Another Side of the Robert Allen Stanford Case

Antigua sued by Stanford 'victims'
By Sheila McNulty in Houston and Stacy-Marie Ishmael in,New York
Published: July 14 2009 03:00 | Last updated: July 14 2009 03:00
A group of plaintiffs identifying themselves as "victims" of Sir Allen Stanford's alleged $7bn Ponzi scheme yesterday filed a $24bn lawsuit against the government of Antigua, where the bank at the epicentre of the alleged fraud was based.

The complaint, filed in federal court in Houston, alleges that the government of the twin-island nation "became a full partner in [the] fraud".

The US government has accused Sir Allen of defrauding investors through so-called certificates of deposits issued by Stanford International Bank, based in the Antiguan capital of St John's.

Sir Allen has extensive business and personal ties to the island, of which he is a citizen.

"Antigua worked tirelessly to protect and nurture Stanford's criminal enterprise and, in return, eagerly accepted its share of criminally procured funds," attorneys for the plaintiffs claimed in the filing.

"Stanford stuffed Antigua's coffers - and its officials' pockets - with money stolen from unsuspecting customers throughout the United States, Canada, Central America, South America and elsewhere."

This month, US officials accused Leroy King, a former top Antiguan financial regulator, of accepting thousands of dollars in bribes and of turning a blind eye to the alleged fraud.

Mr King is currently under house arrest in Antigua, while Sir Allen, who has denied all the allegations against him, is in custody pending trial.

Representatives of the Antiguan government could not be reached for comment.

Another defendant in the Stanford case - James Davis, former chief financial officer of Stanford Financial Group - yesterday pleaded not guilty to criminal charges related to the alleged fraud at the group.

However, his lawyer, David Finn, confirmed that Mr Davis planned to enter a formal guilty plea within two weeks in a deal with the authorities.

Under US law, victims must be notified of any deal before it can be accepted by the courts.

"This thing was smoke and mirrors and duct tape for at least the last 15 years," Mr Finn said.

Mr Davis, the second-highest ranking executive at the group, has been charged with conspiracy and fraud.

He remained subdued throughout the proceedings and spoke softly in the small and tightly packed court room.

Mr Finn told the court Mr Davis had co-operated with prosecutors for several months, meeting last week alone with the Federal Bureau of Investigation, Internal Revenue Service, the Department of Justice and the Securities and Exchange Commission.

Mr Davis was released on a $500,000 bond, requiring a $5,000 cash deposit. He had to surrender his passport.

Mr Davis, 60, waived his right to a grand jury hearing to decide whether there was probable cause to bring the charges against him, signalling his plans to co-operate with prosecutors.

Sir Allen Stanford has been charged on 21 counts including fraud and obstruction to which he has pleaded not guilty.

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Copyright The Financial Times Limited 2009