The Securities and Exchange Commission today charged Robert Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an $8 billion CD program.
Link Here
Stanford's companies include:
- Antiguan-based Stanford International Bank (SIB)
- Houston-based broker-dealer and
- Stanford Group Company (SGC),
- Stanford Capital Management.
The SEC also charged SIB chief financial officer James Davis as well as Laura Pendergest-Holt, chief investment officer of Stanford Financial Group (SFG), in the enforcement action.
SEC's complaint here (PDF File)
SEC's complaint alleges:
alleges that acting through a network of SGC financial advisers, SIB has sold approximately $8 billion of so-called "certificates of deposit" to investors by promising improbable and unsubstantiated high interest rates. These rates were supposedly earned through SIB's unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for the past 15 years.
This looks like another Bernie Maddoff type scheme.
Other SEC allegations:
Violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act, and registration provisions of the Investment Company Act.
An additional scheme relating to $1.2 billion in sales by SGC advisers of a proprietary mutual fund wrap program, called Stanford Allocation Strategy (SAS), by using materially false historical performance data.
Interestingly one of the victims may be England and West Indies cricket board. They have a multi-million dollar deal with Standford for a couple of games every year. The boards may not have been paid by Stanford.
UPDATE: According to Market Movers Stanford has connection to Madoff
"SIB has exposure to losses from the Madoff fraud scheme despite the bank's public assurances to the contrary": Stanford invested money with Tremont Partners, which in turn invested more than 6% of that money with Madoff. One analyst came up with an estimate of $400,000 in Madoff losses.
More from the Market movers:
Impossibly, Stanford's portfolio managed to rack up identical 15.71% back-to-back returns in 1995 and 1996 -- which implies that this fraud has been going on for at least 13 years.
And this:
In any case, the performance claims were simply false: "(e.g., a claimed return of 18.04% in 2000, when actual SAS investors lost as much as 7.5%)."