Home » Robert Allen Stanford: Magnate, Philanthropist and Con Man

Robert Allen Stanford: Magnate, Philanthropist and Con Man

the-greatest-scams - Robert Allen Stanford: Magnate, Philanthropist and Con Man

Year made public: 2009

Estimated Losses: $8 billion

Robert Allen Stanford is the sole owner and the head of Stanford Financial Group, which turned out to be a colossal Ponzi scheme. As in the case with Madoff Investment Securities, the cause of its collapse was the financial crisis of 2008 and the impossibility to continue the payment to the old depositors at the expense of attracting new ones.

the-greatest-scams - Robert Allen Stanford: Magnate, Philanthropist and Con Man

Robert Allen Stanford was born March 24, 1950 in Mexia, Texas. His father and grandfather, Lodis Stanford and James Stanford, led insurance company, launched by James Stanford during the Great Depression. In 1993, James Stanford retired, remained honorary the Chairman of the Board of Directors of Stanford Financial Group (SFG). Purchased of father’s share, Allen became the sole owner of Stanford Financial Group.

Stanford’s banking business in Antigua and Barbuda attracted investors, as company’s investments brought two percent more than the US Treasury bonds. In 2008, Stanford’s financial empire controlled assets worth more than $ 50 billion.

the-greatest-scams - Robert Allen Stanford: Magnate, Philanthropist and Con Man

After the SEC made an audit of SFG in early February 2009 it accused the company of creating a fraudulent investment scheme: Stanford and his associates sold certificates of deposit and other investment tools to customers promising high returns more than 10 percent per annum.

Contrary to the statements of Stanford himself, they had not been licensed by the US Federal Deposit Insurance Corporation (FDIC). The total amount of damages of the company’s customers made up approximately $ 8 billion. Besides, mass media disclosed the information that Stanford was accused of creating a financial pyramid: the dividends to the previous investors were paid from new investors’ funds.

After the scandal broke Stanford tried to leave the United States on a private jet, but the airline company refused to accept his credit card. As a result, Stanford was forced to give his passport to authorities. The warrant for his arrest was issued only on June 18, 2009, soon Stanford appeared before the court, which brought charges against him, the maximum penalty for which could reach 250 years. However, the Federal Court of Houston (TX) reduced the sentence twice as much. In June 2012, Stanford was sentenced to 110 years in prison, giving way to his “colleague” Madoff by the amount of the fraud, and the term duration.

Ponzi Scheme is an investment scheme that provides incomes of earlier investors on account of the funds received from later investors. At first, it may seem perfectly legitimate, but Ponzi scheme is usually destroyed as soon as the flow of funds from new investors is no longer sufficient to make payments to the old ones. The scheme is named after Charles Ponzi, who is notorious for using this affair in early 1920. Ponzi is not the author of the idea, but he was the first con artist in the United States who managed to get a huge amount of investment.

Have your say!

0 0

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Lost Password

Please enter your username or email address. You will receive a link to create a new password via email.

Sign Up