Given the amount of time that the SEC and the media have been sniffing around his operation, today’s fraud charges can’t have come as much surprise to Allen Stanford. And given that he owns banks in many different jurisdictions (the FT has found entities not only in the US and Antigua, but also New Zealand, Switzerland, Colombia, Ecuador, Mexico, Peru, Panama, Venezuela, and, of course, Panama), as well as what Matthew Goldstein calls "a number of private jets", one expects that at this point his contingency plan is well underway.
Yesterday, Stanford spokesman Brian Bertsch "wouldn’t discuss the whereabouts of the Texas billionaire", probably because he didn’t know those whereabouts. It’s probably a safe guess, however, to say that he’s not in the US, and neither is he in the US Virgin Islands, where he lives most of the year. Antigua? It’s possible, but I’d say unlikely. More probable is somewhere with an ask-no-questions private-banking industry and a vague-to-nonexistent extradition treaty with the US.
Remember that according to the SEC complaint, the lion’s share of Stanford’s assets were placed in a "black box" under the control of just two people: CFO James Davis, and Allen Stanford himself. Remember too that Stanford has been reneging on deals to provide tens of millions of dollars in financing to the kind of micro-cap companies the firm specializes in. Stanford probably had that money cued up in liquid form, ready to go; I wouldn’t be at all surprised if he just decided to trouser it personally instead.
My guess is that only Stanford knows where his depositors’ money has gone, and that for the time being he still has control of most of it. If the US authorities have any interest in reuniting those depositors with any of their cash, they might end up having to cut some kind of deal with Stanford. But they’ll need to find him first.
For anybody who’s coming new to this story, it began with an article entitled "Duck Tales", which can be downloaded here, in Veneconomia magazine in Venezuela. The article essentially accused Stanford of being a fraud; it was picked up by Venezuelan blog Venepiramides on February 6, and had made it to Portfolio.com by the morning of Feburary 10. The following day, February 11, there was a big article at both BusinessWeek; by February 12, the rest of the mainstream media had cottoned on, if cautiously.
By yesterday, with depositors flying to Antigua in a desperate and doomed attempt to cash out their CDs, it was all over bar the formal indictment. Stanford Group is now in receivership, and its top two executives are fugitives from justice. But given that they seem to have been operating this scam for over a decade, they surely saw this coming long before the authorities started asking awkward questions. In fact, they’re probably shocked themselves at how long it’s taken the SEC to get to this point.
Allen Stanford might be a moustachioed crook, but he’s not stupid. There’s still a good chance that he could live out the rest of his life in sybaritic luxury, even as his investors lose substantially everything they entrusted to him and his offshore bank.