R. Allen Stanford, the Texas billionaire accused of masterminding an $8-billion Ponzi scheme, said “I’m not a damn swindler” in an interview in Houston.  Stanford, 59, was sued along with two associates and three of his companies by the US Securities and Exchange Commission on February 17. Regulators accused them of running a “massive ongoing fraud” involving high-yield certificates of deposit through Antigua-based Stanford International Bank.

“The SEC far overreached and basically ruined a multibillion-dollar company,” Stanford said in the interview in the office of his criminal-defense lawyer, Dick DeGuerin on Monday. “Everybody got paid and everybody got made whole until the SEC came in and shut everything down.”

The SEC claims Stanford, who was ranked 605th on Forbes’s 2008 list of the world’s richest people, skimmed $1.6 billion in personal loans from his Stanford Financial Group of companies. They also claim he invested billions of dollars of depositor funds in inappropriate real estate and private-equity ventures and not in conservative, liquid assets that he said backed the offshore CDs.

Stanford hasn’t been charged with criminal wrongdoing.

Court-appointed receivers in the US and Antigua seized all of Stanford’s personal and corporate assets and shuttered his offices worldwide. They are pursuing bank accounts and other assets held in the name of 198 Stanford entities.

Ralph Janvey, the US receiver, has said he anticipates finding “hundreds of millions, not billions” of dollars in Stanford assets to repay investors.

Nigel Hamilton-Smith, Stanford’s Antiguan receiver, has said he has “little doubt” Stanford ran the Antiguan bank as a Ponzi scheme, in which early investors were repaid with funds taken from new investors.

But in Monday’s hour-long interview, Stanford said he wasn’t responsible for day-to-day operations of the company, including decisions concerning its multibillion-dollar investment portfolio.

Business unit managers were “given total authority” to run their divisions, Stanford said. “Forget micro-manage; I’m not even going to macro-manage you,” Stanford said he told his executives.

Stanford said his role was to be “chairman and chief cheerleader,” establishing the company’s overall direction while James M. Davis, the chief financial officer, and chief investment officer Laura Pendergest-Holt ran the investment portfolios, along with teams of advisers.

The SEC accused Davis and Holt of helping Stanford defraud investors. Davis is cooperating with federal investigators. Pendergest-Holt, who was charged with criminal obstruction of the investigation and released on $300,000 bail, has denied the allegations through her attorney.

Stanford said his banking companies suffered the same liquidity crisis as other financial institutions during the global financial meltdown that began last year.

“But Stanford International Bank didn’t have a fed-funds window to go to for a bailout,” he said. “We were extra liquid, with more than $2 billion on hand, but it turned out not to be enough.”

Stanford CD depositors were allowed to make early redemptions on about $2 billion worth of immature Antiguan CDs in late 2008 and early 2009 because, he said, he understood people needed to get to their cash during the credit collapse.

“We were paying out and paying out, having huge withdrawals,” he said. “I thought that we could handle it. I thought that we could handle anything because we had $2 billion.”

In January, Stanford said the bank suspended early redemptions because, like most banks around the world, it was running low on cash. “But the assets were there,” he insisted, saying the funds were invested in real estate and business ventures around the globe.

Stanford said the $1.6-billion personal loan the SEC accuses him of taking represented corporate borrowings that he’d signed as the company’s sole shareholder.

“That was a shareholder note, not a note to me personally,” Stanford said. “That was money that was then fronted to Stanford Venture Capital, which in turn would go out and make investments. I never got a dollar of that money.”

It appeared depositor withdrawals were beginning to level off in January and February, Stanford said. He said the SEC complaint, filed February 17, kicked off a full-scale bank run on his operations.

“The SEC came in and gestapo-ed my business, and I watched $5 billion of my net worth disappear,” Stanford said.

“If the SEC had not come in and taken the actions they did, and had the ripple effect they did around the world, unequivocally yes, we would’ve survived,” Stanford said. “Now, I don’t know. I don’t know where the business stands because I’ve been locked out of my businesses, too.”

The native of Mexia, Texas, who has been living with his fiancée in rural Virginia, said he has been “locked out” of both his apartment in the US Virgin Islands and an apartment he used at the company’s airplane hangar in suburban Houston, where the receiver has also impounded Stanford’s six private aircraft, worth an estimated $100 million. Government agents also seized Stanford’s 120-foot yacht, the Sea Eagle, in the Virgin Islands.

“I used to be one of the richest men in the world, who has done nothing but work his butt off, and I’ve been turned into a pariah,” Stanford said. “But I don’t feel sorry for myself. I’m angry.”

In an interview aired by CNBC also on Monday, Stanford said his investment firm had $400,000 with Bernard Madoff, according to a transcript provided by the television network. Madoff last month pleaded guilty to defrauding investors with a $65-million Ponzi scheme.

In the Bloomberg News interview, Stanford vowed to fight the allegations against him and to repay investors who lost their life savings on the Antiguan CDs.

“I’m going to fight to make every one of them whole,” he said. “It’s going to be a huge war, not a battle. And there will be massive lawsuits filed from my end, you’re damn right. I’m going to fight for my employees and my clients who have been hurt by this far-reaching action.”

sources: bloomberg, businessmirror

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