DALLAS (CN) - Antigua and Barbuda and its banks were Allen Stanford's "partners in crime," aiding and abetting his $7 billion Ponzi scheme, victims of the imprisoned fraudster claim in court.
The Official Stanford Investors Committee sued Antigua and Barbuda in Federal Court for $230 million.
In a separate, similar federal complaint, the committee sued Antigua and Barbuda and eight Caribbean banks: the Bank of Antigua, the Eastern Caribbean Central Bank, the Antigua Commercial Bank, the St. Kitts-Nevis-Anguilla National Bank, the Eastern Caribbean Financial Holdings Co., the National Commercial Bank (SVG), the Eastern Caribbean Amalgamated Bank, and the National Bank of Dominica.
Unless otherwise noted, citations for this story are taken from the complaint against sole defendant Antigua and Barbuda.
"Stanford could not have conducted his fraud without the knowing, necessary, and pervasive assistance of Antigua and its government officials," the 42-page complaint states. "Stanford's influence and reach within Antigua was unprecedented and penetrated as far as the Prime Minister's office and to every aspect of Antigua's business and governmental communities."
The Investors Committee claims that Antigua helped Stanford because it needed his money to remain solvent. They say the impoverished country has a history of corruption that became worse in 1995 after its tourism industry collapsed due to a series of hurricanes.
Tourism has historically accounted for more than half of Antigua's gross domestic product.
"Antigua lacked creditworthiness, could not borrow funds from international monetary agencies or other lending institutions," the complaint states. "Thus, while assisting Stanford's criminal enterprise with one hand, Antigua took with the other hand tens of millions of dollars in 'loans' - fraudulent transfers under applicable law - from Stanford and the Houston-based entities he operated."
Stanford stole money from his investors and used it to pay former Antigua Prime Minister Lester Bird's medical bills and to bribe to the country's Tourism and Planning Ministers, according to the complaint.
"Stanford received land transfers with government assistance [in return], operated Antigua's airport, built the national library, sponsored the country's cricket tournament, and improperly 'loaned' the government tens of millions of dollars of the CD investors' money for innumerable commercial enterprises," the complaint states.
The Investors Committee claims that Leroy King, chief administrator and chief executive officer of Antigua's Financial Services Regulatory Commission, entered into a "blood oath" with Stanford on behalf of the government, "committing himself, his country, and the agency he controlled to shielding and protecting Stanford's fraudulent dealings."
King, however, is not named as an individual defendant.
The investors claim that Stanford paid regular bribes to King, entered into several "sweetheart" deals with the government, and that King conducted "sham audits" of the Stanford International Bank and the Bank of Antigua, both owned by Stanford.
"Perhaps most devastating to Stanford's CD investors, King obstructed several [U.S. Securities & Exchange Commission] investigations of SIBL, forwarding confidential SEC correspondence to Stanford, providing responses to SEC inquiries which were actually drafted by Stanford or his employees and professionals, and misleading the SEC concerning the nature and extent of the FSRC's oversight of SIBL," the complaint states. "King, although notably not charged with any crime in Antigua, has been indicted on numerous criminal charges in the United States and is awaiting extradition to face those charges in an American court of law."
Karyl Van Tassel, who was hired by court-appointed receiver Ralph Janvey to head the forensic accounting of the scheme, testified that the Antiguan government owed Stanford Financial Group $20 million in unpaid loans and the Bank of Antigua up to $70 million, the plaintiffs claim.
"Van Tassel, however, testified that she has seen evidence suggesting loans far in excess of $90 million, including documents showing that Antigua owed Stanford approximately $230 million and a letter discussing Stanford's forgiveness of the EC $300 million debt in return for developmental rights conferred to Stanford," the complaint states. "Van Tassel 'found no records showing that any of the loans to Antigua were paid off.'"
In the complaint against Antigua and the banks, the Investors Committee claims they were defrauded again the government and banks seized the Bank of Antigua's assets from Stanford in 2009.
"These assets were and remain subject to this Court's receivership and must be returned to the receivership estate,' the 26-page complaint states. "The seizure of the Bank of Antigua by the defendants also constituted an illegal attempt to retain the vast sums of money stolen from Stanford's investors and funneled to Antigua through the concerted and corrupt actions of Stanford and its partner, Antigua itself."
The Investors Committee claims that Antigua Prime Minister Baldwin Spencer admitted that the seizure of assets was a tactic to facilitate additional theft.
"We have to give ourselves a bargaining chip, so when the receivers come they have to deal with the government of Antigua and Barbuda," Spencer told the Antiguan House of Representatives in February 2009, after it approved the seizure of Stanford's real estate holdings on the island, according to the complaint.
Spencer is not named as an individual defendant.
The Investors Committee and court-appointed receiver Ralph Janvey already have sued several U.S. law firms and attorneys they accuse of helping Stanford avoid regulators.
Among them: Proskauer Rose, and Chadbourne & Parke and attorney Thomas V. Sjoblom, in February ; and Greenberg Traurig, and Hunton & Williams and attorney Yolanda Suarez, in November 2012 .
Stanford is serving 110 years for securities fraud.
The Investors Committee seeks actual and punitive damages for breach of contract, fraudulent transfer, aiding and abetting fraud, aiding and abetting a fraudulent scheme, aiding and abetting breaches of fiduciary duty, civil conspiracy, and aiding and abetting violations of the Texas Securities Act.
They are represented by Peter Morgenstern with Butzel Long in New York City.
Follow @davejourno
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