Allen Stanford Ponzi Scheme

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Stanford Bank's Clients in Latin America Seek Funds (Update2)

By Matthew Walter and Daniel Cancel
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aR5mOfZofx7c#

Feb. 17 (Bloomberg) -- Stanford International Bank Ltd's affiliates in Venezuela, Panama and Ecuador were packed with clients trying to close accounts after the firm was accused of fraud in the U.S.

"Me and my family have started filling out forms for them to take our money out and close our accounts," said Carlos Araujo, 43, a financial adviser in Caracas. Araujo said he invested $80,000 of savings, mostly in certificates of deposit. "I've always thought this was a stable place," he said.

The U.S. Securities and Exchange Commission today accused R. Allen Stanford of running a "massive, ongoing fraud" through his Houston-based Stanford Group. Co., while selling $8 billion in certificates issued by an affiliated bank in Antigua. Stanford has offices in Venezuela, Mexico, Ecuador, Peru, Panama and Colombia.

Stanford Group Venezuela Asesores de Inversión, C.A. is listed as an affiliate of Stanford International Bank on its Web site. The Venezuelan affiliate has offices in five cities in the South American country.

More than 100 clients crowded around the marble front desk at one of Stanford's Caracas offices. They were served coffee, tea and water as they filled out wire transfer forms.

Standards Compliance

Stanford Bank Venezuela SA, a separate commercial bank affiliated with Stanford Financial Group. Co., has enough liquidity to comply with local and international standards, it said in an e-mailed statement today. The Venezuelan accounts aren't consolidated with those of other affiliates of the Antigua-based bank, the company said.

Araujo said he earned a return of between 5 percent and 6 percent on deposits made at the bank during the past five years.

"The explanation they gave us was that they had a low number of employees, and, secondly, free taxes because they were in Antigua," Araujo said, referring to the high rate of return. "I really trusted the organization. It was very personal service."

At the Stanford Group Casa de Valores in Quito, Ecuador, clients mingled in the lobby seeking information.

"We have no information yet, and things are operating normally so far," said Dayana Hernandez, the manager at the Quito brokerage.

At Stanford's Panama unit, customers who wanted to withdraw money were turned away because the branch was already closed.

Operating Normally

Stanford Bank of Panama S.A. had $41.8 million of capital as of January 2009, according to the country's banking authority. The Panamanian government doesn't insure deposits.

Calls to Panama's Stanford Bank president Ramon Martinez for comment weren't immediately returned and government officials couldn't be reached for comment.

Stock transactions by Stanford Financial Group's Colombian brokerage unit operated normally today, the Bogota securities exchange said. The exchange is unaware of any problems involving Stanford's Bolsa y Banca unit, an exchange spokesman said by telephone from Bogota today.

A unit of Stanford acquired Bolsa y Banca two years ago when the firm employed 137 people in Bogota and Medellin, according to Stanford's Web site.

There was nobody at Colombia's financial regulatory agency available for comment. Phone calls to Bolsa y Banca's main switchboard weren't answered. Stanford's chief of staff and head of Latin America, Yolanda Suarez, didn't respond to an e-mailed request for comment.

Stanford's unit in Mexico is only authorized to sell funds that operate in Mexico, the National Banking and Securities Commission said today in an e-mailed statement. The commission didn't say whether it's investigating Stanford.

To contact the reporter on this story: Matthew Walter in Caracas at [e-mail]; Daniel Cancel in Caracas at [e-mail].
Last Updated: February 17, 2009 23:31 EST

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