournament. The ECB chairman, Giles Clarke, defended the original deal yesterday. “We believed he could pay the prize money he was offering and that money was paid into bank accounts in advance,” he told the BBC.

The SEC complaint ran over 25 pages and alleged a string of lies told by the Antigua bank to its clients, including an assertion that it had no exposure to the Madoff debacle. The SEC says that, to the contrary, the bank had $400,000 in Madoff funds. The complaint notes that in 1995 and 1996, the Antigua bank offered identical – and inexplicable – rates of return of 15.71 per cent on certificates of deposit. It adds that Sir Allen and Mr Davis have “wholly failed to co-operate with the commission’s efforts to account for the $8bn of investor funds purportedly held by” Stanford International Bank.

The horror for clients of Stanford International, meanwhile, is that if fraud has been committed, they may find their deposits have been vaporised. While the focus was on Stanford International, there were worries about the condition of the group as a whole, which manages $51bn in assets. Those in the financial industry who have for years competed for clients against Stanford and his fabulous rates of interest may not be surprised. Russ Dallen, a former head of Oppenheimer & Co’s business in Caracas, Venezuela, told The Huffington Post that Sir Allen wooed his clients with promises of “14 per cent on savings, guaranteed. We were gobsmacked because guaranteeing those kinds of returns is not possible.”

Mosul dam was retaken with the help of the US
voicesRobert Fisk: Barack Obama is following the jihadists’ script
Arts and Entertainment
Loaded weapon: drugs have surprise side effects for Scarlett Johansson in Luc Besson’s ‘Lucy’
filmReview: Lucy, Luc Besson's complex thriller
A cleaner prepares the red carpet for the opening night during the 59th International Cannes Film Festival May 17, 2006 in Cannes, France.
newsPowerful vacuum cleaners to be banned under EU regulations
Have you tried new the Independent Digital Edition apps?
A polar bear’s diet is rich in seal blubber and half of its own body weight is composed of fat
London is the most expensive city in Europe for cultural activities such as ballet
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
Jeremy Clarkson has rejected criticisms of his language, according to BBC director of television Danny Cohen
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Arts and Entertainment
Is this how Mario Balotelli will cruise into Liverpool?
Caption competition
Caption competition
Latest stories from i100
Daily Quiz
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

Career Services

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape