By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
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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. In addition to the downtown Miami location, the company operated South Florida offices in Boca Raton, Bonita Springs, Fort Lauderdale, Vero Beach and Longboat Key and employed more than 500 people. Forbes estimated Allen Stanford's personal worth at $2 billion, and he purchased an airline, a newspaper 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?"
Charles Hazlett, a top Miami investment broker, aired his fears about the company in 2003.
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."
In January 2003, one year after he started as an investment broker at Stanford Group Company, Charles Hazlett packed a cardboard box inside his apartment-size office. He had just quit, after yet again demanding a meeting with top officials to talk about how the CDs performed so well.
Hazlett's customer in Curaçao had pulled out his $5 million investment one month earlier, but Hazlett stuck around longer, hoping his bizarre run-in with Laura Pendergest-Holt and the frightening, religion-tinged dressing-down from James Davis somehow had been an aberration.
Now he believed the worst. He had no proof of what exactly Sir Allen was up to in his Caribbean hideout, but Hazlett wanted no part of it. He called his lawyer.
"I want to take these guys to court," Hazlett said.
A few weeks later, the broker and his former company met in a Boca Raton arbitration court run by what is now called the Financial Industry Regulatory Authority, an industry group sanctioned by the SEC. Hazlett spelled out his experience: Brokers were heavily pressured to sell offshore CDs and were stonewalled when they tried to find out where the CDs were being invested.
Repeated calls to the SEC's press office seeking comment for this story were not returned.
"I thought, 'At least I put my story out there and someone on the regulatory side is going to realize these are bad guys,'" Hazlett recalls today. "Because I know I'm not the only one that had this experience."
Hazlett lost his case and never again heard from the SEC, even though he was right — he wasn't the only Stanford employee complaining to regulators.
In fact, even as Stanford's business holdings and personal wealth grew exponentially, his brushes with legal and regulatory authorities were frequent, and the warning signs that something was amiss were many.
In 1999, a DEA investigation found that members of the vicious Juárez Cartel in Mexico had deposited more than $3 million in Stanford's bank to launder drug money. Stanford quickly surrendered the cartel's money to the DEA and earned praise from the agency for his quick action. But later that year, federal regulators placed Antigua on a blacklist of nations suspected of money laundering and fraud.
That same year, the Clinton administration introduced a bill to crack down on overseas banks favored by gambling rings, drug militias and terrorists. Two months later, according to a study by consumer advocacy group Public Citizen, Stanford hired a powerhouse lobbying group to fight the bill and began donating to both major parties. He handed out $208,000 to Republican campaign committees and $145,000 to Democrats that year. Among his biggest recipients were powerful Texas lawmakers, including House Democratic Caucus Chair Martin Frost. The bill, despite passing a House committee 31-1 with strong Treasury Department backing, was allowed to die in a Senate committee.
In 2002, as Congress took up a bill called the Financial Services Antifraud Network Act, which would have strengthened U.S. regulators, Stanford upped his lobbying. That year, according to the Center for Responsive Politics — a nonprofit group that monitors campaign money — Stanford's company gave $800,000 to the Democratic Senatorial Campaign Committee — the vice chairman of which was Florida's Senator Bill Nelson. The senator received more of Stanford's cash than any other member of Congress, according to one study, with $45,900 donated to his campaign. Stanford, in fact, hosted a fund-raising event for Nelson in Florida. The anti-money-laundering bill died in a Senate committee.
Nelson has given all of Stanford's donations to charity, and there's no clear link between his actions as DSCC vice-chairman or senator and what appear to be Stanford's efforts to kill the bill. The Florida Democrat was a junior senator in his first term when the bill was taken up, and his staff disputes the notion he wielded enough power to influence the legislation. The same provisions later found their way into the Patriot Act, and Nelson voted for them there, says Nelson spokesman Dan McLaughlin.