Stanford Financial’s Assets a Drop in the Bucket Toward Repaying Swindled Investors, Receiver Says

Allen Stanford, the Texas billionaire accused in an $8 billion Ponzi scheme, greatly overstated the value of real estate and other assets he owned, meaning there likely is not enough cash to repay investors who lost money in Stanford investments, a court-appointed receiver said today.

One of Stanford’s listed assets was a 1,600-acre plot in Antigua, the Caribbean nation where the tycoon lived and based his banking and investment empire. Stanford reportedly bought the land in 2008 for $63.5 million, but just months later, he valued the land at $3.2 billion on his company’s books, according to Ralph Janvey, who is overseeing operations of Stanford Financial during the federal probe of the firm.

Bad News for Stanford Investors

What this all means for former Stanford Financial clients is bad news. If Stanford’s assets are falsely inflated, then authorities will not be able to recover as much cash to repay the thousands of people who lost their retirement accounts, college funds, and other monies they entrusted to the fallen money manager. Creditors who are owed money by Stanford also are likely to be left holding the bag.

“It appears that the total value of the assets of the estate is likely to be only a fraction of the total amount that would be needed to pay all outstanding CDs and other anticipated claims against the estate,” Janvey said today in a court filing.

Stanford Denies Wrongdoing, Vows to Fight

For his part, Stanford has denied wrongdoing and insisted that his banking empire was no Ponzi scheme. He has said he did not control his firm’s investment programs and that he plans to fight the Securities and Exchange Commission charges claiming he sold fraudulent investments.

Certificates of deposit in Stanford International Bank are at the heart of the federal case against Stanford. The SEC contends that Stanford Financial sold billions of dollars in the certificates after promising sky-high interest rates and returns that failed to materialize.

Janvey said his investigation of Stanford’s financial books revealed that Stanford personally did not hold any of the certificates, but that about $7.2 billion worth of CDs were held by public investors as of February 2009.

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