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International Bank was a bank based in the
Caribbean The Caribbean ( , ; ; ; ) is a region in the middle of the Americas centered around the Caribbean Sea in the Atlantic Ocean, North Atlantic Ocean, mostly overlapping with the West Indies. Bordered by North America to the north, Central America ...
, which operated from 1986 to 2009 when it went into receivership. It was an affiliate of the
Stanford Financial Group The Stanford Financial Group was a privately held international group of financial services companies controlled by Allen Stanford, until it was seized by American authorities in early 2009. Headquartered at 5050 Westheimer in Uptown Houston, Texa ...
and failed when its parent was seized by United States authorities in early 20008as part of the investigation into
Allen Stanford Robert Allen Stanford (born March 24, 1950) is an American-Antiguan convicted financial fraudster, former financier, and sponsor of professional sports. He was convicted of fraud in 2012, having operated an eight billion dollar Ponzi scheme, and ...
. Prior to its demise, Stanford International Bank Limited (SIBL) offered
certificate of deposit A certificate of deposit (CD) is a time deposit sold by banks, thrift institutions, and credit unions in the United States. CDs typically differ from savings accounts because the CD has a specific, fixed term before money can be withdrawn wit ...
(CDs) at rates consistently higher than those available from banks in the United States.


History


Founding

The bank was started by
Allen Stanford Robert Allen Stanford (born March 24, 1950) is an American-Antiguan convicted financial fraudster, former financier, and sponsor of professional sports. He was convicted of fraud in 2012, having operated an eight billion dollar Ponzi scheme, and ...
in 1986 in
Montserrat Montserrat ( , ) is a British Overseas Territories, British Overseas Territory in the Caribbean. It is part of the Leeward Islands, the northern portion of the Lesser Antilles chain of the West Indies. Montserrat is about long and wide, wit ...
where it was called Guardian International Bank. Allen Stanford's move into banking utilised funds he had made in real estate in
Houston, Texas Houston ( ) is the List of cities in Texas by population, most populous city in the U.S. state of Texas and in the Southern United States. Located in Southeast Texas near Galveston Bay and the Gulf of Mexico, it is the county seat, seat of ...
, in the early 1980s. There was no direct connection between Stanford's insurance business in
Texas Texas ( , ; or ) is the most populous U.S. state, state in the South Central United States, South Central region of the United States. It borders Louisiana to the east, Arkansas to the northeast, Oklahoma to the north, New Mexico to the we ...
and the banking business. Stanford relocated its operations to
Antigua Antigua ( ; ), also known as Waladli or Wadadli by the local population, is an island in the Lesser Antilles. It is one of the Leeward Islands in the Caribbean region and the most populous island of the country of Antigua and Barbuda. Antigua ...
. The bank's portfolio was overseen by an investment committee consisting of Allen Stanford; his father; Laura Pendergest-Holt, Stanford Financial Groups' Chief Investment Officer; James M. Davis (Allen Stanford's college roommate), CFO of Stanford International Bank; and a resident of Mexia, Texas (where Stanford's US interests were based) with cattle ranching and car sales experience.


Regulatory investigation in the United States

In February 2009, the US
Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
(SEC) investigated the US operations of the
Stanford Financial Group The Stanford Financial Group was a privately held international group of financial services companies controlled by Allen Stanford, until it was seized by American authorities in early 2009. Headquartered at 5050 Westheimer in Uptown Houston, Texa ...
, including the bank. On 13 February Stanford was quoted saying "the bank remains a strong institution". On 17 February 2009, the SEC charged Allen Stanford, Pendergest-Holt and Davis with fraud in connection with the bank's US$8 billion
certificate of deposit A certificate of deposit (CD) is a time deposit sold by banks, thrift institutions, and credit unions in the United States. CDs typically differ from savings accounts because the CD has a specific, fixed term before money can be withdrawn wit ...
(CD) investment scheme that offered "improbable and unsubstantiated high interest rates". This led the federal government to freeze the assets of the bank and other Stanford entities. In addition, the bank placed a 60-day moratorium on early redemptions of its CDs. On 27 February 2009, 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 A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...
", misappropriated billions 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'' (''WSJ''), also referred to simply as the ''Journal,'' is an American newspaper based in New York City. The newspaper provides extensive coverage of news, especially business and finance. It operates on a subscriptio ...
, February 27, 2009
The former head of Antigua and Barbuda’s Financial Services Regulatory Commission (FSRC), Leroy King, also involved in the
Allen Stanford Robert Allen Stanford (born March 24, 1950) is an American-Antiguan convicted financial fraudster, former financier, and sponsor of professional sports. He was convicted of fraud in 2012, having operated an eight billion dollar Ponzi scheme, and ...
Ponzi Scheme A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...
fraud In law, fraud is intent (law), intentional deception to deprive a victim of a legal right or to gain from a victim unlawfully or unfairly. Fraud can violate Civil law (common law), civil law (e.g., a fraud victim may sue the fraud perpetrato ...
, was charged by the US authorities. Extradited to the US in November 2019 and pleaded guilty to obstructing a proceeding before the SEC and to conspiracy to obstruct a Commission proceeding in United States, in February 2021 was sentenced to 10 years in prison.


Subsidiaries in Venezuela and Mexico

In 2007 the bank formed a subsidiary in
Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and many Federal Dependencies of Venezuela, islands and islets in the Caribbean Sea. It com ...
, which rapidly developed a network of branches throughout the country. There was a run on the bank in February 2009 following the SEC's investigation into Stanford's affairs in the US, and this forced the Venezuelan authorities to seize the bank. It was sold to Banco Nacional de Crédito in May 2009.
Mexico Mexico, officially the United Mexican States, is a country in North America. It is the northernmost country in Latin America, and borders the United States to the north, and Guatemala and Belize to the southeast; while having maritime boundar ...
's financial regulator announced on 19 February 2009 that it was investigating the local affiliate of Stanford bank for possible violation of banking laws.


Receivership and liquidation

In the United States District Judge David Godbey froze all of the Stanford personal and corporate assets in the US and appointed Ralph Janvey of
Dallas Dallas () is a city in the U.S. state of Texas and the most populous city in the Dallas–Fort Worth metroplex, the List of Texas metropolitan areas, most populous metropolitan area in Texas and the Metropolitan statistical area, fourth-most ...
as receiver. Janvey retained control until the SEC suit is resolved. On 19 February 2009, Nigel Hamilton-Smith and Peter Wastell of the British accounting firm
Vantis Vantis plc was an accountancy firm based in London, England, providing accounting, tax and business advice to owner-managed businesses, listed companies, not for profit organisations, high-net-worth individuals and other professionals. It was pla ...
were appointed joint receivers of the bank, and were made liquidators on 15 April 2009. In February 2010, Vantis' auditors
Ernst & Young EY, previously known as Ernst & Young, is a multinational corporation, multinational professional services partnership, network based in London, United Kingdom. Along with Deloitte, KPMG and PwC, it is one of the Big Four accounting firms, Big F ...
expressed concern about whether Vantis would receive payment for its work on Stanford.Vantis counts cost of Stanford fraud affair
''The Times'', 2 Feb 2010. Retrieved 2010-06-14.
Properties in Antigua emerged as an important part of the company's assets, to be sold to enable payment of creditors and Vantis' own fees. In June 2010, it was announced that the liquidators and the US receiver had entered into a co-operation agreement, under which the liquidators were to deal with the realisation of the bank's assets in Antigua and the United Kingdom, and the US receiver was to deal with the realisation of the bank's assets in the US and Canada. 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. Vantis itself was placed in
administration Administration may refer to: Management of organizations * Management, the act of directing people towards accomplishing a goal: the process of dealing with or controlling things or people. ** Administrative assistant, traditionally known as a se ...
on 29 June 2010 and promptly broken up, with the various offices and businesses being sold as going concerns. Hamilton-Smith and Wastell transferred to the buyout firm FRP Advisory, and continued their legal fight to be reinstated as liquidators of Stanford. In May 2011 following a claim made to the Eastern Caribbean Court of Appeal, Hamilton-Smith and Wastell were removed as liquidators. On 12 May 2011, Marcus Wide and Hugh Dickson of the international accounting firm
Grant Thornton Grant Thornton is a multinational professional services network based in London, United Kingdom. It is the seventh-largest in the world by revenue and the sixth-largest by number of employees. The network consists of independent accounting an ...
were appointed the new liquidators by the High Court of Antigua. In September 2011, it was reported that the U.S. Justice Department was investigating whether a Swiss subsidiary of
Société Générale Société Générale S.A. (), colloquially known in English-speaking countries as SocGen (), is a French multinational universal bank and financial services company founded in 1864. It is registered in downtown Paris and headquartered nearby i ...
was used to channel funds to Stanford's personal accounts and failed to follow due diligence procedures or to ask questions about irregular banking activity.Wall Street Journal, September 16, 2011
/ref> On Friday, January 20, 2012, an email was sent by the Joint Liquidators to creditors who had been depositors, the "Fraud Victims" urging them to resubmit their claims. They were given some hope of an "interim distribution" but no imminent final sale of some major assets. The information is repeated and the forms are at http://www.sibliquidation.com/claims-administration/ (the URL denoted in the email was erroneous in as much as the "-" was missing between the words "claims" and administration").


Online creditors’ meeting

On 11 October 2011, the liquidators convened an online creditors’ meeting. Audio recording. The liquidators emphasized that there was a huge shortfall between the available assets and the claims. The claims are around US$7 billion. The assets available are estimated to range from US$73 million to US$1.5 billion. Some of the assets are harder to liquidate, such as property. Therefore, patience will be required to obtain the highest values in the long-term. Another goal of the liquidators is to avoid litigation that could be costly. The liquidators reported that they had met with a number of representatives of various national governments. These governments each have taken their own independent legal actions under their regulatory and/or court systems. The USA is also contemplating a
tax lien A tax lien is a lien which is imposed upon a property by law in order to secure the payment of taxes. A tax lien may be imposed for the purpose of collecting delinquent taxes which are owed on real property or personal property, or it may be i ...
against the assets that could deprive the creditors of a sizable sum. US$5 million has already been spent by the liquidators. The liquidators established a multinational creditors committee composed of six larger individual large claimants and one attorney representing a number of individuals. This committee does not have legal status in the liquidation, but it is administratively convenient for the liquidator to have a body to work with. The liquidators reported that an interim distribution may be made in the first quarter of 2012.


See also

* Mark Kuhrt * Gilbert Lopez


References

{{Reflist


External links


Stanford International Bank Ltd.
(Archive)
USA Receivers websiteLiquidators' website
Stanford Financial Group Bank failures Defunct banks Corporate scandals Banks established in 1986 Banks disestablished in 2009 1986 establishments in Montserrat