1 00:00:02,480 --> 00:00:06,160 In this episode of American Greed. Hello, I'm Alan Stanford. 2 00:00:06,420 --> 00:00:09,580 A financial predator of epic proportions. 3 00:00:10,240 --> 00:00:15,100 Alan Stanford and his shocking $7 .2 billion fraud. 4 00:00:15,900 --> 00:00:20,600 He's an absolute crook. He's a thief. And created a blueprint to build people 5 00:00:20,600 --> 00:00:21,860 out of billions of dollars. 6 00:00:22,330 --> 00:00:29,250 For two decades, Stanford runs an international Ponzi scheme, selling 7 00:00:29,250 --> 00:00:33,650 certificates of deposit from his offshore bank on the island of Antigua. 8 00:00:34,450 --> 00:00:37,830 Stanford International Bank from day one was a facade. 9 00:00:38,310 --> 00:00:39,370 It didn't exist. 10 00:00:39,570 --> 00:00:43,790 It was a Hollywood set. They weren't investing the money, like Stanford told 11 00:00:43,790 --> 00:00:49,230 investors. And it's those investors, more than 20 ,000 of them, who foot the 12 00:00:49,230 --> 00:00:51,330 bill for Stanford's lavish lifestyle. 13 00:00:51,770 --> 00:00:53,870 Alan Stanford, at his peak, was a billionaire. 14 00:00:54,090 --> 00:00:58,510 He was one of the richest men in the world. He used the money on yachts and 15 00:00:58,510 --> 00:01:02,590 private jets, had homes around the world, and also to prop up his empire. 16 00:01:02,910 --> 00:01:08,910 Billions of investor dollars gone. To lose $1 .3 million by someone that 17 00:01:08,910 --> 00:01:12,530 absolutely stole the money from me is just horrific. 18 00:01:12,910 --> 00:01:14,650 Alan Stanford is a sociopath. 19 00:01:14,930 --> 00:01:17,490 We have real assets, real people. 20 00:01:18,000 --> 00:01:20,820 a real group of companies, and this was no Ponzi scheme. 21 00:01:34,480 --> 00:01:38,720 June 11, 2008, Lord's Cricket Field, London, England. 22 00:01:40,540 --> 00:01:45,660 American billionaire Alan Stanford stands proudly at the apex of his 23 00:01:46,760 --> 00:01:49,460 The banker is on the Forbes 400 list. 24 00:01:50,380 --> 00:01:55,120 He's been knighted Sir Alan Stanford by the Caribbean island of Antigua, where 25 00:01:55,120 --> 00:01:56,120 he lives. 26 00:01:56,660 --> 00:02:01,760 And strangely enough, for a man who grew up in Texas, Stanford is considered the 27 00:02:01,760 --> 00:02:04,480 world's number one promoter of the game of cricket. 28 00:02:06,300 --> 00:02:12,560 Stanford was all about creating this mystique, and cricket was the perfect 29 00:02:12,560 --> 00:02:13,560 vehicle for that. 30 00:02:13,980 --> 00:02:17,860 The defining image of Stanford was landing in the middle of the most famous 31 00:02:17,860 --> 00:02:22,320 cricket field in Britain in his personal helicopter with a plexiglass box full 32 00:02:22,320 --> 00:02:26,040 of $20 million in cash that would go to the winner of some cricket match. This 33 00:02:26,040 --> 00:02:29,200 was very much the type of image that he liked to project. 34 00:02:29,520 --> 00:02:33,640 But the fun's over just eight months later when the Securities and Exchange 35 00:02:33,640 --> 00:02:38,380 Commission raids Stanford's Houston headquarters, shutting down operations 36 00:02:38,380 --> 00:02:40,660 the U .S. and 13 other countries. 37 00:02:42,500 --> 00:02:46,980 Tens of thousands of investors will learn that their life savings have been 38 00:02:46,980 --> 00:02:47,980 squandered. 39 00:02:55,220 --> 00:02:59,460 If you look at Alan Stanford as a person, what you have to remember first 40 00:02:59,460 --> 00:03:02,740 foremost is he's a Texan. I happen to be one too. He's a classic. 41 00:03:03,440 --> 00:03:08,100 Texas archetype, the swashbuckling, often big, muscular entrepreneur. 42 00:03:08,600 --> 00:03:12,680 Vanity Fair correspondent Brian Burrow knows the lay of the land. 43 00:03:13,020 --> 00:03:15,180 He grew up near Stanford's hometown. 44 00:03:15,900 --> 00:03:20,780 He grows up in this kind of run -down little town, Mahea, south of Dallas. His 45 00:03:20,780 --> 00:03:24,860 dad has a little insurance agency. His mom is a housewife who writes for the 46 00:03:24,860 --> 00:03:25,860 local paper. 47 00:03:25,960 --> 00:03:31,900 Stanford graduates from Baylor University, marries, and wastes no time 48 00:03:31,900 --> 00:03:32,900 a business. 49 00:03:33,160 --> 00:03:38,700 Stanford's genius was that he turned this one little health club on Lake Eyre 50 00:03:38,700 --> 00:03:42,400 Boulevard in Waco, Texas, into something called Total Fitness. 51 00:03:43,960 --> 00:03:49,220 And it was the first gym in Central Texas to bring out these newfangled 52 00:03:49,220 --> 00:03:50,220 weight machines. 53 00:03:50,520 --> 00:03:55,020 My family lived there at the time. Total Fitness was where everybody went to 54 00:03:55,020 --> 00:03:55,978 work out. 55 00:03:55,980 --> 00:03:57,680 It's where you went to be seen. 56 00:03:58,300 --> 00:04:02,760 This location at one time was Alan Stanford's Total Fitness Center. 57 00:04:03,050 --> 00:04:07,990 Former gym member Doug Birdsong knew Alan Stanford back when everyone called 58 00:04:07,990 --> 00:04:09,030 Big Al. 59 00:04:09,470 --> 00:04:14,930 I used to work out here some with Alan, and you have to remember that Alan is a 60 00:04:14,930 --> 00:04:21,390 mammoth of a man. At the time, he was 6 '5", and probably weighed 330, 340. 61 00:04:21,730 --> 00:04:27,250 According to Birdsong, Stanford was arrogant in his dealings with employees 62 00:04:27,250 --> 00:04:28,250 even customers. 63 00:04:29,390 --> 00:04:32,670 He was the biggest, he was the best, and he was the boss. 64 00:04:33,650 --> 00:04:36,930 No one much cared for him, but he was the owner. 65 00:04:37,550 --> 00:04:42,150 He was somebody who wanted things done when he wanted it, didn't seem to have a 66 00:04:42,150 --> 00:04:46,130 whole lot of regard for the people who would work around him. He was a tyrant 67 00:04:46,130 --> 00:04:51,590 work for, but he also had this charisma. He had this ability to pull people in, 68 00:04:51,710 --> 00:04:53,770 and that's how he achieved what he did. 69 00:04:54,890 --> 00:04:59,450 You know, the amazing thing about Stanford is here he is, 28, 29 years 70 00:04:59,450 --> 00:05:02,010 got a little string of three or four health clubs in Central Texas. 71 00:05:02,650 --> 00:05:08,090 But to look at the guy, you'd think he was a mogul. He's driving a white Jaguar 72 00:05:08,090 --> 00:05:10,550 through the streets of Waco, Texas at age 30. 73 00:05:10,990 --> 00:05:15,430 And he gets a helicopter, apparently, at least. You know, there's this total 74 00:05:15,430 --> 00:05:19,470 fitness on the side. So the guy looks like, you know, a little Texas Bill 75 00:05:19,530 --> 00:05:20,530 It's clearly... 76 00:05:20,830 --> 00:05:25,590 The image of success that he wanted to broadcast. It helped bring in money when 77 00:05:25,590 --> 00:05:28,330 he tried to raise it. It certainly helped to bring in customers. 78 00:05:28,610 --> 00:05:29,850 Until it didn't. 79 00:05:31,090 --> 00:05:34,510 In the early 80s, the Texas oil business goes bust. 80 00:05:35,150 --> 00:05:37,070 Total Fitness loses members. 81 00:05:37,510 --> 00:05:39,610 And Stanford faces bankruptcy. 82 00:05:40,550 --> 00:05:46,430 One day we showed up and the doors were locked. There was a sign on the door. It 83 00:05:46,430 --> 00:05:47,430 said closed. 84 00:05:47,790 --> 00:05:53,710 With $13 million in debt, it's time for Stanford to throw in the towel. He loses 85 00:05:53,710 --> 00:05:55,590 his string of health club to bankruptcy. 86 00:05:56,710 --> 00:06:02,090 But Stanford lands on his feet, becoming an entrepreneur in the Texas energy 87 00:06:02,090 --> 00:06:03,090 business. 88 00:06:04,150 --> 00:06:10,650 Though it's a more elemental form of energy, as Doug Birdsong finds out when 89 00:06:10,650 --> 00:06:13,570 responds to an ad for firewood. 90 00:06:15,020 --> 00:06:18,600 And here came Allen driving a truck with a cord of firewood on the back. 91 00:06:19,320 --> 00:06:20,640 So he was still in town. 92 00:06:21,360 --> 00:06:25,020 But he was not in the banking business, and he was not in the gymnasium 93 00:06:25,020 --> 00:06:29,200 business. He was in the firewood business, which is where he should have 94 00:06:30,860 --> 00:06:33,800 But the restless dreamer has bigger plans. 95 00:06:34,280 --> 00:06:38,160 But I guess the question for us now and for Stanford then is, what type of 96 00:06:38,160 --> 00:06:42,380 business does the ownership of a bankrupt line of health clubs actually 97 00:06:43,100 --> 00:06:45,630 Well... The answer turned out to be Caribbean banking. 98 00:06:48,410 --> 00:06:52,210 The volcanic island of Montserrat is a British territory. 99 00:06:52,550 --> 00:06:57,550 You wouldn't know by looking at it, but Montserrat is also a banking center. 100 00:06:57,950 --> 00:07:03,170 With 350 banks on this tiny island, there is one for every 30 residents. 101 00:07:03,550 --> 00:07:05,830 Many banks exist only on paper. 102 00:07:06,070 --> 00:07:11,390 Some are domiciled in bars, and regulation is notoriously lax. 103 00:07:12,240 --> 00:07:16,620 As a result, a lot of people that went to Montserrat were people who could not 104 00:07:16,620 --> 00:07:19,020 get banking licenses anywhere else. 105 00:07:19,320 --> 00:07:23,940 I talked to one money laundering expert who said, look, the only reason to open 106 00:07:23,940 --> 00:07:28,460 a bank on Montserrat was if you had fraud in mind. If you were legitimate, 107 00:07:28,460 --> 00:07:29,480 went somewhere else. 108 00:07:31,360 --> 00:07:36,740 Amazingly, Alan Stanford, former health club mogul of Waco, doesn't come here to 109 00:07:36,740 --> 00:07:37,659 start a bank. 110 00:07:37,660 --> 00:07:40,540 He lands on Montserrat as a scuba instructor. 111 00:07:42,570 --> 00:07:47,910 One of the great mysteries of Stanford's career is how he got his start in 112 00:07:47,910 --> 00:07:52,090 Caribbean banking. You know, it was said that he started this initial bank on 113 00:07:52,090 --> 00:07:54,530 the island of Montserrat with something like $6 million. 114 00:07:54,770 --> 00:07:59,530 Nobody has a clue where he got $6 million or even if he had $6 million. 115 00:08:00,010 --> 00:08:01,630 But this much is known. 116 00:08:03,150 --> 00:08:08,210 Stanford buys a storefront calling the business Guardian International Bank. 117 00:08:09,580 --> 00:08:14,300 He hangs a painting of his grandfather Lotus in the lobby and tells people 118 00:08:14,300 --> 00:08:18,060 falsely that the bank was founded in the 1930s. 119 00:08:19,620 --> 00:08:24,700 Initially, Stanford targets wealthy Latin Americans worried about the 120 00:08:24,700 --> 00:08:25,700 of their governments. 121 00:08:26,160 --> 00:08:30,620 Many of these rich Venezuelans and Colombians seek an offshore haven. 122 00:08:31,000 --> 00:08:36,860 He placed small ads, some with attractive women, in scores of Latin 123 00:08:36,860 --> 00:08:37,860 newspapers. 124 00:08:38,380 --> 00:08:43,580 And the key was he advertised deposit returns, two points over whatever was 125 00:08:43,580 --> 00:08:44,960 being advertised in the U .S. 126 00:08:45,340 --> 00:08:49,480 And nobody understood quite how he would do it. And he would always have this 127 00:08:49,480 --> 00:08:52,680 kind of blather about, well, we're a very lean company. We don't pay a lot of 128 00:08:52,680 --> 00:08:54,660 taxes. Montserrat is low cost. 129 00:08:54,860 --> 00:08:56,060 So we're just leaner. 130 00:08:56,880 --> 00:09:00,760 There's no magic to investing. It's just hard work. It's a lot of diligence. 131 00:09:01,000 --> 00:09:02,360 And it's just staying the course. 132 00:09:03,150 --> 00:09:08,710 By 1990, Stanford's Guardian Bank touts $100 million in its accounts. 133 00:09:09,150 --> 00:09:15,690 But around this time, the winds of fortune shift when the FBI and Scotland 134 00:09:15,690 --> 00:09:19,050 suspect drug money is coursing through Montserrat's banks. 135 00:09:20,300 --> 00:09:26,040 This led to a two - or three -year investigation in which scores of these 136 00:09:26,040 --> 00:09:30,400 banks called Instabanks were thrown off the island. And ultimately, while it was 137 00:09:30,400 --> 00:09:34,820 never proven that Stanford himself was taking drug money, his bank license, 138 00:09:34,880 --> 00:09:36,640 was revoked in 1991. 139 00:09:37,180 --> 00:09:39,360 It's a major defeat for Stanford. 140 00:09:39,880 --> 00:09:44,760 But just like before, when he lost the health club chain, Alan Stanford will 141 00:09:44,760 --> 00:09:46,980 come back bigger and badder than ever. 142 00:09:47,740 --> 00:09:49,640 Up next on American Green. 143 00:09:50,270 --> 00:09:53,990 Stanford reinvents himself with brash Texas bravado. 144 00:09:54,230 --> 00:10:00,190 He ultimately managed to buy a new bank on an island that was every bit as 145 00:10:00,190 --> 00:10:01,470 corrupt as Montserrat. 146 00:10:08,430 --> 00:10:14,630 In 1991, Alan Stanford's adventure in Caribbean banking is sinking fast. 147 00:10:15,790 --> 00:10:19,770 The island of Montserrat, under pressure from an international money laundering 148 00:10:19,770 --> 00:10:22,790 investigation, revokes his banking license. 149 00:10:23,570 --> 00:10:28,270 Stanford needed a new place to go, and so he goes 20 miles away. The nearest 150 00:10:28,270 --> 00:10:31,630 island is Antigua, and Antigua welcomed him with open arms. 151 00:10:31,930 --> 00:10:33,570 This is the heart of it all. 152 00:10:34,230 --> 00:10:40,290 CNBC senior correspondent Scott Cohn covers the Stanford story and follows 153 00:10:40,290 --> 00:10:42,090 investigative trail to Antigua. 154 00:10:45,420 --> 00:10:50,460 The island paradise is plagued by poverty and has a history of corruption. 155 00:10:52,060 --> 00:10:56,200 Antigua needs investment. The tourism industry is building, but it needs 156 00:10:56,200 --> 00:11:00,060 investment. And they weren't necessarily looking around to see what happened the 157 00:11:00,060 --> 00:11:01,060 next island over. 158 00:11:01,100 --> 00:11:05,220 Alan Stanford comes in and he has money. He wants to set up a bank. 159 00:11:06,300 --> 00:11:10,580 In 1991, Stanford International Bank is born. 160 00:11:11,820 --> 00:11:15,820 He targets those rich Latin Americans looking for safe investments. 161 00:11:16,400 --> 00:11:18,740 His rise is meteoric. 162 00:11:19,100 --> 00:11:23,920 He became the largest private employer on the island, and Antigua became, in 163 00:11:23,920 --> 00:11:26,000 some ways, a center for offshore banking. 164 00:11:26,200 --> 00:11:29,240 Of course, it also became the heart of Alan Stanford's empire. 165 00:11:29,900 --> 00:11:36,200 The pride of that empire is called the Stanfordville Complex. It's all Stanford 166 00:11:36,200 --> 00:11:39,400 right there. It's the first thing you see when you come out of the airport in 167 00:11:39,400 --> 00:11:40,400 Antigua. 168 00:11:40,720 --> 00:11:44,360 He had his fingers in every part of this economy. He owned a newspaper. 169 00:11:44,620 --> 00:11:45,620 He owned an airline. 170 00:11:45,820 --> 00:11:51,460 In the years to come, the Antiguan government will rack up $87 million in 171 00:11:51,460 --> 00:11:52,460 from Stanford. 172 00:11:52,880 --> 00:11:55,200 Antigua becomes his personal domain. 173 00:11:55,900 --> 00:11:58,260 He wielded enormous power in Antigua. 174 00:11:58,520 --> 00:12:02,800 This man had almost single -handedly shaped the Antiguan economy. 175 00:12:03,470 --> 00:12:10,090 And by 1994, Stanford International Bank's assets skyrocket to $350 million. 176 00:12:11,450 --> 00:12:15,610 Stanford opens branches in Venezuela, Peru, and Panama. 177 00:12:16,130 --> 00:12:19,390 But he isn't content to stay in the southern hemisphere. 178 00:12:20,470 --> 00:12:26,290 In 1995, with an eye on the much bigger U .S. market, he establishes the 179 00:12:26,290 --> 00:12:28,430 Stanford Financial Group in Houston. 180 00:12:29,150 --> 00:12:34,010 It allowed him to sell in the U .S., which was a market that he hadn't really 181 00:12:34,010 --> 00:12:34,949 tapped before. 182 00:12:34,950 --> 00:12:38,870 It allowed him to reach all of these people that were looking for this 183 00:12:38,870 --> 00:12:39,870 safe investment. 184 00:12:40,290 --> 00:12:46,670 The company offers a variety of financial products, bonds, mutual funds. 185 00:12:47,170 --> 00:12:51,690 But ironically, the hard -driving Texan makes his name pushing an investment 186 00:12:51,690 --> 00:12:57,470 vehicle that's about as conservative as it gets, a product synonymous with 187 00:12:57,470 --> 00:12:58,470 safety. 188 00:12:58,570 --> 00:13:00,130 The certificate of deposit. 189 00:13:01,210 --> 00:13:05,910 This guy was a salesman. He knew what buttons to push, like any good salesman. 190 00:13:06,030 --> 00:13:11,350 He knew that people wanted to be wealthy, wanted to save their money, 191 00:13:11,350 --> 00:13:13,050 their money, grow their money. 192 00:13:13,750 --> 00:13:17,630 As they say, the closer you get to 60, the more conservative you need to be. 193 00:13:18,150 --> 00:13:20,610 And that's what I thought I was doing. 194 00:13:21,210 --> 00:13:25,530 Doug Birdsong used to lift weights with Alan Stanford back in the 80s when the 195 00:13:25,530 --> 00:13:26,970 banker owned Total Fitness. 196 00:13:27,720 --> 00:13:32,000 The last time they met, Stanford was starting over as a firewood salesman. 197 00:13:32,200 --> 00:13:37,340 So when Birdsong's broker in Austin, Texas, tells him about some CDs being 198 00:13:37,340 --> 00:13:39,260 offered by a company in Houston. 199 00:13:39,680 --> 00:13:41,800 And he said the company's name is Stanford. 200 00:13:42,340 --> 00:13:47,580 Birdsong doesn't make the connection that Stanford is Big Al from the gym. 201 00:13:47,980 --> 00:13:53,200 My financial advisor brought me a proposed portfolio and said this is what 202 00:13:53,200 --> 00:13:56,280 might do. It isn't that different than what we currently have. 203 00:13:57,040 --> 00:13:58,540 with a few tweaks here and there. 204 00:13:58,760 --> 00:14:03,700 For 20 years, Birdsong owned and operated a software company serving the 205 00:14:03,700 --> 00:14:04,659 care industry. 206 00:14:04,660 --> 00:14:07,140 Now he's downshifting into retirement. 207 00:14:08,180 --> 00:14:12,000 Birdsong's advisor recommends a certificate of deposit from Stanford. 208 00:14:12,260 --> 00:14:16,740 It offers a return 1 .5 % higher than most other CDs. 209 00:14:17,220 --> 00:14:19,420 To Birdsong, it's a no -brainer. 210 00:14:20,460 --> 00:14:24,160 I know what a CD is. I know exactly what a CD is. 211 00:14:24,400 --> 00:14:29,120 And that sounds safe to me. So that's what we're going to do. And that's what 212 00:14:29,120 --> 00:14:30,120 did. 213 00:14:31,140 --> 00:14:36,900 In Houston, Cassie and Phil Wilkinson are in the enviable position of being 214 00:14:36,900 --> 00:14:38,100 to retire early. 215 00:14:38,480 --> 00:14:43,600 My husband and I never doubted our ability to earn or our ability to save. 216 00:14:44,060 --> 00:14:46,660 But we didn't have any confidence in ourselves. 217 00:14:47,200 --> 00:14:50,660 for investing, because I'm a designer and he's in the oil industry. 218 00:14:51,080 --> 00:14:56,300 Phil worked for Aramco Oil for 28 years and has a sizable retirement fund 219 00:14:56,300 --> 00:14:58,220 through the company's 401k plan. 220 00:14:58,740 --> 00:15:03,880 The Wilkinsons meet their financial advisor, a broker for the Stanford 221 00:15:03,880 --> 00:15:05,500 craft an investment strategy. 222 00:15:06,020 --> 00:15:12,900 He recommended that we pull out of an annuity a large sum of money, hundreds 223 00:15:12,900 --> 00:15:16,340 of thousands of dollars, and invest it in a Stanford CD. 224 00:15:17,100 --> 00:15:20,880 And the stock market was booming, and the rates were, you know, the returns 225 00:15:20,880 --> 00:15:25,980 big. And so I asked him, why would we want to do that when we're making so 226 00:15:25,980 --> 00:15:30,820 in the stock market? And he said, because it protects you, it's 227 00:15:30,820 --> 00:15:31,820 safe. 228 00:15:32,360 --> 00:15:37,580 For investors nearing retirement, like the Wilkinsons, it makes perfect sense. 229 00:15:38,080 --> 00:15:42,220 And if anyone wonders how Stanford is able to provide above -market returns, 230 00:15:42,700 --> 00:15:44,340 there's a ready explanation. 231 00:15:45,610 --> 00:15:50,730 The interest rate was higher, but that was easily explained, that there was 232 00:15:50,730 --> 00:15:51,730 one bank. 233 00:15:52,390 --> 00:15:57,430 They didn't have a lot of concrete on the ground, as our advisor said. 234 00:15:57,650 --> 00:16:00,770 They didn't have tons of employees to pay. 235 00:16:01,010 --> 00:16:07,230 It was one bank that was well managed, and it was just a couple of points 236 00:16:07,230 --> 00:16:08,490 than the prevailing rate. 237 00:16:08,910 --> 00:16:13,650 It was believable. That's all I can say is that it was simply believable. 238 00:16:14,830 --> 00:16:21,630 Up next, Alan Stanford is transformed into Sir Alan. That really gave him even 239 00:16:21,630 --> 00:16:26,010 more of a sense of just being the international man of mystery. 240 00:16:26,250 --> 00:16:29,310 And Stanford's reckless spending knows no limits. 241 00:16:29,790 --> 00:16:36,270 All he was doing was putting our money in his pocket, buying airplanes, buying 242 00:16:36,270 --> 00:16:41,150 homes in Florida, having them destroyed, and building new ones. I consider what 243 00:16:41,150 --> 00:16:43,510 Alan Stanford did to be far beyond greed. 244 00:16:48,880 --> 00:16:53,460 Hover round takes me where I want to go, where will it take me? 245 00:16:57,380 --> 00:17:03,120 On the Caribbean island of Antigua, Alan Stanford's bank thrives in its new 246 00:17:03,120 --> 00:17:08,540 location. Writer Brian Burrow traces Stanford's ascent for Vanity Fair. 247 00:17:08,980 --> 00:17:13,859 It's just stunning how successful this bank was. It grows from $350 million... 248 00:17:14,250 --> 00:17:17,369 to $3 billion in 2004. 249 00:17:17,650 --> 00:17:21,910 And Stanford owns it all. You know, at the top of his rise, Stanford was worth 250 00:17:21,910 --> 00:17:26,310 an estimated $2 .2 billion, and he was in the Fortune 400. 251 00:17:26,690 --> 00:17:32,030 No longer a firewood salesman or a failed health club owner from Waco. 252 00:17:32,490 --> 00:17:37,370 By 2004, Alan Stanford is a world -class tycoon. 253 00:17:38,280 --> 00:17:44,340 Everything that Alan Stanford did was to exude wealth, to make people feel good, 254 00:17:44,420 --> 00:17:49,760 to make people feel like they were investing with a self -made billionaire 255 00:17:49,760 --> 00:17:54,000 was trustworthy. You felt like you were investing in something substantial, when 256 00:17:54,000 --> 00:17:57,260 in fact what you were investing in was Alan Stanford's lifestyle. 257 00:17:59,110 --> 00:18:05,110 He liked to live large mansions in South Florida, homes in London and elsewhere. 258 00:18:05,290 --> 00:18:11,590 He liked playing the part of what he was, a big swashbuckling Texas guy. He 259 00:18:11,590 --> 00:18:14,910 liked landing on cricket fields with helicopters. 260 00:18:17,030 --> 00:18:23,990 Stanford spends in one three -year period a staggering $100 million on 261 00:18:24,490 --> 00:18:27,310 including helicopters and private Lear jets. 262 00:18:28,380 --> 00:18:31,480 His Houston headquarters gleamed with the finest materials. 263 00:18:32,220 --> 00:18:36,540 Marble, mahogany, gold, brass, a sweeping staircase. 264 00:18:38,140 --> 00:18:39,900 The building exuded wealth. 265 00:18:40,300 --> 00:18:45,620 His office was grandiose. It was bigger than a lot of New York City apartments. 266 00:18:45,740 --> 00:18:50,600 Big desk in the corner. He had his own private bathroom with a shower. And he 267 00:18:50,600 --> 00:18:54,720 also had his own private entrance so he could come and go from the building and 268 00:18:54,720 --> 00:18:56,360 wouldn't have to deal with the riffraff. 269 00:18:57,240 --> 00:19:03,080 Of course, if you're Alan Stanford, one, two, or even three residences aren't 270 00:19:03,080 --> 00:19:04,080 enough. 271 00:19:04,800 --> 00:19:09,660 He owns mansions in Houston, Antigua, St. Croix. 272 00:19:10,000 --> 00:19:13,160 He buys a small island for $63 million. 273 00:19:14,620 --> 00:19:19,040 Then there's the elegant Ticliff Castle in Coral Gables, Florida. 274 00:19:20,140 --> 00:19:26,840 It's an enormous 18 ,000 square feet with 57 rooms, a tower, and even a 275 00:19:26,840 --> 00:19:27,840 moat. 276 00:19:28,080 --> 00:19:33,860 Stanford lives there for a year, tires of it, moves out, and then demolishes 277 00:19:33,860 --> 00:19:34,860 property. 278 00:19:36,200 --> 00:19:39,680 But maybe there's a good reason for all the homes. 279 00:19:40,080 --> 00:19:44,240 The high -flying Texan is notorious for his roving eye. 280 00:19:44,700 --> 00:19:49,300 He liked women. He was married and he had at least three different women that 281 00:19:49,300 --> 00:19:55,160 know of who had five children. So, you know, he spread his money. He spread a 282 00:19:55,160 --> 00:19:56,160 lot of things around. 283 00:19:57,020 --> 00:20:02,480 Throughout his career, Alan Stanford has carefully crafted a persona, even if it 284 00:20:02,480 --> 00:20:04,220 requires rewriting history. 285 00:20:04,700 --> 00:20:09,720 In his Montserrat days, Stanford falsely claimed that his grandfather, Lotus, 286 00:20:09,900 --> 00:20:10,900 founded a bank. 287 00:20:11,320 --> 00:20:13,100 Now Stanford is at it again. 288 00:20:13,550 --> 00:20:15,870 this time on a much bigger scale. 289 00:20:16,270 --> 00:20:21,710 Like anybody in his position, Stanford wanted to highlight his good works and 290 00:20:21,710 --> 00:20:26,970 his connections, and clearly he shared a name with a very famous university in 291 00:20:26,970 --> 00:20:27,970 Palo Alto, California. 292 00:20:28,550 --> 00:20:31,150 He claimed he also shared lineage. 293 00:20:31,550 --> 00:20:37,130 The billionaire banker donates $2 .5 million to Stanford University to 294 00:20:37,130 --> 00:20:39,490 co -founder Leland Stanford's home. 295 00:20:39,830 --> 00:20:43,590 Well, Stanford University didn't take too kindly to this and actually sued 296 00:20:43,590 --> 00:20:47,730 Stanford for trademark infringement, said that there was no family 297 00:20:47,950 --> 00:20:51,990 and asked him to cease and desist from using the Stanford name. 298 00:20:52,270 --> 00:20:54,570 But this is a rare misstep. 299 00:20:55,050 --> 00:20:58,650 By all appearances, Stanford's fortune continues to flourish. 300 00:21:00,130 --> 00:21:05,670 In 2006, he attains even greater notoriety when he's knighted by the 301 00:21:05,670 --> 00:21:06,670 of Antigua. 302 00:21:07,120 --> 00:21:12,700 That, in many ways, was the capper. And from then on, he could sign all of his 303 00:21:12,700 --> 00:21:16,260 letters to shareholders as he did Sir Alan Stanford. 304 00:21:16,580 --> 00:21:21,600 That really gave him even more of a sense of being the international man of 305 00:21:21,600 --> 00:21:27,020 mystery. Coming up, Stanford's band of brokers preys on victims. 306 00:21:27,440 --> 00:21:32,200 I had never heard of Stanford Financial Group, but my broker was going there, so 307 00:21:32,200 --> 00:21:33,520 that was good enough for me. 308 00:21:33,880 --> 00:21:37,300 And what happens when one financial advisor suspects fraud? 309 00:21:37,740 --> 00:21:43,380 Well, I had not been at Stanford but maybe a month when the first red flag 310 00:21:43,380 --> 00:21:44,380 appeared. 311 00:21:53,920 --> 00:22:00,920 Mansions, airplanes, yachts. The international banker now known as Sir 312 00:22:00,920 --> 00:22:01,920 Alan Stanford. 313 00:22:02,380 --> 00:22:07,260 is burning through tens of millions of dollars every year, putting intense 314 00:22:07,260 --> 00:22:11,060 pressure on his Stanford financial group to remain profitable. 315 00:22:11,680 --> 00:22:17,820 To reel in more investors, Stanford expands his empire, opening more than 30 316 00:22:17,820 --> 00:22:23,740 offices across the United States and building an army of brokers. 317 00:22:24,440 --> 00:22:26,600 He was trying to create... 318 00:22:27,050 --> 00:22:31,570 a real financial services business. So he would hire these brokers away from 319 00:22:31,570 --> 00:22:32,570 established firms. 320 00:22:32,730 --> 00:22:36,830 In retrospect, what he needed from them was their client list, was, you know, 321 00:22:36,830 --> 00:22:39,230 these people could bring in clients, and indeed they did. 322 00:22:39,550 --> 00:22:45,390 I had met my broker numerous years ago. I had known him for a long time. We 323 00:22:45,390 --> 00:22:48,330 became very close, and I had followed him from firm to firm. 324 00:22:49,010 --> 00:22:54,850 In 2005, in Houston, Sandra Dorrell's broker moves to Stanford. 325 00:22:55,310 --> 00:22:58,790 and tells Durrell he's taking a select group of clients with him. 326 00:22:59,030 --> 00:23:00,950 He'd like her to be one of them. 327 00:23:01,450 --> 00:23:06,350 I had never heard of Stanford Financial Group, but my broker was going there, so 328 00:23:06,350 --> 00:23:07,710 that was good enough for me. 329 00:23:08,270 --> 00:23:12,470 Durrell is sitting on a windfall, having just sold an office furniture business. 330 00:23:12,830 --> 00:23:17,050 Her broker recommends she buy Stanford's Bank of Antigua certificates of 331 00:23:17,050 --> 00:23:22,670 deposit. They pay a percentage point or two more than CDs from domestic banks. 332 00:23:23,280 --> 00:23:27,220 And I asked why, and he said because they're an offshore bank, they don't 333 00:23:27,220 --> 00:23:31,840 the taxes that they have to pay in the U .S., and they can get away with a 334 00:23:31,840 --> 00:23:33,080 little bit higher returns. 335 00:23:33,400 --> 00:23:37,360 And he said, you'll like the returns. They pay like clockwork. It's a 336 00:23:37,580 --> 00:23:40,100 wonderful avenue to make money. 337 00:23:40,980 --> 00:23:47,200 The total amount of the CDs that I purchased over the years was $1 .3 338 00:23:48,480 --> 00:23:51,440 That is a lot of money to someone like me. 339 00:23:52,230 --> 00:23:56,650 Darrell is a single mother with a daughter to support, and she's been 340 00:23:56,650 --> 00:24:01,190 with Caroli's disease, a very rare and life -threatening condition that often 341 00:24:01,190 --> 00:24:03,290 destroys the liver and kidneys. 342 00:24:03,950 --> 00:24:08,210 Shortly after I found out about the disease, I realized that I would need a 343 00:24:08,210 --> 00:24:10,290 liver and kidney transplant. 344 00:24:10,710 --> 00:24:15,550 I knew that I would need a lot of money, and that's what my CD money was for. It 345 00:24:15,550 --> 00:24:19,390 was going to mature about the time that I would be needing it. I wanted to make 346 00:24:19,390 --> 00:24:20,390 sure that it was safe. 347 00:24:20,880 --> 00:24:24,860 Her broker reassures her, asking what could be safer than a certificate of 348 00:24:24,860 --> 00:24:25,860 deposit. 349 00:24:26,220 --> 00:24:31,560 But inside the walls of Stanford Financial, some brokers have an uneasy 350 00:24:32,000 --> 00:24:37,700 Well, I had not been at Stanford but maybe a month when the first red flag 351 00:24:37,700 --> 00:24:42,800 appeared. In Houston, broker Charlie Rall has just joined Stanford after 352 00:24:42,800 --> 00:24:45,960 many years with some of the biggest names on Wall Street. 353 00:24:46,300 --> 00:24:48,600 He quickly begins to doubt the move. 354 00:24:49,280 --> 00:24:53,280 It seems the Securities and Exchange Commission is taking a hard look at 355 00:24:53,280 --> 00:24:58,000 Stanford, specifically his flagship certificate of deposit from Antigua. 356 00:24:58,460 --> 00:25:04,720 The SEC has even sent FedEx packages to all of Stanford's CD investors, asking 357 00:25:04,720 --> 00:25:06,320 them a long list of questions. 358 00:25:07,400 --> 00:25:11,500 So these clients picked up the phone naturally and called their advisor to 359 00:25:11,580 --> 00:25:14,720 what in the world is this? Why is the SEC asking me these questions? 360 00:25:14,940 --> 00:25:18,740 Did I buy something bad? Is there something wrong here? And they were 361 00:25:18,740 --> 00:25:19,740 concerned. 362 00:25:19,880 --> 00:25:24,820 Stanford hires a law firm and tells his regiment of brokers that everything's 363 00:25:24,820 --> 00:25:29,440 okay. But it quickly becomes apparent to Charlie Rall that it's not. 364 00:25:29,860 --> 00:25:32,440 In approximately June of 2006, 365 00:25:33,770 --> 00:25:38,590 All of the assistants were pulled together in a conference room and told 366 00:25:38,590 --> 00:25:42,470 they needed to go through all of the files that contained information about 367 00:25:42,470 --> 00:25:45,070 bank CD, the client files that had purchased CDs. 368 00:25:45,390 --> 00:25:49,270 And the staff was told to go through every file and clean out the files. 369 00:25:49,630 --> 00:25:54,630 Rawls says the assistants are told to destroy every handwritten letter, every 370 00:25:54,630 --> 00:26:00,110 post -it note, everything except the official documents involving the sale of 371 00:26:00,110 --> 00:26:01,370 the Bank of Antigua CDs. 372 00:26:02,510 --> 00:26:06,250 That was very strange, and many of the advisers were talking about that. What 373 00:26:06,250 --> 00:26:07,650 going on? Is there a lawsuit? 374 00:26:08,090 --> 00:26:13,130 Is the SEC asking for these things? We were concerned. That was a big red flag 375 00:26:13,130 --> 00:26:18,170 to me because if indeed there was an open investigation or inquiry, purging 376 00:26:18,170 --> 00:26:22,010 files and the possible destruction of documents was a tremendous no -no. 377 00:26:23,150 --> 00:26:28,770 Ironically, after ordering employees to destroy files, Stanford then sends a 378 00:26:28,770 --> 00:26:31,030 memo reminding them to save everything. 379 00:26:31,880 --> 00:26:38,880 It was a CYA memorandum to, in my mind, really cover up that 380 00:26:38,880 --> 00:26:41,520 purging of files that had happened a month or so prior. 381 00:26:42,120 --> 00:26:44,160 What is Sanford trying to cover up? 382 00:26:44,600 --> 00:26:48,760 Raw believes it has something to do with how the CDs are marketed to investors. 383 00:26:49,880 --> 00:26:54,460 Glossy corporate videos exaggerate the solidity of Stanford investments. 384 00:26:55,120 --> 00:26:59,740 Our banks offer innovative products, security, and world -class service. It 385 00:26:59,740 --> 00:27:03,500 obvious to me that if you pull out the notes, the sticky notes, the letters, 386 00:27:03,640 --> 00:27:09,280 anything other than the official documents, you couldn't prove how the CD 387 00:27:09,280 --> 00:27:13,460 sold. So that's why the documents needed to be purged and cleaned out. Then they 388 00:27:13,460 --> 00:27:14,940 made copies and sent them to somebody. 389 00:27:15,300 --> 00:27:18,440 It was later we learned that that somebody was the SEC. 390 00:27:19,340 --> 00:27:24,340 Next on American Greed, two brokers risk potential ruin when they attempt to 391 00:27:24,340 --> 00:27:28,500 take Stanford down from the inside. When we drove to Fort Worth to turn over 392 00:27:28,500 --> 00:27:31,940 these documents, I spent more time looking in my rearview mirror than I did 393 00:27:31,940 --> 00:27:32,940 looking through the windshield. 394 00:27:33,320 --> 00:27:34,320 Paranoid, maybe? 395 00:27:35,140 --> 00:27:40,240 Watch more of Alan Stanford's corporate video at AmericanGreed .CNBC .com. 396 00:27:43,630 --> 00:27:48,690 From the outside, billionaire banker Alan Stanford seems to radiate success. 397 00:27:49,370 --> 00:27:54,990 But inside Stanford headquarters in Houston, the halo effect has grown 398 00:27:55,290 --> 00:28:00,450 Some of Stanford's brokers, including Mark Tidwell, worry that Sir Alan is 399 00:28:00,450 --> 00:28:01,550 cooking the books. 400 00:28:01,950 --> 00:28:07,550 There were a lot of after -hour phone calls, meetings and discussions about, 401 00:28:07,550 --> 00:28:11,830 know, what is really going on here? You know, there's a disclaimer on it. Yeah. 402 00:28:12,250 --> 00:28:17,230 The breaking point for Tidwell and Charlie Wall comes when Stanford asks 403 00:28:17,230 --> 00:28:19,090 staffers to destroy documents. 404 00:28:19,850 --> 00:28:23,110 They believe it's a cover -up involving Stanford CDs. 405 00:28:24,210 --> 00:28:27,510 We're very confident that Stanford is doing things wrong. 406 00:28:27,990 --> 00:28:31,090 You know, they're not reporting things correctly. 407 00:28:31,370 --> 00:28:32,810 They're manipulating data. 408 00:28:33,050 --> 00:28:37,230 They're cooking the numbers. Everything became a gray area. What is right? What 409 00:28:37,230 --> 00:28:38,230 is wrong? 410 00:28:38,330 --> 00:28:41,830 What you can report, what you should report, but what you can maybe disclaim 411 00:28:41,830 --> 00:28:46,030 away. I mean, there were a lot of issues here that kind of cut across a lot of 412 00:28:46,030 --> 00:28:49,590 different areas, mostly very technical, but very real. 413 00:28:50,410 --> 00:28:54,750 All we wanted to do was leave that place, get out of there, and get our 414 00:28:54,750 --> 00:28:55,810 out safe and sound. 415 00:28:56,730 --> 00:29:01,390 Fearing for their clients' money and their own futures, Rall and Tidwell 416 00:29:01,390 --> 00:29:03,070 in December 2007. 417 00:29:04,820 --> 00:29:09,960 Stanford responds by suing them for breach of contract, and he tries to claw 418 00:29:09,960 --> 00:29:13,260 back signing bonuses that had been given to the two brokers. 419 00:29:14,460 --> 00:29:18,800 They knew they could steamroll us and beat us down and win. We knew that if 420 00:29:18,800 --> 00:29:23,180 we're going to have any chance of survival, that we needed to bring this 421 00:29:23,180 --> 00:29:24,180 the public domain. 422 00:29:24,260 --> 00:29:27,940 We needed to go to every regulator we could think of. We needed to go to the 423 00:29:27,940 --> 00:29:29,380 enforcement agencies that would listen. 424 00:29:30,360 --> 00:29:35,260 Months earlier, the two brokers had begun to compile evidence of 425 00:29:35,260 --> 00:29:36,420 at Stanford Financial. 426 00:29:36,960 --> 00:29:40,720 They bring the documents to the Securities and Exchange Commission. 427 00:29:41,320 --> 00:29:46,540 Among other things, the documents show that Stanford has vastly overstated the 428 00:29:46,540 --> 00:29:48,220 performance of his mutual funds. 429 00:29:48,940 --> 00:29:53,620 Rall and Tidwell believe that this information could put Alan Stanford out 430 00:29:53,620 --> 00:29:55,000 business for good. 431 00:29:56,330 --> 00:30:00,370 When we drove to Fort Worth to turn over the documents, Mark and I went a 432 00:30:00,370 --> 00:30:01,370 different route. 433 00:30:02,770 --> 00:30:07,110 I spent more time looking in my rearview mirror than I did looking through the 434 00:30:07,110 --> 00:30:08,110 windshield. 435 00:30:08,930 --> 00:30:09,930 Paranoid, maybe. 436 00:30:11,350 --> 00:30:15,330 I remember conversations with Charlie. You know, you turn on a light switch and 437 00:30:15,330 --> 00:30:19,170 it sounded funny, or you started your car and it didn't really sound the way 438 00:30:19,170 --> 00:30:20,590 was supposed to sound. We were scared. 439 00:30:22,550 --> 00:30:25,390 We knew that it was the entire Stanford Empire. 440 00:30:26,120 --> 00:30:28,120 It'd be taken down with what we were doing. 441 00:30:28,900 --> 00:30:32,160 Federal investigators begin to pour through the documents. 442 00:30:32,640 --> 00:30:37,600 They find that marketing materials misrepresent the security of Stanford's 443 00:30:37,880 --> 00:30:42,660 implying the CDs are insured by Lloyds of London when they are not. 444 00:30:43,220 --> 00:30:47,880 They also discover that Stanford Group lied about the performance of mutual 445 00:30:47,880 --> 00:30:48,880 funds. 446 00:30:49,660 --> 00:30:53,480 When we left Stanford, we didn't know how bad the fraud was. That began to 447 00:30:53,480 --> 00:30:54,480 reveal itself. 448 00:30:54,900 --> 00:30:58,820 Over time, we knew they were lying about a lot of things. We never dreamed it 449 00:30:58,820 --> 00:30:59,820 was a Ponzi scheme. 450 00:31:00,640 --> 00:31:04,380 At that point, not only I had never heard of Stanford, I had never heard of 451 00:31:04,380 --> 00:31:07,860 billion Ponzi scheme. I thought that was kind of crazy. 452 00:31:08,660 --> 00:31:12,420 Paul Pelletier is a former assistant U .S. attorney in Houston. 453 00:31:12,720 --> 00:31:18,480 In May 2008, he gets the Stanford case from the SEC, which believes Stanford's 454 00:31:18,480 --> 00:31:20,140 file is a criminal matter. 455 00:31:20,760 --> 00:31:24,940 And as you look at this, you can see, like everything that's Stanford, it has 456 00:31:24,940 --> 00:31:26,200 the trappings of legitimacy. 457 00:31:26,820 --> 00:31:31,160 But when you just scratch the surface or look behind it, there's really nothing 458 00:31:31,160 --> 00:31:32,160 there. 459 00:31:32,540 --> 00:31:35,000 There are many warning signs of fraud. 460 00:31:35,500 --> 00:31:40,360 The bank's board of directors is composed of Stanford's relatives and 461 00:31:40,360 --> 00:31:44,500 -men. Few have any experience in financial services. 462 00:31:45,260 --> 00:31:50,460 And Stanford himself struggles to explain how his investments work in this 463 00:31:50,460 --> 00:31:52,200 used to lure investors. 464 00:31:52,860 --> 00:31:58,460 We have the advantage of always placing our clients' interests above that of any 465 00:31:58,460 --> 00:32:03,080 shareholders. When you see him talking to people, it's always pablum. 466 00:32:03,280 --> 00:32:07,840 When you look at it, it's just words. Because when people are asking him 467 00:32:07,840 --> 00:32:11,980 questions about the investments, he always reverts back to the problem. We 468 00:32:11,980 --> 00:32:16,120 the landscape with eagle vision, seeing opportunities where others cannot. 469 00:32:17,520 --> 00:32:22,540 Opportunities for new markets, new investments, and new ways of enhancing 470 00:32:22,540 --> 00:32:23,780 financial security. 471 00:32:24,580 --> 00:32:30,280 Up here, the possibilities are endless because potential has no boundaries. 472 00:32:31,700 --> 00:32:36,280 Pelletier begins to fear that tens of thousands of investors may have already 473 00:32:36,280 --> 00:32:37,680 lost their life savings. 474 00:32:38,300 --> 00:32:40,720 But how does he build a criminal case? 475 00:32:42,060 --> 00:32:47,280 Pelletier gets a break when Jim Davis, Alan Stanford's right -hand man since 476 00:32:47,280 --> 00:32:52,680 early days on the island of Montserrat, agrees to tell all in exchange for a 477 00:32:52,680 --> 00:32:53,720 reduced sentence. 478 00:32:54,020 --> 00:32:56,320 Trust and integrity are indispensable. 479 00:32:56,740 --> 00:32:59,640 That thought of personal relationship. 480 00:33:01,310 --> 00:33:06,150 is a cornerstone to establish a lifelong rapport. 481 00:33:06,530 --> 00:33:10,390 What Jim Davis said from the beginning, the books were cooked. From the 482 00:33:10,390 --> 00:33:16,850 beginning, they were making up numbers as to what the profitability of the bank 483 00:33:16,850 --> 00:33:22,850 was from his first day on the job. That's what his job was, a CFO. And he 484 00:33:22,850 --> 00:33:29,130 continued to do that from 1987 or 88 all the way until 2009. 485 00:33:30,190 --> 00:33:32,650 It was sort of a symbiotic relationship. 486 00:33:32,930 --> 00:33:37,870 Stanford would look to Davis to make the numbers sing, and Davis would look to 487 00:33:37,870 --> 00:33:41,370 Stanford for the approval and to continue to finance his lifestyle. 488 00:33:41,910 --> 00:33:48,210 Up next on American Greed, Stanford's former ally tells the shocking story of 489 00:33:48,210 --> 00:33:53,050 bizarre ritual between Sir Allen and Antigua's chief banking regulator, 490 00:33:53,050 --> 00:33:55,070 with blood and bribes. 491 00:33:55,760 --> 00:34:00,220 Each of them cut their fingers and mixed their blood at the time they arranged 492 00:34:00,220 --> 00:34:01,220 the deal. 493 00:34:10,380 --> 00:34:15,060 Allen Stanford's former right -hand man, Jim Davis, is cooperating with the 494 00:34:15,060 --> 00:34:19,820 Department of Justice, providing a window into one of the biggest frauds in 495 00:34:19,820 --> 00:34:20,820 history. 496 00:34:21,800 --> 00:34:28,460 In 2009, Davis tells former prosecutor Paul Pelletier that in Antigua, Stanford 497 00:34:28,460 --> 00:34:30,120 could do whatever he wanted. 498 00:34:30,540 --> 00:34:35,600 In a shocking revelation, Davis says Stanford bribed the chief banking 499 00:34:35,600 --> 00:34:39,620 of the island and used a bizarre ritual to close the deal. 500 00:34:39,940 --> 00:34:45,120 They sealed this bribery scheme with a blood oath and that each of them cut 501 00:34:45,120 --> 00:34:49,900 their fingers and mixed their blood at the time they arranged the deal to it. 502 00:34:50,330 --> 00:34:54,750 to engage in this bribery scheme, and that they were now blood brothers so 503 00:34:54,750 --> 00:34:58,990 could never violate that oath by exposing this bribery scheme to anyone. 504 00:34:59,630 --> 00:35:04,690 And with the bank's regulator looking the other way, Pelletier says Alan 505 00:35:04,690 --> 00:35:06,550 Stanford had no constraints. 506 00:35:06,990 --> 00:35:11,290 He siphoned investor money into his own personal Swiss bank accounts. 507 00:35:11,770 --> 00:35:15,670 The amount of money that he spent... 508 00:35:16,090 --> 00:35:20,310 through these slush funds was astronomical, but nobody knew that he 509 00:35:20,310 --> 00:35:26,950 it. To cite one egregious case, Stanford spends $12 million of investor money 510 00:35:26,950 --> 00:35:31,330 lengthening his yacht, the Sea Eagle, by just six feet. 511 00:35:31,730 --> 00:35:36,710 To top it off, the renovation actually diminishes the value of the boat. 512 00:35:37,150 --> 00:35:43,590 The fact that a person would use investor money to increase the size of a 513 00:35:43,590 --> 00:35:50,210 by six feet, speaks volumes as to where his head is at in terms of whether or 514 00:35:50,210 --> 00:35:52,450 not he really cares about the investors. 515 00:35:52,810 --> 00:35:58,930 But sadly, the $12 million spent on the Sea Eagle is a speed bump compared to 516 00:35:58,930 --> 00:36:02,530 the Mount Everest of theft Pelletier will eventually uncover. 517 00:36:03,390 --> 00:36:09,270 What we learned is that ultimately he was siphoning off money in loans to 518 00:36:09,270 --> 00:36:14,390 himself that he would remove from the depositors' CD holdings. 519 00:36:15,000 --> 00:36:19,700 And these loans ultimately amounted to approximately $2 billion, which were 520 00:36:19,700 --> 00:36:21,180 never revealed to investors. 521 00:36:22,200 --> 00:36:28,920 On February 17, 2009, the headquarters of Stanford International Bank becomes 522 00:36:28,920 --> 00:36:29,940 a crime scene. 523 00:36:30,820 --> 00:36:37,060 The SEC shuts down Stanford's operation in Houston and across the country. 524 00:36:38,240 --> 00:36:41,320 Thousands of investors watch in horror. 525 00:36:42,480 --> 00:36:48,900 No one was more surprised than I was the day I woke up and found out that Alan 526 00:36:48,900 --> 00:36:55,740 Stanford was actually the person that I had known since I met him as 527 00:36:55,740 --> 00:36:56,618 Big Al. 528 00:36:56,620 --> 00:36:58,820 That was a very shocking day. 529 00:36:59,100 --> 00:37:06,080 And my first reaction was to come home, pack a suitcase, grab some cash, 530 00:37:06,460 --> 00:37:09,160 hop on a plane, and fly to Antigua. 531 00:37:09,690 --> 00:37:11,550 It was just a panic situation. 532 00:37:11,990 --> 00:37:17,130 I immediately go to my bank account and realize I have $200 in my checking 533 00:37:17,130 --> 00:37:21,490 account. I have no money. I had no savings other than everything that was 534 00:37:21,490 --> 00:37:22,990 Stanford Group Companies. 535 00:37:23,470 --> 00:37:24,670 I am dead broke. 536 00:37:25,290 --> 00:37:30,530 And while victims soon learn their money has vanished, Stanford apparently has 537 00:37:30,530 --> 00:37:32,290 lost none of his swagger. 538 00:37:32,630 --> 00:37:36,030 And at this point now, he claims he's going to stay and fight. 539 00:37:36,250 --> 00:37:39,010 He said he's knocked back on his heels a little bit, but now... 540 00:37:39,520 --> 00:37:40,800 Now he's going to fight this thing. 541 00:37:41,280 --> 00:37:45,200 He claims that it was the government, it was the FTC that destroyed his 542 00:37:45,200 --> 00:37:47,600 financial empire. It wasn't a Ponzi scheme that fell apart. 543 00:37:47,800 --> 00:37:52,220 It was because the government moved in with its heavy hand and knocked the 544 00:37:52,220 --> 00:37:53,019 thing down. 545 00:37:53,020 --> 00:37:58,180 In a rare and exclusive interview, Stanford meets with CNBC senior 546 00:37:58,180 --> 00:37:59,200 Scott Cohn. 547 00:37:59,700 --> 00:38:00,700 Madoff comes along. 548 00:38:00,940 --> 00:38:03,180 Well, they need somebody to make an example out of. 549 00:38:03,940 --> 00:38:06,420 In this case, to hell with the investor. 550 00:38:06,970 --> 00:38:11,730 Let's go after this thing. Let's just carve it to pieces, bludgeoned it, and 551 00:38:11,730 --> 00:38:13,090 leave it worthless. 552 00:38:13,950 --> 00:38:17,390 So they screwed up with Madoff, so they came after you? Is that what you're 553 00:38:17,390 --> 00:38:19,170 saying? You make your own judgment there. 554 00:38:19,950 --> 00:38:21,490 You make your own judgment there. 555 00:38:21,710 --> 00:38:23,290 Madoff was a true Ponzi scheme. 556 00:38:23,950 --> 00:38:30,110 We have real assets, real people, a real group of companies, 557 00:38:30,290 --> 00:38:32,330 and this was no Ponzi scheme. 558 00:38:33,190 --> 00:38:39,430 In June 2009, Alan Stanford is charged with fraud, conspiracy to launder money, 559 00:38:39,610 --> 00:38:41,730 and conspiracy to obstruct justice. 560 00:38:42,190 --> 00:38:45,270 He's arrested at his girlfriend's house in Virginia. 561 00:38:45,950 --> 00:38:50,650 The case drags on for more than three years and is filled with drama. 562 00:38:52,070 --> 00:38:54,770 Stanford is hospitalized for heart trouble. 563 00:38:55,310 --> 00:38:59,310 He claims he's addicted to pills and is mentally unstable. 564 00:39:00,780 --> 00:39:03,180 He's beaten up and bloodied in prison. 565 00:39:03,940 --> 00:39:05,540 He even bloodies himself. 566 00:39:06,620 --> 00:39:11,840 He bit his tongue and kept spitting up blood in court. 567 00:39:13,000 --> 00:39:17,540 And it was unusual to me, but he was trying to portray himself as if he had 568 00:39:17,540 --> 00:39:23,660 internal bleeding. But in reality, he had bit his tongue and was spitting that 569 00:39:23,660 --> 00:39:25,100 blood in a cup in court. 570 00:39:25,360 --> 00:39:28,700 Stanford's life has been a lie. 571 00:39:29,370 --> 00:39:31,330 and a ploy to deceive people. 572 00:39:31,530 --> 00:39:34,630 And he didn't change that once he was incarcerated. 573 00:39:36,130 --> 00:39:40,610 Finally, in January 2012, the trial moves forward. 574 00:39:41,150 --> 00:39:46,270 Alan Stanford pleads not guilty and tries to blame everything on Jim Davis. 575 00:39:47,030 --> 00:39:49,950 But the evidence against Stanford is overwhelming. 576 00:39:51,750 --> 00:39:55,810 On March 6, 2012, Stanford is found guilty. 577 00:39:56,780 --> 00:40:02,360 The jury convicts him of 13 out of 14 counts of fraud, money laundering, and 578 00:40:02,360 --> 00:40:03,360 obstruction. 579 00:40:05,360 --> 00:40:12,140 In June 2012, American Greed is on location in Houston for Stanford's 580 00:40:12,140 --> 00:40:17,620 hearing. Victims, wearing black in solidarity, gather outside the 581 00:40:18,540 --> 00:40:21,900 Cassie Wilkinson steps up to speak out against Stanford. 582 00:40:22,320 --> 00:40:27,980 The sentencing for crimes like this has become so big and so long that they're 583 00:40:27,980 --> 00:40:32,100 comparing it to economic homicide. And really, that's what it is. Someone 584 00:40:32,100 --> 00:40:36,820 murdered the life that I knew, that I worked hard for. 585 00:40:37,040 --> 00:40:41,280 We were not born with money. We earned every single penny. 586 00:40:41,680 --> 00:40:47,180 Judge David Hittner sentences Stanford to 110 years in prison. 587 00:40:47,880 --> 00:40:52,260 Though it's less than the maximum sentence, many victims are satisfied 588 00:40:52,260 --> 00:40:55,360 Stanford will spend the rest of his life behind bars. 589 00:40:56,020 --> 00:41:00,480 Well, anything beyond about 30 years would have been just to send a message. 590 00:41:00,480 --> 00:41:02,640 think it was a good, strong sentence. 591 00:41:03,100 --> 00:41:06,200 110 years, I think, was an appropriate sentence. 592 00:41:06,620 --> 00:41:10,620 Naturally, I would have loved to see the 230 that the government requested, but 593 00:41:10,620 --> 00:41:12,500 I think 110 sends a good message. 594 00:41:13,150 --> 00:41:18,930 Sandra Dorrell invested $1 .3 million with Stanford so she could have peace of 595 00:41:18,930 --> 00:41:20,570 mind as she fought a serious illness. 596 00:41:21,070 --> 00:41:25,850 She has since had a successful liver and kidney transplant paid for by insurance 597 00:41:25,850 --> 00:41:29,650 and considers herself lucky to enjoy good health. 598 00:41:29,910 --> 00:41:33,330 But any hope for financial security is gone. 599 00:41:33,770 --> 00:41:38,070 I wake up every day thinking about money. I go to bed every night thinking 600 00:41:38,070 --> 00:41:42,070 money. And now it's not there, and I have to worry about it every day of my 601 00:41:42,070 --> 00:41:47,060 life. How am I going to live the rest of my life without that money? 602 00:41:48,780 --> 00:41:54,000 Cassie Wilkinson and her husband Phil lost a six -figure portion of their 603 00:41:54,000 --> 00:41:58,440 retirement. My husband has had to go back to work. We've put our house on the 604 00:41:58,440 --> 00:42:04,600 market. It was our life that was stolen, a life that we worked really hard for. 605 00:42:04,760 --> 00:42:09,840 None of it was given to us. And Alan Stanford used it like it was pocket 606 00:42:11,020 --> 00:42:17,220 To lose $1 .3 million by someone that absolutely stole the money from me is 607 00:42:17,220 --> 00:42:18,220 horrific. 608 00:42:19,580 --> 00:42:26,020 The evidence showed Alan Stanford was a man that survived on two things, ego and 609 00:42:26,020 --> 00:42:31,420 greed. Lying to people who you are taking money from for the sole purpose 610 00:42:31,420 --> 00:42:37,360 promoting your ego and promoting your sociopathic lifestyle. 611 00:42:37,960 --> 00:42:39,500 That's the definition of greed.