Houston Trial Lawyer Blog : Houston Business Litigation Lawyer & Attorney : Arnold & Itkin Law Firm : Personal Injury, Wrongful Death, Accident Claims

In his first response to investment fraud charges brought against him by the U.S. Securities and Exchange Commission (SEC), billionaire Texas financier, Allen Stanford, has denied masterminding the $8 million fraud.

It's the first formal statement we’ve heard from the man at the center of the Stanford investment scam. In the response, Stanford denies each of the allegations listed by the SEC. He also announced he will be representing himself in court due to the freezing of his assets by court-appointed receiver Ralph Janvey.

Allen Stanford stands accused of scamming investors out of billions of dollars by conducting a huge Ponzi scheme in which he sold purportedly safe certificates of deposit and promised ultra-high returns. While he has yet to be criminally charged, his chief investment officer, Laura Pendergest-Holt, remains the only person involved in the fraud to have criminal charges filed against her.

Stanford’s predicament – not having money to hire a lawyer – may seem strange, but he is not without company. His situation is similar to that faced by other investment fraudsters like Arthur Nadel. Nadel has also been forced to represent himself due to lack of funds. Bernard Madoff, on the other hand, was able to hire a lawyer using funds believed to be unrelated to the infamous Madoff investment fraud. In 1989, the Supreme Court ruled that a person's right to counsel was not violated if his assets were seized, depriving him of the ability to hire a lawyer. Experts believe that with no money and no lawyer, Stanford will be less likely to avoid indictment. He will probably find that conceiving and masterminding the $8 billion Stanford financial fraud was far easier than figuring out how to free himself from the tangled web he's woven.  

Stanford Investment Fraud Attorneys

Protecting your investments after they have been involved in a securities fraud like the one Stanford operated, can be hard to do on your own. These are complex legal cases that involve thousands of other duped investors and expert attorneys. Being represented by an experienced securities attorney can help you recover lost investments.

If you have lost money in the Stanford Financial Group fraud or any other securities fraud, contact a securities attorney at Arnold & Itkin LLP to discuss your options for compensation.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

Securities attorneys representing investors duped in the Stanford investment fraud are getting ready to persuade Ralph Janvey, the U.S. receiver of Allen Stanford's assets, to release frozen assets. Also, the two receivers in the U.S. and Antigua are locking horns over Stanford Financial Group asset control and the man at the center of the scandal seems to have zeroed in on a criminal lawyer to represent him.

Janvey has released a set of procedures that investors, who believe their accounts should not be frozen as part of the freeze on all Stanford assets, can use to prove their money was not tainted by the scandal and should, therefore, be released. The money in question is tied up in funds and amounts to a total of $1.7 billion dollars. Investors who wish to see their frozen funds released will have to agree not to sue the group elsewhere and to abide by the court's decisions. Earlier in March, Judge David Godbey released approximately 28,000 of the frozen investor accounts that amounted to over $4 billion. The other investors will have to furnish details about the interest they earned during their investment and what they did with the money. They will also be required to convince Janvey that their funds are clean and should be released.

Meanwhile, the dispute over who exactly controls the Stanford Financial Group's assets in Antigua continues with Janvey and Antigua government appointed receiver, Nigel Hamilton Smith. The receivers continue to play tug-of-war over the assets. Janvey insists his control extends to all Stanford Group assets, including those in Antigua, while Smith claims he is the sole receiver for the assets. The two are expected to meet soon to come to an agreement. 

Finally, capping off days of hectic legal activity, Allen Stanford is likely to be represented by a Houston-based criminal attorney. The lawyer, Dick DeGuerin, has not formally been appointed as the billionaire's lawyer because Stanford has no money to retain legal services.

Stanford Financial Fraud

Losing money in an investment scam can be a painful experience with the nightmare seemingly never ending. The process of recovering your money is not an easy one and can it take weeks and even months for legal experts to build a case. It is extremely important to have an experienced securities attorney on your side to represent you and help you through tough times.

If you have lost money in the Stanford Financial Group scam, contact a securities attorney at Arnold & Itkin LLP for a free evaluation of your case.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

More revelations about the $8 billion Stanford Financial securities scam are providing clues to how the massive scam managed to stay under the radar for so long. Two employees at the Stanford Financial Group served as senior members of an advisory watchdog body that was set up to help prevent investment fraud.

In a classic case of the foxes guarding the hen house, Lena Stinson, who served as the Stanford Financial Group's director of global compliance, and Frederick Fram, chief operating officer of Stanford Group holdings, served on the membership committee of the Financial Industry Regulatory Authority (FINRA). FINRA is the largest financial regulatory body overseeing U.S. securities firms. The agency did impose fines on Stanford Financial Group for a series of violations, including falling below the minimum capital requirement. In 2007, Stanford Group was fined $10,000 for distributing marketing materials that failed to disclose both risks and benefits of CD investments in a balanced manner. When the firm fell below the minimum capital requirement for a broker, it was fined $10,000 but no further action was taken to investigate the company, even though a broker falling below the minimum capital requirement is a rare occurrence and one that should have alerted the agency to what was going on at the Stanford group. When you consider that two of the Group's employees occupied influential membership positions on the board at FINRA, you begin to wonder if there was a reason for the leniency shown to Stanford.  The Stanford Group has not responded to these reports.

Allen Stanford took care to develop the right contacts and spread his sphere of influence to lawmakers and, now it seems, even to financial regulators. It's too early to say if the presence of two Stanford insiders at a financial regulatory body, established to prevent investment broker abuse, had some link to how the Stanford Financial fraud was able to remain under cover for so long. But questions are beginning to emerge about how FINRA could have been represented by members of a company that was part of the very group of investment brokers it was meant to regulate.

Stanford Financial CD Fraud

The Stanford investment scam has rocked an already shaky Securities and Exchange Commission (SEC), which oversees FINRA. While the SEC has continued to mishandle investigations, innocent investors have had their Stanford Financial Mutual Fund and CD accounts frozen by receivers. 

During a crisis like this, it's important to have the expert guidance of an experienced securities attorney. If you have lost money in the Stanford investment fraud, contact a securities attorney at Arnold & Itkin LLP to understand how you can begin the process of recovering your assets. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The recent Stanford investment fraud scam, which unveiled an $8 billion securities fraud, has made one very unlikely person the most sought-after at theSecurities Exchange Commission(SEC) –the whistleblower. Whistleblowers, who are typically thought of as selfish snitches, have gained the positive attention of the country's premier financial regulating agency.

A few weeks ago, a fraud investigator testified to a stunned Congressional hearing about the many times he attempted to bring the ongoing Madoff fraud to the attention of SEC officials. Every time, Harry Markopoulos attempted to alert seniors about Madoff's Ponzi scheme, he was thwarted. Among other things, officials at the SEC told him to quit pursuing Madoff's fraud because he "was too big." The agency, Markopoulos testified, is staffed by "financially illiterate" people. Markopoulos also added suggestions for the way the SEC can revamp its regulating procedures so that more investment fraudsters like Bernie Madoff and Allen Stanford can be stopped early on.  These recommendations include staffing the agency with more street smart financial brains and moving the agency to New York or Boston.

According to insiders, nearly half of all investment frauds, including Ponzi schemes, are revealed by the tips of whistleblowers. At the SEC, inspector general David Kotz is working to ensure that whistleblowers who have access to information about ongoing investment scams are encouraged to come and share their information with the SEC. The agency is contemplating an incentive structure, so people will be encouraged to come forward with tips and awarded.  At the end of the day, however, all these recommendations could be useless if they are not implemented quickly. Bureaucratic hurdles and simple lack of will could leave the SEC to continue down the path the becoming a paper tiger that appears on the scene only after all damage has been done and billions have been wiped clean.

Stanford Investment Fraud Attorney

Losing hard earned money in an investment fraud, like the one run by the Stanford Financial Group, can be an emotionally draining experience. Investors may struggle not only with concerns of their long term financial security, but also their immediate and short term financial needs. In these difficult times it helps to have the assistance of a securities attorney who can help you understand your financial situation and the complexities involved in the claims process.

If you have lost money in the Stanford Group Investment scam, contact a securities attorney at Arnold & Itkin LLP to get the help and resources you need. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

As new details have emerged about the Stanford investment fraud, we have learned that the company went to great lengths to woo new investors and impress existing ones. However, investors who asked pointed questions about the way the Stanford Financial Group was able to show unbelievable profits every year received few answers.

Former employees of Stanford International Bank are revealing what went on behind the scenes at the bank. According to a former investment officer at Stanford International, employees were trained to limit information given to investors. Much like investors, senior employees at Stanford had limited access to the bank's investment methods themselves. At least one employee, Michael Zarich, told Securities and Exchange Commission (SEC) investigators that presentations made to potential investors never included information about the monitoring methods for supervising close to 80% of the bank’s assets. These assets were known as Tier Three funds, and were not monitored by the analysts who monitored the rest of the assets. Clients often asked why the company used a small accounting firm in Antigua. To that Zarich had a ready answer - a big accounting firm would require a hefty commission from returns paid to clients. Beside, investors were told, Enron's big auditing firm, Arthur Anderson, could not prevent their collapse.

According to Stanford Group employees, they have no idea how the Tier Three funds were managed. Even Laura Pendergest-Holt, who is one of the defendants in the case filed by the SEC, told investigators she has no idea how the funds were managed.

Stanford Financial CD Fraud

The Stanford investment fraud was not only complex but also shrouded in mystery and secrecy, with many employees unaware of how the company was able to claim such high returns year after year. This kind of secrecy makes it harder for victims of the Stanford financial fraud to recover their money. Investigations are likely to take a significant amount of time and it is important that victims be guided by an experienced securities attorney who can protect their interests.  

If you have sustained losses in the Stanford investment fraud, contact a securities attorney at Arnold & Itkin LLP to learn how you can begin to recover your losses.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Information about the victims of the Stanford investor fraud is emerging and egregiously, the victims of the $8 billion securities fraud include a Central American charity.

A Colorado doctor, Pieter Dahler, claims he was defrauded of the total worth of his charity - $734,864. His charity, the Foundation for Development of Healthy Teeth in a Healthy Body, constructs mobile clinics in Central America and Mexico and uses the services of 465 doctors, who donate their time and effort to the cause. Dahler also lost his personal savings in the Stanford Financial CD fraud. The charity, Dahler says, is now defunct and, accordingly, he has filed an investment fraud lawsuit against Allen Stanford. Dahler says he is fine living off social security payments, but is heartbroken by the demise of the charity he dedicated his life to.

Stanford Financial Group Chairman Contributed Heavily to Politicians

American politicians who received campaign donations from Stanford have been asked to return money to investors. Ralph Janvey, the court-appointed attorney placed in charge of overseeing Stanford's financial assets, sent letters to the Democratic Senatorial Campaign Committee and the National Republican Congressional Committee asking them to donate an equal amount to a receivership estate, if they have not already donated their Stanford campaign donations to charity. President Barack Obama has already promised to donate an amount equaling the donation Stanford made to his election campaign to charity. Several lawmakers have also followed suit. According to sources, the Stanford Financial Group spent approximately $4.8 million in donations to American politicians over the past decade. Stanford worked hard to spread his influence in American politics. He, not only donated to the Obama, McCain and Clinton campaigns, but in 2002, donated heavily to Florida senator Bill Nelson who served as vice chairman of the Democratic Senatorial Campaign Committee during the time Congress was debating the introduction of harsher anti-investment fraud laws.          

Investors anxious to recover compensation from the receivership estate may have to wait awhile. The estate may require at least a decade to complete payments to all victims of the Stanford investment fraud. The Stanford fraud is not only large in size, but also extremely complex and is expected to have an international impact. Because Stanford based most of his financial dealings in Antigua, the fraud is even more complicated and difficult to sort through.

Janvey, who has already frozen Stanford accounts, is also expected to make use of "clawbacks" to force investors who cashed out their Stanford Financial Mutual Fund accounts early to return at least part of their profits.

Stanford Financial Group

For investors who have lost money in the Stanford Financial Mutual Fund fraud, recovering investments can be a complex and lengthy affair. Complicated cases like this one will require the expertise of an experienced securities attorney working on your side.

If you have sustained financial losses in the Stanford investment fraud, contact a securities attorney at Arnold & Itkin LLP and learn how you can begin to recover your investment.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

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.

• Email This
• Print
• Comments
• Trackbacks
• Share Link