US Accuses Texas Financial Firm Of 8 Billion Fraud 2009: Breezy Haven

US accuses Texas financial firm of 8 billion fraud

But in the breezy money haven that is the Caribbean nation Antigua and Barbuda, he was lord of an influential financial fief, decorated with
a knighthood and courted by government officials, and he basked in the spotlight of sports and charity events on which he generously showered his fortune. On Tuesday, his reign was thrown into turmoil as a caravan of cars and trucks carrying federal officials pulled up to the Houston headquarters of his company, Stanford Group, to shut down what the regulators described as a “massive ongoing fraud” stretching around the world from the Caribbean and Texas. The status of investments in as much as $8 billion in high-yielding certificates of deposit held in the company’s bank in St. John’s, the capital of Antigua Barbuda, was unknown. The U.S. Securities and Exchange Commission said in a civil suit that Stanford and two colleagues had fraudulently peddled the certificates to scores of investors. Stanford had announced the annual matches amid fanfare at Lord’s Cricket Ground in London last June. In December, he said he was “evaluating his options” about whether to continue financing the series, the Stanford Super Series. The Daily Mail said he lost $40 million on the event last year, according to Bloomberg. Julie Hodge, a spokeswoman for Stanford, said Tuesday that she had no comment. Like Bernard Madoff, who is accused of operating a $50 billion Ponzi scheme, Stanford offered investment opportunities that sounded almost too good to be true: promises of lucrative returns on relatively safe certificates of deposit that were often more than twice the going rate offered by mainstream banks. A substantial portion of the bank’s portfolio was in very illiquid real estate and private equity investments. The portfolio was monitored by only two individuals – Stanford and James Davis, a director and chief financial officer of Stanford Group and the Antigua-based bank affiliate. The Antiguan auditor does not audit the bank’s portfolio or verify its assets.
While regulators are not accusing Stanford of operating a Ponzi scheme – a fraud in which money from new investors is used to pay off previous investors – they say that Stanford Group lulled investors into believing that the certificates of deposits were safe by advertising investments in “liquid” securities that could be bought and sold easily.

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