Stanford Financial Investment Fraud: $8 Billion Investment Scam
Texas billionaire Allen Stanford has been accused by the U.S. Securities and Exchange Commission (SEC) of a massive $8 billion investment fraud. The complaint alleges that the Stanford Financial Group “lured investors” by promising exceedingly high returns on certificates of deposit, while continuing to siphon their funds into a “black box of hard to trade assets.”
The Antigua-based Stanford International Bank Limited assured clients that it’s certificates of deposit were as secure as “U.S. government insured accounts”. As SEC agents and U.S. marshals raided the company's Houston office, investors had already begun to reveal the attraction the Stanford Financial Group scam presented. One investor who stands to lose $150,000 in Stanford's CDs says the bank assured him of the highest security. Funds placed in the bank were insured, the bank told its customers. According to the SEC, which names Stanford Financial Group, Stanford International and Stanford Capital Management LLC, Stanford informed clients that their money would be secure in "easily sellable" instruments and that the accounts would be audited by regulators in Antigua. Clients were informed that their funds would be monitored by "more than 20 analysts." Instead, most of the portfolio management was done by Stanford and James Davis, the chief financial officer of the Antigua company. According to the SEC complaint, which also names Davis, a sizable portion of the funds were invested in real estate and private equity.
Stanford Financial Group Not Registered Investment Advisor
The Stanford fraud has only increased the pressure on the SEC which is having to answer why the agency has again been so slow in stopping fraudsters in their tracks. According to the SEC complaint, Stanford's company was never registered as an investment advisor, which by itself, should have been enough to alert the SEC. At least two former Stanford brokers have come forward to confirm that they stopped dealing with the company a year ago because they did not want to “engage in business practices they deemed improper”. Those allegations were made by former brokers Charles Rawl and Mark Tidwell in a lawsuit filed in January 2008, claiming that their refusal to indulge in shady business practices led to them being forced to resign from the company a month earlier.
Investment Fraud Attorneys
As more investment and securities scams emerge, investors are relying on experienced securities attorneys to help recover their losses.
If you have lost money in the Stanford Financial Investment Fraud, the law firm of Arnold & Itkin LLP can help. Contact an investment fraud attorney at Arnold & Itkin LLP today for a FREE consultation.
