MIAMI (Reuters) - Investors suing the state of Antigua and Barbuda for losses suffered in Allen Stanford’s alleged $7 billion fraud may find it difficult to prove their case, the Caribbean nation’s attorney general said on Tuesday.
“Mr. Stanford did not own the country,” Attorney General Justin Simon told Reuters in a phone interview.
He was commenting on a civil lawsuit filed last week in a Houston court by investors from the United States, Mexico, Colombia and Peru who are seeking up to $24 billion of damages from Antigua and Barbuda, alleging the tiny Caribbean state was a “full partner in crime” with Stanford.
“What do they want? The whole country?” Simon asked, referring to the maximum damages sought against the small, tourism-dependent twin-island state, which was at the heart of the Texas financier’s business empire stretching from the Caribbean to the United States, Latin America and Europe.
Stanford faces civil and criminal charges related to an alleged fraud that U.S. prosecutors say was centered on certificates of deposit issued by his Stanford International Bank in Antigua. Antigua’s former chief financial regulator, Leroy King, has also been charged with abetting the fraud and is under house arrest awaiting a U.S. extradition request.
The lawsuit, filed on July 13 in the U.S. District Court for the Southern District of Texas, alleges the Commonwealth of Antigua and Barbuda “reaped enormous financial benefits” from the “multiyear, multibillion-dollar ‘Ponzi’ scheme of international scope” that it says Stanford operated.
The defendants are seeking at least $8 billion of damages that they say should be trebled under the U.S. Racketeer Influenced and Corrupt Organizations Act.
Stanford, who is in jail in the United States ahead of his trial, has said he is innocent of any wrongdoing.
“Stanford stuffed Antigua’s coffers -- and its officials’ pockets -- with money stolen from unsuspecting customers throughout the United States, Canada, Central America, South America, and elsewhere,” the complaint states.
Simon said Antigua and Barbuda is a sovereign state and that the complaint against it had not yet been formally served to the authorities. He said he would raise the case in a meeting with the country’s cabinet on Wednesday, in which the government would consider how to respond to the complaint.
“I believe they (the plaintiffs) will have difficulties in pursuing it successfully,” Simon said, adding it would be hard to demonstrate wrongdoing by a sovereign state. He said he would be taking legal advice on how to address the damages suit.
The scandal surrounding Stanford, a flamboyant financier and sports entrepreneur who was known as “Sir Allen” in Antigua after he was granted a knighthood by its government, has badly rocked the small country, causing losses and layoffs and damaging its image as an offshore finance destination.
STANFORD‘S ‘SAFE HAVEN’
Simon said he would recommend that the Caribbean Financial Action Task Force, a grouping of Caribbean Basin states set up in the early 1990s to fight criminal money laundering, undertake a full investigation into Stanford’s operations in Antigua and Barbuda and elsewhere in the Caribbean region.
The Houston court lawsuit alleges that Antigua and Barbuda provided a “safe haven” for Stanford and his banking operation and “essential assistance” in his efforts to portray himself as a legitimate provider of financial services.
It also says the Caribbean state participated with Stanford in a variety of commercial activities, and “provided false and fraudulent information to the (U.S.) Securities and Exchange Commission.” Antigua “shared in the criminal proceeds of the conspiracy,” the complaint says.
Simon said preliminary investigations by the Antigua authorities indicated that King, the country’s former top financial regulator, did not share with the government what he knew about Stanford’s activities and also concealed repeated requests for information by U.S. financial regulators.
The attorney general said there had been “no collusion” with Stanford by the United Progressive Party government of Prime Minister Baldwin Spencer, who took over in Antigua and Barbuda after defeating the Antigua Labor Party of former premier Lester Bird in a 2004 election. But he said he could not vouch the same for the Bird administration.
Simon said Spencer’s government was on record of having questioned and contested attempts by Stanford to acquire more land in Antigua for multimillion-dollar development projects.
After Stanford’s financial empire collapsed in February, when U.S. regulators closed in on its operations, Antigua and Barbuda appointed a receiver to take control of the bank and trust company Stanford operated, and local lawmakers approved a government takeover of his land.
(The civil lawsuit filed in U.S. District Court in Houston is called Frank v. The Commonwealth of Antigua and Barbuda, civil action no. 4:09-cv-2217.
Editing by Steve Orlofsky