Legal News

Hints of Madoff: SEC Charges Stanford With ?Massive Fraud?

By Dan Slater

Let’s head to Antigua for the latest example of alleged financial fraud. This morning, the Journal reported that depositors from as far away as Colombia have begun arriving in the island nation, seeking to withdraw their money from an offshore bank under investigation by U.S. state and federal authorities.

Texas businessman R. Allen Stanford during an interview in May 2008. (Reuters)

Stanford International Bank Ltd. and related firms controlled by Texas businessman R. Allen Stanford, the Journal notes, have fallen under scrutiny by the FBI, the SEC and other regulatory bodies.

The latest: the SEC has filed civil charges against Stanford, alleging he orchestrated a multibillion dollar scheme centering on an $8 billion certificate of deposit program. The SEC said Stanford “perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors.”

Sound familiar?

“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,” SEC enforcement director Linda Thomsen said in a statement. “We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors.”

Attempts to reach Stanford were unsuccessful.

Update: The receiver in the case is Ralph Janvey, a Dallas lawyer and former assistant director of securities for the U.S. Comptroller of the Currency.

Full post as published by Law Blog - WSJ.com on February 17, 2009 (boomark / email).