Sir Allen Stanford is the moneyman from Texas, accused in a financial scandal that rocked the world.
CNBC’s Senior Correspondent Scott Cohn unlocks a bank vault full of secrets that destroyed savings, ruined lives and threatens a country’s economy.
He was an international man of mystery, a globetrotting banker and an Antiguan Knight. Sir Allen Stanford headed a financial empire with 28,000 clients in 133 countries.
But U.S. authorities say his Antigua-based Stanford International Bank was an essential strand in a web of deceit ... a global Ponzi scheme that destroyed the savings of unsuspecting investors.
Today, charged with 21 criminal counts of fraud, conspiracy and obstruction, the billionaire banker lives at a federal detention center in downtown Houston, held without bail after a judge ruled he is a flight risk.
Stanford's attorney Kent Schaffer says prison life has been excruciating on Stanford.
"He's aging before our eyes," Schaffer says. "He's lost 40 or 50 pounds, he's turning gray, he's becoming a little hunched over, he's lost his smile, his sense of humor...the man's depressed at the situation that he finds himself in."
So how did Stanford fall from Knighthood to depressed inmate?
Federal agents say Stanford International Bank issued $8 billion in certificates of deposit from Antigua, supposedly backed by Stanford’s secure investments. The CDs were sold by hundreds of Stanford brokers around the world to investors big and small.
But the Securities and Exchange Commission says those CDs are bogus and the funds from new investors were used to pay improbably high returns to old investors.
This, authorities say, is the scene of the crime: The Houston offices of Stanford International, and the birthplace of the alleged $8 billion investment scam.
Largely untouched since Federal agents raided it on Feb. 17, 2009, it's frozen in time, as are the lives of the investors — and even Allen Stanford himself.
In an exclusive interview, Sir Allen Stanford swears he did nothing wrong. Interviewed by CNBC’s Senior Correspondent Scott Cohn, he says the authorities are targeting him and his legitimate global empire to make up for their mis-steps in the Bernie Madoff financial scandal.
Stanford: “You make your own judgment there. Madoff was a true Ponzi scheme. We have real assets, real people, a real group of companies and this was no Ponzi scheme.”
>See Scott Cohn’s Exclusive Interview
In 2008, Stanford’s net worth was listed by Forbes at $2.2 billion. He was a Knight Commander of the Most Distinguished Order of the Nation of Antigua and Barbuda. He was a philanthropist and friend to both Democratic and Republican politicians. Lavish homes, private jets — Sir Allen lived a life of opulence and mystique.
Now, everything is shut down. The Stanford empire was forced into receivership by U.S. and Antiguan courts.
In Antigua, a nation of just 85,000 people, it’s impossible to miss the signs of Allen Stanford’s empire. He was Antigua’s largest private employer and his investments raised the country’s standard of living. Stanford owned Antigua’s largest newspaper, a gourmet restaurant and The Stanford Cricket Grounds.
But regulators and investors say there’s just one problem: it was all paid for with other people’s money. And it doesn't stop there.
When the Antiguan government wanted to revamp its banking laws, it turned to Stanford, its newest banker. Stanford happily obliged, hiring a team of consultants. But he denies any role in writing the rules that would eventually govern his own business.
Prosecutors say that doesn't matter, though, because Stanford had something even better: Antigua's top financial regulator, Leroy King (pictured), in his pocket.
King, the former head of Antigua's Financial Services Regulatory Commission, is among those indicted in the Stanford case.
And then there are the victims ...
Following the FBI raid on Stanford’s offices, a court ordered all of Stanford’s assets frozen … including the investment funds of Troy and Melanie Lille ….and Mike Kogutt and wife Angie Shaw.
They had been told they were investing in safe Certificates of Deposit backed by a stable portfolio of stocks, bond, precious metals and real estate. Now, authorities said they had, in reality, invested in a giant Ponzi scheme and all their money was probably gone.
James Davis was Sir Allen Stanford’s Baylor college roommate and for more than 20 years, his Chief Financial Officer. Davis is now cooperating with the authorities.
The court appointed receiver in the case reports finding 200 different accounting systems at Stanford’s company, in a system officials believe was designed to prevent any one employee from knowing the full scope of the Stanford operations.
Sir Allen Stanford called it The Stanford Investment Model — safe, smart secure. Members of his sales force, including Michael Word, marketed with fervor and collected a commission upfront and a continuing commission for as long as they kept their clients invested.
Word was among Stanford’s top performers, according to court documents, receiving $1.3 million in commissions since 2007.
Now, the court appointed receiver is suing Word and 65 other Stanford advisors – seeking to recover $40 million in commissions to return to investors.
Word’s attorney says his client believed the Stanford certificates of deposits were appropriate for the investors he recommended them to, and that Word’s commissions were disclosed to clients.
Even if Allen Stanford is not convicted, his empire is essentially gone. His properties are being sold, and investors, if they collect anything, will likely wait months, maybe years.
Meanwhile, Antigua is being sued by US investors who claim the country was Stanford's "full partner in crime." The country's largest employer is gone, and the economy has all but collapsed.
Embarrassed and angry, the Antiguans stripped Sir Allen Stanford of his knighthood in November, 2009.
But was any of it real? That is still the biggest secret of all.