![Risk.net](https://www.risk.net/sites/default/files/styles/print_logo/public/2018-09/print-logo.png?itok=1TpHrpuP)
Stanford and Antigua regulator 'blood brothers' in fraud, claims CFO
Chief financial officer says Stanford sealed fraud conspiracy in 'brotherhood ceremony' with Antigua supervisor
HOUSTON, TX - Accused fraudster Allen Stanford's larger-than-life story has taken a turn for the surreal, with assertions he became 'blood brothers' with the chief Antiguan regulator, according to allegations made as part of a plea deal with Stanford's former chief financial officer, James Davis.
Davis's plea deal, filed on August 27, takes the Stanford trial from the sublime to the ridiculous, by accusing the Texan billionaire of making a "blood oath" with Leroy King, Antigua's chief banking supervisor, in 2003, to hide a $7 billion fraud at the Stanford Financial Group.
Davis has entered a guilty plea to fraud and conspiracy charges made by a Federal District Court in Houston, alleging Stanford ordered him to report false revenue and false investment portfolio statements to banking supervisors as far back as 1988, when Stanford ran an offshore bank on the Caribbean island of Montserrat.
"I did wrong. I'm sorry. I apologise. And I take responsibility for my actions," said Davis in a post-hearing statement.
Stanford, who was knighted by Antigua and Barbuda in 2006 as the leading employer within the Caribbean island economy, is alleged to have bribed King through payments to a Swiss bank account, as well as gifting him Super Bowl sports tickets.
In return, King - who Davis says referred to Stanford as "Big Brother" - is alleged to have colluded in a fraud conspiracy to hide a multibillion-dollar international Ponzi scheme from US and other regulators.
Reports first surfaced in February that US authorities, including the FBI, the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (Finra) and Florida state supervisors, were investigating Stanford's financial network for fraud.
Davis's plea alleges Stanford and he attempted to cover up evidence of fraud throughout the middle of 2008 by inflating the value of assets through a bogus Antiguan real estate deal that would convert a $65 million transaction into a fictitious $3.2 billion asset.
Stanford and Davis are accused of defrauding 30,000 investors out of $7 billion, filing false disclosures to investors and regulators, in addition to diverting more than $1.6 billion into undisclosed personal loans to Stanford, and conspiring to obstruct an SEC investigation.
The FBI served Stanford with an SEC civil compliant on February 19, but he was not arrested until June 18, after US authorities, still suffering media strife from the Madoff scandal, had been forced to admit they did not know Stanford's location.
Stanford, who has vociferously denied any wrong-doing in the case, was also due to appear in court on August 26, but a soaring pulse rate caused him to be hospitalised earlier that morning, with his lawyers subsequently saying he must either undergo angioplasty or have a heart catheter fitted.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Banks fret over vendor contracts as Dora deadline looms
Thousands of vendor contracts will need repapering to comply with EU’s new digital resilience rules
EU banks lose relief on model test after FRTB delay
Deferment of new trading book regime to January 2025 eats into transition period for “erratic” P&L attribution test
Sunday night football and the Basel III endgame
Big banks, political advocates and housing organisations are unlikely allies in race to dropkick new capital regime
Futures exchanges seek clarity on China licensing regime
Hazy details on landmark Futures and Derivatives Law breeds legal uncertainty, unnerving operators
Some EU banks wanted option to start FRTB on time
Representatives of member states raised possibility with European Commission at July meeting discussing the delay
For US Treasury troubles, treat the cause not the symptom
Regulatory alarm about hidden risk in the Treasury futures market misses the point, fund association execs write
Iosco delays pre-hedging consultation to November
Review into controversial practice splits industry
Honey, I shrunk the Fed. (Not a sci-fi fantasy)
Promoting the discount window may be the Fed’s key to shrinking its $7trn balance sheet, says Bill Nelson