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The trial of Robert Allen Stanford begins this week. Stanford, a billionaire who established well-known financial institutions in Antigua, Barbuda and elsewhere, was charged with orchestrating a $7 billion Ponzi scheme in 2009.
Using investor money to furnish an impressive lifestyle of lavish houses in Miami and the U.S. Virgin Islands, private jets, private islands, a cricket team and sizable political donations over the years, Stanford masqueraded as a successful businessman for many years. But let’s meet the real Robert Allen Stanford:
- Between 2001 and 2006, one of Stanford’s companies, Stanford Group, was accused of varying degrees of fraud in seven arbitration matters on file with Financial Industry Regulatory Authority (FINRA);
- Stanford Group was fined over $70,000 by FINRA, in 2007 and 2008, for misrepresenting facts about the company’s CD disclosures (what caused the whole Ponzi scheme allegations to begin with) and improperly monitoring customer transactions among other things;
- On two separate occasions, former employees of Stanford sued him claiming they became aware of a fraud perpetrated by Stanford. One former employee said Stanford was running a Ponzi scheme and the others said he was using illegal practices involving the sale of CDs…sound familiar?;
- Investors in Stanford sued him in 2005 and said he was running a Ponzi scheme targeted towards Venezuelans, and that Stanford allowed a known money launderer to use Stanford’s banks to execute the fraud;
- In 2002, money launderers sued him for failing to protect their money (as promised by him) when Stanford’s bank gave the criminals’ money to the Drug Enforcement Administration (this is my favorite one!);
- Stanford reportedly had ties to Mexican drug cartels and money launderers and maintained convenient relationships with regulators in Antigua that were too cozy and documented in numerous media articles published from the late 1990s on; and,
- Like Bernie Madoff, Stanford’s accountant was a small accounting firm, C.A.S. Hewlett & Co., based in Antigua and run by Charlesworth Hewlett who died in January 2009 (right before SEC brought its charges).
Allegations of fraud, running a Ponzi scheme, and maintaining close relationships with money launderers and other criminals: that was all in Stanford’s history before the SEC brought its charges. This information was found through reviewing public records, obtaining court documents in lawsuits filed against Stanford and his affiliates, and analyzing the information…standard procedure for our background checks. This was also closely examined in our book, Digging for Disclosure: Tactics for Protecting Your Firm's Assets from Swindlers, Scammers and Imposters. Stanford had a documented history of malfeasance that demonstrates that had investors conducted a thorough background check before investing with him, they would have learned of his years of impropriety and walked away from Stanford's shady empire and saved themselves millions of dollars, not to mention embarrassment.
