The Lavish Lifestyle Of Sir Allan Stanford

Court papers lift lid on Stanford’s lifestyle
By Michael Peel and Megan Murphy in London and Stacy-Marie Ishmael in New York
Published: February 20 2009 19:19 | Last updated: February 20 2009 21:56
The lavish lifestyle enjoyed by Sir Allen Stanford, the Texas billionaire charged by US financial regulators with “massive” investment fraud, has been laid bare by court documents from two years ago that emerged on Friday.

A $10m Florida mansion, bills of up to $75,000 for Christmas presents and childrens’ holidays, and a $100m fleet of private jets topped a list of Sir Allen’s outgoings and assets in the documents obtained by the Financial Times from a 2007 court case.

Details of his lifestyle emerged as the Federal Bureau of Investigation continued its probe into the billionaire’s affairs and allegations that his Antigua-based Stanford International Bank was at the centre of an $8bn fraud that may have drawn in tens of thousands of investors.

The criminal inquiry by the FBI and justice department is expected to resemble that of Enron seven years ago, when a special taskforce was formed to investigate allegations of criminal behaviour at the Houston-based energy company.

Sir Allen and two co-defendants had surrendered their passports to the US authorities, the Securities and Exchange Commission said on Friday.

A law firm representing 100 Stanford clients filed a civil lawsuit in Texas accusing the billionaire of fraud, conspiracy and breach of contract. It is thought to be the first such action. James A. Dunlap Jr and Associates LLC, a Georgia firm, filed its suit on behalf of a Colorado charity.

In London, the England and Wales Cricket Board said it was ending all contracts with the Stanford Financial Group, including a planned four-country tournament in England due in May.

The 2007 court case against Sir Allen was brought by a woman who claims to be the mother of two children by him. The documents detailed personal expenditure ranging from a $100,000 a week yacht to $25,000 a month rent for a Florida home.

In the paternity suit, Louise Sage Stanford said the family once lived together in a $10m mansion known as the Wackenhut Castle after its builder, the former FBI agent and private security tycoon George Wackenhut. Her claims – admitted by Sir Allen – included his chartering of the yacht, the purchase of gifts and vacations costing from $30,000 to $75,000, and his ownership of a fleet of private jets.

Elsewhere, the reverberations from the SEC allegations continued apace.

In Houston, the court-appointed receiver for the Stanford Financial Group warned that customers of the firm’s brokerage and advisory businesses would not be able to access their cash or close their accounts while the company’s assets were being examined.

“For the foreseeable future, customers cannot use their accounts to make payments because transfers out of these accounts are frozen until the receiver is able to verify there are no legal or equitable claims against those accounts,” the receiver said in a statement.

In Antigua, the island’s financial regulators appointed separate receivers to unravel the affairs of Stanford International Bank, Sir Allen’s offshore business, and the Stanford Trust Company.

Separately, the Eastern Caribbean Central Bank - the monetary authority for eight island nations - was forced to seize control of a commercial bank owned by Sir Allen to prevent its collapse. The ECCB said it would take over the Bank of Antigua after “an unusual and substantial withdrawal of funds” during the week.

The Bank of Antigua is a separate entity from Stanford International Bank and is not mentioned in the SEC’s complaint. But the association with Sir Allen was enough to prompt hundreds of locals to demand their money back. The subsequent run on the bank had threatened to destabilise the country’s economy, banking officials said.

Officials in Venezuela have also banned the directors of Sir Allen’s banking operations there from leaving the country. The Venezuelan government took control of Stanford Bank Venezuela on Thursday.

Additional reporting by Joanna Chung, Greg Farrell and Tracy Alloway

Copyright The Financial Times Limited 2009