Texas Financial Firm Accused of Fraud

By | February 19, 2009

http://xenophilia.com/wp-content/uploads/2009/02/article-1025831-0148E3FB00000578-109_468x286.jpgIn Texas, Robert Allen Stanford was just another wealthy financier.

But in the breezy money haven of Antigua, he was lord of an influential financial fief, decorated with a knighthood, courted by government officials and basking in the spotlight of sports and charity events on which he generously showered his fortune.

On Tuesday, his reign was thrown into turmoil as a caravan of cars and trucks carrying federal authorities pulled up to the headquarters of his company, the Stanford Group, to shut down what the regulators described as a “massive ongoing fraud” stretching from the Caribbean to Texas, and around the world.

Unknown is the status of investments in as much as $8 billion in high-yielding certificates of deposit held in the firm’s bank in Antigua, which the Securities and Exchange Commission, in a civil suit, said Mr. Stanford and two colleagues fraudulently peddled to scores of investors.

Also unknown Tuesday were the whereabouts of Mr. Stanford — or Sir Allen, as he became known after the Antiguan prime minister knighted him — whose financial activities on the tiny island had raised eyebrows among American authorities as far back as a decade ago.

Like Bernard L. Madoff, who is accused of operating a $50 billion Ponzi scheme, Mr. Stanford offered investment opportunities that sounded almost too good

to be true: promises of lucrative returns on relatively safe certificates of deposit that were often more than twice the going rate offered by mainstream good to be true: promises of lucrative returns on relatively safe certificates of deposit that were often more than twice the going rate offered by mainstream banks.

Stanford Group said it could pay higher rates on the C.D.’s because of the consistently high returns it made on investor assets. And it claimed to be safe, thanks to monitoring by a team of more than 20 analysts and yearly audits of the investments by regulators in Antigua.

None of that was true, according to the S.E.C.’s complaint. …

The current S.E.C. charges stem from an inquiry opened in October 2006 after a routine exam of Stanford Group, according to Stephen J. Korotash, an associate regional director of enforcement with the agency’s Fort Worth office.

He said the S.E.C. “stood down” on its investigation at the time at the request of another federal agency, which he declined to name, but resumed the inquiry in December 2008.

via Texas Financial Firm Accused of Fraud – NYTimes.com.

Here is a list of federal agencies. Was it the Grain Inspection, Packers and Stockyards Administration? The Marine Mammal Commission? Hmm.

What would you do with a billion dollars if you had to spend it on something selfish? Buy an island? Travel to space? Find someone? Build something?

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