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Posted by: Matthew Goldstein on February 13
Texas-born billionaire R. Allen Stanford likes to portray himself as having been born into success.
For years, he talked about being a distant relative of the founder of Stanford University—something that the university says isn’t true. And he talks about the 77-year history of the Stanford family being in the finacial services business. Stanford Financial’s website says:
The first Stanford company was founded by his grandfather, Lodis B. Stanford in 1932.
But what Allen Stanford doesn’t like to talk about is one of the failed businesses he was involved with before getting into the financial services industry. And what was that business: a Waco, Tx. health club called Total Fitness of Temple Inc.
Court documents reveal that in 1983, Allen Stanford was slapped with a default judgment for failing to pay back rent on the lease for the health club. The judge in the case signed an order permitting the landlord, Allied Development Co., to collect some $31,800 in unpaid rent plus interest from the man who reportedly now has $2.2 billion in wealth.
That’s quite a humble start for man who now is the sole shareholder of one of the fastest-growing financial services firms.
A little more about Allen Stanford’s early days. Stanford International Bank, the offshore bank in Antigua got its start in 1986 in Montserrat, another Caribbean island nation. Back then the bank was called Guardian International Bank. Eventually, Stanford reloacted his operation to Antigua and the rest is history.
Here’s a ruling from a US Court of Appeals for the Fifth Circuit, affirming much of a US Tax Court’s ruling on a dispute emanating from Stanford’s days of running the bank in Montserrat. In short, the court found that Stanford and his wife, Susan, under reported their 1990 federal taxes by $423,531.36.
BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.