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Posted by: Matthew Goldstein on March 30
Did disgraced financier R. Allen Stanford cut a business deal last fall with the government of Libyan leader Muammar el-Qaddafi?
Last November, Stanford may have met with a representative of the Libyan government to discuss their interest in putting a significant investment into Stanford’s offshore bank in Antigua. Soon after the meeting, which took place in Washington, D.C., Stanford boasted to a number of his top executives that the Libyans were sinking more than a $100 million into the bank’s now infamous high-yielding certificates of deposit.
Now sources say the federal authorities investigating the alleged $8 billion fraud at Stanford’s once fast-growing financial empire are trying to determine whether the Libyan government, or a group of investors with ties to the Libyan government, actually invested money with Stanford. And, if the Libyans did make a sizeable investment in the CDs peddled by Stanford International Bank, what happened to money.
Last fall Stanford had told several people that the money from the Libyans was invested in accounts at Stanford Financial Group’s former office in Switzerland. Stanford had claimed the Libyans were looking to move money into higher-yielding investments, after the US government removed the North African nation from the State Department’s list of countries supporting terrorism.
Sources say Stanford portrayed the Libyan investment as a big coup for the Texas-based firm and a move that would shore-up any liquidity concerns at its Antigua-based bank. A spokesman for the Libyan Liaison Office in Washington, DC did not return a phone call. Stanford’s attorney, Dick DeGuerin, was not immediately available for comment. David Finn, the attorney for Jim Davis, Stanford’s chief financial officer, said his client is cooperating with federal investigation and helping that locates “any assets that may be available.’’
These days there are a lot of people who are angry with Stanford. The alleged fraud involving the sale of CDs has hurt thousands of investors in the US, Mexico, Venezuela, Ecuador and elsewhere in Latin America. Many of Stanford’s US investors were wealthy, with more than $1 million in assets. But that wasn’t necessarily the case with Stanford’s Latin American clients. The minimum investment for offshore investors was $25,000—half the minimum deposit was for US customers.
But all those frustrated and annoyed investors may pale next to the Libyans. Even if Libya is no longer a sponsor of state terrorism, it seems to us that Qaddafi isn’t the kind of guy you want to turn into an enemy.
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.