Allen Stanford

Robert Allen Stanford
Born:	March 24, 1950 Mexia, Texas
Charges:	Wire fraud, Mail fraud, Conspiracy, Obstruction of an SEC investigation, Money laundering conspiracy
Sentence:	110 years
Facility:	USP Coleman II
Status:	Incarcerated

Robert Allen Stanford (born March 24, 1950) is an American former financier serving a 110-year federal prison sentence. A jury convicted him in March 2012 of running a Ponzi scheme through Stanford International Bank, an offshore bank he controlled in Antigua. Prosecutors put the loss at about $7 billion. Roughly 30,000 investors in more than 100 countries bought the bank's certificates of deposit.

Before the case, Stanford was a known figure outside finance. The government of Antigua and Barbuda made him a knight, and he used the title "Sir Allen." He spent heavily on cricket, including a $100 million deal tied to a Twenty20 series. By 2008 his firms reported managing about $50 billion for clients. The U.S. Securities and Exchange Commission filed civil fraud charges on February 17, 2009, calling the operation a "massive Ponzi scheme." A criminal indictment followed.

Stanford was convicted on 13 of 14 counts on March 6, 2012, after a six-week trial. U.S. District Judge David Hittner sentenced him on June 14, 2012. He is held at United States Penitentiary Coleman II in Coleman, Florida. His direct appeals are exhausted.

Background and Business Empire

Stanford was born March 24, 1950, in Mexia, Texas, a small town in the center of the state. His father, James Stanford, later sat on the board of Stanford Financial Group. Stanford graduated from Baylor University in Waco with a finance degree in 1974.

An early gym venture failed. Stanford then bought distressed Houston real estate during the Texas oil downturn of the early 1980s and sold as prices recovered. That gave him capital. In 1991 he founded Stanford Financial Group and built it out of the family's insurance and real estate business.

The center of the operation was offshore. Stanford ran Stanford International Bank from Antigua, where oversight was light. The bank's main product was a certificate of deposit that promised steady, above-market returns. Stanford told investors the returns came from a disciplined global investment portfolio. By 2008 the group reported about $50 billion under management for clients in 140 countries. Stanford's own net worth was reported in the billions.

Stanford spent on his public profile. He invested in banking, tourism, and infrastructure in Antigua. In 2006 the government there named him a Knight Commander of the Order of the Nation. That gave him the "Sir Allen" title, which he used in business.

His most public spending was on cricket. In June 2008 he landed a helicopter at Lord's in London and carried out a box holding $20 million in cash, the winner-take-all purse for a Twenty20 match between England and a West Indies team. The stunt marked a $100 million arrangement with the England and Wales Cricket Board. Some in the sport welcomed the money. Others questioned the source.

The Ponzi Scheme

The bank's returns were not real. Stanford used money from new depositors to pay earlier depositors. That is the core mechanic of a Ponzi scheme. The certificates of deposit were marketed as safe and high-yield. They were backed by Stanford's ability to keep selling more of them.

The SEC said the scheme ran for about 20 years. Investor money funded Stanford's lifestyle. There were mansions, yachts, and private jets. Money also went to bribes to Antiguan officials and to speculative bets that lost. The SEC complaint stated the position plainly: "Stanford International Bank's financial statements, including its investment income, are fictional."

The numbers were large. About 30,000 investors held the bank's certificates of deposit. They lived in more than 100 countries. The total loss was put near $7 billion. Many investors handed over retirement savings on the strength of the bank's reputation and Stanford's public standing.

Investigation and Charges

Stanford's operation came apart in February 2009. On February 17 the SEC filed civil fraud charges against Stanford and several associates and moved to freeze assets. The agency described a "massive Ponzi scheme" and the misappropriation of billions of dollars.

The cricket deals ended at once. The England and Wales Cricket Board cut ties and cancelled contracts within days of the SEC filing. Antigua moved next. On November 2, 2009, the country's National Honours and Awards Committee revoked Stanford's knighthood.

Federal prosecutors in Houston obtained a 14-count indictment. The counts included wire fraud, mail fraud, conspiracy to commit wire and mail fraud, conspiracy to obstruct an SEC investigation, obstruction of an SEC investigation, and conspiracy to commit money laundering. The exposure ran to a possible 230 years.

The path to trial was delayed. In September 2009 another inmate assaulted Stanford in federal detention. Stanford said the injuries caused memory loss and left him unfit to stand trial. Psychiatric evaluation and treatment followed. A court later found him competent, and the case moved forward.

A central government witness was James Davis, Stanford's former chief financial officer. Davis pleaded guilty and agreed to cooperate. He testified about how the fraud worked from the inside.

Trial and Sentencing

The trial began January 24, 2012, in Houston before U.S. District Judge David Hittner. It ran about six weeks. Prosecutors argued that Stanford personally directed the scheme and used depositor money for his own purposes, including real estate, aircraft, and watercraft. The defense argued that Stanford ran a legitimate business hurt by regulators and by the global financial crisis.

The jury reached a verdict on March 6, 2012, after about three days. Stanford was convicted on 13 of the 14 counts: one count of conspiracy to commit wire and mail fraud, four counts of wire fraud, five counts of mail fraud, one count of conspiracy to obstruct an SEC investigation, one count of obstruction of an SEC investigation, and one count of conspiracy to commit money laundering. He was acquitted on one wire fraud count.

Judge Hittner sentenced Stanford on June 14, 2012, to 110 years. Stanford was 62. The sentence ran the counts consecutively. Prosecutors had asked for the maximum of 230 years. The defense had asked for no more than 44 months and argued Stanford was not the architect of the fraud. The judge rejected both requests.

The court entered a personal money judgment of $5.9 billion against Stanford. The jury also found that 29 foreign accounts worth about $330 million were proceeds of the fraud and ordered them forfeited. More than 350 victim impact statements were submitted to the court before sentencing.

Incarceration

Stanford is held at United States Penitentiary Coleman II, a high-security federal prison in Coleman, Florida. It sits inside the Coleman Federal Correctional Complex, one of the largest federal prison complexes in the country.

He has continued to fight the case from prison and has maintained that he is innocent. Stanford appealed in September 2014. The Fifth Circuit Court of Appeals rejected the appeal in October 2015 and upheld the conviction and the 110-year sentence. The court turned aside arguments that he was unfit for trial, that the proof fell short, that the sentence was excessive, and that the trial judge was biased. The U.S. Supreme Court declined to hear the case in November 2016. That ended his direct appeals.

Recovery for investors has been slow. A court-appointed receiver has worked to find and sell Stanford's assets and return money to victims. The amounts recovered are a fraction of the loss. Some victims have said legal and administrative costs absorbed much of what was recovered. Later civil suits targeted banks that processed transactions for Stanford's entities, and some of those produced settlements that added to the pool.

Frequently Asked Questions

Q: What was Allen Stanford convicted of?

A federal jury in Houston convicted Stanford on March 6, 2012, on 13 of 14 counts. The counts included wire fraud, mail fraud, conspiracy to commit wire and mail fraud, conspiracy to obstruct an SEC investigation, obstruction of an SEC investigation, and conspiracy to commit money laundering. The case involved a roughly $7 billion Ponzi scheme run through Stanford International Bank in Antigua.

Q: How long is Allen Stanford's prison sentence?

U.S. District Judge David Hittner sentenced Stanford to 110 years in federal prison on June 14, 2012. Prosecutors had asked for 230 years. The court also entered a $5.9 billion personal money judgment and ordered the forfeiture of about $330 million held in foreign accounts.

Q: Where is Allen Stanford incarcerated?

Stanford is held at United States Penitentiary Coleman II, a high-security federal prison in Coleman, Florida. It is part of the Coleman Federal Correctional Complex.

Q: How did the Stanford Ponzi scheme work?

Stanford sold certificates of deposit through Stanford International Bank in Antigua and promised steady, above-market returns. The returns were not generated by real investments. Money from new depositors paid earlier depositors while Stanford spent on personal property, paid bribes to Antiguan officials, and made losing bets. The SEC said the bank's financial statements were "fictional."

Q: When did Allen Stanford's scheme collapse?

The SEC filed civil fraud charges on February 17, 2009, and froze assets. A federal indictment followed. Antigua revoked Stanford's knighthood on November 2, 2009. His trial began in January 2012, and the jury convicted him on March 6, 2012.

Q: How many people did Allen Stanford defraud?

About 30,000 investors in more than 100 countries held the bank's certificates of deposit. Prosecutors put the total loss near $7 billion. More than 350 victim impact statements were filed before sentencing.

Q: Did Allen Stanford appeal his conviction?

Yes. Stanford appealed in September 2014. The Fifth Circuit Court of Appeals upheld the conviction and sentence in October 2015. The U.S. Supreme Court declined to hear the case in November 2016, which ended his direct appeals.