Victims of Stanford fraud file suit against Antigua government, Caribbean regulators

Victims of Stanford scam sue Antigua, Carib bank

SAN JUAN, Puerto Rico — Jilted investors of a global fraud allegedly run by jailed financier R. Allen Stanford filed a lawsuit Tuesday against Caribbean regulators, five regional financial institutions and the government of Antigua and Barbuda.

The class-action suit seeks compensation for the “unlawful seizure” of the Bank of Antigua, a Stanford affiliate, Attorney Peter D. Morgenstern said.

The Eastern Caribbean Central Bank, or ECCB, took over the Bank of Antigua in February 2009 in the wake of the U.S. fraud probe of the Texas tycoon’s vast financial empire and redistributed its equity ownership.

But the complaint alleges the victims are entitled to the value of the Bank of Antigua when it was seized to provide some compensation to the roughly 28,000 investors from across the globe who allege they lost their life savings to the flamboyant financier.

“Instead of acting as a legitimate central bank, the ECCB became a partner in crime with the government of Antigua and Barbuda when it seized the bank,” Morgenstern said in a statement. “The Bank of Antigua was, and remains, enormously valuable. All of that value rightfully belongs to Mr. Stanford’s victims.”

According to the suit filed in U.S. District Court in Dallas, the Bank of Antigua’s value included loan receivables from the government of Antigua worth tens of millions of dollars, at least.

Phone calls made to several Antiguan government officials went unanswered Tuesday. Kennedy Byron, a director of bank supervision for the ECCB, declined to comment.

The Eastern Caribbean Central Bank is the monetary authority for a group of eight island economies, and it explained its intervention at the time as an effort to contain damage to the local economy.

Stanford provided loans to the government of Antigua and was the country’s largest private employer, with businesses that included a development company, cricket stadium, newspaper, an airline and two restaurants.

But Angela Shaw, a leader of the advocacy group Stanford Victims Coalition whose family invested $4.5 million in Stanford certificates of deposit, said foreign investors in Stanford’s CDs were abandoned in the rush to protect the economy of Antigua, an island of some 80,000 people.

“How can they say they need to protect Antigua when it has come at the cost of foreign citizens from around the world, when it was purchased with stolen money?” Shaw alleged during a phone interview from Dallas.

Stanford and other executives of the now-defunct Houston-based Stanford Financial Group are accused of orchestrating a huge Ponzi scheme by advising clients to invest more than $7 billion in certificates of deposit from the Stanford International Bank on Antigua. Investors from 113 countries were promised huge returns and assured that their investments were safe.

But U.S. authorities say Stanford, a once prominent figure in the Caribbean, and the executives fabricated the bank’s balance sheets, bribed Antiguan regulators and misused investors’ money to pay for his lavish lifestyle.

The lawsuit says investors are entitled to compensation for the value of the Bank of Antigua when it was seized, and that equity ownership of the bank was distributed by the central bank to Antigua itself and five bank defendants for little or no compensation.

It says the financial institutions that took ownership of the Bank of Antigua are Antigua Commercial Bank, St. Kitts-Nevis-Anguilla National Bank Ltd., Eastern Caribbean Financial Holdings Company Ltd., National Commercial Bank (SVG) Ltd., and National Bank of Dominica Ltd.

Stanford’s financial empire was placed in the hands of a court-appointed attorney last year when the U.S. Securities and Exchange Commission sued Stanford. The SEC accuses him of skimming more than $1 billion.

Stanford and the three executives pleaded not guilty to charges they ran a Ponzi scheme. Another former executive, James M. Davis, pleaded guilty and is cooperating with prosecutors.

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.