By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
Stanford International Bank operated outside of direct U.S. scrutiny. The bank's certificates of deposit—which are similar to savings accounts, except that they are held for a preset period of time with a fixed interest—consistently returned more than most American deposits, with funds in the mid-'90s routinely bringing 15 percent interest.
Meanwhile, Stanford's Houston-based firm, Stanford Group Company, was a traditional Securities and Exchange Commission-regulated broker. It managed portfolios, traded stock and, quite prominently, sold CDs in Stanford's Antiguan bank to American investors.
About six years after moving his offshore bank to Antigua, Florida state records show, Allen Stanford brought his company to South Florida and made Miami the de facto heart of his new empire—midway between his Houston investment headquarters and the Antigua bank, and close to the wealthy Latin Americans to whom he catered. By the end of the '90s, his formula—pushing CDs in his offshore bank to U.S. and Latin American investors through his Houston- and Miami-based brokerages—was making the Texan a mint. And as Stanford grew richer in his island fiefdom, his eccentricities flowered like a tropical orchid.
He soon obtained Antiguan citizenship, persuaded the former British colony to bestow an honorary knighthood upon him, and then demanded he be addressed everywhere as "Sir Allen." He became an avid cricket fan and brought the sport to Antigua by sponsoring a lavish international tournament with an unheard-of $20 million prize for the winning team. It was during this time that the 6-foot-4-inch Texan began talking with a slight British accent. He told reporters—falsely, it turned out—he could trace his lineage back to the founder of Stanford University.
In October 2003, he found a suitable home to mirror this new image, paying $10.5 million for a massive, 57-bedroom mansion on the Coral Gables, Florida, waterfront built by the Wackenhut family, which owned a nationwide private security firm. He rechristened the estate—which was outfitted with turrets, grottoes, a pub and a throne-like toilet—Tyecliffe Castle.
Though he'd been married since 1974 to a Texas dental hygienist named Susan, Stanford began keeping mistresses around the Caribbean and Florida. According to court documents, he fathered six children with four women and paid around $200,000 a month in child support. One mistress, Louise Sage, lived in the Coral Gables manor with two of Stanford's children.
In the late '90s and '00s, the Stanford Group became a prominent player in South Florida sports and charities. Stanford, of course, didn't forget his home state—the company donated a $30,000 piece of medical equipment to the Texas Scottish Rite Hospital for Children in Dallas and also sponsored the Houston Polo Club's Open Invitational in 2005.
By 2007, just 16 years after opening as a small bank on a tiny island, Stanford's enterprises seemed to have amassed a spectacular amount of wealth. The bank in Antigua counted 30,000 customers in 131 countries with more than $8 billion in investments. The Houston-based brokerage managed 35,000 accounts worth more than $50 billion. Forbes estimated Allen Stanford's personal worth at $2 billion, and he purchased an airline and a number of restaurants in Antigua.
Court filings spell out the Miami lifestyle that came with all the wealth: $75,000 Christmas gifts for his children by Louise Sage, regularly chartered $100,000 yachts, a $100 million fleet of personal jets, $25,000 monthly payments on his mansion.
In his more public dealings, Stanford's thin veneer of supposed old-money aristocracy always seemed moments away from cracking. During a now-infamous exchange on live television in late 2008, a sycophantic CNBC reporter asked him: "So, is it fun being a billionaire?"
Sir Allen shifted uncomfortably in his seat, chuckled awkwardly and cleared his throat. "Hmm, uh, yes," he said, eyes darting. "Yes, I'd have to say it is fun."
When investment broker Charles Hazlett went to work for the Stanford Group Company in Miami in 2002, the firm was unlike any other place he had ever worked. Hazlett had more than 15 years' experience managing portfolios for investors in Latin America and the Caribbean when he jumped ship from Prudential Securities to the Stanford Group Company, an up-and-coming firm in downtown Miami, lured by up to $400,000 in bonuses, a $180,000 salary and a plush waterfront office.
At weekly staff meetings, there was more talk about offshore banking deposits than the fluctuations of the stock market. In fact, at Stanford Group, hardly anyone talked about Wall Street.
There were bizarre rituals, such as the heraldic gold eagle that the company plastered on nearly every surface (the doors, the elevators, even the toilet seats) and sent employees home for forgetting to wear on their lapel.
And Hazlett couldn't figure out what was going on with those certificates of deposit in the company's offshore bank—the managers were relentless about those CDs, asking how many had he sold that week. Nothing else seemed to matter.
As Hazlett discovered in his nine months at Stanford, these were all reflections of the firm's quirky founder. In Antigua, where he had been knighted, Stanford attained an almost godlike status. He owned a daily newspaper and the Bank of Antigua, and he sat on the board regulating the island's banks—a board he also helped to create.