The Stanford Financial Group was a privately held international group of

financial services Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companie ...

companies controlled by

Allen Stanford Robert Allen Stanford (born March 24, 1950) is an American financial fraudster, former financier, and sponsor of professional sports. He is serving a 110-year federal prison sentence, having been convicted in 2012 of fraud, on charges that his i ...

, until it was seized by

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal district, five ma ...

(U.S.) authorities in early 2009. Headquartered at 5050 Westheimer in

Uptown Houston Uptown (more commonly called The Galleria Area) is a business district in Houston, located west of Downtown Houston, Downtown and is centered along Post Oak Boulevard and Westheimer Road (Farm to Market Road 1093). The Uptown District is ro ...

Texas Texas (, ; Spanish language, Spanish: ''Texas'', ''Tejas'') is a state in the South Central United States, South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2 ...

, it had 50 offices in several countries, mainly in the Americas, included the Stanford International Bank, and was said to have managed US$8.5 billion of assets for more than 30,000 clients in 136 countries on six continents. On February 17, 2009, U.S. Federal agents placed the company into

receivership In law, receivership is a situation in which an institution or enterprise is held by a receiver—a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights"—especially in c ...

due to charges of fraud. Ten days later, the U.S. Securities and Exchange Commission amended its complaint to accuse Stanford of turning the company into a "massive

Ponzi scheme A Ponzi scheme (, ) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are comi ...

History

Allen Stanford traced his company to the insurance company founded in 1932 in

Mexia, Texas Mexia ( ) is a city in Limestone County, Texas, United States. The population was 6,893 at the 2020 census. The city's motto, based on the fact that outsiders tend to mispronounce the name , is "A great place to live, no matter how you pronou ...

, by his grandfather, Lodis B. Stanford. However, there was no direct connection between the insurance company and Allen Stanford's banking business, which he started on the British Overseas Territory of Montserrat in the

West Indies The West Indies is a subregion of North America, surrounded by the North Atlantic Ocean and the Caribbean Sea that includes 13 independent island countries and 18 dependencies and other territories in three major archipelagos: the Great ...

in the 1980s. Allen Stanford's move into banking utilised funds he had made in real estate in Houston in the early 1980s. In 2008, Stanford Financial Group announced it would open a new global management complex in

St. Croix, U.S. Virgin Islands Saint Croix; nl, Sint-Kruis; french: link=no, Sainte-Croix; Danish and no, Sankt Croix, Taino: ''Ay Ay'' ( ) is an island in the Caribbean Sea, and a county and constituent district of the United States Virgin Islands (USVI), an unincorpo ...

, to include the base for the corporate support functions such as business technology, compliance, finance, human resources, investment strategy and legal, as well as the chairman's office. Completion was planned for July 2009 but did not occur due to the company's dissolution. GalleriaTowerIIHoustonTX

The company was bound by a web of personal and family ties. Stanford's chief financial officer and second-in-command,

James M. Davis James M. Davis (born 1948) is the former chief financial officer of Stanford Financial Group. On 27 August 2009 he pleaded guilty to charges of fraud and obstruction of Justice in relation to a $7 billion investment fraud Ponzi scheme allegedly run ...

, was his roommate at

Baylor University Baylor University is a private Baptist Christian research university in Waco, Texas. Baylor was chartered in 1845 by the last Congress of the Republic of Texas. Baylor is the oldest continuously operating university in Texas and one of the ...

. The

chief investment officer The chief investment officer (CIO) is a job title for the board level head of investments within an organization. The CIO's purpose is to understand, manage, and monitor their organization's portfolio of assets, devise strategies for growth, act as ...

Laura Pendergest-Holt Laura Pendergest-Holt (born July 23, 1973) is a convicted Ponzi scheme perpetrator, financier, and former chief investment officer of Stanford Financial Group, who was charged with a civil charge of fraud on February 17, 2009. On May 12, 2009, Pen ...

, grew up attending a church in Baldwyn, Mississippi, where Davis was a

Sunday school A Sunday school is an educational institution, usually (but not always) Christian in character. Other religions including Buddhism, Islam, and Judaism have also organised Sunday schools in their temples and mosques, particularly in the West. S ...

teacher. Many top officials were related to each other. This led former employees to claim the company was fraught with nepotism; former executive Charles Satterfield told

Bloomberg News Bloomberg News (originally Bloomberg Business News) is an international news agency headquartered in New York City and a division of Bloomberg L.P. Content produced by Bloomberg News is disseminated through Bloomberg Terminals, Bloomberg Televi ...

that whenever someone asked questions, a common response was "I'm not going to question my brother-in-law."

Affiliated companies

Stanford Financial Group comprised several affiliated companies: *Stanford Financial Group Company (SFGC) was an entity based in Houston, Texas, USA, that provided financial services to several of the affiliated companies, and in particular to Stanford International Bank Limited (SIBL). The services were provided via a "Services Agreement" that paved the way for investor deposits to be funneled via a circuitous route to multiple destinations, including affiliated companies that leased multiple corporate jets, owned yachts, funded a cricket pitch and even a Swiss bank account used to bribe officials. * Stanford Capital Management, investment adviser, based on Houston * Stanford Group Company, broker-dealer, based in Houston * Stanford International Bank, was started in 1986 in Montserrat where it was called Guardian International Bank. Allen Stanford relocated its operations to Antigua. On February 19, 2009 Nigel Hamilton-Smith and Peter Wastell of the British accounting firm Vantis were appointed joint receivers of the bank, and were made liquidators on April 15, 2009. In June 2010, the High Court of Antigua resolved that Vantis should be removed from its responsibilities. The firm, which had recently received government approval to sell the property assets, appealed the decision. * Stanford Trust Company, helped manage and protect wealth. Vantis was also appointed receivers of Stanford Trust Company. *

Bank of Antigua Bank of Antigua was an Antigua-based bank that was owned by the Stanford Financial Group and was central to the Ponzi scheme run by Allen Stanford. It was originally formed on the 10 February 1981 in St. John's. When the Ponzi scheme was expo ...

* Stanford Coins and Bullion

Sponsorships and charity

In 2007, Stanford Financial Group assumed title sponsorship of the

Stanford St. Jude Championship Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is considere ...

, a top

PGA Tour The PGA Tour (stylized in all capital letters as PGA TOUR by its officials) is the organizer of professional golf tours in the United States and North America. It organizes most of the events on the flagship annual series of tournaments also k ...

event to benefit

St. Jude Children's Research Hospital St. Jude Children's Research Hospital is a pediatric treatment and research facility located in Memphis, Tennessee. Founded in 1962, it is a 501(c)(3) designated nonprofit medical corporation which focuses on children's catastrophic diseases, pa ...

Memphis, Tennessee Memphis is a city in the U.S. state of Tennessee. It is the County seat, seat of Shelby County, Tennessee, Shelby County in the southwest part of the state; it is situated along the Mississippi River. With a population of 633,104 at the 2020 Uni ...

. On March 20, 2009, after the Group's fraud was revealed, the PGA announced that they would be dropping their affiliation with the company and that for 2009 the event would be called the St. Jude's Classic. Stanford Financial Group was the lead financier for the 2007 film '' The Ultimate Gift'',. According to the Association for Healthcare Philanthropy, the story of ''The Ultimate Gift'' promoted

philanthropy Philanthropy is a form of altruism that consists of "private initiatives, for the public good, focusing on quality of life". Philanthropy contrasts with business initiatives, which are private initiatives for private good, focusing on material ...

in not-for-profit

health care Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health ...

institutions. The group established a significant presence in

golf Golf is a club-and-ball sport in which players use various clubs to hit balls into a series of holes on a course in as few strokes as possible. Golf, unlike most ball games, cannot and does not use a standardized playing area, and coping ...

, polo,

tennis Tennis is a racket sport that is played either individually against a single opponent ( singles) or between two teams of two players each ( doubles). Each player uses a tennis racket that is strung with cord to strike a hollow rubber ball c ...

cricket Cricket is a bat-and-ball game played between two teams of eleven players on a field at the centre of which is a pitch with a wicket at each end, each comprising two bails balanced on three stumps. The batting side scores runs by st ...

and

sailing Sailing employs the wind—acting on sails, wingsails or kites—to propel a craft on the surface of the ''water'' ( sailing ship, sailboat, raft, windsurfer, or kitesurfer), on ''ice'' ( iceboat) or on ''land'' ( land yacht) over a chose ...

, sports which were popular among Stanford’s wealthy clients. Stanford Financial Group was the title sponsor for such sporting events as the Stanford U.S. Open Polo Championship, the Stanford USPA Silver Cup, the Stanford Antigua Sailing Week, the PGA Tour Stanford St. Jude Championship, and the Stanford International Pro-Am. Stanford also sponsored professional golfers Vijay Singh,

Camilo Villegas Camilo Villegas (; born 7 January 1982) is a Colombian professional golfer who plays on the PGA Tour. Early years Villegas was born in Medellín, Colombia, and took up golf as a child. After several different National Junior Championships in ...

and David Toms as well as

Morgan Pressel Morgan Pressel (born May 23, 1988) is an American professional golfer and golf commentator who played on the LPGA Tour. In 2001, as a 12-year-old, she became the youngest player to qualify for the U.S. Women's Open. She was the 2005 American Ju ...

on the LPGA Tour. In tennis, the company was a sponsor of the

Sony Ericsson Open The Miami Open (also known as the Miami Masters, and currently branded as the Miami Open presented by Itaú for sponsorship reasons) is a tennis tournament held at Hard Rock Stadium in Miami Gardens, Florida. It is part of the men's ATP Tour Mas ...

. Stanford also sponsored the Champions Series Tennis Tournaments featuring

Jim Courier James Spencer "Jim" Courier (born August 17, 1970) is an American former world No. 1 tennis player. He won four major singles titles, two at the French Open and two at the Australian Open. He was the youngest man to reach the singles finals o ...

John McEnroe John Patrick McEnroe Jr. (born February 16, 1959) is an American former professional tennis player. He was known for his shot-making and volleying skills, his rivalries with Björn Borg and Jimmy Connors, and his confrontational on-court beha ...

and

Pete Sampras Petros "Pete" Sampras ( el, Πέτρος Σάμπρας; born August 12, 1971) is an American former world No. 1 tennis player. His professional career began in 1988 and ended at the 2002 US Open, which he won, defeating longtime rival Andre ...

. The Stanford Financial Tour Championship, previously known as the

LPGA The Ladies Professional Golf Association (LPGA) is an American organization for female golfers. The organization is headquartered at the LPGA International in Daytona Beach, Florida, and is best known for running the LPGA Tour, a series of week ...

Playoffs at The ADT and the ADT Championship, was the season-ending

tournament on the US-based

LPGA Tour The Ladies Professional Golf Association (LPGA) is an American organization for female golfers. The organization is headquartered at the LPGA International in Daytona Beach, Florida, and is best known for running the LPGA Tour, a series of wee ...

. Beginning with the 2009 event, it was to be sponsored by Stanford Financial Group. As one of the founding partners, Stanford Financial Group was also involved in

Tiger Woods Eldrick Tont "Tiger" Woods (born December 30, 1975) is an American professional golfer. He is tied for first in PGA Tour wins, ranks second in men's major championships, and holds numerous golf records. * * * Woods is widely regarded as ...

's annual golf tournament, the AT&T National.

Regulatory investigation

During the week of February 13, 2009, Stanford issued a letter to clients saying: "Regulatory officers have visited our offices and have stated that these are routine examinations". On February 17, 2009, U.S. federal agents entered the company's Houston and Memphis offices. Law enforcement officials placed signs on the office doors stating that the company was temporarily closed: "The company is still in operation but under the management of a receiver". The

Securities Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agencies of the United States government, independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary pu ...

's (SEC) charged Allen Stanford, Pendergest-Holt and Davis with fraud in connection with Stanford Financial Group's US$8 billion

certificate of deposit A certificate of deposit (CD) is a time deposit, a financial product commonly sold by banks, thrift institutions, and credit unions in the United States. CDs differ from savings accounts in that the CD has a specific, fixed term (often one, ...

(CD) investment scheme that offered "improbable and unsubstantiated high interest rates". This led the Federal government to freeze the assets of Allen Stanford, Stanford International Bank, Stanford Group Co., and Stanford Capital Management. In addition, Stanford International Bank placed a 60-day moratorium on early redemptions of its CDs. On February 18 and 19, 2009,

Ecuador Ecuador ( ; ; Quechuan languages, Quechua: ''Ikwayur''; Shuar language, Shuar: ''Ecuador'' or ''Ekuatur''), officially the Republic of Ecuador ( es, República del Ecuador, which literally translates as "Republic of the Equator"; Quechuan ...

and

Peru , image_flag = Flag of Peru.svg , image_coat = Escudo nacional del Perú.svg , other_symbol = Great Seal of the State , other_symbol_type = Seal (emblem), National seal , national_motto = "Fi ...

suspended the operations of local Stanford units, and, in

Venezuela Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in ...

and

Panama Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Co ...

, the governments seized local units of Stanford Bank.

Mexico Mexico ( Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guate ...

's financial regulators announced on February 19 that it was investigating the local affiliate of Stanford bank for possible violation of banking laws. On February 27, 2009, Stanford official Laura Pendergest-Holt was arrested by Federal agents in connection with the alleged fraud. On that day the SEC said that Stanford and his accomplices operated a "massive Ponzi scheme", misappropriated billions of dollars of investors' money and falsified the Stanford International Bank's records to hide their fraud. "Stanford International Bank's financial statements, including its investment income, are fictional," the SEC said.New SEC Complaint Says Stanford Ran Ponzi Scheme

Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...

, February 27, 2009 United States District Judge David Godbey froze all of the Stanford personal and corporate assets. Godbey gave them to Ralph Janvey, a

Dallas Dallas () is the List of municipalities in Texas, third largest city in Texas and the largest city in the Dallas–Fort Worth metroplex, the List of metropolitan statistical areas, fourth-largest metropolitan area in the United States at 7.5 ...

receiver; Janvey will retain control until the SEC suit is resolved. A British receiver took the Antigua-based Stanford International Bank. On July 1, 2009,

, the CFO of the company, agreed to change course from his not guilty plea and plead guilty to three charges related to the Ponzi scheme fraud, once details can be worked out. On November 13, 2009, the US District Court ordered brokerage accounts to be transferred to

Dominick & Dominick LLC Dominick and Dickerman is an investment and merchant banking firm, located in New York City. From 1899 through to 2015, the firm was known as Dominick and Dominick. Following the sale of the wealth management business, the firm reverted to its ...

. The transfer became effective on January 20, 2010. In 2011, an auction of Stanford's goods was held in Houston. On March 19, 2012, the 5th U.S. Circuit Court of Appeals overturned a federal judge’s ruling from the previous year that threw out three class action lawsuits that are trying to use state laws to recover investor losses resulting from Stanford’s scheme. The ruling allows lawsuits by investors who lost millions in Stanford Ponzi scheme to go forward against several 3rd parties.

Headquarters

Stanford Financial - 5050 Westheimer Office - 2nd Floor

Stanford was headquartered in the Galleria Tower II in

, U.S. Previously the company was headquartered in 5050 Westheimer Road, a three-story, building across from The Galleria. Jennifer Dawson of the ''

Houston Business Journal American City Business Journals, Inc. (ACBJ) is an American newspaper publisher based in Charlotte, North Carolina. ACBJ publishes The Business Journals, which contains local business news for 44 markets in the United States, Hemmings Motor New ...

'' described the facility as "high-end office digs."Dawson, Jennifer.
Scheduled Stanford auction scratched as no bids show for building
" ''

''. Friday July 2, 2010. Retrieved on August 25, 2010. By 2007 Stanford's headquarters moved to Galleria Tower II. On May 18, 2010 the receiver entered into a stalking horse contract for the sale of 5050 Westheimer Road.NOTICE OF PUBLIC AUCTION OF REAL PROPERTY IN HARRIS COUNTY, TEXAS
" Stanford Financial Receivership. Retrieved on August 25, 2010. During that month Black Forest Ventures LLC was the designated bidder to defeat at the auction, with a minimum bid being $12.5 million. The auction was scheduled to be held on Thursday June 24, 2010 at the offices of Baker Botts, L.L.P. in

One Shell Plaza One Shell Plaza (OSP) is a 50-story, skyscraper at 910 Louisiana Street in Downtown Houston, Texas. Perched atop the building is an antenna that brings the overall height of the building to . At its completion in 1971, the tower was the talles ...

Downtown Houston Downtown is the largest central business district in the city of Houston and the largest in the state of Texas, located near the geographic center of the metropolitan area at the confluence of Interstate 10, Interstate 45, and Interstate 69. The ...

. The auction was canceled due to a lack of bids, and Black Forest's stipulated that it would acquire the building for $12.2 million. Black Forest bought the 5050 Westheimer building in July 2010.Dawson, Jennifer.
Black Forest Ventures buys W. Houston facility
" ''

''. Monday August 23, 2010. Retrieved on August 25, 2010.

References

External links

Stanford Financial Group Receivership
* *
Stanford Watch
at ''

Houston Chronicle The ''Houston Chronicle'' is the largest daily newspaper in Houston, Texas, United States. , it is the third-largest newspaper by Sunday circulation in the United States, behind only ''The New York Times'' and the ''Los Angeles Times''. With i ...

'' {{Scams and confidence tricks 2009 in economics Financial services companies established in 1932 Financial services companies disestablished in 2009 Corporate scandals Criminal investigation Great Recession Financial services companies of the United States Investment management companies of the United States Companies based in Houston Pyramid and Ponzi schemes 2009 disestablishments in Texas