HUNDREDS OF panicked savers yesterday rushed to withdraw their money from banks linked to Sir Allen Stanford, the Texan billionaire who has been charged by US securities regulators with “massive” investment fraud.
Sir Allen, whose whereabouts was still unknown to investigators last night, was reported by CNBC to have attempted to hire a private jet in Houston to fly to Antigua, where his offshore Stanford International Bank (SIB) is based. The jet leasing company declined to accept his credit card.
The US Securities and Exchange Commission (SEC)accused Sir Allen on Tuesday of operating an alleged $8 billion (€6.3 billion) scheme involving certificates of deposits sold through SIB that allegedly promised “improbable and unsubstantiated high interest rates”.
In Antigua, authorities tried to calm locals who lined up at the Bank of Antigua in St John’s to demand their money. Bank of Antigua is part of Sir Allen’s holding on the island but it doesn’t figure in the SEC’s complaint.
Sir Allen’s operations in Venezuela were also besieged. The country’s regulator said that Venezuelans had about $2.5 billion invested with SIB.
It also emerged that, contrary to Sir Allen’s assurances, at least $400,000 of SIB’s assets were exposed to Bernard Madoff, the US broker-dealer accused in December of perpetrating a $50 billion Ponzi scheme.
The SEC’s complaint said SIB had money invested in Meridian, a New York-based hedge fund that used Tremont Partners as its asset manager. Tremont invested approximately 6-8 per cent of the SIB assets they indirectly managed with Madoff’s investment firm.
The complaint also details how the bank’s problems started growing before the regulator’s action. In December, Pershing, a clearing firm, told SIB it would no longer wire funds from Stanford Group to the bank because the bank had not given it financial details of its position, as requested.
In recent weeks, the regulator said it had noticed increasing liquidation by SIB of the funds with the bank seeking to remove more than $178 million from its accounts.
SIB does not operate like a standard bank. Instead, it offers depositors an attractive fixed rate of interest paid out of investment returns. The bank makes no loans
