Update: We’ve been covering various angles on the Stanford fraud all day. Check out:
- The SEC whiffs again.
- Stanford had money with Madoff.
- Never trust someone with knighthood.
- How Stanford killed an anti-money laundering bill.
- Allen Stanford, friend of George W. Bush.
Original post: That was fast. Just a few days after the world learned of Sir Allen Stanford and his Antigua-based bank, the SEC has accused him and his firm of running a massive, $8 billion fraud
NYT: In its complaint, the S.E.C. said it could not account for the $8 billion in assets that were housed in the Antigua bank after issuing subpoenas for bank records and to various witnesses. Most witnesses, including Mr. Stanford, Mr. Davis, and the Antigua-based bank’s president, failed to appear to testify nor did they produce documents shedding light on the assets.
Ms. Pendergest-Holt said in testimony to the S.E.C. that she could not account for the assets, asserting that Mr. Stanford and Mr. Davis were the only ones with access to the bank’s assets.
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,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. “We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors.”
Rose Romero, Regional Director of the SEC’s Fort Worth Regional Office, added, “We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world.”
The SEC’s complaint, filed in federal court in Dallas, alleges that acting through a network of SGC financial advisers, SIB has sold approximately $8 billion of so-called “certificates of deposit” to investors by promising improbable and unsubstantiated high interest rates. These rates were supposedly earned through SIB’s unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for the past 15 years.
According to the SEC’s complaint, the defendants have misrepresented to CD purchasers that their deposits are safe, falsely claiming that the bank re-invests client funds primarily in “liquid” financial instruments (the portfolio); monitors the portfolio through a team of 20-plus analysts; and is subject to yearly audits by Antiguan regulators. Recently, as the market absorbed the news of Bernard Madoff’s massive Ponzi scheme, SIB attempted to calm its own investors by falsely claiming the bank has no “direct or indirect” exposure to the Madoff scheme.
One question… We know that the SEC has been looking at this guy for a while, but is there any chance that this was the guy Markopolos said he would turn in?
More to come.