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Stanford Accused Of Using Investor Money On Island Resort To Lure The Rich

A prosecutor introduced a$330 million promissory note sealed by R. Allen Stanford asevidence at his crook hearing that the banker secretlyborrowed allowance from his bank to erect a intemperate “Stanford Worldin Antigua” and captivate abounding new clients.

“Rich people do not obtain tender really easily,” Stanfordsaid in an undated video shave shown to his jury yesterday inHouston sovereign court. “They have to return literally blownaway, adage ‘I have a certainty and a trust that we will dobusiness in that segment of the world.’”

Stanford, videotaped whilst vocalization to a finding inAntigua, mentioned his objective in office building the in isolation transport hangar,restaurants, cricket drift and promissory note services on 20 acressurrounding Stanford International Bank Ltd. was to remonstrate the”richest people in the world” it was protected to deposit there.

Stanford, 61, was charged in June 2009 on charges he led a$7 billion investment rascal formed on certificates of depositissued by the Antiguan bank. He’s accused of 14 counts includingmail fraud, handle rascal and barrier of a investigate by the U.S.Securities and Exchange Commission. He denies the allegations.If convicted on the many major charges, he could be imprisonedfor 20 years.

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Assistant U.S. Attorney Gregg Costa asked governmentwitness Arnold Knoche, a one-time boss of StanfordDevelopment Corp., if he knew where the allowance came from for”Stanford World in Antigua.”

“He told me he had his personal resources, that he’d takecare of it,” Knoche testified in the second week of trial. “Ialways wondered where the allowance was forthcoming from since it was ahuge amount.”

Knoche testified that Stanford never mentioned he useddepositors’ supports on real estate developments in the Caribbeanor elsewhere. He moreover mentioned he never suspected unlawful activityduring his 16 years with Stanford’s organization. Knoche mentioned heresigned in 2003 since he was sleepy of the regular travel.

Costa showed Knoche a duplicate of a Stanford International Bankpromissory note for $330 million sealed by Stanford personallyin December 2003. Knoche mentioned he wasn’t wakeful Stanford hadborrowed any allowance from his bank, and mentioned he would have beenconcerned if he had known.

“The depositors at the bank were told there were not loansbeing made,” he said. Knoche mentioned promotional materials for thebank’s CDs mentioned the supports were placed in conservative, liquidinvestments and that the bank “has never done and will nevermake loans.”

After reviewing Stanford International Bank’s annualreports for 2002 and 2003 on the declare stand, Knoche concludedthat Stanford’s promissory note wasn’t disclosed to depositors.

Prosecutors say Stanford skimmed more than $1 billionof depositor allowance for personal use, inclusive appropriation theCaribbean real estate ventures, a few informal airlines, aprivate navy of airplanes and yachts, and a collection ofunrelated in isolation equity investments.

The crook box is U.S. v. Stanford, 09-cr-342, U.S.District Court, Southern District of Texas (Houston). The SECcase is Securities and Exchange Commission v. StanfordInternational Bank, 09-cv-298, U.S. District Court, NorthernDistrict of Texas ( Dallas ).

To meeting the contributor on this story:Laurel Brubaker Calkins in Houstonat laurel@calkins.us.com .

To meeting the editor accountable for this story:Michael Hytha in San Francisco at mhytha@bloomberg.net .