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Stanford arrested and charged with fraud

Antigua-based billionaire Allen Stanford has been arrested and charged with fraud by US authorities. The Securities and Exchange Commission said that they were “alleging a fraud of shocking magnitude”.

The ECB reacted to the news with a statement saying it and the West Indies board had “suspended negotiations with Stanford and his financial corporation concerning a new sponsorship deal”.

Linda Chatman Thomsen, director of the SEC’s division of enforcement, said: “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. We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors.”

A US district judge granted the SEC’s request to impose a temporary restraining order on the Stanford operations and to freeze the defendants’ assets, and appoint a receiver to marshal those assets.

Earlier today the SEC had filed a complaint in federal court in Dallas accusing Stanford, the head of the Stanford Financial Group, of fraud in the sale of about US$8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. James M. Davis, a director and chief financial officer of Stanford Group, was also arrested

The SEC said it could not account for the US$8 billion in assets that were housed in the Antigua bank after issuing subpoenas for bank records and to various witnesses. Most of those subpoenaed, including Davis and Stanford, failed to testify or produce documents relating to the assets.

The SEC went on to describe claims by the bank that it paid “significantly” higher returns on its CDs because of the high quality of its investments as “improbable, if not impossible”. It is believed that Stanford and Davis’s assets have been frozen pending further investigations and that their passports have been confiscated.

The SEC’s investigation into Stanford Financial Group comes at a time it is under considerable pressure inside the USA for its inaction regarding the multi-billion Bernard L. Madoff case.

© Cricinfo

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