The Path from Billionaire to Inmate
When it comes to white-collar crime and Ponzi schemes, few names can stand shoulder to shoulder with Bernie Madoff, but Allen Stanford is a very close contender. Born in Texas, only 90 miles south of the Dallas/ Fort Worth Metroplex, Mr. Stanford was at one time recognized as one of the wealthiest men in America with an estimated personal worth of $2.2 billion.
His life was in many ways the very definition of extravagant spending. In only three short years, he spent nearly $100 million on a variety of personal aircraft, including everything from helicopters to Lear Jets. At one point he even invested a staggering $12 million in a project to lengthen his yacht by an additional six feet.
It was later discovered, however, that his lifestyle had been fueled by what was ultimately found to be stolen money. In the early months of 2009, his luxurious lifestyle was brought to a sudden halt.
Stanford was exposed as the central figure in a Ponzi scheme of international proportions that had drawn in more than $7 billion from unsuspecting investors. His case has been compared more than once to Bernie Madoff’s scandalous actions, and like the disgraced broker’s victims, none of the 20,000 investors who trusted Allen Stanford have recovered their money.
A Texas-Sized Conman’s Fake Lifestyle
Stanford’s wild spending habits didn’t end with expensive aircraft. At one point he successfully purchased a small island that was worth around $63 million, along with mansions in multiple countries including a property in his home state.
In Florida, Stanford acquired a literal castle that came complete with a tower and moat alongside 57 rooms. After only a year though, he was so bored with living in the oversized home that he decided to just move out and demolish the entire thing.
His fascination with the game of cricket secured him a position as the world’s premier promoter of the sport. In 2008, his cash prize of $20 million for a cricket match held in London became the largest prize ever for a team-based sporting event.
Underneath his wildly extravagant façade though, was a long trail of stolen money. According to the U.S. Attorney’s office, Stanford had been quietly drafting loans for his personal use using approximately $2.2 billion of his investors’ money without ever informing them.
From Failure to Money Maker
Stanford’s early business ventures created little more than a mountain of personal debt. After declaring bankruptcy in 1982 and accruing more than $13 million in personal debt, Stanford eventually moved to the Caribbean, where he would make the first moves towards building his illegal fortune.
In 1991, the Stanford International Bank was founded on this island of Antigua, and his rising business quickly became the largest source of employment for the local citizens. By catering to the fears of wealthy Latin Americans, and presenting himself as the answer to their fears of regional instability, Stanford quickly accumulated a whopping $350 million in assets for his new bank.
After only a year, he decided to branch out and established the Stanford Financial Group based in Houston. The company presented itself as a dependable source of certificates of deposit (also known as CDs). Over the next decade, the imagined security of CDs fueled the growth of his business, and an estimated $3 billion or more was invested in his company.
Unfortunately for the investors, Stanford’s CDs were nothing but a fraud that allowed him to live an increasingly luxurious lifestyle using the money others entrusted him with.
The Beginning of the End
Suspicions about Stanford’s fortune began to circulate in 2005 once investigators working for the Securities and Exchange Commission began to look closely at the Stanford Financial Group. Over the next three years, two separate whistleblowers stepped forward, and the SEC was given the concrete proof it needed to expose Stanford as a fraud.
The final nail in Stanford’s economic coffin appeared in the form of his chief financial officer, Jim Davis. As one of his closest allies since the 80’s Davis had all the information that Assistant U.S. Attorney Paul Pelletier needed to shut Stanford down permanently. Davis made a deal for a reduced sentence in exchange for his testimony, and Pelletier did not hesitate to agree.
By June of 2009, Stanford was buried in charges ranging from fraud and money laundering to conspiracy and obstruction of justice. All through his trial though, Stanford insisted that he was entirely innocent, and even went as far as blaming Davis for orchestrating the entire situation. Fortunately, the jury at his trial did not believe him or his story, and he was sentenced to prison for more than a century for a variety of crimes.
Already in his 60’s Stanford’s expected release date is well beyond the turn of the next century, and many of his victims firmly believe that he completely deserves to spend the rest of his life exactly where he has ended up.