Robert Allen Stanford, Head of Stanford Financial Acused of Massive Fraud to Tune of $9.2 Billion

Photo: Robert Allen Stanford, ABC News

UPDATE

According to ABC News, Mr. Stanford, who is accused of cheating 50,000 customers out of $8 billion dollars, is reportedly missing. Federal authorities raided his financial empire in Houston, Memphis, and Tupelo, Miss., and have said that they do not know his current whereabouts.

Well, we are on to Bernie Madoff No. 2. The Securities and Exchange is investigating what it calls “massive ongoing fraud,” as it accused Robert Allen Stanford, the chief of the Stanford Financial Group, of fraud in the sale of about $8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. Also named in the suit were two other executives and some affiliates of the financial group. Fi fie fo fum, the smell of a prison cell is in the air! This is big because federal agents with the U.S. Marshals Service entered the Houston office of the company this morning.

In the complaint, filed in Federal District Court in Dallas, the SEC accused Mr. Stanford and two associates — James M. Davis, a director and chief financial officer of Stanford Group and the Antigua-based bank affiliate, and Laura Pendergest-Holt, the chief investment officer of both organizations — with misrepresenting the safety and liquidity of the uninsured CDs. The CDs were sold by Stanford International Bank through the firm’s registered broker-dealer and investment adviser, which are in Houston. Both the bank, which claims $8.5 billion in assets and 30,000 clients in 131 countries, and the brokerage unit, which operates about 30 offices in the United States, were named in the SEC suit. Stanford Financial asserts that it advises about $50 billion in assets.

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.

The S.E.C. accused the bank and its affiliates of falsely stating in marketing materials that client funds were placed in liquid financial instruments, when in fact they were invested in private equity funds and real estate. On Nov. 28, Stanford International Bank quoted a rate of 5.375 percent on a $100,000 three-year CD, compared with rates of less than 3.2 percent at American banks. The bank recently has offered rates of more than 10 percent on five-year CDs, the filing stated. Source: Wall Street Journal

These people need to go to prison for a long, long time. Sheriff Leon in Richland County, South Carolina, was so worried about Michael Phelps' alleged marijuana use, law enforcement everywhere need to worry about these criminals dressed in suits and running these financial corporations. They need to be locked away for 15 to life or whatever. Sorry, but as the economic meltdown continues, more of these dirt bags will come out of the woodwork.