FBI: Stanford blew $20 million on yachts — and $379M on his B-D

Few of financier's investments turned a profit, special agent testifies; $7B hole
MAR 16, 2012
By  John Goff
R. Allen Stanford blew $1.1 million at the Bellagio hotel and casino in Las Vegas and gave another million in cash to family members, including his wife and girlfriend, an FBI agent told jurors at the financier's criminal fraud trial. The Texas financier also spent $20 million on yachts, $37 million promoting cricket tournaments, $333 million on a pair of startup Caribbean airlines, and another $379 million to underwrite his Stanford Group Co. broker-dealer, FBI Special Agent Robert Martin testified yesterday about his review of the company's financial records. “Did that represent all his spending?” Assistant U.S. Attorney Andrew Warren asked Martin. “No, not at all,” Martin replied. Prosecutors showed jurors evidence illustrating how they believe Stanford spent more than $2 billion he's accused of skimming from certificates of deposit at Stanford International Bank Ltd. in Antigua. While customers were promised their money was invested in safe, liquid assets, prosecutors claim Stanford borrowed heavily from the CDs to finance an extravagant lifestyle and dozens of risky ventures. Flight Risk Stanford, 61, has been jailed as a flight risk since his indictment in June 2009. The former billionaire, who denies wrongdoing, faces as long as 20 years in prison if convicted of the most serious charges against him. Among Stanford's personal wire transfers to the Bellagio in Las Vegas, Martin testified he found one for $200,000 in January 2009, four weeks before regulators seized Stanford's operation on suspicion it was a $7 billion Ponzi scheme. Martin said he also reviewed business records indicating the financier loaned $418 million to Stanford Development Co., his real estate development firm, and $350 million to his venture capital unit. An array of other speculative ventures, some of which simply disappeared, Martin said, burned through an additional $486 million Stanford borrowed from CD depositors. Stanford's defense lawyers have told jurors their client was in the process of consolidating roughly 130 private companies onto his Antiguan bank's balance sheet when U.S. regulators shut him down. If regulators hadn't blocked that consolidation, his lawyers claim, the move would have recapitalized the bank and repaid all of Stanford's investors. ‘Practically None' “Practically none of Mr. Stanford's companies were profitable,” Martin testified. While some of Stanford's side ventures made money from “time to time,” the agent said, only Bank of Antigua, a tiny commercial bank Stanford ran for islanders, consistently earned a yearly profit. The side ventures Stanford loaned more than $2 billion to collectively lost at least $711 million by the end of 2008, Martin told jurors. The financier's borrowings contributed to a $7.05 billion “hole” Martin said existed between the $8.59 billion in reported assets and $1.54 billion in actual assets on Stanford International Bank's books at year-end 2008. Under questioning by Ali Fazel, one of Stanford's attorneys, Martin said he has calculated “practically zero” value for most of the financier's side enterprises because the entities weren't owned by the bank and most were unprofitable. “Are you saying these companies are worthless because they have no profits?” Fazel asked. “These companies have no value in and of themselves?” ‘Can Have Value' “They can have value, but that doesn't mean they do have value,” Martin replied. Fazel suggested the government hasn't found all of Stanford's assets, and that's why the bank's balance sheet appears short. “Wouldn't it be important to know the totality of assets SIBL has before you tell the jury that 92 percent of the assets are missing or don't exist?” Fazel asked. “Are there assets out there you don't know about?” “I don't think there are,” Martin replied. “I think we've got an accounting of what the bank's assets were at the end of 2008.” Lanny Breuer, head of the Justice Department's criminal division, monitored testimony yesterday at Stanford's trial, which is in its fourth week. Sitting alone in the rear of the courtroom, Breuer said he has been “following the case” through regular reports. He declined to comment on the trial, citing a gag order by the judge barring lawyers from publicly discussing it. --Bloomberg News--

Latest News

What does it take to feel ‘financially comfortable’ or ‘wealthy’ in 2025?
What does it take to feel ‘financially comfortable’ or ‘wealthy’ in 2025?

New report shines a light on how Americans view wealth today.

Retirement delays, Social Security fears prompt advisors to rethink income strategies
Retirement delays, Social Security fears prompt advisors to rethink income strategies

Concerns about outliving savings and healthcare costs are reshaping how "Peak 65" Americans and advisors approach income planning.

Merrill Lynch on the hook for $3.7M after clients claimed sale of unsuitable private equity
Merrill Lynch on the hook for $3.7M after clients claimed sale of unsuitable private equity

Some investors recently have seen million dollar plus decisions by FINRA arbitration panels involving complex products decisions go their way.

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

RIA moves: Modern Wealth tops $8.5B AUM as Aspen expands in Connecticut
RIA moves: Modern Wealth tops $8.5B AUM as Aspen expands in Connecticut

Modern Wealth's latest deal for a California-based fee-only RIA marks its fourth acquisition of 2025.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.