The fallout in South Florida, Latin America, and the Caribbean has been devastating. Almost 200 Stanford employees in Florida have lost jobs, tens of thousands of investors in the region have had accounts frozen, and 30,000 worldwide have lost a total of $8 billion in life savings to the giant house of cards.

Even more than Bernie Madoff's tale, R. Allen Stanford's rise and fall is the story of the past decade in America, where greed mixed with cynical politics birthed a perfect storm for men such as Stanford to help bring the global economy to its knees. And as Stanford's story shows, the warning signs were there. They were simply ignored.

Robert Allen Stanford was born in 1950 in Mexia, an oil boomtown on the endless plains of central Texas about 85 miles south of Dallas.

Laura Pendergest-Holt is the only Stanford exec who faces criminal charges, 
for allegedly lying to SEC investigators.
REUTERS/Richard Carson/Newscom
Laura Pendergest-Holt is the only Stanford exec who faces criminal charges, for allegedly lying to SEC investigators.
R. Allen Stanford faces federal civil charges that his bank was a “massive Ponzi scheme.”
REUTERS/Joe Skipper/Newscom
R. Allen Stanford faces federal civil charges that his bank was a “massive Ponzi scheme.”

He lived in Mexia (pronounced muh-HAY-uh) until the fourth grade, when his parents separated and he moved with his mother to Fort Worth. But those who remember him from that young age say that even then, he was famous for trying to make a buck.

"He was always known as an entrepreneur," says Bob Wright, editor of the Mexia Daily News and a family acquaintance. "He liked to make money, and he always seemed to have a few things going."

Childhood friend Jo Bennett recalled to the Houston Chronicle that as a boy, Stanford tried to sell her his bike for a profit when he got a new one as a gift. In high school, Stanford played football, and at Baylor University, he taught scuba lessons to make extra money.

Stanford graduated from Baylor in 1974 with a business administration degree and joined his father in Mexia to help run the family insurance business. But Stanford had bigger plans.

"I couldn't stay in a small town and be content," Stanford told Forbes magazine last fall.

By the early 1980s, Stanford had persuaded his father to sell the insurance business and join him in Houston as a real estate speculator. Houston's market had crashed after the oil bubble burst, and the Stanfords began buying up distressed properties at bargain prices — rundown apartment complexes and strip malls, and later larger swaths of land.

By the mid-'80s, Stanford had set his sights beyond real estate. In December 1985, with a few million in start-up cash from his father, he established an offshore bank called Guardian International Bank in Montserrat, a small British territory in the Leeward Islands.

The bank earned licenses to manage international banking accounts and in five years grew to about $14 million in holdings. But by 1990, Stanford faced an IRS lawsuit accusing him of owing the government $420,000 in unpaid taxes — and at the same time, the British government successfully pressured the territory to toughen regulations on its banks. In 1991, Stanford withdrew his license in Montserrat and began looking for another Caribbean home.

He found it later that year in the tiny island nation of Antigua and Barbuda, a country of about 85,000 in the middle of the Lesser Antilles. Stanford relocated to Antigua and split his company into the two central pieces that still exist today. The first, called Stanford International Bank, was housed in a hillside estate in the capital city of Saint John's. The other arm, called Stanford Group Company, was based in downtown Houston. He made James Davis, his college roommate at Baylor, director and chief financial officer of both companies. Stanford, though, was the sole shareholder.

Stanford International Bank operated outside of direct U.S. scrutiny. The bank's certificates of deposit — which are similar to savings accounts, except they are held for a preset period of time with a fixed interest — consistently returned more than most American deposits, with funds in the mid-'90s routinely bringing 15 percent interest.

Meanwhile, Stanford's Houston-based firm, Stanford Group Company, was a traditional SEC-regulated broker. They managed portfolios, traded stock and, quite prominently, sold CDs in Stanford's Antiguan bank to American investors.

About six years after moving his offshore bank to Antigua, state records show, Stanford made South Florida the de facto heart of his new empire — midway between his Houston investment headquarters and the Antigua bank, and close to the wealthy Latin Americans to whom he catered.

By the end of the decade, his formula — pushing CDs in his offshore bank to U.S. and Latin American investors through his Houston and South Florida brokerages — was making the Texan a mint. And as Stanford grew richer in his island fiefdom, his eccentricities flowered like a tropical orchid.

He soon obtained Antiguan citizenship, persuaded the former British colony to bestow an honorary knighthood upon him, and then demanded he be addressed everywhere as "Sir Allen." He became an avid cricket fan and brought the sport to Antigua by sponsoring a lavish international tournament with an unheard-of $20 million prize for the winning team. It was during this time that the six-foot-four Texan began talking with a slight British accent. He told reporters — falsely, it turned out — that he could trace his lineage back to the founder of Stanford University. According to a Forbes profile, rumor abounded that he toted around a vial of blood in his briefcase that he claimed came from a priest with stigmata, or Christ-like wounds. Stanford denied carrying such a vial but said he met a priest with stigmata in the early '90s and felt a "life-changing surge."

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