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Stanford Investor Suit Targets Central Bank in Caribbean

One year after the Securities and Exchange Commission accused Texas billionaire Allen Stanford of running a massive fraud through his offshore bank in Antigua, a group of Stanford investors is suing the region's central bank, calling it Stanford's "partner in crime."

Allen Stanford
AP
Allen Stanford

Separately, the Stanford Victims Coalition is marking the anniversary by launching a campaign to boycott Antigua, and particularly its lucrative tourism industry.

The class action suit seeks at least $100 million in damages from the Eastern Caribbean Central Bank and its five member banks in the region. It was filed in federal court in Dallas by New York attorney Peter Morgenstern on behalf of as many as 28,000 Stanford investors.

After authorities shut down Stanford International Bank in Antigua last year for allegedly issuing $7 billion in bogus certificates of deposit, the Eastern Caribbean Central Bank seized a second Stanford-owned bank, the Bank of Antigua, which dealt primarily with local deposits and loans.

The suit claims the seizure was illegal, and that the institution — which Morgenstern says is still "enormously valuable" — should have become the property of Stanford's alleged victims.

Instead, the bank's assets were distributed among the ECCB's member banks — Antigua Commercial Bank, St. Kitts-Nevis-Anguilla National Bank, Eastern Caribbean Financial Holdings Company, National Commercial Bank (SVG), and National Bank of Dominica — which are also named in the suit.

Investors previously sued the Antiguan government for $24 billion, after U.S. authorities charged the nation's top banking regulator with accepting hundreds of thousands of dollars in bribes to hide the Stanford scam from the SEC.

Antigua has not formally responded to the lawsuit.

Now, the investors are hoping to turn up the heat on Antigua by urging travel agents to steer clear of the country's popular resorts. The group is also pressing Congress to block international aid to Antigua, which lost its largest employer when Stanford Financial shut down.

The SEC sued Stanford and his companies on February 16, 2009 alleging an $8 billion international fraud. The following day, a federal judge placed the firm in receivership, halting its operations worldwide, and potentially leaving investors with pennies on the dollar.

A federal grand jury indicted Allen Stanford and three top executives in June — all have pleaded not guilty — as well as former Antigua Financial Services Regulatory Commission chief Leroy King, who is fighting extradition to the U.S. The five are scheduled to go on trial in January, 2011.