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
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)
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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.