Allen Stanford, former chairman of the Stanford Financial Group of Companies, was convicted on Tuesday on 13 counts of fraud, conspiracy, obstructing justice, violating U.S. securities laws—for operating a Ponzi scheme. Sentencing is scheduled for June, which could result in Stanford remaining behind bars for at least another 20 years.
The scheme, valued at $7 billion at its zenith, has only $300 million in various accounts. Another jury has just ruled these accounts may be seized for potential customer restitution.
The Ponzi scheme was elegantly simple. Stanford’s offshore bank in the British overseas territoryof Montserrat was closed down for “irregularities” in the mid-1980s so he moved it to Antig
ua where he ingratiated himself, using investors’ money, with the local government by lending it millions of dollars and building government administration offices and a hospital. Meanwhile his investors were fooled into thinking they were buying ultra-safe Certificates of Deposit paying above-market rates of interest. His influence went way beyond the local government, however, with regular, sometimes daily, flights of U.S. Senators and Congressmen coming to Antigua to partake of Stanford’s generosity and enjoy his lavish parties. As Mikeda Mikel, the owner of a private jet company in Antigua explained: “They were partying on yachts in an exclusive resort, and when you have US politicians supporting a man like Mr. Stanford on an island as small as Antigua…if you had any doubts before [about his honesty] they go out the window. America has sanctioned him [therefore] he’s good to go.”
By investing in regulatory “protection,” Stanford was able to live for years on his investors’ capital without being disturbed by annoying questions into how he could pay such generous dividends to his clients. As Gaston Browne, chairman of the Antigua Labour Party (ALP), which was in power during Sanford’s heyday, said: