Arab Today, arab today stanford\s 7 bln fraud built on lies
Last Updated : GMT 19:27:01
Arab Today, arab today
Arab Today, arab today

Stanford\'s $7 bln fraud built on lies

Arab Today, arab today

Arab Today, arab today Stanford\'s $7 bln fraud built on lies

Houston - AFP

Financier and cricket mogul Allen Stanford built a $7-billion Ponzi scheme on lies and stole the dreams of thousands of his bank\'s customers, US prosecutors said. Stanford \"treated deposits like his own personal piggy bank,\" assistant US attorney Gregg Costa said in opening statements of the high-profile fraud trial. \"You\'ve heard of compound interest. This was the power of compound fraud.\" Stanford, 61, has pleaded not guilty to bilking some 30,000 investors from over 100 countries through bogus investments with Stanford International Bank. The mustachioed ex-tycoon has spent the past three years in jail after being deemed a flight risk shortly after his February 2009 arrest. Badly beaten in a jailhouse brawl, the flamboyant Texan was found temporarily unfit for trial after he became addicted to painkillers while also on antidepressants. He tried to have his case completely dismissed after claiming that the beating and drugs destroyed his memory, but Judge David Hittner was not convinced. Stanford is expected to testify in a case watched closely by myriad investors who still do not know if they will get any of their money back. \"Much of it is just simply gone,\" Costa told the jury. Stanford\'s \"lying, bribing and stealing\" deprived investors of money meant for comfortable retirements and their children\'s college educations, he added. Prosecutors said Stanford\'s ruse began in 1988 when he founded Guardian International Bank on the island of Montserrat. Stanford sold investors certificates of deposit that he promised were safe and well managed, but only placed a \"snippet\" of the funds with reliable money managers. Regulators eventually kicked Stanford out of Montserrat, but he just \"hopped over to the next island\" and founded Stanford International Bank in Antigua, Costa said. \"And that was a perfect name of it,\" said Costa, who told jurors that Stanford used investors money to create his own fiefdom. He pulled hundreds millions of investor deposits out of the bank to fund his lavish lifestyle and business ventures. He also paid out huge bonuses to his staff in order to \"keep the money coming in\" and convince customers not to withdraw funds, Costa said. But the inflated returns he promised investors were a paper tiger and investigators could not find 92 percent of the $8 billion the bank said it had in assets and cash reserves. He kept the scheme going by bribing Antiguan banking regulator Leroy King to \"look the other way\" and fire an official who began digging into Stanford\'s accounts, Costa said. The bribes included cash, Super Bowl tickets and the use of Stanford\'s private jet. A self-described \"maverick,\" Stanford hit international sports headlines by creating the eponymous Stanford Super Series Twenty20 cricket competition in 2005. The $20 million winner-take-all match appalled many in the cricket world by challenging the sacrosanct traditional cricket establishment. In Antigua, he was a larger-than-life figure, the island\'s largest employer and the recipient of a 2006 knighthood. But after the allegations against him surfaced, much of his support dwindled and the England and Wales Cricket Board cut ties with him. His defense attorney insisted that Stanford\'s conspicuous largess and massive personal wealth came from legitimate earnings. \"We\'re going to prove to you that the Stanford empire was real,\" Robert Scardino told the jury. The prosecution has taken \"a snapshot\" of Stanford\'s business dealings and \"want you to believe that it is the entire picture,\" he said. Scardino also implied that he would try to paint Stanford as a victim of his own employees. \"He had to rely on information from others,\" he told the jury. \"He was not an information and technology guy. He only used his computer to send and receive email.\" Testimony in the trial begins Wednesday. One of the key prosecution witnesses will be former Stanford chief financial officer James Davis. Davis, who has pleaded guilty, was Stanford\'s roommate at Baylor University and \"the loyal lieutenant he was looking for,\" Costa told the jury. Stanford faces up to 20 years in prison if convicted of 14 counts of fraud, money laundering, conspiracy and obstruction.  

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