Longform

R. Allen Stanford's story tells how one eccentric billionaire can help bring the global economy to its knees

It's a bright September afternoon in 2002 inside the towering Miami Center on Biscayne Boulevard. From his 21st-floor office, Charles Hazlett has a clear view of Biscayne Bay's sailboat-speckled water, the massive cruise ships docked at the port, and Bayfront Park's emerald lawn.

The six-foot-four South Florida native — a ringer for Steven Seagal, with long, slick black hair; a tailored suit; and a booming voice — is one of the top investment brokers in South Florida. He has been managing portfolios for investors in Latin America and the Caribbean for more than 15 years, ever since graduating from Florida International University. Nine months ago, he jumped ship from Prudential Securities to an up-and-coming firm in downtown Miami, lured by up to $400,000 in bonuses, a $180,000 salary, and this plush waterfront office.

The firm — which also has offices in Fort Lauderdale and Boca Raton — is unlike any other place Hazlett has ever worked. The company seal, a golden eagle, adorns everything — from the doors and elevators to the toilet seats in the company jet. Employees who don't wear it on their lapel are sent home.

Then there are the weekly staff meetings, where there is more talk about offshore banking deposits than the fluctuations of the stock market. In fact, at Stanford Group Company, hardly anyone talks about Wall Street.

As Hazlett has discovered in his nine months at Stanford, these are all reflections of the firm's quirky founder, a Texas-born swashbuckler of the financial world who has created his own personal fiefdom on the tiny island of Antigua. Born of humble beginnings on the plains of central Texas,R. Allen Stanford now flies the world on private jets, lives in a palatial South Florida estate with its own moat, and at times adopts a faux British accent. In Antigua, where he has been knighted, he has attained an almost godlike status. He owns a daily newspaper and the Bank of Antigua.

At first, Hazlett was too focused on building his investments to delve into the company's methods. In his second quarter at Stanford Group Company , he sold more than $10 million in certificates of deposit to the firm's offshore bank, which made him one of the company's top producers and earned him a $100,000 BMW as a bonus.

But lately, something about his new job had been bothering him, spurred in part by a big-money client with some persistent questions. Why were the CDs performing so well? What was the explanation for the incredible returns? And where were the deposits invested? The more Hazlett pressed his managers for an explanation, the more he was stonewalled.

Today he has maneuvered his way into a meeting with the company's investment chief, and unless she tells Hazlett how the deposits are invested, his biggest client, a Curaçao native with a $5 million stake, will pull out his cash.

Hazlett walks into an office, accompanied by his supervisor. An attractive woman in torn blue jeans, open-toed shoes, and long brown hair tied up into a messy knot swivels around in a leather chair. She looks 22, like a sorority girl roused from her dorm room.

"So you're the chief investment officer?" he asks in confusion.

"Yes," she says in a thick Mississippi twang. "I'm Laura Pendergest."

Hazlett quizzes her on her credentials. She's actually 28, with a master's degree in math from Mississippi State and no investment experience. A sickening pit forms in his stomach. The anxiety swells with each deflected question, confused look, and angry reply that comes from the young woman.

"I can't tell you that, Chuck. It's proprietary information," she says again and again, first trying out her pretty Southern charm and then shifting to an accusatory tone. "Why can't you control your client?"

Hazlett's brassy baritone leaps a notch. He isn't asking for "proprietary information" — all he wants is a basic breakdown. What percentage is invested in stocks, what percentage in bonds? How can these things churn out such better returns than any American deposits? He refuses to relent.

"It's not just my client, Laura," Hazlett says. "I have questions too. The returns these generate don't make sense to my client or to me. I need answers."

Instead of answering him, Pendergest begins to cry. She quietly sobs and then abruptly grabs her purse and runs through the glitzy lobby and out the door.

Hazlett, utterly baffled, stares at his manager across a long boardroom table.

Fifteen minutes later, the company's number two executive — a Mississippi native named James Davis — phones from Memphis. Hazlett picks up the phone.

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Tim Elfrink is an award-winning investigative reporter, the managing editor of the Miami New Times and the co-author of "Blood Sport: Alex Rodriguez and the Quest to End Baseball's Steroid Era." Since 2008, he's written in-depth pieces on police corruption, fatal shootings and social justice issues across South Florida. He's won the George Polk Award and has been a finalist for the Goldsmith Prize for Investigative Reporting.
Contact: Tim Elfrink