Depositors who have had dealings with Stanford Financial want fast cash in advance of the legal proceedings Allen Stanford will face. He has been charged with fraud because of $8 billion in notes he sold. Two other executives are accused as well.

Storming the banks

Hundreds of people lined up in Antigua and Caracas  to take their money out of affiliated with the Texas billionaire after they heard news of the fraud charges. Stanford Financial’s headquarters are in Houston, Texas, but the financial group has banks all over the world.

The U.S. Securities and Exchange Commission has accused Stanford of operating a fraud centered on the sale of certificates of deposit from his Antiguan affiliate, Stanford International Bank Ltd., according to Reuters.

Following the revelations of the charges, Stanford’s customers were set on getting their cash fast and in advance of any trial.

Financier disappears

It seems Stanford customers are getting their cash in advance of federal agents getting Allen Stanford. At the moment, Allen Stanford’s whereabouts are unknown. He tried to hire a private jet to fly out of Houston to Antigua, but the lessor would not accept his credit card.

Far-reaching impact

Houston-based Stanford Financial is the biggest private employer in the twin-island state of Antigua and Barbuda. Prime Minister Baldwin Spencer admitted the charges against Stanford could have “catastrophic” consequences, but he urged everyone to not panic.

The Eastern Caribbean Central Bank posted a statement at Bank of Antigua saying the bank had sufficient reserves.”If individuals persist in rushing to the bank in a panic, they will precipitate the very situation that we are all trying to avoid,” the statement said.

Details of impeding charges

In a civil complaint, the SEC said SIB sold $8 billion in “by promising high return rates that exceed those available through true certificates of deposits offered by traditional banks.”

It makes sense that the customers of a potential scam artist would want to pull their cash fast, in advance of any criminal charges.

Sir Allen Stanford

No Payday Loan for Texas magnate and cricket promoter Allen Stanford. He used the Bernie Madoff system and ripped off the very respectable amount of $9.2 billion.

Allen Stanford

The Securities and Exchange Commission says that Stanford is facing civil fraud charges for “promising improbable and unsubstantiated high interest rates.” Stanford has had his assets frozen.

Multi-billion dollar fraud

Stanford and three of his companies have been charged with “orchestrating a fraudulent, multi-billion dollar investment scheme centering on an eight billion CD program”.

No ordinary man

Look at Stanford’s companies:

• The Antiguan-based Stanford International Bank (SIB), Houston, Texas-based broker-dealer
• Investment adviser Stanford Group Company (SGC),
• Investment adviser Stanford Capital Management.

And that’s not all

There is also a SEC complaint about an additional scheme relating to $1.2 billion in sales by SGC advisers of a mutual fund program, called Stanford Allocation Strategy (SAS), by using “materially false” data.

The chief financial officer and the chief investment officer of Stanford Financial Group are also being investigated.

The charges

The director of the SEC’s enforcement division says that Stanford and his circle of family and friends with whom he runs his businesses, perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors.

An SEC regional director said, “We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world.”

We are not talking about allegations against Payday Loans here – this seems to be real fraud and is going to put Stanford behind bars for years.

This isn’t cricket

Cricket

Cricket is a game that began in England centuries ago and is considered the game of gentlemen. Arguments rage to this very day among aficionados of the game as to whether a player should voluntarily declare himself out or wait for the umpire to make the decision. Cricket is the epitome of honesty and good sportsmanship.

And Allen Stanford is one of the world’s major cricket supporters and benefactors, if not the greatest in the world. The charges against him are going to have devastating effects around the cricket playing world. Already the England and Wales Cricket Board has suspended its talks with him.

Up to his neck in it

Stanford is up to his neck in cricket. A West Indies domestic tournament bears the name of Stanford. He was the man behind the Stanford Super Series which ended with his team of Caribbean Superstars defeating England in a match which netted the winning side a million dollars each. Stanford had put up $20 million in prize money for that match.

Who is Stanford?

Sir Robert Allen Stanford, born in 1950, is a fifth-generation Texan who resides in St. Croix, U.S. Virgin Islands. He holds dual U.S. and Antigua and Barbuda citizenship. He was the first American to be knighted by Antigua and Barbuda. Stanford began his business career in Houston making his first fortune in real estate in the early 1980s.

Stanford Financial Group is the sponsor for such sporting events as the Stanford U.S. Open Polo Championship, the Stanford Antigua Sailing Week, the PGA TOUR Stanford St. Jude Championship, and the Stanford International Pro-Am.

Stanford sponsors professional golfers Vijay Singh, Camilo Villegas, David Toms, and Henrik Stenson as well as Morgan Pressel on the LPGA Tour.

Where to now?

I wonder where Stanford will decide to spend his years in jail – U.S. or the West Indies. I wonder if he will have a choice. Does he take his 2.2 billion dollar fortune in there with him?

About his application for a Payday Loan – Declined!

Allen Stanford

Billionaire Allen Stanford could find himself needing payday loans if his fortune is wiped away with the new revelation that Stanford is being charged with fraud.

The U.S. Securities and Exchange Commission says Stanford Financial Group fraudulently sold $8 billion in high-yield certificates of deposit. Stanford and two other top executives are being charged with fraud.

Ordered to the court

In the lawsuit the commission alleges that Stanford’s scheme stretched throughout the globe. Three of Stanford Financial Group’s companies are involved in the suit. There has been news recently of payday loans companies being involved in lawsuits recently, but they were nothing close to this magnitude.

The SEC was seeking to freeze the assets of the Stanford group and appoint a receiver “to take possession and control of defendants’ assets for the protection of defendants’ victims,” according to Reuters.

Whisked away

Fifteen federal agents descended on the company headquarters in Houston, Texas, to cart Stanford away. For the time being, financial operations are continuing at Stanford’s companies. However, a note on the door at the Houston headquarters said Standford Financial was “under the management of a receiver.”

Year of the scam

Stanford Financial claims to oversee $50 billion in funds.

Last year was filled with scams of all types. From Bernard Madoff’s $50 billion Ponzi scheme to individuals setting up fraudulent “work from home” companies, 2008 appeared to be the year of the scam. Now, only a few weeks in to 2009, it appears maybe the trend will continue. Many con artists have used the recession, mortgage crisis and credit crunch to prey on people. It is important to stay financially educated to avoid these scammers.

Personal Money Store’s Money Blog can help you in your quest for financial education with articles about payday loans, scams and other general financial news.