$7 billion Ponzi scheme fraudster Allen Stanford is languishing in jail – but accountants are still trying to recover the cash for his many victims four years after the crimes came to light.
The first $1 million is ready for distribution among the fraud victims, but while they poured hundreds of thousands of dollars each into the plausible scammer’s scheme, the returns are a pittance.
So far, the highest payout is around $50,000 – while the lowest was $2.81.
Court papers range the vast majority of returns for the investors who took Stanford at his word between $1,000 and $4,000.
British expat Kate Freeman. Who lives on the tiny Caribbean island of Antigua, told the media she had handed $820,000 over to Stanford.
“After all this time and all the money the investors put in, the amount we are getting back is a big disappointment,” she said.
The court appointed receiver claims this is the first distribution of recovered funds from $55 million released by the courts, but is unsure how much more will follow.
Before he was jailed, prosecutors explained to the courts that Stanford wooed unwary investors into buying deposit certificates held by his bank on Antigua.
Stanford then blew the money on a luxury lifestyle, failed businesses and bribes to keep regulators off his back so he could prolong his fraud.
In a Ponzi scheme, the perpetrator relies on attracting new money in to repay debts to old investors – keeping the difference between the two. The problems start when the money comes in dries up and the fraud starts to unravel.
Picking the bones
Stanford had to broaden his operation to keep luring new investors into his net, and at one stage, his crime empire stretched from South /America, across the Caribbean and to the USA.
Once respected but now disgraced, Stanford was convicted of fraud and sentenced to 110 years in jail.
Although Freeman and other investors in the Ponzi fraud are complaining about the lack of pace the courts are showing in returning their money, the receiver explained that the cash could only be disbursed as fast as the victims completed their paperwork.
Another problem slowing the compensation payments is who has the rights to Stanford’s assets.
The receiver in the US and bank liquidators in Antigua have been arguing over who picks the bones of Stanford’s dead bank. After months of wrangling, they have agreed a split, but at this stage, no one seems to know, what, if anything will be realised from the liquidation.