Stanford Bank Seized by Venezuela
By Ben Fox
ST. JOHN'S, Antigua -- Venezuela on Thursday seized a failed bank controlled by Texas billionaire R. Allen Stanford after a run on deposits there, while clients were prevented from withdrawing their money from Stanford International Bank and its affiliates in a half-dozen other countries.
The Venezuelan government said it would immediately put the Caracas-based Stanford Bank SA up for sale and guarantee the remaining savings of some 15,000 Venezuelans, most of them small depositors.
A group of wealthy Venezuelans also hold $2.5 billion in assets at the Antigua-based Stanford International Bank, but their investments are outside the purview of Venezuelan law and will not be protected by Caracas, Banking Superintendent Edgar Hernandez said.Banking regulators throughout Latin America are scrambling to contain the damage after the U.S. Securities and Exchange Commission charged Stanford and three of his companies on Tuesday with committing an $8 billion fraud that lured investors with promises of "improbable and unsubstantiated" high returns on certificates of deposit and other investments. Depositors walked away empty-handed Wednesday from the bank's headquarters in Antigua after rushing to the Caribbean island only to be told their accounts were frozen and no money could be released. "I have my life savings here and I'm scared," said Reinaldo Pinto Ramos, 48, a Venezuelan software firm owner who flew in by chartered plane from Caracas with other investors to check on their accounts. Stanford, 58, is a larger-than-life figure in the Caribbean, using his personal fortune -- estimated at $2.2 billion by Forbes magazine -- to bankroll public works and cricket tournaments.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts