Hundreds of depositors lined up at Sir Robert Allen Stanford's Antiguan bank today, seeking to withdraw funds, a day after US authorities charged the Texas billionaire with an $8 billion fraud.
The US Securities and Exchange Commission (SEC) has accused the businessman of running a ''massive, ongoing fraud" while selling roughly $8-billion in deposit certificates through his Antigua-based Stanford International Bank Ltd.
According to the SEC, Stanford's investment firm made "improbable and unsubstantiated'' claims about its ability to generate "safe" returns of more than 10 per cent, while also misleading investors of their exposure to Bernie Madoff's alleged Ponzi scheme.
The SEC also asked the Dallas federal court to freeze assets and appoint a receiver to return money to investors.
In Antigua, nearly 600 people stood in a long queue despite assurances from regional monetary authorities that the bank had sufficient reserves.
The six-nation Eastern Caribbean Central Bank posted a statement at Bank of Antigua saying many depositors had started to withdraw funds, "causing some anxiety," adding that the bank had sufficient reserves.
"However, if individuals persist in rushing to the bank in a panic, they will precipitate the very situation that we are all trying to avoid," the statement added.
Bank of Antigua, with three branches in the tiny twin-island state of Antigua and Barbuda, is at the heart of fraud charges lodged by US regulators.
The SEC accused Stanford, 58, of operating an $8 billion fraud centered on the sale of certificates of deposit offered by Stanford International Bank Ltd (SIB), his Antiguan affiliate.
The whereabouts of Stanford, a financier and sports entrepreneur, are yet unknown.
Antigua's prime minister, Baldwin Spencer, said in a televised address to the nation yesterday that the charges against Stanford could have "catastrophic" consequences for the nation, but he urged the public not to panic.
Stanford, who holds a dual US-Antiguan citizenship, lived for more than 20 years in the small island, only 9 miles wide and 12 miles long, with a population of just 70,000.
He owns the country's largest newspaper, heads a local commercial bank, is the biggest private employer and its top investor, and a white knight in Antigua. He has homes across the region, from Antigua to Virgin Islands to Miami.
The charges come from America and won't apply in Antigua. But the Stanford Group's assets in Houston, Texas stand frozen. A federal judge has also appointed a receiver "to take possession and control of defendants' assets for the protection of defendants' victims."