Posted by: Matthew Goldstein on April 17
Did disgraced financier R. Allen Stanford keep two sets of book at his controversial offshore bank in Antigua?
Well that appears to be the preliminary finding of the British firm tapped by authorities in the island nation of Antigua and Barbuda to liquidate Stanford International Bank. Representatives for the liquidator, Vantis Business Recovery Services, made the some what startling announcement during a court proceeding in Antigua on April 13.
The judge, upon hearing the news about the two sets of bank records, asked Vantis to come back to court with some evidence to bolster their claim. Vantis did that on April 15, submitting a lengthy series of spread sheets that purport to show the bank’s investments in two accounts at Societe Generale. Vantis also gave the court information on what Stanford’s bank had told Antigua regulators about the holdings in those accounts. And there appears to be a big discrepancy.
We’re trying to get a copy of those spread sheets. But according to a source who has seen them, Stanford had about $330 million in assets in the SG accounts. But it told Antigua’s Financial Services Regulatory Commission it had about $1.3 billion in those same accounts. For now Vantis isn’t commenting. But a spokeswoman did confirm that Vantis representatives had told the judge they found evidence Stanford’s operation maintained two sets of books.
This may explain why Vantis’ Nigel Hamilton-Smith, in a press release on April 16, said: “It is also now apparent, that the assets of SIB are insufficient to meet the level of liabilities.” Or in plain English, the alleged $8 billion the bank claimed to have taken in from investors who purchased high-yielding certificates of deposit may not exist.
And that means Stanford’s thousands of beleaguered investors may only get back a fraction of their money—if anything. We hope to update this story with more information later today.
Meanwhile, Stanford’s well-known defense attorney Dick DeGuerin says he isn’t aware of the Vantis allegation. Later today, he intends to file a motion in federal court seeking to lift a freeze on Stanford’s assets so he has the money to mount a legal defense. Stanford’s assets in the US have been frozen since the SEC filed civil fraud charges against him on Feb. 17.
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.