Apparently the FBI have had him on their radar for 20 years. He had to hand over $3 milllion to the authorities when it was 'discovered' that his bank was found to have been used by some drug cartels to launder money. As many as five investigations happened but no charges were laid. This may be because he has donated over $2.4 million to various politicians. Interestingly, there is also the recent death (Jan 1) of his accountant. Charlesworth Hewlett who may have dies from simple old age at 73 years of age but maybe he was Frank Nuganed.
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Sir Allen Stanford: how the small-town Texas boy evaded scrutiny to become a big-time 'fraudster'
For a town of just 10,000 people, it is remarkable that Mexia - motto "a great place, no matter how you pronounce it" - should throw up two larger-than-life characters: Anna Nicole Smith and Sir Allen Stanford.
By Andrew Alderson, Philip Sherwell in New York, and Patrick Sawer
Last Updated: 10:08PM GMT 21 Feb 2009
![[Image: allen-stanford_1318973c.jpg]](http://www.telegraph.co.uk/telegraph/multimedia/archive/01318/allen-stanford_1318973c.jpg)
On Friday, as the ECB sheepishly announced it had severed its ties with the 58-year-old banker following allegations that he carried out a $9.2 billion fraud Photo: AP
At first glance, Ms Smith and Sir Allen have little in common beyond their birthplace. The surgically enhanced former Playmate of the Year was the model, actress and sex symbol who died from a drug overdose in 2007, nine months before her 40th birthday.
Sir Allen, who has also been under the plastic surgeon's knife, is the flamboyant businessman turned cricket entrepreneur who last week left the England and Wales Cricket Board (ECB) ruing its involvement with him.
Yet both celebrities, despite coming from a town which owes its past prosperity to the Texas oil fields on which it sits, were determined from a young age to dig for gold: Ms Smith famously snared a billionaire husband 63 years her senior after meeting him at her strip club, while Sir Allen – if the allegations against him are proved – preferred to use gullible investors, US politicians and sporting icons to bring him fame and fortune.
On Friday, as the ECB sheepishly announced it had severed its ties with the 58-year-old banker following allegations that he carried out a $9.2 billion fraud, Sir Allen's fellow Texans were coming to terms with life in the spotlight.
His current lifestyle, which includes a $10 million Florida mansion and $100 million fleet of private jets, is a far cry from his roots in Mexia. Sir Allen started in the family insurance business in the mid-1970s as a salesman and book-keeper. In the early 1980s, he and his father bought Texan homes cheaply during an oil crash and the sold them for a profit when the market improved. This provided funds for Stanford Jnr to launch offshore ventures largely based in Antigua, the Caribbean island where financial scrutiny is anything but draconian.
Today Mexia, now a quiet ranching community, provides important clues to how Sir Allen was able to avoid scrutiny for so long: two octogenarian residents sit on the six-person board of directors for the multi-billion Stanford group empire.
One is his father James, an 81-year-old former mayor, who still lives in the modest single-storey home that has been the family residence since 1924. The other is Oliver Goswick, 85, a local car dealer, rancher and family friend. Despite his lack of finance expertise or college education, Mr Goswick holds what should be a key post as overseer of investments for the board.
Yet, according to his son, Dick, Mr Goswick has been barely able to communicate since suffering a stroke in 2000 – even though he is described on the company website as an "active investor". Dick Goswick said that even before the stroke his father and Mr Stanford Snr did not have the financial know-how to understand the business. "These two gentlemen were so far out of place," he said.
The lack of oversight of the bank's investment strategy – raised regularly by former employees over the past six years – was at the centre of last week's civil claim from the Securities and Exchange Commission (SEC) , the Wall Street regulator, that Sir Allen had perpetrated a "massive, ongoing fraud". The FBI is also investigating him with a view to bringing criminal charges.
But how had the SEC ignored the warning signs for so long? And how had the ECB board been successfully wooed by Sir Allen when other major cricket nations wanted nothing to do with him?
It was Forbes, the business magazine, which last year estimated Sir Allen's personal wealth at $2.2 billion
(£1.5 billion). In an interview with the publication, he said: "How do you spot a liar? You ask him the same question three different ways and see if his answers are consistent."
Perhaps nobody has ever taken Sir Allen at his word, because it emerged last week how he has apparently been deceitful about everything from his family background to how he was investing an estimated $50 billion (£35 billion) for 50,000 investors.
Sir Allen had long claimed to be related to Leland Stanford, the founder of Stanford University in California. He even funded the restoration of Leland Stanford's mansion in Sacramento "to preserve an important piece of Stanford family history". Yet, according to the university itself, no family connection exists.
His alleged lies to those who invested millions with him – attracted by his high-interest returns – were on a different scale. The SEC says that the Stanford group's massive portfolio was not, as claimed, monitored by a team of 20 analysts, but by Sir Allen and one or two key allies.
According to court papers prepared by the SEC, Sir Allen and his former college room-mate and fellow board member James Davis held 90 per cent of their investments in a "black box" hidden from view or oversight.
Mr Davis, chief financial officer of Stanford Investment Bank, and Sir Allen are said by investigators to be the only ones who knew the precise details of the investments made on behalf of clients who are now desperate to retrieve their money.
Mr Davis has worked for 30 years at Sir Allen's side. The SEC's writ charges Mr Davis with aiding the cover-up of the fraud, stating: "SIB goes to great lengths to prevent any true independent examination of the those portfolios."
Also cited in the SEC writ is Laura Pendergest-Holt, the group's chief investment officer, who the SEC says was "indispensable to this scheme by helping preserve the appearance of safety fabricated by Stanford and by training others to mislead investors".
The SEC alleges: "Investors frequently inquired whether Allen Stanford could 'run off with the money" and Pendergest-Holt trained [staff] 'not to divulge too much' about oversight of the portfolio because that information 'wouldn't leave an investor with a lot of confidence'."
This weekend the SEC is hoping that Ms Pendergest-Holt will provide evidence against her former boss: a process which may already have started. The Sunday Telegraph has learnt that she was questioned under oath for four hours at the SEC's offices in Forth Worth, Texas, on February 10, just a week before SIB's US offices were raided.
There are, however, many who believe the SEC acted too slowly. It emerged last week that law-enforcement officers have been sniffing around Sir Allen's business empire since the 1990s, after he lost his banking licence in the Caribbean island of Monserrat (a decision which was revoked by the courts on appeal).
The murkiness of the group's finances rang alarm bells with others, as did events in 1997, when the bank was involved in a Drugs Enforcement Agency probe into the laundering of Mexican drug cartel funds. SIB cooperated with the inquiry, handed over $3 million
(£2.1 billion) from a Mexican customer and was not accused of any wrongdoing.
Jeffrey Robinson, one of world's leading experts on international financial crime, said: "Stanford first came on to my radar 12 to 15 years ago when I was looking at bank activities in Antigua. I know an FBI agent who has been trying to pin [drug] charges on him for a decade and prosecutors who have been looking at him for many years. He took the Robert Maxwell approach, developed this larger-than-life persona and started to believe his own publicity."
If anyone outside Sir Allen's tight-knit group of colleagues should have been aware that not everything was as it seemed, it was his British-qualified accountant. For 10 years, Charlesworth "Shelley" Hewlett had been responsible for auditing the bank's investment portfolio. However, the alleged fraud appears to have escaped his attention.
This weekend Mr Hewlett's family and friends expressed shock and surprise that he should have been caught up in the scandal. However, any secrets he knew he has taken to his grave. Mr Hewlett died, aged 73, on January 1.
One of the last people to speak to Mr Hewlett was his friend George Jones, a character actor who divides his time between London and Antigua. "Shelley was an honest, God-fearing and law-abiding person. If he had been aware of anything suspicious, he would have quickly and quietly disassociated himself from it," he said.
But the SEC's writ questions why SIB employed the services of "a small local accounting firm in Antigua" to oversee its investment portfolio.
The accountant, along with his wife Delvine, divided his time between his offices in the Antiguan capital of St John's and London, where Mr Hewlett worked out of an anonymous office on a busy road in the suburb of Enfield, before re-locating four years ago to his terrace house in nearby Haringey.
Hours after Sir Allen, whose whereabouts were unknown last week for several days, was tracked down by the FBI to his girlfriend's brother's house in Virginia, the ECB announced that it was terminating his contract with immediate effect.
But many inside and outside the sport have been dismayed at the way that David Collier and Giles Clarke, chief executive and chairman of the ECB, were willing to do business with Sir Allen when other countries, notably Australia and South Africa, shunned him.
Lord Marland, the former Conservative Party treasurer who stood down earlier this month in the contest to challenge Mr Clarke as chairman, told The Sunday Telegraph that he had been suspicious of the way that Sir Allen "came out of the blue" to English cricket. "This ECB management has been responsible for a catalogue of disasters, and something has got to change." he said.
It was early last summer that the ECB negotiated a secret, five-year deal, whereby Sir Allen pumped millions of pounds into the sport in this country – with everyone from leading players to the 18 county sides due to receive a slice of his largesse.
Ever the showman, Sir Allen marked clinching the deal by arriving in June on the Lord's outfield in a hired helicopter bearing his logo. He then wheeled out a box supposedly containing $20 million (£14 million): the prize for a winner-takes-all Twenty20 match between England and his team of West Indian superstars: a match won by the Caribbean players last year.
If Sir Allen's behaviour at Lord's was crass, there was worse to come. A renowned womaniser, he was caught on the giant video screen at the match in Antigua, flirting outrageously with the wives and girlfriends of the English players, one of whom was sitting on the grinning entrepreneur's knee.
Critics have demanded that Mr Clarke, Mr Collier and even the 12-strong board should resign. Others called for the full details of the relationship between the ECB and Sir Allen to be made public. Yet tomorrow Mr Clarke is almost certain to be rubber-stamped as the ECB's chairman: he and Mr Collier deny acting improperly or imprudently.
It is worth remembering that, on the other side of the Atlantic, the residents of Mexia, who were once proud of Anna Nicole Smith, ended up being embarrassed by her antics. "Anna Nicole is not somebody we consider one of our own," said the Rev Marcus Sheffield, pastor of First Baptist Church.
Ms Smith had a sad death, apparently of an accidental drug overdose in a Florida hotel. If the accusations against Sir Allen stick, he may have an equally lonely death: behind bars and far away from the spotlight that Mexia's most famous son has always craved.
Additional reporting by Colin James in St John's.
THE FIRM
Stanford Financial was founded in 1932 by Sir Allen’s grandfather Lodis, a barber who spotted an opportunity in the insurance industry during the Great Depression. Allen Stanford joined the company in 1975, turning it from a Texas-only business into a multi-national. He later boasted that he could never be content as a “smalltown” businessman.
THE WHISTLEBLOWERS
Mark Tidwell and Charles Rawl, former employees who suspected that Sir Allen was falsifying the returns of about $8 billion in certificates of deposit.
THE VICTIMS
Investors in Sir Allen’s adopted home of Antigua queued to get money out of his bank after prime minister Baldwin Spencer warned of “catastrophic consequences”. Tens of thousands of other investors worldwide also face losing their money, mainly in Venezuela and Latin America.
THE FOOTBALLER
Newcastle United striker Michael Owen, who could lose out on hundreds of thousands of pounds after signing up as a global brand ambassador for Sir Allen’s companies last year. He is believed to have received about £500,000, having declared last year that: “Stanford is a company that has a solid track record in financial services and wealth management.”
THE CRICKETER
Shivnarine Chanderpaul. Among five West Indian cricketers who are part of the Stanford Superstars team, which beat England in Antigua last November. They are said to have invested their $1 million earnings back in Stanford’s firms.
THE CRICKETER’S WIFE
During October’s Twenty20 cricket tournament in Antigua, Emily Prior, wife of England wicketkeeper Matt Prior, is seen sitting on Sir Allen’s lap. He later apologises, but the incident highlights concerns about the England and Wales Cricket Board’s decision to sign a $20 million deal with him.
THE CO-ACCUSED
James M Davis, Stanford International Bank’s chief financial officer, and Laura Pendergest-Holt, chief investment officer of Stanford Financial Group. Both accused by US financial authorities of involvement in “massive, ongoing fraud”.
THE DRUG CONNECTION
Federal authorities have been investigating whether Stanford was inadvertently laundering money for a notorious Mexican drug-trafficking ring. In 1999, he voluntarily handed over to US officials more than $3 million in drug money which had found its way to his Antigua-based bank. It was believed to belong to the late Mexican drug baron Amado Carrillo Fuentes, who died in 1997. It is now claimed that Sir Allen’s life may be at risk from other drug gangsters, who fear he may turn informant.
THE KNIGHTHOOD
Three years ago, Sir Allen Stanford’s website announced that he had been made “Knight Commander of the Most Distinguished Order of the Nation” after becoming a citizen of Antigua, claiming that the knighthood came courtesy of Prince Edward. It has since turned out that the honour was actually bestowed by the Governor-General of Antigua and Barbuda.
THE AUDITOR
Charlesworth Hewlett, founder of C A S Hewlett, Antiguan auditors, which signed off Sir Allen’s empire as being in good financial health. Died last month, having run his business from offices in Antigua, his home in north London and two rooms above a nearby hair salon.
THE FATHER
James Stanford still lives in the modest house in Mexia that has been the Stanford home since 1924. He says his son is “not flamboyant”, but describes him as “a Boss Hogg-type guy.
THE GOLFER
Vijay Singh has a lucrative sponsorship deal with Stanford and wears shirts bearing a company logo.
"The philosophers have only interpreted the world, in various ways. The point, however, is to change it." Karl Marx
"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.
“I think it would be a good idea” Ghandi, when asked about Western Civilisation.
![[Image: STN-stanford_487240a.jpg]](http://www.timesonline.co.uk/multimedia/archive/00487/STN-stanford_487240a.jpg)
![[Image: NEStanford_1110302f.jpg]](http://www.telegraph.co.uk/telegraph/multimedia/archive/01110/NEStanford_1110302f.jpg)
Sir Allen Stanford Photo: PA ![[Image: 20092172081976580_5.gif]](http://english.aljazeera.net/mritems/Images//2009/2/17/20092172081976580_5.gif)
