Lawsuit Accuses Antigua of Acting as Stanford's 'Blood Brother'

"Stanford received land transfers with government assistance [in return], operated Antigua's airport, built the national library, sponsored the country's cricket tournament, and improperly 'loaned' the government tens of millions of dollars of the CD investors' money for innumerable commercial enterprises..."

The receiver and official creditors committee representing victims of Allen Stanford's $7 billion Ponzi scheme filed a lawsuit accusing the dual-island nation of Antigua and Bermuda of serving as Stanford's 'blood brother' in providing necessary assistance to sustain the massive scheme.  Stanford, who is currently serving (and appealing) a 110-year sentence for masterminding the scheme, was once a 'favorite son' of Antigua where he enjoyed close relationships with various government and regulatory officials. A separate lawsuit also asserted similar charges against eight Caribbean banks.  The lawsuits are seeking over $230 million in damages, as well as an award of punitive damages

As a result of these relationships, investors alleged that Antigua was a prime participant, beneficiary, and co-conspirator in Stanford's fraud, having received nearly $90 million in documented loans from Stanford that were not repaid and instead served as an incentive to overlook Stanford's activities.  Indeed, according to the suit, the Eastern Caribbean Central Bank ("ECCB") nationalized the Bank of Antigua soon after Stanford's fraud was exposed, and in a 'second act of brazen thievery' then distributed ownership in the bank to the Antiguan government and other Caribbean banks.  Further adding to the suspicious nature of these actions, the head of ECCB's monetary council at the time was Errol Court, who was both the Antiguan Minister of Finance and one of Stanford's personal attorneys.  

Another banking regulator, Leroy King, was accused of taking bribes from Stanford in return for falsifying bank audits as well as impeding U.S. regulatory investigations of Stanford's operations.  While King faces criminal charges, Antiguan authorities have thus far refused to participate in his extradition.  

In the separate lawsuit brought by court-appointed receiver Ralph Janvey, twenty-three former directors and officers of Stanford's operations were accused of breaching their fiduciary duties to investors.  Janvey is seeking the return of all compensation paid to those individuals.

For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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