Allen Stanford's Three Score And Ten Birthday Blues

R. Allen Stanford hits 70 on March 24. And in case you’re thinking about baking him a cake, you might also think about hiding a file inside. Home Depot has a wide variety starting at $8.79, not including postage.

For America’s second most infamous living fraudster – Bernie Madoff, who will be 82 next month, is in pole position – Stanford was listed by Forbes in 2008 as one of the richest men in America, supposedly worth $2.2 billion. More than enough, obviously to enjoy all the usual trappings – planes, a yacht, plus big homes in Antigua, St. Croix and Houston – he also owned a private island, purchased for $63 million. He described it as “small,” suggesting that, as islands go, $63 million doesn’t buy as many coconut trees as it once did.

Anyway, back to the cake with the file inside.

Actually, there’s no hurry. Stanford celebrates birthdays these days as a full time resident at Federal Prison Coleman in Florida, a sprawling complex with high walls and barbed wire, ten minutes outside of the tiny town of Sumterville, an hour or so northwest of Orlando, which means it is in the middle of nowhere.

There is a satellite camp, reserved for non-violent, white-collar prisoners. But not for him. That’s adjacent to Coleman-Low, also reserved for other non-violent offenders. Again, not for him. Then there is Coleman Medium and Coleman-I, both going higher on the security scale of increasing restrictions on inmate movement. He’s not there either.

Stanford is isolated deep inside Coleman-II, the maximum security facility where the most hardcore inmates have extremely limited movement, very few privileges, and very little contact with anyone else.

It is more than just the 180-degree opposite of his high-flying days, it is four hours – and four civilizations - away from the 57-room baronial castle he once owned in Coral Gables, that came complete with a tower and a moat.

*****

Born Robert A. Stanford, he grew up in a dusty small Texas town, an hour and a half south of Dallas. His first business venture was a gym which he expanded into a small chain of health clubs. At 6’5” and, in those days supposedly weighing 330 pounds, he cut an arrogant figure the small business world of south Texas. That is, until 1982 when he went bankrupt, with personal losses totaling $13 million.

That’s when the Caribbean beckoned. It was the heyday of the Medellin and Cali cocaine cartels, with narco dollars free-flowing throughout the offshore islands. In particularly,the coconut-tree lined paradise that attracted him was Montserrat.

A British Commonwealth island with a population of 13,000, the local government, desperately in need of revenue, was licensing banks at a furious pace. Within no time, there were 350 chartered banks there, some of them with vaguely familiar names like Prudential Bank and Trust, Deutsche Bank (Suisse), and Chase Overseas. There was even one called World Bank. Of course, none of them had walls or roofs. They were nothing more than a brass plaque on the door of some company formation agent. Who, by the way, wasn’t even necessarily in Montserrat. Although the owner of Zurich Overseas was present, holding court every day at his bank’s main office, a local bar.

Still, such was the demand for banks on Montserrat that it created a thriving cottage industry of wholesalers who lauded the benefits of Montserrat as a “bullet proof jurisdiction.” They offered people the chance to “Buy out your own debt for a song,” and “Stage your own friendly self-takeover,” and “Make exorbitant profits absolutely legally.”

Stanford’s Guardian International Bank was the odd one out, in that it actually had four walls and a roof. His original act was capital flight. He ingratiated himself to South Americans looking to get their money out of South America by not asking questions because he didn’t give a damn where money was coming from. Later he would claim that he was secretly working for the CIA, feeding them information on the Colombian cartels.

Conmen often claim that to be double agents because they know that, even if the spy services deny it, they can always claim, of course they have to deny it. That said, it is known that the Israeli spy service Mossad was using a Montserrat bank to launder money in a weapons deal with Colombian drug barons. Whether Stanford knew that is doubtful. True to form, Mossad said they’d never heard of Stanford.

However, British and American law enforcement had.

In fact, the British were so concerned about Montserrat in general and Stanford in particular, they sent a senior police officer with financial crime experience there to investigate. A terrific guy who has since passed away, Dick Marston, was a seasoned financial gumshoe with London’s Metropolitan Police.

What he discovered was a situation so out of control that Parliament was eventually forced into the unprecedented step of amending Montserrat's constitution. It officially removed responsibility for the financial sector from local control and placed it under the authority of the British appointed Governor General. Given those powers, the first thing the GG did was to revoke 311 banking licenses.

While that was happening, Marston also convinced the government to strike Guardian off the register of companies.

Stanford, who left the island in the middle of the night, resurfaced in Antigua. That’s when Marston joined forces with now retired FBI special agent Ross Gaffney in Miami to create the White-Collar Criminal Investigation Team (WCCIT). A joint venture of the Bureau and the Met, they investigated offshore money laundering. As they did, the Stanford files accumulated.

Unknown at the time was how Stanford had double-crossed some of Guardian’s nastier clients – traffickers, mobsters and dodgy South American politicos – and would spend the rest of his life looking over his shoulder. Some people who’d investigated Stanford believe the only reason he is still alive to celebrate his 70th is thanks to the protection offered him by the United States Bureau of Prisons. That if he’d been out, he’d have been murdered a long time ago.

Marston, Gaffney and WCCIT were now seriously concerned over Stanford’s relationship with Antigua’s Bird family. The patriarch, Vere Bird, had been chief minister and premier under British rule for 16 years until independence in 1981, then prime minister until 1994. Despite accusations of corruption and cronyism that characterized the island as “a Bird family business,” he passed the torch to his son Lester, who served as PM until he was unseated in 2004.

Vere allowed Stanford to buy the failing Bank of Antigua, even though foreigners were banned from owning onshore banks. Lester then permitted Stanford to parlay his holdings into such a huge portfolio that Stanford became the island’s largest private employer. He obtained Antiguan citizenship and was even knighted. He was now, officially, Sir Allan. As such, Lester appointed him head of the oversight panel for the island’s financial sector. The very authority that was charged with drawing up money laundering legislation.

That didn’t last long when the US and the UK both objected so strongly that Byrd was forced to rescind the appointment.

Still, Stanford’s Antiguan interests grew to be huge, with 50 offices around the world, supposedly managing $8.5 billion for some 30,000 clients.

That a man who’d bankrupted a gym in Texas and had fled Montserrat should be entrusted with that much money belonging to other people, didn’t seem to concern the Byrds. Then again, poachers in the hen house is common practice in the offshore world. Typically, those people who could do something about bank secrecy, phony shell companies, money laundering and American tax evaders, have the least incentive to act because bank secrecy, phony shell companies, money laundering and American tax evaders are big business.

And in Antigua, in those days, it was the biggest business. To some extent, it still is. Well known as a suspect jurisdiction, there was once a shack at the end of a runway in Antigua with the sign “Bank” on it so that small planes carrying cash could deposit cash without even shutting off their engines.

Also right up there on the list of Antigua’s greatest hits, was the totally crooked European Union Bank of Antigua (EUB).

Owned by Russians through a Bahamian shell company called Swiss Investment Association, it was chartered in Antigua in July 1994 while the owner was in jail in the States. It opened its doors in September or, more accurately, that’s when it turned on its computer. In truth, the bank didn’t exist in Antigua, or anywhere else. It’s only presence was on the Internet. The bank’s website pitch read, “Since there are no government withholding or reporting requirements on accounts, the burdensome and expensive accounting requirements are reduced for you and the bank.”

Within nine months, EUB claimed assets of $2.8 million through 144 accounts in 43 countries. Naturally, EUB was claimed to maintain the strictest standards of banking privacy, reinforced by the notion - somehow made with a straight face - that Antigua was a serious financial center with serious penalties for anyone violating its serious banking secrecy laws.

Among many things not publicly disclosed was that EUB’s computer server, which was, effectively, the bank, was located in Washington DC. And the man operating the computer server, who was effectively the banker, was in Canada. How much money was ultimately funneled through the bank – supposedly washed by Russians for other Russians - is not known. Nor will it ever be. Because one day in mid-1997, just like that, someone unplugged the computer and that was the last anyone ever heard of the depositors’ $12 million.

To further appreciate just how perfect a petri dish Antigua was for Stanford’s criminal activities, there is the story of $7 million once belonging to a Boston-based marijuana trafficker.

The Feds had tracked drug money from Massachusetts to St. Lucia, and from there to the Caymans. After that, the money was moved to Bermuda and, eventually wound up in Antigua. Stating it’s claim to it in the US courts, the Justice Department’s Asset Forfeiture and Money Laundering Section wrote to the appropriate office in Antigua effectively saying, please send us our money.

Hardly surprising, no one in Antigua seemed anxious to do that.

It took two years of repeated requests before the Antiguans happened to mention that, just before the original American request was received, $5 million had been transferred to a government account, while the remaining $2 million was set off against “fees incurred.” Regretfully, came the Antiguan lament, nothing’s left.

Several stern “give us back our money” demands followed, all to no avail. Ultimately, the State Department dispatched Jonathan Winer to Antigua to fetch the money. A lawyer by trade, he was, at the time, Deputy Assistant Secretary for International Law Enforcement Affairs.

In Antigua, he eventually worked his way up the food chain to the Prime Minister’s office. There, explaining the case politely, he reminded Lester Bird, it’s our money and we want it back.

That’s when Bird asked if Winer had heard about the big hurricane.

Winer didn’t understand and asked, what big hurricane?

Bird explained that there’d been a big hurricane in the Caribbean the previous week and that bank records had been destroyed.

Winer wondered if he meant a bank had been destroyed.

No, Bird told him, “But the big hurricane destroyed those documents.”

Winer was dumbfounded. “You’re telling me, there was a big hurricane which destroyed the records pertaining to a single account? Everybody else’s accounts are fine, except this one? A big hurricane destroyed the documents we want? Just those documents?”

Bird stuck to his story and the Americans never got their money.

Long after Dick Marston passed away, Gaffney still had the Stanford files, piling high in his office. I can vouch for having seen those files, going floor to (almost) ceiling.

According to what the FBI knew, Stanford International Bank was founded in 1991, laying the foundation of his empire, which soon turned him into the island’s largest employer. He was also, at least for a while, Antigua’s largest foreign investor. He owned a domestic bank - in addition to his offshore international bank - Caribbean Star airline, the Antigua Sun newspaper which he heavily censored to support the Byrd regime, and The Informer newspaper which had been accused of being a front for the Byrd government.

He was also the island’s most important residential housing developer, financing $100 million of government building projects which included a stadium. He also, all-too-easily, obtained the rights to develop extremely valuable land around the international airport. After Hurricane Georges, Stanford loaned the government $5 million, interest free, to help rebuild the island, demanding development rights on other public lands as collateral.

When he pitched up in Antigua, he did his Montserrat trick of targeting wealthy Latin Americans worried about the stability of their governments. Within three years, his bank’s capital flight assets skyrocketed to $350 million. A year after setting up that bank in Antigua, he set up the Stanford Financial Group in Houston.

Now he went into the business of CD fraud.

Selling certificates of deposit at greatly inflated interest rates – offering 12%-14% when bank interest rates were 3%-4% attracted the gullible and greedy. Obviously, he came up with complicated explanations as to how the bank could afford to give people multiple times more in interest on their savings than it was making on its lending. And tens of thousands of people mindlessly and willingly handed over their money to him.

Which he promptly spent on himself, working as best he could a Ponzi - whenever anyone wished to cash out - stealing from Peter to pay Paul.

The problem with his case, as Gaffney explained it to me, was that incriminating information was needed to be obtained in Antigua, and as long as Stanford was protected by the Byrds, that would never be forthcoming.

Eventually, the Securities and Exchange Commission (SEC) became so concerned that it began mounting a case against Stanford. That brought whistleblowers out of the woodwork. And many people believe that’s how he was brought down.

But there appears to be another side to the story.

Some years ago I was in Antigua, speaking about money laundering and financial crimes to a pan-Caribbean meeting for island prime ministers and the judiciary. The story I picked up - which may or may not be true, although I heard it from several people independently - is that someone in the Bird family decided he wanted a slightly bigger slice of the pie. It was widely believed that Stanford was kicking back certain people 3%. Now, the price was going up to 5%.

Whereas, an increase of 2% might sound fair enough – after all, even crooks have to consider inflation and rising costs - Stanford was by then so arrogant as to think he was untouchable. Feeling betrayed and insulted, certain people decided it was time to pull the plug.

I decided to ask Stanford about this, so I contacted him in prison. The first thing he wanted to know was, where do I live and what are my contact phone numbers?

Now, when you’ve been interacting with bad guys and sleazebags as long as I have, you protect yourself. For example, no midnight meetings in dark alleys. This is why God invented crowded hotel lobbies at noon. I personally like the tables that can be seen by the CCTV cameras. I once joked with my wife that at least if I get whacked, the kids can have the video footage. She didn’t find that funny. And she’s probably right.

More rules. You always arrive very early so you can see who else is already there. And you want to see who your guy comes in with. Meeting one on one is the rule. When the person you’re waiting for walks in with two other guys and they go to opposite ends of the room, the meeting is off. No exceptions.

And everything is taped. No exceptions. You tape overtly or covertly, but you tape.

With guys like Stanford in mind, years ago, I set up an address of convenience and a special phone number that I never answer. It’s strictly for voice mail. What’s more, it cannot be traced back to me. Stanford fell for the phone number but he didn’t like my convenience address. No, he said, I need your home address. I told him that wasn’t going to happen. At which time he exploded into a series of expletives and indirect threats. I knew this guy was nasty piece of work but I wasn’t expecting voice mail from someone claiming to be his friend, making certain demands on his behalf.

My new best friend R. Allan and I parted company immediately.

I continued hearing from his friend for a few weeks until they both tired of me.

Good riddance.

*****

When he was first arrested, Stanford was housed in Houston's city jail. That’s where he found out that nobody cared how important he thought he was. The story I picked up – again, from a couple of different sources - was that he swaggered around the jail with his characteristic arrogance. Which is a pretty stupid thing to do, especially in a city jail where guys in for violent crimes like aggravated assault, manslaughter and murder don’t necessarily appreciate big shots. Especially white big shots.

There is a distinct social hierarchy in jail. Prison officers may think they control the prison, but prisoners battle daily with other prisoners over territory and to become “the man” – the king-pin who oversees the various crimes that are being committed regularly, from extortion to rape.

One of the rewards for being a loyal lieutenant is the television. It’s the master of the remote who sets the programming. You want to watch something, you do business with him. You have to pay for the privilege of watching what you want to watch.

Stanford either didn’t know how this, or thought the rules didn’t apply to him. Later, he would claim that he was on the phone when, out of the blue, some guys slammed his head into a concrete wall, split open his skull open, then stomped on his face.

Apparently, he’d strolled up to the set and changed the channel. Several guys reminded him that wasn’t the way this worked and, as they switched it back, they reminded him what it would cost if he wanted something else. He reminded them that he was a big shot, didn’t have to pay them anything, and switched it back to the channel he wanted.

Guards saved his life by rushing him to the hospital with 32 broken bones in his head. He spent the next nine months in a prison hospital where he claimed to have become addicted to prescription anti-anxiety drugs. Because of that, he insisted, he was mentally unfit to stand trial.

The court ruled otherwise. After a six-week trial, the jury found him guilty on one count of conspiracy to commit wire and mail fraud, four counts of wire fraud, five counts of mail fraud, one count of obstruction of an SEC investigation, and one count of conspiracy to commit money laundering.

Unlike Madoff’s victims – who have recouped some of their money - Stanford’s victims have mostly lost everything.

*****

So Robert Allen Stanford has reached the Biblical three score and ten.

Not counting credits for good behavior, he is scheduled to get out April 17, 2105. As that happens to be a Friday, he’ll have the weekend to celebrate, belatedly, his 155th birthday.

By which time – come to think of it - he won't need that file.

     *****

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? Jeffrey Robinson 2020

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