Scandal: Stanford’s Swindle

On Feb. 17, the SEC accused Texas billionaire Robert Allen Stanford of running a “massive, ongoing fraud” involving the sale of $8 billion in certificates of deposit (CDs) at his financial services company, Stanford Financial Group. Two other Stanford executives were also charged: James Davis (Stanford’s college roommate) and Laura Pendergest-Holt.

The SEC complaint (PDF) describes Stanford Financial Group as a “privately-held group of companies that has in excess of $50 billion ‘under advisement.’” The Antigua-based affiliate, Stanford International Bank, is accused of lying to investors about where it put approximately $8 billion. Instead of putting the money into “safe” CDs as promised, the SEC says the firm invested it in “illiquid investments, such as real estate and private equity.”

The SEC complaint also alleges that Stanford International Bank assured customers that it was audited by the Antiguan regulator, the Financial Services Regulatory Commission. In fact, that job was done by a “small local accounting firm in Antigua,” says the SEC.    

The SEC has been investigating Stanford’s CDs since last summer, but decided to act “after Stanford moved to liquidate some of its holdings.” 

Not surprisingly, Stanford has earned comparisons to fellow-alleged-huckster Bernard Madoff. Like Madoff, Stanford promised his investors too-good-to-be-true returns - called “improbable, if not impossible” by the SEC—based on his own unique formula.

And in a bizarre twist, Stanford International Bank is also accused of lying to investors about its ties to Madoff. The SEC alleges that Stanford executives told investors they “had no direct or indirect exposure” to Madoff’s investments when in fact $400,000 was invested in a firm tied to Madoff.

Stanford wrote a letter to his clients on Feb. 11 in response to reports that his company was under investigation. In it, he wrote that the company was “focused on upholding industry guidelines and standards.”

TPMMuckraker compiled a timeline of the investigations into Stanford here.

Florida Aided Allen Stanford, Suspect in Huge Swindle Miami Herald, 7/6

The SEC Has Strong Words for Sir Allen Stanford Financial Times, 5/5

Stanford ‘Surrenders’ to Feds Who Didn’t Want Him Houston Chronicle, 5/5

Stanford ‘Surrenders’ to Feds Who Didn’t Want Him Houston Chronicle, 5/1

Inside Allen Stanford’s Inner Sanctum The Guardian, 4/27

Stanford Points Fingers in Fraud Case New York Times, 4/21

Stanford’s Antigua Bank Deep in the Red Reuters, 4/17

Official Seeks Return of Stanford Paid Commissions Financial Times, 4/16

Stanford Coaxed $5B From Investors as SEC Weighed Powers Bloomberg, 4/16

Tearful Allen Stanford Expects Indictment in Two Weeks ABC News, 4/7

Hard Sell Drove Stanford’s Rise and Fall Wall Street Journal ($), 4/3

Defendants, With Assets Frozen, Find it Tough to Hire Attorneys Wall Street Journal ($), 4/2

Who Is R. Allen Stanford’s No. 2? Bloomberg, 3/26

Stanford Gears up for a Legal Showdown BusinessWeek, 3/26

R. Allen Stanford’s No. 2 Cooperating in Probe Wall Street Journal ($), 3/24

IRS Can Pursue R. Allen Stanford for Taxes AP, 3/17

Why Is Stanford Still A Free Man? ABC News, 3/13

Allen Stanford Not Cooperating in SEC Probe Reuters, 3/11

FBI in Search for Stanford Victims Financial Times, 3/10

Employees of Investment Firm Stanford Laid Off AP, 3/9

North Texans Among Stanford Victims WFAA-TV, 3/4

Stanford Retains Lawyer for SEC Case Reuters, 3/4

In Stanford’s Wake, Levin Announces New Improved Tax Haven Bill TPMMuckraker, 3/3

Stanford’s Employees Feel a Pinch Wall Street Journal ($), 3/3

Stanford Bank Collapse Threatens Venezuela Wall Street Journal ($), 3/2

New SEC Complaint: Stanford Ran Ponzi Scheme Wall Street Journal ($), 3/2

Stanford Tapped Home Politicians As Allies Dallas Morning News, 3/2

SEC Alerted About Stanford in 2003 Financial Times, 2/27

Top Stanford Official Is Arrested Wall Street Journal, 2/27

R. Allen Stanford Faces $104 Million Tax Lien Miami Herald, 2/26

Stanford’s Ties to Condos Are Adding to Buyers’ Fears Wall Street Journal ($), 2/25

Officials Outside U.S. Seek Stanford’s Assets Wall Street Journal ($), 2/25

Convicted Congressman Bob Ney Tied to Stanford Sunlight Foundation, 2/25

Antigua Is Hurt by U.S.‘s Crackdown Wall Street Journal ($), 2/24

Bill That Might Have Helped Catch Stanford Died In Senate Finance Committee TPMMuckraker, 2/24

‘Red Flags’ Caused Alarm for Stanford Investors Houston Chronicle, 2/24

Stanford Had Link to Fund Run by Bidens Wall Street Journal ($), 2/24

Louisiana Community Suffers Stanford Fallout Wall Street Journal ($), 2/23

For Stanford, A Long Trail Of Run-Ins With Authorities TPMMuckraker, 2/23

Members Eye Campaign Refunds Over Probes Roll Call ($), 2/23

Stanford Wooed Lawmakers Through Obscure Nonprofit TPMMuckraker, 2/23

Five-Star Dining, Stanford Style! TPMMuckraker, 2/20

Stanford Pitched Sessions On Protecting Off-Shore Loopholes TPMMuckraker, 2/20

Rep. Sessions’ Office Falsely Claims He Didn’t Know Stanford TPMMuckraker, 2/20

Stanford’s Alleged Fraud Said to Be Under Investigation by FBI Bloomberg, 2/20

Mad Rush in D.C. to Give Back Stanford’s Money ... Except Cornyn & Sessions TPMDC, 2/20

Questioning Stanford’s Returns Could Get Your Fired AP, 2/20

Stanford’s Whereabouts: Again a Mystery Reuters, 2/20

Stanford’s Reappearance Brings Relief to his Folks Reuters, 2/20

Mystery of Stanford’s Whereabouts Ends in Virginia Bloomberg, 2/20

Allen Stanford, Ponzi Operator Portfolio, 2/19

Stanford and Firm Spent $7.2 Million on Lawmakers Bloomberg, 2/19

Accused Financier Under Federal Drug Investigation ABC News, 2/19

Stanford Burns Latin Americans Seeking Shelter From Currencies Bloomberg, 2/19

Stanford Probably Not in Antigua, Prime Minister Says Bloomberg, 2/19

FBI Had Stanford In Its Sights in Prior Probe Washington Post, 2/19

Madoff Case Led SEC to Intensify Stanford Probe Wall Street Journal ($), 2/19

As Others Fled Venezuela, Stanford Saw a Chance New York Times, 2/19

SEC Fines Didn’t Avert Stanford Group Case New York Times, 2/19

Obama Gives Away Campaign Contribution from Stanford Los Angeles Times, 2/19

Stanford Wielded Jets, Junkets and Cricket to Woo Clients Bloomberg, 2/18

Lawmakers’ Caribbean Junket With Allen Stanford: The Pictures That Reveal All TPMMuckraker, 2/18

Six Degrees Of Allen Stanford TPMMuckraker, 2/18

Tex. Businessman Sought Influence in Washington Wall Street Journal ($), 2/18

Stanford Was Big-Time Campaign Contributor Capital Eye, 2/17

SEC Accuses Stanford Financial of $8 Billion Fraud New York Times, 2/17

Regulators Probing Stanford Financial BusinessWeek, 2/13

Whistleblower Alleges $8 Billion Fraud At Stanford Int’l Bank Portfolio, 2/12