Texas Billionaire R. Allen Stanford Accused By SEC of Operating 'Massive' Fraud
A Texas billionaire who operates a Houston-based investment firm has been accused of running a “massive, ongoing fraud” by the U.S. Securities and Exchange Commission.
In a civil complaint filed today in Dallas, the SEC accuses Robert Allen Stanford, businesses he controls and two officers of selling $8 billion in certificates of deposit through Stanford International Bank of Antigua based on “improbable and unsubstantiated” claims by the bank that the CDs had been generating double-digit annual returns since 1995, according to Bloomberg and the Houston Chronicle.
“We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world,” Rose Romero, who heads the SEC’s office in Fort Worth, Texas, says in a written statement.
The SEC complaint accuses the defendants of lying to customers both about how their money was invested and about the past performance of the firms’ investment portfolios, reports the Washington Post. However, it isn’t clear what has happened with customers’ deposits.
The complaint also says that it couldn’t account for the Antigua bank’s $8 billion in assets, due to a lack of cooperation by the bank, Stanford and others, reports the New York Times.
A federal judge in Dallas issued an order today freezing the defendants’ assets and appointing a receiver, the Chronicle reports. The defendants are: Stanford himself; Stanford International Bank of Antigua; Stanford Group Co., a Houston-based broker-dealer; Stanford Capital Management, an investment adviser; James Davis, the bank’s chief financial officer; and Laura Pendergest-Holt, the Stanford Financial Group’s chief investment officer.
In a Feb. 12 e-mail to employees at the Stanford Group, Stanford said he would “fight with every breath to continue to uphold our good name,” reports Bloomberg.
Additional coverage:
Market Movers (Portfolio): “Stanford: How Quickly did the SEC Move?”
Bloomberg (Feb. 13): “Stanford Blames ‘Former Disgruntled’ Workers in Probe”
Wall Street Journal (sub. req.): “On Antigua, Frustrated Stanford Account Holders Gather “
Wall Street Journal: “SEC Statement on R. Allen Stanford Charges “
Last updated at 4:49 p.m. to add additional coverage from Portfolio and the Washington Post and Wall Street Journal.
