Nathan Kolb, Staff
Source: Business Insider
Robert Allen Stanford, a name that would rise to infamy, was born in Mexia, Texas on March 24, 1950. As a youth, Stanford once made $400 to clear an area of land for real estate developers and in exchange, he received cutdown trees that he could sell as firewood. After graduating from Baylor University, Stanford worked for Stanford Financial, a company that his grandfather founded as a salesman and bookkeeper. Stanford, with his talents in finding opportunities, transformed Stanford Financial into a multi-billion-dollar company owning $51 billion in investments. During the 1983 Texas oil bubble burst, Stanford traveled to Latin America and later set up shop in Antigua. Similar to all wealthy and successful people, Allen Stanford explored lobbying in the realm of politics; two lawmakers, Bob Ney and Tom DeLay, resigned as a result of his lobbying. It can be argued that his time in Antigua may have been the most successful years for him. Stanford led an extraordinary life which would eventually catch up with him.
After years of legitimacy, Allen Stanford went the unsavory route of scamming innocent people. Stanford’s plan was simple: tell investors that investing with him will lead to no risk and high returns and support it with a believable story. To hide his fraud, Stanford sent out fake financial reports. Stanford’s investors’ investments included securities such as certificates of deposits with interest rates double the average rate of the market. The average person would give Stanford their money because doing so appealed to their sense of financial security.
As far as Ponzi schemes go, the most notable and infamous one is Bernie Madoff. He scammed his investors roughly $20 billion while telling his clients their investments were valued to be at $60 billion. Madoff pleaded guilty and received a 150-year sentence. The second largest Ponzi scheme in history is that of Allen Stanford. Stanford sold high yield certificate deposits to 18,000 people from 113 countries where he ran a $7.2 billion Ponzi scheme. Stanford was eventually caught in 2009 and assigned a 110-year sentence starting in 2012. In June 2016, Ralph Janvey, a court-appointed receiver, obtained $65 million in a settlement. Out of the $7 billion in Stanford’s bank, only $63 million was uncovered at the start of the receivership. In other words,only 0.95 percent of that $7 billion was found. Already, $443 million has been given out to Stanford’s victims while another $550 million will be distributed in quarter one of 2022. This $1 billion recovery also happens to be the second largest amount in history, with Bernie Madoff’s victims recovering $11 billion.