Texas magnate Allen Stanford is accused of operating a multi-billion dollar investment scam. -- PHOTO: REUTERSWASHINGTON - US regulators on Tuesday accused Texas magnate and top cricket promoter Allen Stanford of fraud in selling US$9.2 billion (S$14.05 billion) in securities by promising 'improbable and unsubstantiated' returns'.
A US district judge froze Stanford's assets after the Securities and Exchange Commission (SEC) said he was involved in global 'fraud of shocking magnitude that has spread its tentacles throughout the world.' Stanford's wealth management and financial services group has offices across North America, Latin America, Europe and the Caribbean.
The SEC filed the civil charges against Stanford and other officials of his financial group in a federal court in Dallas.
It is the most high profile alleged fraud scheme since the SEC charged Wall Street financier Bernard Madoff with carrying out a US$50 billion (S$75 billion) Ponzi scheme December.
A major cricket enterpreneur, the 58-year old Stanford faces civil fraud charges for 'promising improbable and unsubstantiated high interest rates,' the SEC said.
It charged him and three of his companies with 'orchestrating a fraudulent, multi-billion dollar investment scheme centering on an eight billion CD (certificate of deposit) programme,' a statement said.
Stanford's companies include Antiguan-based Stanford International Bank (SIB), Houston, Texas-based broker-dealer and investment adviser Stanford Group Company (SGC), and investment adviser Stanford Capital Management.
The SEC also linked Stanford to an additional scheme relating to US$1.2 billion in sales by SGC advisers of a mutual fund program, called Stanford Allocation Strategy (SAS), by using 'materially false' data.
SIB chief financial officer James Davis as well as Laura Pendergest-Holt, chief investment officer of Stanford Financial Group (SFG), were included with Stanford in the SEC enforcement action.
Following the commission's action, US District Judge Reed O'Connor had entered a temporary restraining order, froze Stanford's assets, and appointed a receiver to marshal those assets.
'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 Thomsen, director of the SEC's enforcement division.
Rose Romero, an SEC regional director, said, 'We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world.' The charges against Stanford has raised doubts over his cricket deals.
The England and Wales Cricket Board (ECB) said Tuesday they, together with West Indies cricket chiefs, had suspended talks with him concerning a new sponsorship deal.
The 20-nation West Indies domestic 20/20 cricket tournament and the cricket Super Series staged last year bear the name of Stanford. -- AFP
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