Investigation on Allen Stanford's Ponzi Scheme Fraud

This report investigates the case of Allen Stanford, an American former financier who sponsored professional sports and was convicted for perpetrating a $7 billion investment fraud. It covers how he grew his business unchallenged by US regulatory authorities, the culture inside the business that enabled him to continue fraudulent activities, and his conviction. The report also reflects on the claims that make him guilty in the author's opinion.

Research on Allen Stanford

Table of Contents
Introduction......................................................................................................................................1
Background of Allen Stamford........................................................................................................1
How he was able to grow his business unchallenged by US Regulatory authorities......................2
How the culture inside the business enabled him to continue the fraudulent activities..................2
What brought about Allen Stanford Conviction..............................................................................3
Reflection on the claims that makes him guilty in my opinion.......................................................3
References........................................................................................................................................5
..........................................................................................................................................................6

Introduction
Robert Allen Stanford who was an American Former Financier and a sponsor who used
to sponsor professional sports was born in the year 1950. He had started a company which was
making profit out of investment in a Ponzi scheme. As and when it was revealed that his
investment was out of Ponzi scheme the investors started to claim their money and that's how the
he was uncovered. This report contains the investigation about the case of Allen Stamford and
how he could expand his business to the top height, also the claims that he made to protect
himself from the criminal prosecution would be analysed.
Background of Allen Stamford
Allen Stamford begin his earlier year from the town of Mexia, Texas in 1950 in a lower
middle class family. His father James Stamford, was a former mayor of Mexia and was board of
director of Stanford Financial Group. He first entered in the field of business in Waco, Texas
where he opened a Gym that was a absolute failure for him and doesn't pay him any money.
Afterwards his first success was from the speculating business that was in real estate. Form this
he got a little confidence and started to buy the depressed real estate and used to sell them when
market recovered. Later on when he was not able to grow and all the earlier ventures were not
able to pay him a good profit. He incorporated a Stanford International Bank in 1991 in Antigua,
which was the base of his empire and it was one of the largest employing company on the island.
By the year 2008 he became one of the richest men in America. In the year 2005 he provided
certificate of deposit from Antigua to the clients of his bank. Which gave his client a confidence
that it is better than any government bond and is highly secured. In the year 2007 two of his
company’s whistle-blowers came forward, and the agency was hand forward proof of standford's
fraud. The company was paying the Antigua island chief banking regulator and was all in the
back pocket of company. By making all the false promise to the investors he raised around $7
billion certificates of deposits which was controlled by Stanford and located on the island of
Antigua. He used this money for investment in offshore banks on Caribbean island of Antigua
which was all done as a Ponzi Scheme.
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How he was able to grow his business unchallenged by US Regulatory
authorities.
As Allen Stanford was doing his business from the island of Antigua he was able to make
some political connection with the mayor of the island. He was the largest employer in the island
which was helping the political parties in fulfilling the promise to deliver employment
opportunities to the people of the country. As he came in the list of richest men alive in the
country he had some political powers which helped him in doing the business and expanding his
empire. He used to bribe the political official due to which they were not able to take any action
against him. He managed to hedge researchers for years with the help of seven former senior US
and foreign regulators and officials who were law enforcer. He paid them huge amount of money
so that they were able to change the papers that were against him. This helped him in shaking
five SEC investigations between 1997 and 2005 which occurred against him. As he fleeced the
leaders of Antigua and Barbuda they were helping him in tackling all the regulations that were
set on him by SEC. Indeed, in the comfortable relationship he was never questioned about what
they were doing with the money. When the SEC was investigating in the case he always used to
claim that SIBL's asset grow from about $1.2 billion to $8.5 billion. In the year of 2000 to 2006
the company and the employees gifted $2m to the US political parties and their campaigner
which gave him immense amount of political power. The company also made an important
contribution to the defence funds of two lawmakers. Conductors sent from the US Embassy to
the State Division at that time described a power snatch and added a dynamical legal aid.
Investigators which were hired from US were likely being tasked with cleaning the files to make
sure that there is nothing in them that would damage or implicate the American offshore banker.
He took a step to improve its banking laws. He asked them to issue in the informative capacity to
the government and chartered a top notch team of former US legal and regulative professionals
so as to change the banking regulations. As there was warning which was given to his company
and this warning was because of this regulatory change because of this his business Surged
spectacularly. He then started to expanded his business in lobbying activities in Washington.
How the culture inside the business enabled him to continue the fraudulent activities.
As the company was engaged in doing the business of fraudulent activity of laundering
money and sending it to the Caribbean island, the employees were not known about what was
done by the company. Only the CFO named James Davis was known about what was going in
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the company and was helping them in gaining the profit. The company used to tell their
employees to alter the financial statements and lie to their own employees and investors and
about company’s true financial achievement. This give the evidence that all the employees were
under a curtain and didn't know what was happening in the company. The employees were given
a good salary so as to increase their standard of living. As he was taking the advantage of lying
to the employees and using their skills of manipulating the financial data he expanded its
business of doing fraudulent activity by investing in Ponzi schemes.
What brought about Allen Stanford Conviction.
R. Allen Stanford, was charged for perpetrating an $7 bn investment fraud. He had made
a company that was investing in an offshore investment and giving his clients confident that high
interest rate would be offered to them. Investors unable to get their money back from him sued
company, they said had aided in the fraud, relying on Louisiana and Texas law. The firms
responded that the suits could not be brought under state laws because they were barred by the
1998 federal law.
Stanford allegedly exploited most of those investor assets including amusing more than
$1.7 billion into non disclosed personal loans that were targeted to himself.
He was convicted to 110 years of imprisonment for masterminding a scheme of 20-year
investment in which he embezzled $7 billion from SIB to finance his personal businesses
organisation and living conditions. The jury also founded that 25 financial statements that were
located abroad were worth $330 million and were ceased and forfeited.
Reflection on the claims that makes him guilty in my opinion.
Guilty person is the one who has done some actions which is against the law or rules set
by the local authority. Allen Stanford is guilty as he has some crimes which should not be done
by him which is mentioned below,
 According to rules, any board of director cannot use company's money to benefit their
personal agenda but still he has use 7 billion dollars from SIB for increasing their
personal company's capital.
 Money laundering is a crime in UK but still he found to transfer its illegal amount of
money to different states and country so that he would be save from paying tax.
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 Jury of US has found that he has more than 25 accounts in abroad banks for settling his
illegal money worth 330 million dollars.
 Stanford has committed different types of fraud like mail and wire fraud, obstruct US
securities exchange company for smooth functioning and choke SEC investigation etc.
Person who found to halt government body work is a criminal.
 He has committed fraud from his investors as billions of certificates have been issued by
their Stanford international bank and all the money collected is diverted into his personal
bank accounts.
So after all the points mentioned above, it can be concluded that Jury decision of allotting
110 years of jail to Alan Stanford is justified.
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References
Stanford Accused of a Long-Running Scheme. 2009 [Online]. Available Through:
<https://www.nytimes.com/2009/02/28/business/28stanford.html>.
Sir Allen Stanford investigated by FBI over criminal fraud charges. 2008 [Online]. Available
Through: <https://www.telegraph.co.uk/finance/financetopics/sir-allen-stanford/
4701900/Sir-Allen-Stanford-investigated-by-FBI-over-criminal-fraud-charges.html>.
The Spectacular Rise And Fall Of Alleged Ponzi Schemer Allen Stanford. 2007 [Online].
Available Through: <https://www.businessinsider.com/the-once-fabulous-life-and-saga-
of-alleged-ponzi-schemer-allen-stanford-2012-1?IR=T#the-sec-says-he-ran-stanford-
financial-like-a-massive-ponzi-scheme-boasting-improbably-if-not-impossible-returns-
to-investors-2>.
Billionaire R. Allen Stanford accused of $8-billion investment scam. 2009. [Online]. Available
Through: <http://articles.latimes.com/2009/feb/18/business/fi-stanford18>.
SEC Charges R. Allen Stanford, Stanford International Bank for Multi-Billion Dollar Investment
Scheme. 2009. [Online]. Available Through:
<https://www.sec.gov/news/press/2009/2009-26.htm>.
Supreme Court Permits Investor Lawsuits in Stanford Fraud. 2014. [Online]. Available Through:
<https://www.nytimes.com/2014/02/27/us/politics/supreme-court-permits-investor-
lawsuits-in-stanford-fraud.html?rref=collection%2Ftimestopic%2FStanford%2C
%20Rober
%20Allen&action=click&contentCollection=timestopics&region=stream&module=stre
am_unit&version=latest&contentPlacement=2&pgtype=collection>.
Warning signs showed Stanford empire was built on 'threats and innuendos'. 2009. [Online].
Available Through: <https://www.theguardian.com/sport/2009/feb/20/allen-stanford-
profile1>.
Defiant US fraudster Allen Stanford vows to clear name. 2016. [Online]. Available Through:
<https://www.bbc.com/news/world-35283297>.
Court Rules Against Victims of Ponzi Scheme. 2014. [Online]. Available Through:
<https://www.nytimes.com/2014/07/19/business/court-rules-against-victims-of-ponzi-
scheme.html?rref=collection%2Ftimestopic%2FStanford%2C%20Robert
%20Allen&action=click&contentCollection=timestopics&region=stream&module=stre
am_unit&version=latest&contentPlacement=1&pgtype=collection>.
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