FBI hands Stanford fraud charges

Texas billionaire Allen Stanford, accused of an $8 billion fraud that spooked investors around the world, was served with the formal complaint on Thursday by FBI agents in Virginia.

• FBI spokesman Richard Kolko said the Federal Bureau of Investigation had acted at the request of the U.S. Securities and Exchange Commission (SEC), and that Stanford had not been arrested. No criminal charges have been filed against him.
• A law enforcement official said Stanford was making arrangements to surrender his passport. Stanford holds dual U.S.-Antiguan citizenship, and has homes in the United States and the Caribbean.
• The whereabouts of Stanford, 58, had been the subject of intense speculation since he failed to respond to a subpoena from the SEC to answer questions about his company’s operations.
• The SEC filed civil charges in Dallas, Texas, on Tuesday against Stanford, two colleagues and Stanford International Bank Ltd, Stanford Group Co and Stanford Capital Management LLC, accusing them of a “massive, ongoing fraud”.
• A court appointed receiver has moved to add Stanford Financial Group and Stanford Financial Group Bldg Inc as relief defendants, along with the other three companies and three people already named in the case.
• Officials did not say how the FBI learned that Stanford was in Virginia, but they said he had not been hiding and he was not a fugitive.
• Stanford was found in the area of Fredericksburg, Virginia, about 50 miles (80 km) south of Washington, D.C.
• “We’re so pleased and thankful to the lord that he’s alive,” Stanford’s stepmother Billie Stanford told Reuters. She and his father, James, live in Mexia, Texas.
• FALLOUT SPREADS
• The SEC has accused the financier and sports entrepreneur of fraudulently selling $8 billion in certificates of deposit with impossibly high interest rates from his Antiguan affiliate, Stanford International Bank Ltd (SIB).
• The Wall Street Journal reported on Thursday that U.S. federal prosecutors were investigating whether Stanford was operating a Ponzi scheme. In such a scheme, money from new investors is used to pay earlier investors.
• The scandal, emerging hard on the heels of allegations that Wall Street veteran Bernard Madoff carried out a $50 billion fraud, spooked international investors, and prompted investigations in Latin America and Europe as well as in the United States.
• U.S. federal agents raided Stanford Group Co offices in Miami, Houston and other U.S. cities earlier in the week.
• Britain’s Serious Fraud Office (SFO) is monitoring a possible U.K. link after media reports that Stanford’s books were audited in Britain.
• Mexico’s banking regulator said it was investigating a local Stanford bank unit for possible violation of banking laws.
• In Caracas, Venezuela, the government seized Stanford Bank Venezuela, one of the country’s smallest commercial banks, to stem massive online withdrawals and said there would be an immediate sale of the bank.
• Another Andean nation, Ecuador, said it was seizing two local Stanford units, a brokerage house and a fiduciary firm.
• “We will intervene to protect the interests of investors,” Santiago Noboa, the state regulator of the stock exchange in Quito, told Reuters.
• Peru’s securities regulator suspended the operations of a local Stanford unit.
• DEA, WHISTLEBLOWERS, FINES
• ABC News has reported that the FBI and others have been investigating whether Stanford was involved in laundering drug money for a Mexican cartel. The U.S. Drug Enforcement Administration (DEA) said it had no current inquiry underway.
• A DEA spokesman said an initial review produced no past investigations, but officials were still checking.
• Another federal law enforcement official said U.S. agencies previously had investigated suspected money laundering at Stanford’s offshore banks but had not found evidence warranting criminal charges.
• In an interview on Thursday, Stanford’s father, James, told Reuters that in the late 1990s, a Mexican customer of Stanford put $3 million into the bank for investment purposes. He said DEA agents then approached Allen Stanford and said the money was from a Mexican drug cartel and had been laundered several times.
• James Stanford said that Allen told the board about this, and that he had “refunded” the money to the U.S. Treasury. “Allen worked with them, hand in glove,” the elder Stanford said.
• Antigua has faced U.S. scrutiny in the past for alleged money laundering activities and operations by suspected Russian “shell” banks.
• Jonathan Winer, a Washington lawyer and former State Department official in the Clinton administration, said that after a U.S. warning to Antigua in the late 1990s, consultants and lawyers working for Stanford took control of records of Antigua’s bank regulatory agency “to carry out a cleanup” of the suspect banks.
• The local bank regulator objected, as did the U.S. government, Winer said. “The conflict of interest that we felt existed with using Mr. Stanford and his people to clean up the banking system was unique … it was bizarre and inappropriate.”
• “One of the results of all this was that Antigua was put on a watch list.”
• In response, Antigua implemented banking reforms requested by the United States, and the sanctions were lifted in 2001.
• In 2007 and 2008, the Financial Industry Regulatory Authority (FINRA), the U.S. broker-dealer watchdog, fined privately held Stanford Group for issuing misleading sales literature, not promptly forwarding customer checks from the firm’s retail brokerage operations and conducting a securities business without maintaining minimum capital levels.
• Mark Tidwell and Charles Rawl, former Stanford brokers in Houston, quit in 2007 over concerns that Stanford was lying to clients about returns.
• Rawl told Reuters that when he confronted his managers about possible discrepancies in the performance of funds that he was marketing to clients, he was told of ongoing discussions at the “highest level of management” about whether or not to take a closer look.
• At a staff presentation in March 2007, management tried to conceal such discrepancies, Rawl said. “They tried to pull the wool over our eyes in a meeting.”
• WHO KNEW?
• In the capital city St. John’s, a small Antiguan firm that Stanford identified as the auditors of his offshore bank said on Thursday it had no information about ties to the tycoon.
• A woman at C.A.S. Hewlett & Co, who identified herself only as Celia, told Reuters by telephone that the firm’s former chief executive, Charlesworth Hewlett, was the only person who may have had knowledge of a relationship with Stanford, and Hewlett died on January 1.
• Britain’s Evening Standard newspaper had reported that Hewlett’s daughter Celia had taken on the responsibilities of the accounting firm from London after her father died.
• Stanford’s personal fortune was estimated at $2.2 billion last year by Forbes Magazine. He has donated millions of dollars to U.S. politicians, and has secured endorsements from sports stars, including golfer Vijay Singh and soccer player Michael Owen.
• The England and Wales Cricket Board (ECB) has severed its association with Stanford, who had sponsored a multimillion-dollar tournament.
• The ATP governing body of men’s professional tennis circuits said on Thursday it had terminated Stanford’s role as its Official Investment Advisor for the ATP World Tour.