By Don Miller
The fraud scandal surrounding Allen Stanford and his consortium of investment firms grew to shocking proportions today (Thursday) as it spread its tentacles from the United States and the Caribbean to Latin America and Europe.
The sordid web of allegations against Stanford grew from outright fraud and security violations to possible connections with Mexican drug cartels, money laundering, and canceled cricket matches as people scrambled to get their money back from firms linked to the Texas billionaire.
Meanwhile, the U.S. Security Exchange Commission, already reeling from the shock generated by the alleged $50 billion Ponzi scheme fraud blamed on Wall Street veteran Bernard Madoff, could offer no assurances that more scandals would not occur.
When asked whether there would be more fraud cases of the scale and scope of Madoff and Stanford, U.S. Attorney General Eric Holder told reporters: "It's hard to say. I'd like to think that those are going to be the largest."
The SEC on Feb. 17 said that Stanford, 58, ran a "massive, ongoing fraud" through his group of companies and lured investors with "improbable if not impossible" claims about investment returns. Stanford Group,and were named in the SEC complaint.
From the tiny Caribbean island of Antigua, a key outpost in Stanford's business empire, to Latin American nations including Mexico, Venezuela, Colombia and Ecuador, investors and depositors besieged Stanford banks and companies trying to redeem funds or seek information about their savings, Reuters reported.
Venezuela today seized a local bank owned by Stanford to stem massive online deposit withdrawals. Venezuelans may have had as much as $3 billion invested with Stanford, the country's banking regulator, told Bloomberg News.
The closure in Venezuela followed similar actions from authorities around the region. Panama regulators have taken over a Stanford affiliate there and Colombia and Ecuador halted activities of local arms linked to Stanford on their stock exchanges.
"I never thought this would happen, much less to a bank like Stanford with a good name," Celia Daniel Metta, 48, who was among 20 clients standing outside a Stanford affiliate in Mexico City yesterday, told Bloomberg. "Your money isn't safe anywhere."
Perhaps hardest hit was the tiny Caribbean island of Antigua, and its sister-nation Barbuda. The Stanford-controlled Bank of Antigua warned of a possible liquidity crisis at if it continued to be besieged by clients demanding their deposits.
Antigua and Barbuda's minister of finance and economy said the twin-island Caribbean state was scrambling to shore up its banking system after the potentially devastating fraud charges against Stanford.
Additionally, he Antigua and Barbuda's Bankers Association issued an ominous warning saying: "ABBA is of the view that if customers continue to withdraw funds from Bank of Antigua, this could destabilize not only Bank of Antigua, but the entire financial system."
Stanford owns the country's largest newspaper and his local commercial bank is Antigua's biggest private employer. He is also its top investor and is the first American to receive a knighthood from its government. He has homes sprinkled across the region - from Antigua to St. Croix in the U.S. Virgin Islands to Miami.
Further allegations surfaced that the Federal Bureau of Investigation and others have been investigating whether Stanford was involved in laundering drug money from Mexico.
Citing unnamed federal authorities, ABC News reported Mexican authorities had detained one of Stanford's private planes and said checks found inside the plane were believed to be connected to the Gulf Cartel, one of Mexico's most violent gangs, according to Reuters.
The list of victims tangled in Stanford's web continues to emerge and includes such high-profile names as professional golfer Vijay Singh and soccer player Michael Owen.
Singh, wearing a golf shirt with a Stanford logo, told Reuters in California that he was "just surprised by it all." He said Stanford had donated large sums to charity.
Even the seemingly tame sport of cricket was dragged into the mess.
A planned Stanford-sponsored international cricket tournament is now unlikely to take place, England and Wales Cricket Board chairman Giles Clarke said, describing the association with Stanford as a "fiasco."
Despite the far-reaching scandal, a shroud of mystery continues to surround Stanford's whereabouts. CNBC television reported that he tried to hire a private jet to fly from Houston to Antigua, but the jet lessor refused to accept his credit card. The SEC also said it didn't know where Stanford was.
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