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SEC Accuses Texas Firm of 'Massive Fraud'

$8B missing, bank barring withdrawals from offshore accounts

By Kevin Spak,  Newser Staff

Posted Feb 17, 2009 11:43 AM CST
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(Newser) – The SEC today accused Robert Allen Stanford, head honcho of Stanford Financial group, of running a “massive, ongoing fraud,” and roughly 40 policemen and other law enforcement officials raided the group’s Houston headquarters. The group sold $8 billion in certificates of deposit with abnormally high rates of return, and its explanation for how it generated those returns is “improbable if not impossible,” the SEC said.

“We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world,” said the director of the SEC’s Texas office. The SEC says it can’t account for the $8 billion, and its subpoenas of documents and witnesses have largely been ignored. It’s accusing Stanford and his associates of misleading investors on many fronts, including inflating the performance on one of its mutual funds.

Representatives from Stanford Financial Group, along with Vijay Singh and other golfers, present St. Jude Children's Research Hosital with a record-breaking $2.57 million donation in this file photo.
Representatives from Stanford Financial Group, along with Vijay Singh and other golfers, present St. Jude Children's Research Hosital with a record-breaking $2.57 million donation in this file photo.   (PRNewsFoto/Stanford Financial Group; St. Jude Children's Research Hospital)
SEC Chair-designate Mary Schapiro testifiers on Capitol Hill in Washington, Thursday, Jan. 15, 2009, during the Senate Banking Committee hearing on her nomination.
SEC Chair-designate Mary Schapiro testifiers on Capitol Hill in Washington, Thursday, Jan. 15, 2009, during the Senate Banking Committee hearing on her nomination.   (AP Photo/Jose Luis Magana)
Linda Thomsen, director of the Division of Enforcement at the Securities and Exchange Commission (SEC), testifies on Capitol Hill, Feb. 4, 2009.
Linda Thomsen, director of the Division of Enforcement at the Securities and Exchange Commission (SEC), testifies on Capitol Hill, Feb. 4, 2009.   (AP Photo/Susan Walsh)
Sir Allen Stanford is seen in this image taken from the Stanford Financial Group's website.
Sir Allen Stanford is seen in this image taken from the Stanford Financial Group's website.
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fraud • SEC • Antigua • Ponzi scheme • Stanford Financial Group • Robert Allen Stanford

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