R. Allen Stanford blew $1.1 million at the Bellagio hotel and casino in Las Vegas and gave another million in cash to family members, including his wife and girlfriend, an FBI agent told jurors at the financier’s criminal fraud trial.
The Texas financier also spent $20 million on yachts, $37 million promoting cricket tournaments, $333 million on a pair of startup Caribbean airlines, and another $379 million to underwrite his Stanford Group Co. broker-dealer, FBI Special Agent Robert Martin testified yesterday about his review of the company’s financial records.
“Did that represent all his spending?” Assistant U.S. Attorney Andrew Warren asked Martin.
“No, not at all,” Martin replied.
Prosecutors showed jurors evidence illustrating how they believe Stanford spent more than $2 billion he’s accused of skimming from certificates of deposit at Stanford International Bank Ltd. in Antigua. While customers were promised their money was invested in safe, liquid assets, prosecutors claim Stanford borrowed heavily from the CDs to finance an extravagant lifestyle and dozens of risky ventures.
Stanford, 61, has been jailed as a flight risk since his indictment in June 2009. The former billionaire, who denies wrongdoing, faces as long as 20 years in prison if convicted of the most serious charges against him.
Among Stanford’s personal wire transfers to the Bellagio in Las Vegas, Martin testified he found one for $200,000 in January 2009, four weeks before regulators seized Stanford’s operation on suspicion it was a $7 billion Ponzi scheme.
Martin said he also reviewed business records indicating the financier loaned $418 million to Stanford Development Co., his real estate development firm, and $350 million to his venture capital unit. An array of other speculative ventures, some of which simply disappeared, Martin said, burned through an additional $486 million Stanford borrowed from CD depositors.
Stanford’s defense lawyers have told jurors their client was in the process of consolidating roughly 130 private companies onto his Antiguan bank’s balance sheet when U.S. regulators shut him down. If regulators hadn’t blocked that consolidation, his lawyers claim, the move would have recapitalized the bank and repaid all of Stanford’s investors.
“Practically none of Mr. Stanford’s companies were profitable,” Martin testified. While some of Stanford’s side ventures made money from “time to time,” the agent said, only Bank of Antigua, a tiny commercial bank Stanford ran for islanders, consistently earned a yearly profit.
The side ventures Stanford loaned more than $2 billion to collectively lost at least $711 million by the end of 2008, Martin told jurors. The financier’s borrowings contributed to a $7.05 billion “hole” Martin said existed between the $8.59 billion in reported assets and $1.54 billion in actual assets on Stanford International Bank’s books at year-end 2008.
Under questioning by Ali Fazel, one of Stanford’s attorneys, Martin said he has calculated “practically zero” value for most of the financier’s side enterprises because the entities weren’t owned by the bank and most were unprofitable.
“Are you saying these companies are worthless because they have no profits?” Fazel asked. “These companies have no value in and of themselves?”
‘Can Have Value’
“They can have value, but that doesn’t mean they do have value,” Martin replied.
Fazel suggested the government hasn’t found all of Stanford’s assets, and that’s why the bank’s balance sheet appears short.
“Wouldn’t it be important to know the totality of assets SIBL has before you tell the jury that 92 percent of the assets are missing or don’t exist?” Fazel asked. “Are there assets out there you don’t know about?”
“I don’t think there are,” Martin replied. “I think we’ve got an accounting of what the bank’s assets were at the end of 2008.”
Lanny Breuer, head of the Justice Department’s criminal division, monitored testimony yesterday at Stanford’s trial, which is in its fourth week. Sitting alone in the rear of the courtroom, Breuer said he has been “following the case” through regular reports. He declined to comment on the trial, citing a gag order by the judge barring lawyers from publicly discussing it.
The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas).
To contact the reporter on this story: Laurel Brubaker Calkins in Houston at firstname.lastname@example.org.