HOUSTON, Texas, CMC – An Antiguan regulator who scrutinized disgraced Texas tycoon R. Allen Stanford’s bank in the months preceding its collapse said on Thursday he was in disbelief about the profits it claimed.
“It defied my imagination that the bank could make a billion dollar profit,” Paul Ashe of Antigua’s Financial Services Regulatory Commission told jurors in Stanford’s criminal trial in US federal district court here, alluding to profits Stanford’s Antigua-based Stanford International Bank (SIB) claimed in light of the 2008 international financial crisis.
Ashe also said there was panic among tens of thousands of depositors after the US financial services regulator, the Securities and Exchange Commission (SEC), froze Stanford’s assets, in February 2009, over the alleged “massive US$7 billion Ponzi scheme involving high-yield certificates of deposit at the SIB.
“It was total chaos,” he testified. “The customers were screaming for their money.”
Ashe said he and a team of regulators were surprised by the lack of documentation to support Stanford’s reported finances at the SIB.
He also said the team was deeply concerned about loans that Stanford received from the SIB, which, he claimed, were not supported by cash reserves necessary under Antigua laws.
“We wanted to see how Stanford International Bank was actually making its money,” Ashe said.
US prosecutors have charged that Stanford used depositors’ money to operate his businesses, pay for his lavish lifestyle, and bribe regulators and auditors.
They also charged that Stanford lied to depositors by telling them their money was being safely invested.
Stanford has repeatedly denied any wrongdoing. He has been charged with 14 counts, including mail and wire fraud, in the criminal case. He faces up to 20 years in prison if convicted.
Stanford’s former finance chief, James Davis, has pleaded guilty to three felony counts and testified, for five days on the stand, as a government witness against his ex-boss.
Davis claimed that Stanford was the architect and mastermind behind the alleged “massive” Ponzi scheme.
He also told the court that Stanford was the chief beneficiary of the alleged scheme.
In a separate indictment, to be tried later, former head of the Antigua Financial Services Regulatory Commission, Leroy King, is also charged in the alleged ponzi scheme, along with three Stanford financial officials.
Prosecutors allege that King alerted SIB officials when the SEC began making inquiries in 2005, and that Stanford’s general counsel drafted King’s response stating that the bank was in compliance with regulations.
Witnesses have testified that, besides cash payments, King received tickets to the 2004 and 2006 Super Bowls of the American National Football League.
Ashe, who served with King for part of King’s tenure, said he was unaware of those payments, adding that Antigua laws prohibit regulators from accepting gifts worth more than $50.
