Stanford's Double Bookkeeping

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.


Reader Comments

Karl

April 17, 2009 12:22 PM

Two sets of books??? Hogwash!!! That's a LIE! No company keeps "two sets of books". Someone made all of this up! Stanford, & even Madoff, would NEVER do something like that! All of the so-called 'problems' in the world are simply a result of "market conditions", huh?

Michael

April 17, 2009 12:46 PM

Good reporting! Nice to see some actual numbers starting to appear.

http://www.Twitter.com/StanfordFraud

Clay

April 17, 2009 02:40 PM

Allen is my cousin and a good man. I have known him for over 40 years and he is a victim of the Madoff "jet wash" effect as the SEC was exposed for the worthless entity that it is. Allen WILL be vindicated through all of this and the government will have more egg on it's face than it already has.

wowlfie

April 17, 2009 03:52 PM

You already got egg on your face Clay. USA SEC should go after all relatives no matter how distant.......and take it all....

diggy

April 17, 2009 04:08 PM

Is Clay actually Allen posting? hahaha. But seriously, all evidence points SIB being a scam. For example, we have a well documented meeting in Miami in early 2009 between the top Stanford execs where a number of them were shocked to find that a huge chunk of the investor money was being loaned to Allen himself. So just like Madoff, Allen was actually using the company as his personal piggy bank. How is Allen going to explain that piece away?

JM

April 17, 2009 04:48 PM

Stanford has had a bad smell surrounding him since he landed on Antigua - there have been continuous rimors and allegations of drug traficing, government corruption, sweetheart finacial and land deals, etc etc etc since he first appeared on the island. Ask his counsin how th epeople of Antigua will feel as Stanford's criminal activities send the island's economy spiraling down

Nick Los-Angeles CA

April 17, 2009 04:57 PM

Allen and his family of crooks have spent most of the investors gave them on personal luxuries, and put the rest of offshore bank accounts. This con needs to be locked up for good, along with his family.

JKL

April 17, 2009 05:31 PM

When one runs a scam, do you think he´d write THAT in the books??

Big Al

April 17, 2009 06:36 PM

Clay -

Was Allen related to Leland Stanford, or was that a lie? Did the companies Allen ran have a direct lineal connection to the company founded by Lodis Stanford in 1932? Was Allen actually knighted by the Earl of Wessex? Start with those lies and we will move on to the rest of the lies.

Femi

April 17, 2009 06:40 PM

Is this really a story? It's like saying "The Con Man was also a Liar". OF COURSE, he kept 2 sets of books, guys. Find another story

Frafish

April 18, 2009 01:22 AM

I agree with Clay. Stanford was in the wrong place at the wrong time. Now the lawyers are going to take everything. So who's the bigger crook. If you've got property purchased for hundreds of millions and its sold at fire sale prices then how is that fraudulent. Also banks can't survive when there is a run on it and it cannot make money if all of the assets are frozen. The SEC and the government are going to be in for a huge law suit when this information all washes out. Gross negligence, abuse of authority

Pellucid

April 18, 2009 09:13 AM

>> "Stanford has had a bad smell surrounding him since he landed on Antigua - there have been continuous rimors and allegations of drug traficing, government corruption, sweetheart finacial and land deals, etc etc etc since he first appeared on the island."

JM, that "bad smell", was on Antigua LONG before Stanford showed up. Read "Caribbean Time Bomb". The biggest red flag that should have warned investors is Antiguan history.

From Robert Vesco to John Allen Mohammed, Antigua has been a freak show of incompetence since they were kicked out of the British Empire.

Gerald Himmelreich

April 20, 2009 11:01 AM

If Stanford is innocent,as he claims,why hi don't tell or show where all the money is?Why he needs a Criminal lawyer for 10-20 million $.Government appointed is enough!!We investors can,t even afford the rent or utility bill besides a lawyer to represent us.Investors from 100.000 - 500.000 should get there money eminently back before any lawyer or receiver get millions.Every body says the investors are greedy for more interest %, what,s about the lawyers and receivers fee.
Besides no body like to pay to much tax,because we can not control spending of the Government,which is shown to be 20-30% uncontrolled.We know that the capitalistic world only defends the rich and wealthy.
Gery.

edwar77

April 21, 2009 12:24 AM

So much of what Stanford alleges in his defense is thinly veiled BS. It will not stand up to scrutiny or even simple auditing. For example he states that the large personal loan from the bank to him was actually made to companies that he is sole shareholder of AND that the funds were not used by him personally but were reinvested in Stanford Venture Capital. So a simple review of the books of he VC company will clear that one up. It's a good bet that this claim is bogus in one way or another. Another broad claim he makes is that the SEC taking over the bank caused a "run" that depleted assets. This would be a plausible argument for a traditional lending bank that is able to leverage it's deposit base through the Federal Reserve System. SIB was not such an institution. Stanford may have become illiquid as might any financial institution but even then it's illiquid assets should be substantial in relation to it's "deposit" base. This will likely prove not to be true if as suspected Stanford through various means CONSUMED or is HIDING large amounts of that deposit base. As with so many historical scams the paper trail may take a long while to unwind.

Thank you for your interest. This blog is no longer active.

 

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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.

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