SEC Charges Texas Businessman With $8 Billion Fraud

The SEC has charged Robert Allen Stanford, a prominent Texas businessman, in connection with an $8 billion fraud in the sale of so-called certificates of deposit that promised unrealistic rates of return. Stanford guaranteed fixed-income investments by “promising improbable and unsubstantiated high interest rates,” according to a statement by the SEC.

“As we allege in our complaint, Stanford and the close circle of family and friends with whom he runs his businesses perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. “We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors.”

The SEC says the fraud is of “shocking magnitude,” and alleges that Stanford’s company sold “approximately $8 billion of so-called “certificates of deposit,” whose returns were supposedly earned through “SIB’s unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for the past 15 years.”

In fact, the SEC claims that the bank’s multimillion dollar portfolio of assets was managed by a close circle of family and friends, including Stanford’s father, whose business experience is in cattle ranching and car sales, and Stanford’s college roommate, whose experience is unknown.

The New York Times says that in the complaint, the SEC is unable to account for the $8 billion in assets that were housed in the bank when it issued subpoenas for bank records. They’ve asked that Mr. Stanford and the other named executives be required to surrender their passports and for their assets to be frozen.

SEC Charges R. Allen Stanford, Stanford International Bank for Multi-Billion Dollar Investment Scheme [SEC]
U.S. Accuses Texas Financial Firm of $8 Billion Fraud [NYT]

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