Stanford International Bank Under FBI Investigation

Sir Allen Stanford

FBI agents are investigating Antigua-based Stanford International Bank, owned by Texan billionaire Sir Allen Stanford.

The bank has come under scrutiny because it offers CD’s with returns at twice the rate of ‘conventional’ banks. Former employees have also witnessed ”unethical and illegal practices”, reports the times of London.

Mark Tidwell and Charles Rawl alledge that the bank gave clients false indications of investment performance and destroyed documents during a previous investigation by the SEC.

Although it acknowledges an investigation by the SEC is underway, the bank declined to comment on reports of FBI and IRS investigations started months ago. 

Stanford International Bank has an impressive track record, and currently has $8.6 Billion under management. It has succeeded in attracting at least 30,000 depositors in recent years, the majority Latin American. 

The Flamboyant Financier

This is not the first time financier Allen Stanford has courted controversy. The billionaire Texan was also famous for financing the twenty20 cricket tournament between England and the West Indies that promised a prize of $20 million, announcing his arrival in the UK by landing at Lord’s cricket ground in a golden helicopter. During a promotional photo-shoot the divorced father of six caused outrage by posing with one of the England player’s wives on his lap.

The Queen’s office in Buckingham palace recently asked him to change a page on his website which said that he had been knighted by the Earl of Wessex, when it was in fact the Antiguan government which had conferred the honor.

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2 Responses to Stanford International Bank Under FBI Investigation

  1. JDonaldson February 16, 2009 at 3:58 pm #

    As a former Stanford employee, I have seen a lot of half-truths and some outright lies thrown around regarding Stanford International Bank (SIB). There have been many facts that have not been reported that might interest investors, the public in general, and particularly the media, which seem to rely on bloggers for their sources without doing any fact checking.
    Over the last 18 months, there have been unprecedented challenges which have confronted the global financial industry and have led to heightened scrutiny by regulatory bodies, the public and the media. Although Stanford Financial Group has not been the beneficiary of any government bailout money, they are not immune from this crisis; however any comparisons to recently defaulted institutions and scandals are not relevant to the organization and are a disservice to Stanford employees and clients worldwide.
    One analyst’s opinion regarding Stanford International Bank has been picked up by numerous blogs and reputable news outlets and printed “as fact.” These facts need to be known: Stanford International Bank was able to show a positive return for doing what U.S, banks did NOT do: –SIB does not make loans, they have no loan loss reserves, they took no markdowns to capital and had no exposure to subprime. If U.S. Banks had followed this strategy — chances are they might have shown positive returns.
    Has anyone bothered to check out the Analyst — one Alex Dalmady — who is he, what is his track record? It is easy to point fingers and make broad statements — what expertise does this guy have? I would hope the more reputable outlets did this homework, but they seem to have picked his words up verbatim and did no “fact checking” on the source of all of this at all.
    The media has a responsibility to report accurately and balanced — that is not apparent in Stanford’s case. He may be flamboyant, but that is not a crime. Misleading and scaring thousands of investors is.
    And let’s not forget that ALL of this started with two disgruntled employees who owe Stanford a lot of money (Bloomberg link with what they actually owe: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNO2xKLg68_0) running to regulators accusing Stanford when they found out Stanford expected them to pay back what they owed. To date, there has been NO evidence of wrongdoing on the part of Stanford, but evidence of illegal selling practices by the two employees has been uncovered and turned over to regulators. Why has not one reputable media outlet reported this??
    Stanford International Bank has NEVER failed to make an interest payment or pay funds at maturity in the nearly 25 years of its history. That is 25 YEARS, not weeks or months. Also, while not obligated to, this Bank has always tried to help the customers who needed early withdrawals. This Bank has suspended THE Privilege of early withdrawals to ensure the protection of its entire depositor base. The media hype and continued repetition of half truths is only causing heightened anxiety, and this step has been taken in light of this barrage of negative and misleading statements.
    SIB structures, operations and higher returns are no different than other private international banks except that SIB has narrowed its products to CDs and deposit accounts, as well as ancillary products like credit cards and loans to existing clients. The rates for a 5-year jumbo CD are from 1 1/3% to 6 7/8% and are comparable to other international institutions. This information is verifiable on bankrate.com.
    This analyst states that it is near to impossible for SIB to show a positive return — implying there must be fraud for this to occur. Plenty of financial investment vehicles had positive returns — including more than 1,600 hedge funds. The characterization that positive must be fraudlent is simply false and sensationalism.
    Are we going to launch investigations of all firms who did NOT lose money for their investors last year?
    Madoff/ponzi characterization — Separately, at Stanford Group Company, clients assets are held at Pershing LLC, a subsidiary of Bank of New York Mellon—one of the largest custodian organizations in the world. Clients’ brokerage account assets are insured and segregated to assure return of their assets in the event of any catastrophic events like the ones that have occurred to world class financial institutions in the last two years. Madoff was his own custodian…..more sensationalism. Report the truth…report the Pershing relationship. There has not been one fact proving that Stanford International Bank’s custodian relationships are not holding sigificant assets or that their independent money managers are not managing significant amounts for the bank.
    Federal Agencies are “investigating” Stanford — regulators are a reality for any U.S. Broker/Dealer….the SEC and Finra were in Stanford offices as part of a routine examination. No one has confirmed or advised an “investigation is ongoing. There was an article in the New York Times earlier this week with headline “Hundreds of Regulators descend on Citi…..” Regulators are feeling the sting from their testimony to Congress, and are responding with more oversight. Stanford has no problem with this and has track record of full cooperation with regulators over the years.
    Since the first Stanford Company’s founding during the Great Depression, the Stanford Financial Group has grown into a full-service portfolio of companies servicing individuals and institutions. Stanford Financial Group is a privately held global network of independent, affiliated financial services companies including Stanford Group Company, Stanford International Bank and Stanford Trust.
    The Stanford International Bank (SIB) is but one aspect of the overall company portfolio and operates in St. John in the Caribbean Island of Antigua and Barbuda. The Bank has a prudent investment approach that it has followed for over 20 years and has over 30,000 clients in over 90 countries. It has stringent know-your customer/anti-money laundering policies and procedures and terrorist financing tracking. SIB remains a strong institution, and even without the benefit of billions in US taxpayer’s dollars SIB is taking a number of decisive steps to reinforce SIB financial strength to keep the capital base intact to protect SIB depositors.
    Stanford International Bank has used the same auditing firm for a number of years. Once the external bank auditors are selected by the Board of Directors they must be expressly approved by regulatory agencies. The regulatory framework follows international standards set forth by Basel I and II. For the record, Basel I and Basel II are the highest standards in the industry.

  2. Oluckyman February 18, 2009 at 8:26 am #

    The attorney has quit, the accountant just passed away and Stanford bank is in receivership…http://www.reuters.com/article/newsOne/idUSN1737429520090218