Stanford executives charged with defrauding investors
Three senior executives with Stanford Group Co. have been charged with defrauding investors of billions through a high-yield certificates of deposit program and using false historical data to push a special Stanford mutual fund program.
The Securities and Exchange Commission specifically named chairman Robert Stanford, chief financial officer James Davis and chief investment officer Laura Pendergest-Holt in its complaint filed Tuesday in U.S. District Court in Dallas.
Stanford Group is based in Houston, but both Davis and Pendergest-Holt have offices in Memphis at the Crescent Center.
Sources at the building said federal agents were actively removing documents from the local office Tuesday.
"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, in a release. "We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors."
The complaint alleges Stanford used its financial advisers to sell about $8 billion in CDs that promised “improbable and unsubstantiated high interest rates.”
The CDs were sold through Stanford’s Antigua-based Stanford International Bank Ltd., or SIB.
The SEC also said Stanford advisers grew its Stanford Allocation Strategy mutual fund program to almost $1.2 billion in the last four years by using “materially false historical performance data personal no fax payday loan.”
“The fraudulent SAS performance was used to recruit registered investment advisers with significant books of business, who were then heavily incentivized to reallocate their clients' assets to SIB's CD program,” the SEC stated.
The SEC said the investigation is continuing.
Bloomberg reported that Stanford International Bank had placed a 60-day freeze on early redemptions on its CDs, according to sources familiar with the situation.
The investigation into the CD program by the SEC, FBI and other regulatory agencies had been ongoing since the summer, Bloomberg reported.
Messages left with Stanford’s local spokesman were not immediately returned.
Stanford Global Foundation is based in Memphis and the company has contributed millions to charities locally and worldwide.
In 2005, the foundation established the Stanford Financial Excellence in the Arts Award in Memphis and later spread the program to Stanford markets in the South, including Houston, Dallas, Charlotte, N.C., Baton Rouge, La., and Sarasota, Fla.
In 2007 the company became the title sponsor of Memphis’ Professional Golf Association event, the St. Jude Classic, replacing FedEx Corp. and investing upwards of $10 million on top of its sponsorship to rebrand the event the Stanford St. Jude Championship.
Filed under: business by Specialist