Reporters on the Fox Business Network are calling this a "mini Madoff"


The Securities and Exchange Commission today filed civil charges against Texas billionaire Robert Allen Stanford, his offshore bank, two of his Houston-based companies and two other officers, alleging that they have orchestrated a multibillion-dollar investment fraud scheme on certificates of deposit.

U.S. District Judge Reed O’Connor issued an order freezing the defendants’ assets and appointed a receiver to marshal them.

“As we allege in our complaint, Stanford and the close circle of family and friends with whom he runs his businesses perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors,” said Linda Chatman Thomsen, director of the SEC’s division of enforcement, in a statement.

“We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors,” she said.

A company spokesman did not immediately return a call for comment.

The SEC complaint, filed in federal court in Dallas, names Stanford himself, Stanford International Bank in the Caribbean island nation of Antigua and Barbuda, Houston-based broker-dealer and investment adviser Stanford Group Company, and investment adviser Stanford Capital Management.

It also names James Davis, chief financial officer for the bank and Stanford’s roommate at Baylor University in the 1970s, as well as Laura Pendergest-Holt, chief investment officer for Stanford Financial Group.

Doors were locked at Houston headquarters of Stanford Group late this morning, the lobby was filled with people including uniformed officials. The company has buildings on opposites sides of Westheimer just outside the West Loop.

The SEC, FBI and the Internal Revenue Service have been investigating the operations. Also investigating are the Financial Industry Regulatory Authority and the Florida Office of Financial Regulation.

The SEC complaint alleges that acting through a network of Stanford Group Company financial advisers, the bank has sold about $8 billion of certificates of deposit to investors by promising “improbable and unsubstantiated” high interest rates, the agency said in a statement.

The bank claims that its high rates of return are earned through its unique investment strategy, which provided double-digit returns over the last 15 years.

The complaint alleges further that the defendants misrepresented to CD purchases that their deposits are safe and falsely claim that:

* The bank re-invests client funds primarily in “liquid” assets;

* The portfolio is monitored through a team of 20-plus analysts;

* The portfolio is subject to annual audits by Antiguan regulators.

The complaint also alleges that the bank is operated by a close circle of Stanford’s family and friends.

The firm is a privately held network of financial services companies led by Stanford, the chairman and chief executive. The company’s Web site described its private wealth management, institutional investment banking and emerging growth companies as its core businesses, but it also offers merchant and commercial banking, institutional sales and trading, real estate investment and insurance.

The company claims to have more than $50 billion in assets under management or advisement. It has more than 50 offices in North America, Latin America, the Caribbean and Europe.

http://www.chron.com/disp/story.mpl/front/6266846.html

In the local investment management community, the news was not a huge surprise. Stanford was trying to get the new business school at UH named after his firm a few years ago, but the dean wisely walked away from the deal because Stanford wanted too much control over how the money was to be spent. Stanford was involved in a money laundering scheme in the late 1990's as well.

Another more recent story...I was at a dinner a couple of weeks ago with a bunch of Houston-area banking executives, bank stock analysts, buy-side analysts, etc. At the end of the dinner we were each asked to give our favorite long and short idea in financials for 2009. One local money manager said, "I know that it's not a public company, but if it were I would short Stanford Financial."

How can you go wrong with an Antiguan seal of approval?

http://www.msnbc.msn.com/id/29237750

(02-17-2009 01:36 PM)Sleepy Owl Wrote:  In the local investment management community, the news was not a huge surprise. Stanford was trying to get the new business school at UH named after his firm a few years ago, but the dean wisely walked away from the deal because Stanford wanted too much control over how the money was to be spent. Stanford was involved in a money laundering scheme in the late 1990's as well.

Looks like he is still at the laundering, but at least he doesn't own a "discount furniture store"... The bad thing about this is that "legit" investors have their funds comingled with the money of the Gulf Cartel. Try segregating that out. The Feds can take it all and force the legit investors to prove what money is theirs. And his scam isn't a Ponzi Scheme.. because I doubt this guy is stupid enough to screw over a Drug Cartel.

The SEC's fraud charges may be the least of accused financial scammer R. Allen Stanford's worries. Federal authorities tell ABC News that FBI and others have been investigating whether Stanford was involved in laundering drug money for Mexico's notorious Gulf Cartel.

Authorities tell ABC News that as part of the investigation, which has been ongoing since last year, Mexican authorities detained one of Stanford's private planes. According to officials, checks found inside the plane were believed to be connected to the Gulf cartel, reputed to be Mexico's most violent gang. Authorities say Stanford could potentially face criminal charges of money laundering and bribery of foreign officials.

Authorities say the SEC action against Stanford Tuesday may have complicated the federal drug investigation.

The federal investigation, however, did not stop Stanford from using corporate money to become a big man at last year's Democratic convention in Denver.

http://abcnews.go.com/Blotter/story?id=6907429&page=1

I'm really glad this guy's last name isn't Rice.

Whether or not you're a fan of our previous SecState, she never put herself into the bad headlines this guy is getting today.

What does this have to do with Sec. Rice? Or are you just saying you're glad there's no perceivable link to the University? I don't get it.

(02-19-2009 06:00 PM)MOBalum Wrote:  I'm really glad this guy's last name isn't Rice.

Whether or not you're a fan of our previous SecState, she never put herself into the bad headlines this guy is getting today.

I didn't get it at first either Tex...

His name is Stanford
Duke is a Klan leader
Yale is what they do at Tennessee football games

(02-19-2009 07:00 PM)Hambone10 Wrote:  Yale is what they do at Tennessee football games

Well, the guy did claim to be part of the Stanford lineage, though family members couldn't verify his claim. (And this was before the recent charges.)

Well, I don't know why you'd want to claim co-lineage to the namesake of a Junior University, whatever that is.

There's even a Rice athletics connection:

Quote:Mr. Stanford’s divorce lawyer, Bucky Allshouse, told Bloomberg in an interview that he found the latest allegations against his client “shocking and hard to believe.”