Online gambling regulators in the Caribbean licensing jurisdiction of Antigua and Barbuda have long trumpeted their capabilities and the respect in which they are held internationally, even successfully fighting for inclusion on the UK's advertising "white list", but a banking scandal unfolding in the United States has the potential to impact the islanders, and one senior official has already been suspended.
The suspended official is Leroy King, head of the Antigua and Barbuda Financial Services Regulatory Commission to which the island's Internet gambling regulators also report, and the damaging issue under consideration is an alleged pyramid banking scheme run by the larger-than-life Texas financier R. Allen Stanford (59).
Stanford gave himself up to US federal investigators Thursday, and an indictment unsealed on his arrest claims that he paid King more than $100 000 to conceal an elaborate Ponzi scheme that lured about 30 000 investors, according to reports in the Los Angeles Times. Stanford is being held in custody pending a hearing in Houston, Tx.
Federal prosecutors said the alleged bribes helped Stanford and colleagues conceal the scheme that pulled in many American investors and enabled Stanford to live the high life, sponsoring grandiose sports events and jetting around the world.
Stanford, three executives of his firm and King, are named in the indictment and accused of fraud and obstruction charges.
The indictment alleges that in 2005 the Securities and Exchange Commission began investigating Stanford Financial Group and making inquiries with Antigua's financial regulators. The indictment alleges that King showed Stanford the SEC's inquiries and once responded to the agency with material prepared by Stanford.
King, a dual citizen of Antigua and Barbuda and the U.S., has been suspended from his post. The U.S. is seeking his extradition from Antigua.
Also named in the 21-count indictment are Laura Pendergest-Holt, Stanford Financial's chief investment officer; Gilberto Lopez, its chief accounting officer; and Mark Kuhrt, global controller of an affiliate.
James Davis, Stanford International Bank Ltd.'s chief financial officer, was charged in a separate fraud indictment.
Prosecutors said Stanford enticed about 30 000 investors, many in the U.S., with promises of unusually high interest on bank certificates, but in fact ran a scheme in which new investor money, instead of being invested as promised, was used to pay "profits" to earlier clients.
In February, the SEC filed a civil fraud complaint against Stanford, Davis and Pendergest-Holt. Stanford has denied any wrongdoing.
The Attorney General for Antigua, Justin Simon, has disclosed that the island government's Cabinet will meet in the coming week to decide King's future.
"Antigua and Barbuda's offshore business activities (are) once again placed under intense international scrutiny, and this will clearly have adverse effects on the economy and raise questions about our regulatory legal framework," Simon said, assuring the international community that an extensive internal investigation of King and the systems involved is already underway.