Senators Threaten Antigua Over Allen Stanford Victims

A group of senators wants the United States to oppose any new international loans to Antigua until the island nation compensates victims of the fraud allegedly run by R. Allen Stanford, whose bank was located there.

R. Allen Stanford

Sen. Richard Shelby of Alabama, the senior Republican on the Banking Committee, and seven other senators on Tuesday introduced a resolution to have Treasury Secretary Timothy Geithner direct the U.S. representatives at the World Bank and International Monetary Fund to oppose new loans to Antigua "until that government cooperates with the United States" and compensates the Stanford investors.

The so-called sense-of-the Senate resolution would be nonbinding. It wasn't immediately clear when the Senate might vote on it.

Treasury spokeswoman Meg Reilly declined to comment. Spokesmen at the embassy of Antigua and Barbuda in Washington had no immediate comment.

Stanford, a flamboyant Texas financier and prominent figure in the Caribbean, is in jail awaiting trial on U.S. federal charges he ran a $7 billion Ponzi scheme by promising huge returns on certificates of deposit from now-closed Stanford International Bank in Antigua.

Investors were promised the CDs were safe. Money poured in from around the world, with nearly 28,000 depositors from 113 countries investing in the CDs, according to authorities.

The court-appointed receiver tracking down investors' lost money has said he hopes to gain control of more than $1.5 billion that would be returned to them. But an attorney representing the investors has said that goal may be unrealistic and victims should prepare to recover as little as 2 cents on the dollar.

Stanford has pleaded not guilty and denied the Securities and Exchange Commission's civil fraud allegations.

Stanford had ties with the Antiguan government and is alleged to have loaned it about $85 million, which presumably came from Stanford investor funds, Shelby said in a news release. He said Antigua has refused to cooperate with the receiver and therefore should be denied the loans it is seeking from the World Bank and the IMF, which receive significant funding from the U.S.

"It is essential that to the extent possible these victims get their money back," Shelby said in a statement. "It is absurd that the (Antiguan government) is standing in the way of helping victims, while also holding out its hand for funding."

Also proposing the resolution were: Republican Sens. David Vitter of Louisiana, Kay Bailey Hutchison and John Cornyn of Texas, Thad Cochran and Roger Wicker of Mississippi, Johnny Isakson of Georgia, and Democrat Jeanne Shaheen of New Hampshire.