Robert Allen Stanford (born March 24, 1950) is a convicted financial fraudster, former financier, and sponsor of professional sports. He was convicted of fraud in 2012, having operated an eight billion dollar Ponzi scheme,[1][2][3] and is now serving a 110-year federal prison sentence.[4]
Stanford grew up in Mexia, Texas. His father, James Stanford (1927–2021),[13] was mayor of Mexia and a member of the Board of Directors of Stanford Financial Group.[14] His mother, Sammie (née Conn), is a nurse.[15] After his parents divorced in 1959, Stanford and his brother went to live with their mother.[14]
Stanford started in business in Waco, Texas, opening a bodybuilding gym that failed.[19] His first success in business came from speculating in real estate in Houston after the Texas oil bubble burst in the early 1980s;[20] his father was his partner in this venture. The men made a fortune in the 1980s, buying up depressed real estate and selling it years later as the market recovered. After his father retired in 1993, Stanford took control of the company, which by then had 500 employees.[21]
In 2009, Antigua's Financial Services Regulatory Commission named a British firm, Vantis Business Recovery Services, the receiver for Stanford International Bank and Stanford Trust Company, the Associated Press reported.
Reports surfaced in early February 2009 that the SEC, the FBI, the Florida Office of Financial Regulation, and the Financial Industry Regulatory Authority, a major U.S. private-sector oversight body, were investigating Stanford Financial Group,[23] questioning the consistently higher-than-market returns which Stanford International Bank claimed to make for its depositors.[24] A former executive told SEC officials that Stanford presented hypothetical investment results as actual historical data in sales pitches to clients.[25] Stanford claimed his certificates of deposit were as safe as, or safer than, U.S. government-insured accounts.[26]
Federal agents raided the offices of Stanford Financial on February 17, 2009,[27] and treated it as "a kind of crime scene—cautioning people not to leave fingerprints".[28] The SEC charged Stanford with "massive ongoing fraud" centered on an eight-billion-dollar investment scheme.[2][29] Stanford's assets, along with those of his companies, were frozen and placed into receivership by a U.S. federal judge,[30] who ordered Stanford to surrender his passport.[31]
CNBC reported that Stanford tried to flee the country on the same day as the raids on his headquarters. He contacted a private jet owner and attempted to pay for a flight to Antigua with a credit card, but was refused because the company would accept only a wire transfer.[32]
On February 19, acting at the request of the SEC, FBI agents located Stanford at his girlfriend's house near Fredericksburg, Virginia, and served him with civil legal papers filed by the SEC.[33] The SEC often files civil charges before criminal charges are filed.[34] Stanford was arrested on June 18, 2009.[35] He surrendered his passport to federal prosecutors, and hired criminal defense lawyer Brendan Sullivan, who had represented Oliver North.[36]
Various governments took over Stanford's business operations. The Eastern Caribbean Central Bank announced that it had taken over the local operations of the Bank of Antigua, which was renamed the Eastern Caribbean Amalgamated Bank.[37] The Venezuelan government took over Stanford Bank Venezuela, the branch of Stanford's bank in that nation.[38][39]
On February 27, 2009, the SEC said that Stanford and his accomplices operated a "massive Ponzi scheme", misappropriating billions of dollars of investors' money and falsifying the Stanford International Bank's records to hide their fraud. "Stanford International Bank's financial statements, including its investment income, are fictional," the SEC said.[7][40] In an interview on April 20 at the law offices of Houston criminal attorneyDick DeGuerin, Stanford denied any wrongdoing. His companies had been well-run, he claimed, until the SEC "disembowelled" them.[28]
On June 18, 2009, Stanford was taken into custody by FBI agents.[41] On June 25, 2009, he appeared in a Houston court and pleaded not guilty to charges of fraud, conspiracy, and obstruction.[42] On August 27, 2009, Stanford was admitted into the Conroe, Texas, Regional Medical Center. He had complained of a racing heart while being transported from the private prison in Huntsville, Texas, to the Federal Courthouse in Houston to attend a hearing concerning his attorney, Dick DeGuerin, who had asked the court for permission to withdraw from Stanford's case.[43] Robert Luskin of Patton-Boggs, which had been representing Stanford in a simultaneous civil case, was to be lead counsel.[44]
On September 26, 2009, Stanford was hospitalized due to injuries sustained while being severely beaten by another inmate at the Cornell Companies-operated, Joe Corley Detention Facility in Conroe.[45][46] His injuries were described as non-life-threatening.[47]
In March 2010, SEC Inspector General H. David Kotz issued a report finding the SEC had failed to uncover the Ponzi scheme perpetrated by Stanford.[48] Because of concerns raised by former SEC Chief Investigator David P. Weber of improper conduct by Kotz, Inspector General David C. Williams of the U.S. Postal Service was brought in to conduct an independent review.[49] The Williams report found that Kotz "appeared to have a conflict of interest" because he had a personal relationship with an attorney representing Stanford's victims.[50][51]
Stanford's trial date was set for January 2011.[52] The district judge deemed that Stanford's anti-anxiety drug addiction impaired his judgment and therefore made him unfit to stand trial.[53] Stanford was incarcerated at the Federal Detention Center, Houston.[54] In February 2011 Stanford issued a counter-claim of $7.2 billion of damages against the FBI and the SEC.[55] In May, prosecutors dropped seven charges against Stanford, leaving 14 charges ongoing.[56]
By November 5, 2011, Stanford was being held at the Federal Medical Center at the Federal Correctional Complex, Butner in Butner, North Carolina.[57] His attorneys claimed that Stanford was unfit to stand trial due to amnesia resulting from his sustained injuries. On December 22, 2011, he was found competent to stand trial by U.S. District Judge David Hittner.[58]
The trial began on January 24, 2012, at the Houston Federal Courthouse, Judge Hittner presiding.[59][60] On March 6, after three hours of deliberation, the jury convicted him of masterminding a Ponzi scheme.[61] Prosecutors sought a sentence of 230 years in prison—the maximum permitted by law, and 80 years more than the 150-year sentence handed to Bernard Madoff—calling him "a ruthless predator" who "lived a life steeped in deceit." Stanford's lawyers pressed for a sentence of 31 to 44 months and a maximum of 10 years; the former sentence, with credit for time served, could have allowed him to walk out of prison without further jail time.[61][62] According to Peter Henning of The New York Times, judges have been more willing to impose sentences for financial fraudsters that effectively amount to life sentences in recent years. The extent to which such frauds wreck people's lives, Henning wrote, amounts to "economic homicide," and such outsized sentences are a way to express society's anger at such conduct.[63]
On June 14, 2012, Stanford was sentenced to 110 years in prison. Although it is less than half of the maximum sentence sought by prosecutors, it virtually ensures he will die in prison.[64][65][66] Hittner ordered Stanford to forfeit $5.9 billion, saying that Stanford had orchestrated "one of the most egregious frauds ever presented to a trial jury in federal court."[67] At sentencing, Stanford spoke for the first time in the proceedings, denying that he had ever swindled anyone. He blamed his company's failure on "Gestapo tactics" by government regulators.[61] He is incarcerated at Coleman II USP in Sumterville, Florida; his earliest possible release is March 13, 2103.
On April 26, 2013, federal district judge David Godbey sided with the SEC in its civil suit against Stanford and ordered him to disgorge $6.7 billion ($5.9 billion in illegal profits and $861 million in interest) and pay a $5.9 billion fine. He was permanently banned from the securities industry. Godbey wrote that Stanford had carried out the fraud for over a decade "with a high degree of scienter," or knowledge that what he was doing was illegal.[68]
Stanford filed a 299-page brief in September 2014 with the 5th U.S. Circuit Court of Appeals in New Orleans on his conviction.[69] The appeal was rejected in October 2015.[12]
The FBI and other agencies have been conducting an ongoing investigation of Stanford since 2008 for possible involvement in money laundering for Mexico's Gulf Cartel.[72] According to The New York Times, Stanford once held a Cook Islands trust called "Baby Mama", with his mistress and two children as beneficiaries. The trust protected proceeds deposited into Swiss and Isle of Man bank accounts from the sale of a $2.5 million Florida home.[73]
Trademark infringement lawsuit
In 2001, Stanford said that his great-great-great grandfather was a relative of Leland Stanford, the founder of Stanford University.[74] He funded the restoration of Leland Stanford's mansion in Sacramento, California, in an effort "to help preserve an important piece of Stanford family history," and hired genealogists to prove he was a member of the Leland Stanford family.[20] A university spokesperson said "We are not aware of any genealogical relationship between Allen Stanford and Leland Stanford".[20] In 2008 the university filed a trademark infringement suit against Stanford, claiming the school's name was being used "in a way that creates public confusion" and is "injurious".[74]
Knighthood and revocation
A February 2009 Houston Chronicle article described Stanford as "the leading benefactor, promoter, employer and public persona" of Antigua and Barbuda. On November 1, 2006, Stanford was appointed Knight Commander of the Order of the Nation (KCN) of Antigua and Barbuda by the Antiguan government.[75]Prince Edward, Earl of Wessex, joined the then Governor-General of Antigua and Barbuda, Sir James Carlisle, to make this announcement during the Silver Jubilee Independence Day Celebration. After being knighted, Stanford used the awarded title "Sir Allen" often; he was generally referred to as such both by Antiguans and internationally.[76]
In October 2009, the National Honours Committee of Antigua and Barbuda voted unanimously to strip Stanford of his knighthood. On November 2, 2009, the recommendation was forwarded to the Governor-General, Dame Louise Lake-Tack. The order to revoke Stanford's knighthood and insignia was approved and was served upon Stanford on April 1, 2010.[77]
Other interests
Cricket
Stanford created and funded the Stanford 20/20cricket tournament in the West Indies, for which he built his own ground in Antigua. The first Stanford 20/20 Cricket Tournament was held in July and August 2006 where Guyana took 1st place defeating Trinidad and Tobago in the final. The second tournament took place in January and February 2008 with a global television audience of 300million.[78] Trinidad and Tobago took first place and with it the US$280,000 Stanford Super Series prize after defeating Middlesex on October 27, 2008.[79]
In June 2008, Stanford and the England and Wales Cricket Board (ECB) signed a deal for five Twenty20 internationals between England and a West Indies all-star XI, with a total prize fund of £12.27million (US$20million) to be awarded to the team that won the Championship. It was the largest prize ever offered to a team for a single tournament.[80] This was in jeopardy after a row with Digicel, the sponsors of the West Indies cricket team, who were unhappy about sponsorship of the event. Eventually, the dispute was sorted out and the championship was won by Stanford Superstars, who defeated the England team by 10 wickets.[81]
On February 17, 2009, when news of the fraud investigation became public, the ECB and WICB withdrew from talks with Stanford on sponsorship.[82][83] On February 20, 2009, the ECB announced it had severed its ties with Stanford and cancelled all contracts with him.[84]
Media
Stanford owned two newspaper businesses in Antigua and Barbuda[85] and Saint Kitts and Nevis,[86] both called The Sun. Following the scandal, both newspapers put workers on notice that their full operations would cease in April 2010.[87]
Antigua, also known as Waladli or Wadadli by the native population, is an island in the Lesser Antilles. It is one of the Leeward Islands in the Caribbean region and the most populous island of the country of Antigua and Barbuda. Antigua and Barbuda became an independent state within the Commonwealth of Nations on 1 November 1981.
Bernard Lawrence Madoff was an American financial criminal and financier who was the admitted mastermind of the largest known Ponzi scheme in history, worth an estimated $65 billion. He was at one time chairman of the Nasdaq stock exchange. Madoff's firm had two basic units: a stock brokerage and an asset management business; the Ponzi scheme was centered in the asset management business.
Harry M. Markopolos is an American former securities industry executive and a forensic accounting and financial fraud investigator.
Joseph S. Forte of Broomall, Pennsylvania, is an American con artist who operated a Ponzi scheme that cost investors $50 million. He reportedly signed a confession with the United States Postal Inspection Service.
Nicholas Cosmo is an American former businessman and white-collar criminal. He was arrested January 26, 2009 on charges of an estimated $370–413 million Ponzi scheme. Cosmo conducted the scheme using his company Agape World Inc. in Hauppauge, New York, which claimed to make its profits via commercial bridge lending. Authorities arrested him in Hicksville, New York.
H. David Kotz, also known as Harold David Kotz, is a managing director at Berkeley Research Group.
The Stanford Financial Group was a privately held international group of financial services companies controlled by Allen Stanford, until it was seized by American authorities in early 2009. Headquartered at 5050 Westheimer in Uptown Houston, Texas, it had 50 offices in several countries, mainly in the Americas, included the Stanford International Bank, and was said to have managed US$8.5 billion of assets for more than 30,000 clients in 136 countries on six continents. On February 17, 2009, U.S. Federal agents placed the company into receivership due to charges of fraud. Ten days later, the U.S. Securities and Exchange Commission amended its complaint to accuse Stanford of turning the company into a "massive Ponzi scheme".
Stanford International Bank was a bank based in the Caribbean, which operated from 1986 to 2009 when it went into receivership. It was an affiliate of the Stanford Financial Group and failed when its parent was seized by United States authorities in early 2009 as part of the investigation into Allen Stanford.
Bank of Antigua was an Antigua-based bank that was owned by the Stanford Financial Group and was central to the Ponzi scheme run by Allen Stanford. It was originally formed on the 10 February 1981 in St. John's. When the Ponzi scheme was exposed in 2009, the bank was taken over by the Eastern Caribbean Central Bank (ECCB) on 20 February 2009.
David Hittner is a senior United States District Judge on the United States District Court for the Southern District of Texas. He also has served by temporary assignment on the U.S. Court of Appeals for the 5th Circuit, as well as the U.S. District Courts for the Southern District of New York and the District of Arizona. His tenure as a federal jurist began in 1986, when he was nominated for the lifetime position by President Ronald Reagan and unanimously confirmed by the U.S. Senate. Prior to his appointment to the federal bench in 1986, Hittner served from 1978 to 1986 as the elected judge of the 133rd Judicial District Court of Harris County, Texas, based in Houston.
The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former Nasdaq chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities LLC, admitted that the wealth management arm of his business was an elaborate multi-billion-dollar Ponzi scheme.
Steven Jude Hoffenberg was an American businessman and fraudster. He was the founder, CEO, president, and chairman of Towers Financial Corporation, a debt collection agency, which was later discovered to be a Ponzi scheme. In 1993, he rescued the New York Post from bankruptcy, and briefly owned the paper. Towers Financial collapsed in 1993, and in 1995 Hoffenberg pleaded guilty to bilking investors out of $475 million. He was sentenced to 20 years in prison, plus a $1 million fine and $463 million in restitution. The U.S. SEC considered his financial crimes to be "one of the largest Ponzi schemes in history".
Laura Pendergest-Holt is a convicted Ponzi scheme perpetrator, financier, and former chief investment officer of Stanford Financial Group, who was charged with a civil charge of fraud on February 17, 2009. On May 12, 2009, Pendergest-Holt was indicted by a federal grand jury on two counts of a criminal complaint of obstructing a fraud investigation and conspiracy to obstruct justice. In early 2009, Stanford Financial became the subject of several fraud investigations, and on February 17, 2009, Pendergest-Holt was charged by the U.S. Securities and Exchange Commission with fraud and multiple violations of U.S. securities laws for alleged "massive ongoing fraud" involving $8 billion in certificates of deposit. The FBI raided three of Stanford's offices in Houston, Memphis, and Tupelo, Mississippi. On February 27, 2009, the SEC amended its complaint to describe the alleged fraud as a "massive Ponzi scheme". On June 21, 2012, she pleaded guilty to obstructing a U.S. Securities and Exchange Commission investigation into Stanford International Bank (SIB), the Antiguan offshore bank owned by Robert Allen Stanford. On September 13, 2012, Holt was sentenced to three years in prison, followed by three years of supervised probation. She was released on April 23, 2015.
James M. Davis is the former chief financial officer of Stanford Financial Group. On 27 August 2009 he pleaded guilty to charges of fraud and obstruction of Justice in relation to a $7 billion investment fraud Ponzi scheme allegedly run by the company. On January 22, 2013, Davis was sentenced to five years in jail for his part in the Stanford Financial fraud. He admitted that he was aware of Allen Stanford's misuse of funds and he assisted in keeping the misuse of funds quiet. Davis was also sentenced to three years of supervised release and had a judgment of $1 billion placed against him. He finished serving his sentence at Memphis FCI and was released on July 24, 2017.
Gregg Jeffrey Costa is an American attorney who is a former United States circuit judge of the United States Court of Appeals for the Fifth Circuit and former United States district judge of the United States District Court for the Southern District of Texas.
Shana Diane Madoff, sometimes referred to as Shana Madoff Skoller Swanson, is an American former attorney who is now a yoga teacher.
Dr. David Paul Weber is an American criminalist, and the former Assistant Inspector General for Investigations at the U.S. Securities and Exchange Commission (SEC). He is the Principal Investigator of a $2.6 million grant by the U.S. Department of Health and Human Services, to test various white collar crime interventions concerning elder financial exploitation and high-tech crime. He is a Professor of the Practice in Fraud and Forensic Accounting at the Perdue School of Business, Salisbury University. In the past, Dr. Weber was a whistleblower who reported allegations about foreign espionage against the stock exchanges, and misconduct in the Bernard L. Madoff and R. Allen Stanford Ponzi scheme investigations. In June 2013, the SEC settled with Weber his whistleblower protection and U.S. District Court lawsuits, paying him one of the largest federal employee whistleblower settlements ever. In 2014, In Bed with Wall Street author Larry Doyle named Dr. Weber as one of his "top 5 whistleblowers". On July 30, 2015, Weber was recognized by six United States Senators and one member of the House of Representatives at the First Congressional Celebration of National Whistleblower Appreciation Day. On August 5, 2021, Dr. Weber met with the President, Speaker of the House, and Senators at the signing of H.R. 3325, the awarding of the Congressional Gold Medal for those officers who lost their lives at the Capitol Insurrection, as he represents one of the deceased police officers and his widow. Ultimately, he was successful in having his client Police Officer Jeffrey L. Smith designated as having died in the line of duty by the District of Columbia in March 2022, and in August 2023 by the U.S. Department of Justice. Dr. Weber is now a forensic accounting professor at the Perdue School, Salisbury University. As part of his teaching duties, he is a special investigator for the Maryland State's Attorneys Offices in two adjoining counties, and a Virginia financial crimes state prosecutor in the neighboring Virginia county. He supervises his students who act as intern investigators on financial crime cases.
In June 2009 Antigua and Barbuda became a formal member of the Bolivarian Alliance for the Americas (ALBA) international cooperation organization and the Caribbean oil alliance Petrocaribe. In 2009 Antigua and Barbuda received US$50 million from Venezuela. After American billionaire Allen Stanford's banks failed, Chávez sent financial assistance to Antigua and Barbuda, which was dependent on Stanford's investment when his business empire collapsed.
1 2 Securities and Exchange Commission, Plaintiff v. Stanford International Bank Ltd., Stanford Group Company, Stanford Capital Management LLC, R. Allen Stanford, James M. Davis, Laura Pendergest-Holt, Defendants,case no. 3:09-cv-00298-L(U.S. District Court for the Northern District of Texas (Dallas)).
↑ Matthew Goldstein (February 13, 2009). "Stanford's Failed Health Club". BusinessWeek. Archived from the original on February 17, 2009. In 1983, a judgment debt of $31,800 was awarded against Stanford for back rent on a failed health club in Waco.
↑ Staff writer (April 17, 2010). "Stanford company to close 2 Caribbean newspapers". Business Week. Associated Press. Archived from the original on April 22, 2010. Retrieved April 18, 2010. Two Caribbean newspapers owned by jailed Texas financier Allen Stanford were ordered closed because of financial constraints. The Antigua Sun has operated for 13 years, and the Sun St. Kitts and Nevis nearly six years.
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