Stanford Financial Charged with 'Massive' Fraud

From Reuters. There is a Madoff link: “Stanford’s investment companies were exposed to losses from the alleged Ponzi scheme run by Madoff, and falsely reassured investors otherwise, the SEC charged.” And there is a cricket link (hence the Antigua dateline): “Stanford came to prominence in the cricket world following his private Twenty20 competition in the Caribbean and, in particular, the $20 million game in November between England and his own team made up of West Indian players.”

By Anna Driver and Simon Evans | Tue Feb 17, 2009 2:42pm EST

HOUSTON/ST JOHN’S, Antigua (Reuters) – U.S. authorities charged Texas billionaire Allen Stanford and three of his companies with “massive ongoing fraud” on Tuesday as federal agents swooped in on Stanford’s U.S. headquarters.

In a complaint filed in federal court in Dallas, the U.S. Securities and Exchange Commission accused the cricket-loving Stanford and two other top executives at Stanford Financial Group of fraudulently selling $8 billion in high-yield certificates of deposit.

About 15 federal agents, some wearing jackets identifying them as U.S. marshals, entered the lobby of Stanford’s office in the Houston Galleria area, a Reuters eyewitness said.

Stanford Financial said it remained open for business, but was “under the management of a receiver,” according to a sign taped to the door of the firm’s Houston office.

According to the 25-page SEC complaint, Stanford Investment Bank (SIB) sold $8 billion in CDs “by promising high return rates that exceed those available through true certificates of deposits offered by traditional banks.”

The SEC said it was seeking to freeze assets of the company and appoint a receiver “to take possession and control of defendants’ assets for the protection of defendants’ victims.”

The move came as investors, politicians and regulators focus on the returns promised and provided by investment firms, following an alleged $50 billion fraud by Wall Street investment manager Bernard Madoff.

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