Allen Stanford, the one-time billionaire who had St. Croix atwitter at the prospect of his setting up his headquarters here in 2008, was convicted of multiple counts of wire fraud, fraud. and conspiracy Tuesday in federal court in Houston, the Associated Press reports.
After four days of deliberation and difficulty coming to a unanimous verdict, the jury returned today, convicting Stanford of 13 out of 14 counts, acquitting him of a sole charge of wire fraud, according to AP reporter Juan Lozano, who has been covering the trial since it began. The jury’s verdict had not been posted to the public online federal court database as of 5 p.m. Tuesday.
Stanford was accused by the Securities and Exchange Commission of running a $7 billion con through his Stanford International Bank in Antigua. The SEC filed a complaint against Stanford in February 2009 alleging fraud at the Antigua-based Stanford International Bank, triggering the freezing of assets and closures here on St. Croix and elsewhere.
According to the indictment, Stanford and his co-defendants schemed to defraud investors, who purchased some $7 billion in certificates of deposit administered by Stanford International Bank Ltd., an offshore bank controlled by Stanford on the island of Antigua. Stanford and his co-defendants allegedly misused and misappropriated most of those investor assets in many ways, such as diverting more than $1.6 billion into undisclosed personal loans to Stanford himself, while lying to investors about the bank’s financial condition, its investment strategy, and the extent of its regulatory oversight by Antiguan authorities.
Prosecutors argued in the original criminal complaint that the defendants falsely claimed Stanford International Bank’s assets grew from $1.2 billion in 2001 to about $8.5 billion in 2008. Roughly $5 billion of Stanford International Bank’s reported assets consisted of notes on loans to Stanford himself and grossly overstated interests in "island properties," including more than $2 billion from an artificial real estate deal invented solely to inflate the bank’s reported assets.
Stanford and his co-defendants supposedly falsely told investors their investment strategy was to "minimize risk and achieve liquidity" and promised rates of return on certificates of deposit that, in the end, were simply too good to be true in light of the bank’s actual investments and assets.
While Stanford and his co-defendants were claiming they were tightly regulated by Antiguan authorities, he was making "corrupt payments of more than $100,000" to Leroy King, former administrator and head of Antigua’s Financial Services Regulatory Commission, to ensure the Antiguan bank regulatory authority King headed did not accurately audit or verify the assets reported in the bank’s financial statements, according to the indictment.
Prosecutors also alleged Stanford conspired to conceal the fraud from the U.S. Securities and Exchange Commission. He was charged with several counts of mail, wire, and securities fraud; obstructing a U.S. Securities and Exchange Commission; conspiracy to commit these crimes; and conspiracy to commit money laundering. The most serious charges carry potential sentences of 20 years each, and Stanford could face much more time if the court imposes those sentences consecutively.
Stanford and the former executives are also fighting a U.S. Securities and Exchange Commission lawsuit filed in Dallas that makes similar allegations. The territory has been fortunate not to have been hit directly by Stanford’s fraud, but his fall from grace has been a bitter pill for the U.S. Virgin Islands nonetheless.
In February of 2008, top government officials participated in a "groundbreaking" ceremony for what was supposed to be the Stanford Financial Group’s global management complex adjacent to the Henry E. Rohlsen Airport on St. Croix. Plans hyped in the media at the time included a 105,000-square-foot conference center, office and management complex, and a 35,000-square-foot aircraft hangar on 40 acres of land. The only remaining sign of those plans are some fire hydrants Stanford had installed alongside the empty field. At least 18 Stanford employees on St. Croix lost their jobs when his con fell apart.
