Allen Stanford's multi-count indictment

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by By Len Cannon / 11 News

khou.com

Posted on August 15, 2009 at 4:15 PM

Updated Monday, Oct 26 at 1:40 PM

, one of the richest men in America, is now in federal custody.

But was he careless or ruthless?

Video: Stanford Indictment
Look at Allen Stanford's multi-count indictment
July 3, 2009

In a multi-count indictment, federal investigators say the companies purported success, is the smoking gun.

In 2001, Stanford International Bank based in Antigua listed assets of $1.2 billion.

By 2008, it had jumped to $8.5 billion.

The government says those assets were inflated to lure more investors.

Another red flag, says the government, is a 2008 letter to investors. They say that it reported a decline in bank earnings of just 1.3 percent at a time when the markets were in free fall and most financial institutions were seeing losses of up to 50 percent.

"There are a million different numbers you can assign to any given asset, it's actually quite subjective," said Rice University accounting Professor Steven Crawford.

He saw the indictments and said that it is hard to prove assets are inflated, but one thing stood out to him.

And that one thing is called roundtrip transaction.

The government says in July of 2008, Stanford international bank transferred island properties to another Stanford entity.

Those properties were worth $63.5 million.

Just four months later, the properties were transferred back to the bank, now listed as worth an astounding $3.2 billion.

"I won't say it never happens, but it is very unusual that something, real estate, any investment would increase by that much in such a short period of time," said Stevens.

To prosecutors, it looks like fraud.

"I'll guarantee you these defense lawyers will find somebody that can put a dress on that and some makeup and make it sound all right," said 11 News legal analyst Gerald Treece.

And just as Enron prosecutors needed an Andy Fastow, Treece predicts the government will need a Standford insider to make its case.

"You're going to have to have someone, stand up and say I did something bad and A, B and C knew about it," he said.

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