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Alleged Ponzi master Stanford set for trial

After three years in custody, Allen Stanford will face trial for allegedly pulling off a $7-billion (U.S.) Ponzi scheme that U.S. prosecutors say dates back to 1990 and saw him use investors’ cash to buy mansions, a 112-foot yacht, private jets and entire Caribbean islands.

Steve Campbell/Reuters/Steve Campbell/Reuters

Robert Allen Stanford was a cricket-loving Texas billionaire whose wealth made him a well-known figure in his investment bank's home base of Antigua and Barbuda. With homes in the U.S. Virgin Islands and Miami, he mingled with the rich and famous, and gave millions to the presidential campaigns of Barack Obama, John McCain and other U.S. politicians.

But this week, after three years in jail, he will face trial for allegedly pulling off a $7-billion (U.S.) Ponzi scheme that U.S. prosecutors say dates back to 1990 and saw him use investors' cash to buy mansions, a 112-foot yacht, private jets and entire Caribbean islands.

Last month, lawyers for the 61-year-old Mr. Stanford made last-ditch pleas for a delay, saying health problems and memory loss suffered after an assault in prison made him unfit to stand trial. A judge disagreed, and jury selection is set for Monday.

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Even as Mr. Stanford, known as Sir Allen Stanford after being knighted in Antigua, sees his fate decided in a Houston courtroom, his criminal trial is just part of a legal battle around him that makes the rules of his beloved cricket look simple.

Mr. Stanford's 20,000 investors in the U.S., Canada, Europe and elsewhere have yet to see a penny of money returned. But the court-appointed U.S. receiver for Stanford International Bank has spent more than $100-million on investigations, legal fees, wind-down costs and other expenses, according to Bloomberg Businessweek.

Listed along with various Swiss accounts in Mr. Stanford's U.S. indictment are eight accounts with the Toronto-Dominion Bank, containing $20-million in frozen assets in Canada. Burned investors here, including a Calgary furniture maker, Dynasty Furniture Manufacturing Ltd., have sued Mr. Stanford, his entities and associates, as well as TD, over that money.

Plus, the U.S. Securities and Exchange Commission, which shut down Mr. Stanford's companies in 2009, is about to go to court with the agency that insures U.S. brokerage accounts, the non-profit Securities Investor Protection Corp., to try to force it to cover some of the losses suffered by Stanford investors.

The SEC has been stung by criticism that, as in the landmark $50-billion Bernie Madoff case, it ignored whistleblowers who warned about Mr. Stanford.

Mr. Stanford's trial could shed new light on the fascinating details released in court documents about his empire.

He allegedly bribed an Antiguan financial regulator with Super Bowl tickets. In early 2009, as the global financial meltdown and an SEC investigation put his bank on the brink, Mr. Stanford jetted off to Tripoli in a failed attempt to convince the Gadhafi regime's sovereign-wealth fund – which had invested millions with him – to invest some more.

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More recently, his yacht, the mahogany-panelled Sea Eagle, was auctioned off for $3.25-million.

Whatever happens at his trial, Mr. Stanford is unlikely to be sponsoring international cricket matches any time soon, as he did back in 2008. That year, before his empire collapsed, he set up a high-profile international series featuring England and West Indies stars at a stadium that bears his name in Antigua. But the event was marred by controversy when he was forced to apologize for being too friendly with some English players' wives.

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About the Author
Toronto City Hall Reporter

Jeff Gray is The Globe and Mail’s Toronto City Hall reporter. He has worked at The Globe since 1998. From 2010 to 2016, he was the law reporter in Report on Business, covering Bay Street law firms and white-collar crime. He won an honourable mention at the National Magazine Awards for investigative journalism in 2010. More

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