Friday, February 13, 2009

Things We Never Knew … About Sir Allen Stanford and His Sticky Wicket

We’re sorry to admit that the name “R. Allen Stanford” wouldn’t have rung even a faint bell with us before we read this morning’s New York Times, wherein it was reported that a veritable panoply of federal agencies have been eyeballing a Houston-based money management firm and offshore bank operated by the “the flamboyant Texas billionaire.” We’re even sorrier that we hadn’t liquidated our piddling little E-Trade account and turned our life savings over to Mr. Stanford, whose talent for generating Madoff-sized returns for clients apparently aroused the feds’ interest.

According to the Times, which was following a Bloomberg report from earlier this week, the focus of investigations by the SEC, FBI and IRS appears to be how Stanford’s Antigua-based bank "could issue CDs that pay interest rates that are more than twice the national average." These felicitous yields apparently contributed to the good fortune enjoyed by the “well-heeled clients” of the Galleria-headquartered Stanford Financial Services (whose number, Forbes reported last year, include or included golfer Vijay Singh).*

We’ll await the verdict of higher authorities on whether Mr. Stanford has been in violation of banking or securities law or is simply the Unacknowledged Super Genius of the Western Hemisphere, but in the meantime we will state without equivocation that he certainly is an intriguing character, the kind that Our Town has been notoriously lax in producing of late.

As the Times noted, Mr. Stanford presents himself to the world as Sir Allen Stanford, a title bestowed on him by a former Antiguan prime minister. The anglophilia must run deep, as he’s also besotted by cricket, a sport of sorts that we do not believe was seen on the playing fields of Mexia, from whence Stanford hails, or at Baylor, where he was educated, or in the Houston of the 1980s, where he is said to have made his first serious money buying and selling distressed properties in the Oil Bust market. According to his biography on his firm’s Web site, Stanford no longer calls Houston home but resides in St. Croix on the U.S. Virgin Islands and “holds dual citizenship, having become a citizen of Antigua and Barbuda ten years ago.”

This 2003 Wall Street Journal story portrayed Stanford as a large presence on the small island, where magic can happen:
An Antiguan citizen since 1999, Mr. Stanford is underwriting the construction by a Chinese company of a majestic state hospital now mired in a corruption scandal and new executive offices for the government. He is spending undisclosed millions on a cricket stadium, hotel, cinema and restaurant---the Sticky Wicket---on the grounds of the airport.

"I love this place and its people", says Mr. Stanford. That relationship deepened four years ago, he says, when he met a local Catholic priest with wounds in his hands and feet that he believed to be the stigmata of Jesus Christ. As a memento of that life-changing experience, Mr. Stanford carries with him a vial with the congealed fluids drained from the priest's foot.

Where most balk at lending to a bloated and revenue-strapped government with a record of mismanagement and corruption---it hasn't presented audited national accounts to its Parliament in a decade---Mr. Stanford has ponied up about $65 million. In short, says a recent editorial in Mr. Stanford's Antigua Sun, he is that unusual benefactor who has eschewed personal profit to boldly answer John F. Kennedy's famous call: "Ask not what your country can do for you, ask what you can do for your country."

Mr. Stanford's detractors say the government of Prime Minister Lester Bird has become so indebted to Mr. Stanford over the past 12 years that it is only a matter of time before the two-island nation of 70,000 sees another, less altruistic side of the voluble Texan. "This man has a lien on our whole country," says government opposition party leader Baldwin Spencer.
Although he no longer spends much time in the U.S, Stanford and his firm remain vitally interested in the operations of the U.S. government, according to this 2006 Bloomberg article, and gave generously to two disgraced super heroes known as The Torch and The Hammer:
In the past six years, Stanford Financial and its employees have made more than $2 million in donations to U.S. political candidates and parties, according to the Federal Election Commission and congressional and Internal Revenue Service records. Stanford gives to both Democrats and Republicans. Among its top beneficiaries have been former Senator Robert Torricelli, a New Jersey Democrat who left office in 2003 amid ethics allegations, and ... Tom DeLay of Texas, who is resigning from Congress next month after having been indicted in an election-fundraising case, and Bob Ney of Ohio, who's under investigation in the scandal involving lobbyist Jack Abramoff. Stanford Financial or its employees have contributed to the legal defense funds of the three lawmakers.

DeLay's committees paid for flights on Stanford's jets at least 16 times since 2003, including on Oct. 20, the day the former House majority leader was booked in a Houston courthouse on money-laundering charges ...

Members of the House Caribbean Caucus take annual trips to the region on Stanford's jets. Lawmakers are required to reimburse companies at a first-class commercial rate, which is often a fraction of the actual cost.
Then there’s the old school tie (NYT):
… Stanford has claimed ties to Leland Stanford, the former governor of California who started Stanford University in the 1800s. The university, however, has said there is no genealogical relationship between the two. (See Stanford Daily story)
Finally, we’d be remiss in not pointing out that despite his generosity toward noted global warming skeptic DeLay, Stanford is an environmentalist who, unlike you, has been getting his substantial shit together in advance of Doomsday (Forbes):
Stanford is a bit of a global-warming fanatic, trading information frequently with fellow warming-obsessive Ted Turner. His St. Croix house is built on a hill, the better, he jokes, to protect against rising waters from melting ice caps. Stanford has pledged $100 million for various environmental programs, including a marine sciences research institute in Antigua.

*(Bloomberg reported that Stanford International Bank Ltd., with $8.5 billion in assets and 30,000 clients, claimed returns on investment of between 10.3 and 15.1 percent every year from 1995 through 2008. And: "Stanford’s one-year, $100,000 CD paid 4.5 percent annual yield as of Nov. 28 ... A one-year, $10,000 CD purchased at JP Morgan Chase & Co. would earn 1.5 percent …" Apparently Stanford is not the kind of “bank” that lends money but instead “invests in a mix of equities, metals, currencies and derivatives,” although it claims its CDs are the same kind of instruments in which mopes like us park our money.

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