Depositors from the Caribbean to South America tried and failed to withdraw money from Stanford International Bank and its affiliates, as the effects of US fraud charges against Texas financier R. Allen Stanford spread across the globe.
Depositors walked away empty-handed on Wednesday from the bank’s headquarters in Antigua after rushing to the Caribbean island only to be told their accounts were frozen and no money could be released.
“I have my life savings here and I’m scared,” said Reinaldo Pinto Ramos, 48, a Venezuelan software firm owner who flew in by chartered plane from Caracas on Wednesday with other investors to check on their accounts.
PHOTO: AP
Banking regulators throughout Latin America are scrambling to contain the damage after the US Securities and Exchange Commission (SEC) filed civil fraud charges against the billionaire on Tuesday.
Regional Director Rose Romero of the SEC’s Fort Worth office called it a “fraud of shocking magnitude that has spread its tentacles throughout the world.”
Stanford, 58, is a larger-than-life figure in the Caribbean, using his personal fortune — estimated at US$2.2 billion by Forbes magazine — to bankroll public works and sports teams. He also is a major player in US politics, personally donating nearly US$1 million, mostly to Democrats.
He owns a home in the US Virgin Islands, and operates businesses from Houston to Miami and Switzerland to Antigua, where he holds citizenship and the government knighted him in 2006 in recognition of his economic influence and charity work.
US regulators have accused Stanford, two other executives and three of their companies of luring investors with promises of “improbable and unsubstantiated” high returns on certificates of deposit and other investments.
Many details about the alleged fraud remain unclear, but the SEC alleges a pattern of secrecy, including a failure to disclose the bank’s exposure to losses in money manager Bernard Madoff’s alleged Ponzi scheme.
The SEC said no one but Stanford and James Davis of Baldwyn, Mississippi, the Antigua-based bank’s chief financial officer, know where most of depositors’ cash is invested, and both men have failed to cooperate with investigators.
Stanford’s companies also have been scrutinized in recent years over concerns that they were laundering drug money, a US official familiar with the case said.
The Drug Enforcement Administration, the FBI and Homeland Security investigators often launch such inquiries when offshore banks move lots of money, and there is no indication that money-laundering charges are being prepared, said the official, who spoke on condition of anonymity because he was not authorized to discuss the inquiry.
Stanford wasn’t talking on Wednesday and a company Web site directed inquiries to the SEC. But in an e-mail to his employees last week, the billionaire said his company was cooperating with the probe, and vowed to “fight with every breath to continue to uphold our good name and continue the legacy we have built together.”
A US federal judge appointed a receiver to identify and protect Stanford’s assets worldwide, including about US$8 billion managed by the bank, which has affiliates in Mexico, Panama, Colombia, Ecuador, Peru and Venezuela.
Also frozen were assets of Houston-based Stanford Capital Management and Stanford Group Company, which has 29 brokerage offices around the US.
SEC spokesman John Nester said the agency does not know where Stanford is. He does not currently face any charges requiring his presence in court.
Governments across Latin America and the Caribbean took a variety of actions to protect investors who’d deposited money with Stanford-linked institutions.
Colombia and Ecuador suspended the activities of Stanford’s local brokerages on Wednesday, and Panamanian regulators occupied Stanford bank branches hit by a run on deposits.
In Venezuela, banking regulator Edgar Hernandez said the government was considering a request for help from Stanford Bank SA in Caracas after a US$26.5 million run on deposits removed about 12 percent of its holdings.
In Mexico, where the Stanford Fondos unit manages about US$50 million for 3,400 clients, a note posted on a shuttered office door in the capital’s wealthy Polanco neighborhood announced that all accounts “are temporarily frozen.”
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