Stanford Employee Says He Was Forced Out After Questioning CD Returns
A Miami broker who worked for the Texas billionaire accused in an $8 billion fraud says he was forced to resign in 2003 after he raised questions about the returns on certificates of deposit now at the heart of a civil complaint.
Charles Hazlett had been a top salesman for Robert Allen Stanford, earning a BMW as a reward for his efforts, the Associated Press reports. But he says he was stonewalled when he raised questions about the CDs that promised returns twice the usual rates, according to AP and the Miami Herald.
Stanford has been accused in a civil complaint by the Securities and Exchange Commission of operating a “massive, ongoing fraud” by selling the high-return CDs based on unsubstantiated claims. Federal prosecutors are now investigating whether Stanford was operating a Ponzi scheme, the Wall Street Journal reports (sub. req.). The billionaire had been missing until yesterday, when the FBI served him with the civil papers at a relative’s home in Virginia.
Hazlett says he began asking questions after a client wanted to know how Stanford invested the money to get such high returns. Hazlett said he aired his concerns in a 2004 arbitration hearing over his departure, but the regulatory group now known as the Financial Industry Regulatory Authority didn’t follow up.
FINRA acted in November 2007, levying a $10,000 fine because marketing materials used by the Stanford Group Co. “failed to present fair and balanced treatment” of CD risks.
Hazlett told the Miami Herald he wasn’t surprised to hear of the complaint against Stanford. “I knew one day Stanford would blow up,” he said.
