Allen Stanford, Investment Fraud, Texas 2012

Grimy Times Exclusive: Allen Stanford, 62, the former board of directors chairman of Stanford International Bank (SIB), was sentenced to a total of 110 years in prison on March 6, 2012 in Houston, Texas, for orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion from SIB to finance his personal businesses.

The sentencing was announced by the U.S. Attorney’s Office for the Southern District of Texas. Stanford was convicted on 13 of 14 counts by a federal jury following a six-week trial and approximately three days of deliberation. The jury also found that 29 financial accounts located abroad and worth approximately $330 million were proceeds of Stanford’s fraud and should be forfeited.

Stanford was sentenced by U.S. District Judge David Hittner. After considering all the evidence, including more than 350 victim impact letters that were sent to the court, Judge Hittner sentenced Stanford to 20 years for conspiracy to commit wire and mail fraud, 20 years on each of the four counts of wire fraud as well as five years for conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) investigation and five years for obstruction of an SEC investigation. Those sentences will all run consecutively.

He also received 20 years for each of the five counts of mail fraud and 20 years for conspiracy to commit money laundering which will run concurrent to the other sentences imposed today for a total sentence of 110 years. As part of Stanford’s sentence, the court also imposed a personal money judgment of $5.9 billion, which is an ongoing obligation for Stanford to pay back the criminal proceeds. The court found that it would be impracticable to issue a restitution order at this time.

According to court documents and evidence presented at trial, the vehicle for Stanford’s fraud was SIB, an offshore bank owned by Stanford and based in Antigua and Barbuda that sold certificates of deposit (CDs) to depositors. Stanford began operating the bank in 1985 in Montserrat, the British West Indies, under the name Guardian International Bank. He moved the bank to Antigua in 1990 and changed its name to Stanford International Bank in 1994.

The bank issued CDs that typically paid a premium over interest rates on CDs issued by U.S. banks. By 2008, the bank owed its CD depositors more than $8 billion. Stanford diverted billions in depositor funds into various companies that he owned personally, in the form of undisclosed “loans.” Stanford was thus able to continue the operations of his personal businesses, which ran at a net loss each year totaling hundreds of millions of dollars, at the expense of depositors.

The charges against Stanford include conspiracy to commit wire and mail fraud, wire fraud, conspiracy to obstruct a SEC investigation, obstruction of an SEC investigation, mail fraud, and conspiracy to commit money laundering.

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