Feb 22 2009

Stanford on the Rocks

Published by at 12:04 am under Investing,Managing Money

“As a company founded in the midst of the Great Depression – an environment of despair and negativity – we have a long-proven understanding of how even the most severe down cycles can bring opportunities that yield significant benefits in the long run.  This well-grounded approach when making investment decisions and giving investment advice will benefit our clients in these tumultuous times as never before.” – R. Allen Stanford, 2008

 

Long before the Madoff scandal could fade into history (and we still haven’t a clue how he pulled it all off for so long), it would appear there is yet another “brilliant” financier that lived like a king by scamming others.  Fortunately I didn’t give my money to either of these jokers – at least that I know about, but I probably could have been sucked in like so many others given the right set of circumstances.  I feel as though my posts of late read like a bad Hollywood movie blog but they capture real life events and hopefully they will help us all be better investors with a nose for a scam.

 

For those of you that don’t know anything about R. Allen Stanford, I suggest you take a look by following the link.  He is truly an interesting cat.  My first exposure to Mr. Stanford was back in 2004.  My wife and I found ourselves on the lovely Caribbean island of Antigua for vacation.  While walking around St. Johns, the largest town/city, I quickly noticed that Stanford Financial and the Bank of Antigua seemed to be quite prominent.  Just by happenstance, I picked up the local paper and there was an article that mentioned Mr. Stanford.  I recall it suggested that he had been accused of questionable practices involving investment and improper influence of local politicians.  I was rather intrigued and so when I returned to the States, I researched Mr. Stanford a bit and it became apparent that he was quite the player indeed.  In addition to his investment firm and the banks he operated, I was somewhat interested with his plans for development in the Caribbean so when we were planning a trip to Antigua again in 2006 I attempted to set up a meeting with Mr. Stanford.  At one point I thought I would get the chance to meet with him, but he ultimately blew me off and now I am quite confident this was actually a very good thing.

 

Upon our return to Antigua, it was quite obvious that Mr. Stanford had continued to expand his presence on the island.  He had built a new cricket field next to the airport and it seemed that Stanford was displayed everywhere.  It all seemed just a bit overdone – but very few would have known what was actually going on.  I thought at the time that possibly he was involved in some money laundering for wealthy South Americans – but on the surface he seemed to be doing some good things for Antigua so I forgot about it all once the vacation was over.

 

Fast forward to February 2009 and out of the blue it is reported on the news that R. Allen Stanford and two of his top executives are being sought in connection with some kind of Ponzi scheme involving high-yield CDs and the Bank of Antigua.  While I was floored at first, it didn’t take long for me to decide that I really wasn’t all that surprised.  As we all realize sooner or later, making money takes a lot of effort and Mr. Stanford made it look far too easy.  One of the best articles that gives more detail on the whole ordeal is Allen Stanford: The Antigua Triangle published February 22 in Times Online.

 

So it would appear that once again, some smuck and his possibly not-so-clueless employees have duped thousands of people out of huge sums of money.  Many thought they were protecting themselves from the tumultuous equity markets only to apparently lose everything so that Mr. Stanford could live the high life jetting around the globe, sponsoring cricket tournaments and yacht races, not to mention building opulent palaces and office buildings.  I just heard that of the roughly $8 billion that was supposedly deposited in his banks, the authorities are now only able to account for $250 million.  All I can say is that while it is doubtful I will ever experience the grand lifestyle that Mr. Stanford has enjoyed for so long – I wouldn’t trade places with him for all the money that evaporated in the banks of Antigua…

One response so far

One Response to “Stanford on the Rocks”

  1. Tallison 09 Mar 2009 at 10:53 pm

    I can’t believe people like Madoff and Stanford were able to get away with this for so long. This is depressing!

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