Personal Injury Law

Federal Judge freezes assets of Stanford and others

By Edward Bills

A federal judge froze the assets of Stanford and three of his financial services companies and appointed a receiver to marshal what funds could be located.

R. Allen Stanford, the Texas billionaire charged Tuesday with perpetrating an $8-billion investment fraud, cast himself as offshore investment guru to the transatlantic jet set and benefactor to the Caribbean islands’ poor through multimillion-dollar promotions of their beloved sport of cricket.

The Securities and Exchange Commission charged Meridian Stanford and two other principals of his investment and banking empire in a complaint alleging massive fraud just two months after the investment operation of former Nasdaq Chairman Bernard Madoff collapsed.

The SEC called Stanford’s promises of high-interest returns on his bank’s certificates “improbable and unsubstantiated.” The 25-page complaint filed in federal court in Dallas cast doubt on Stanford’s claims of a “unique investment strategy” that allowed the bank to achieve double-digit returns on its investments over the last 15 years.

Also charged were James Davis, Stanford International Bank Ltd.’s chief financial officer, and Laura Pendergest-Holt, Stanford Financial Group’s chief investment officer. The SEC said the trio had engaged in “a fraud of shocking magnitude that has spread its tentacles throughout the world.”

Stanford and Davis, former Baylor University roommates, refused to cooperate with investigators, the SEC complaint said.

It wasn’t immediately clear how much of the Stanford empire would be subject to the SEC action. Federal investigators raided his Houston offices and shut them down, but much of the financial services group is based abroad, primarily on the tiny Caribbean island of Antigua, part of the two-island country of Antigua & Barbuda.

Stanford Group is regulated and audited by the Financial Services Regulatory Commission of Antigua & Barbuda. Commission Chairman Leroy King told Reuters news service Tuesday that he hadn’t initiated any special probe of Stanford’s operations because the commission hadn’t received any complaints from island citizens.

Full post as published by Bodily Injury Blog on February 18, 2009 (boomark / email).