SEC accuses Stanford of “massive, ongoing fraud”

February 17, 2009

Bloomberg reports that the SEC is raiding the Houston offices of Stanford and has formally accused two principals of the firm.  Sad, very sad, this could have been avoided

Feb. 17 (Bloomberg) — U.S. regulators accused R. Allen Stanford of running a “massive, ongoing fraud” while selling about $8 billion in certificates of deposit through investment firm Stanford International Bank Ltd. The Securities and Exchange Commission filed legal papers against him and two other people at Dallas federal court today seeking a temporary restraining order, court records show.

5 Responses to “SEC accuses Stanford of “massive, ongoing fraud””

  1. Mr Danger Says:

    Makes you wonder – after Madoff, anybody in any position of responsibility with regards to this bank should have woken up and set off the alarms. Auditors, board members, regulators – everyone. How many people just sat there until a blogger did it for them?


  2. a blogger (http://dalmady.blogspot.com/) who btw has no blog anymore…. makes you wonder…

    http://dalmady.blogspot.com/

  3. Ken Price Says:

    Latest news- I wonder if he’s in Brazil, or some country without an extradition treaty.

    Ken Price

    Manhunt: Accused Financier Scammer Stanford Missing
    Authorities say Investor Losses Could Rival Madoff Scandal
    By BRIAN ROSS, JOSEPH RHEE, and JUSTIN ROOD

    February 18, 2009—

    Texas financier R. Allen Stanford is accused of cheating 50,000 customers out of $8 billion dollars but despite raids Tuesday of his financial empire in Houston, Memphis, and Tupelo, Miss., federal authorities say they do not know the current whereabouts of the CEO.

    The Securities Exchange Commission alleges Stanford ran a fraud promising investors impossible returns, much like Bernard Madoff’s $50 billion alleged Ponzi scheme.

    Investigators Tuesday shut down and froze the assets of three of the companies Stanford controls and they say the case could grow to be as big as the Madoff scandal. Like Madoff’s clients, Stanford’s investors are in shock.

    “Initially we put our money in this institution and in a CD because we were nervous about the markets and thought it was a safe place,” said investor Brett Zagone. “I’m so upset right now I can’t even talk about it.”

    But in addition to angry clients, Stanford, like Madoff, has many friends in Washington.

    Stanford’s business is headquartered on the Caribbean island of Antigua. In the last decade, Stanford and his companies have spent more than $7 million on lobbyists and campaign contributions in efforts to loosen regulation of offshore banks.

    Among the top recipients: Senator Bill Nelson (D-Fla.), Congressman Pete Sessions (R-Texas), Sen. John McCain (R-Ariz.), Senator Chris Dodd (D-Conn.) and Senator John Cornyn (R-Texas), one of the members who took a trip to Antigua where he was entertained by Stanford.

    Sen Cornyn’s office has said the trip “was strictly a fact-finding trip,” and at the time, “there was nothing untoward or unseemly” about Stanford Financial.

    Senators Will Return Campaign Contributions from Stanford

    Sen. Nelson said late Tuesday that he would return money received by Stanford. “I will give to charity any campaign contributions from him or his employees,” Nelson said through his spokesman.

    A McCain spokesperson said Wednesday that all contributions from Stanford would be donated. “The McCain Campaign is donating all contributions from R. Allen Stanford, and from individuals associated with Stanford Financial, to charity.” This spokesperson said they will donate contributions made to both McCain’s Presidential and Senate campaigns, but did not have a dollar amount.

    Stanford himself did not contribute to the McCain Presidential campaign. He gave the maximum $4,600 contribution to President Obama’s campaign. Indeed, Obama returned $2,300 that was contributed over the limit to Stanford.

    Some say the investigation into Stanford should include an examination of his relationships with members of Congress.

    “Surely there has to be a part of the investigation to look at what was done in Congress and whether the money that was spent to lobby and make political contributions played any role in all of this,” said Sheila Krumholz of the Center for Responsive Politics.

    Once again, this could be another case of the SEC asleep at the switch. Allegations of fraud and possible drug money laundering have been made against Stanford in the past ten years, but the SEC took action only after two former employees filed a lawsuit in civil court.

    Copyright © 2009 ABC News Internet Ventures


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