Nervous Investors Flood Tiny Island Nation to Withdraw Funds Tied to Stanford Bank

Hundreds of investors are flooding two Caribbean islands and other locations around the world looking to withdraw their funds from banks associated with financial adviser R. Allen Stanford, who is accused of orchestrating an $8 billion fraud.

A line of about 600 people formed in front of the Bank of Antigua, even after the nation’s financial authorities tried to reassure the anxious crowd that the bank had sufficient reserves to protect their investments. Some investors flew in from the United States and Europe in an effort to recover their life savings, college funds, retirement accounts, and other monies.

The Bank of Antigua is affiliated with but operated separately from Stanford International Bank, the financial firm at the center of the scandal over allegedly fraudulent certificates of deposit sold by at least three Stanford financial entities. Investors were promised their investments would earn high interest rates with Stanford, but those claims were unfounded and based on fraudulent data, federal prosecutors alleged.

In the Venezuelan capital of Caracas, hundreds of investors lined up to pull their money out of accounts linked to Stanford, officials said. Venezuelan officials estimate that their citizens have invested about $2.5 billion in Stanford’s companies.

Criminal Charges May Come Soon

The U.S. Securities and Exchange Commission on February 17, 2009 announced they would charge Stanford and several business associates for lying to investors, manufacturing fake financial data to support their investment products, and otherwise defrauding thousands of people. The Stanford International Bank had holdings of about $8 billion, but Stanford’s other financial firms had a total value of approximately $51 billion, officials said. His net worth is estimated to be as high as $2.5 billion.

Stanford, a 58-year-old flamboyant Texas native, holds dual citizenship in the United States and Antigua, where he has lived for about 20 years. He is active in supporting the sport of cricket, a popular sport in the island nation, which was founded as a British colony in the 1600s. His whereabouts remained unknown, prosecutors said.

Stanford Funds Frozen

As U.S. financial regulators continue to comb through Stanford’s financial empire in an effort to build a criminal case against the financial giant, a federal judge appointed a receiver “to take possession and control of defendants’ assets for the protection of defendants’ victims.” The hope is that sufficient funds may be frozen and held by the courts to allow defrauded investors to be reimbursed for funds they lost in Stanford’s criminal empire.

No related posts.