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U.S. Agents Scrutinize Texas Firm
By JULIE CRESWELL
Published: February 12, 2009
For years, R. Allen Stanford, a flamboyant Texas billionaire, richly rewarded the well-heeled clients of his private investment empire.
Craig Hartley/Bloomberg News
The headquarters of Stanford Financial in Houston, which has been sued by two former brokers.
Joe Skipper/Reuters
Several federal agencies, including the F.B.I. and the I.R.S., have spent recent months looking into the business activities of the Stanford Financial Group, run by R. Allen Stanford.
But now federal authorities are investigating whether those rewards were simply too good to be true.
Several federal agencies, including the Securities and Exchange Commission, the F.B.I. and the Internal Revenue Service, have spent “many months” looking into the business activities of the Stanford Financial Group, which is based in Houston, and Mr. Stanford’s bank based in Antigua, which issues high-yielding certificates of deposit, according to two individuals briefed on the investigations who were not authorized to speak publicly.
The focus of the investigations appears to be how the bank could issue C.D.’s that pay interest rates that are more than twice the national average.
A spokesman for Stanford Financial said the company had been told by the S.E.C. and by the Financial Industry Regulatory Authority, a securities industry oversight group, that “their visits to our offices were part of a routine examination.”
The spokesman said those visits occurred in January. Embarrassed by their delayed response to multiple opportunities to reveal the $50 billion Ponzi scheme that Bernard L. Madoff is suspected of orchestrating, regulators are turning up the heat on money-management firms that appear to be performing significantly better than their peers.
This is not the first time Stanford’s business operations have raised eyebrows.
Stanford, a diversified financial firm that offers a broad array of services, including investment banking and research, holds about $8 billion in deposits at its bank and has about $50 billion in assets in its wealth management affiliate, according to its spokesman.
However, a wrongful-termination suit filed in a state court in Texas last summer alleges the asset sizes may have been inflated. The two former Stanford brokers who filed the suit said they had left the firm amid fears they could be implicated in the various “unethical and illegal business practices” they claim to have witnessed.
In their suit, they claim Stanford overstated the asset value of individuals in order to mislead potential investors, failed to file mandatory forms disclosing its clients’ offshore accounts, and purged electronic data from its computers in response to an S.E.C. investigation. A lawyer representing the two men did not return a call.
Stanford, which filed a countersuit against the two men seeking repayment of certain loans, denied the men’s accusations.
“These allegations were made by disgruntled employees and are totally without merit. Our company follows industry standards in generating marketing and sales plans, we are rigorously managed and fully compliant with all U.S. regulations,” the company said in a statement.
A colorful and controversial figure, Mr. Stanford has claimed ties to Leland Stanford, the former governor of California who started Stanford University in the 1800s. The university, however, has said there is no genealogical relationship between the two.
Mr. Stanford and his firm have also emerged in recent years as major contributors to various lawmakers, appearing to focus particularly on legislators considering bills that would change offshore banking rules.
And a decade ago, Mr. Stanford told The Associated Press that he had flown a Roman Catholic priest displaying signs of “stigmata,” or bleeding wounds on his wrists and ankles, from the tiny Caribbean island of Antigua to New York City on his jet.
Mr. Stanford, who his firm said was unavailable for comment, ranked 205th last year on the Forbes annual list of the richest people in the United States, with an estimated net worth of $2.2 billion. On Antigua, he is akin to royalty, being knighted by the former prime minister, referring to himself as “Sir Allen Stanford” on the company’s Web site.
By JULIE CRESWELL
Published: February 12, 2009
For years, R. Allen Stanford, a flamboyant Texas billionaire, richly rewarded the well-heeled clients of his private investment empire.
Craig Hartley/Bloomberg NewsThe headquarters of Stanford Financial in Houston, which has been sued by two former brokers.
Joe Skipper/ReutersSeveral federal agencies, including the F.B.I. and the I.R.S., have spent recent months looking into the business activities of the Stanford Financial Group, run by R. Allen Stanford.
But now federal authorities are investigating whether those rewards were simply too good to be true.
Several federal agencies, including the Securities and Exchange Commission, the F.B.I. and the Internal Revenue Service, have spent “many months” looking into the business activities of the Stanford Financial Group, which is based in Houston, and Mr. Stanford’s bank based in Antigua, which issues high-yielding certificates of deposit, according to two individuals briefed on the investigations who were not authorized to speak publicly.
The focus of the investigations appears to be how the bank could issue C.D.’s that pay interest rates that are more than twice the national average.
A spokesman for Stanford Financial said the company had been told by the S.E.C. and by the Financial Industry Regulatory Authority, a securities industry oversight group, that “their visits to our offices were part of a routine examination.”
The spokesman said those visits occurred in January. Embarrassed by their delayed response to multiple opportunities to reveal the $50 billion Ponzi scheme that Bernard L. Madoff is suspected of orchestrating, regulators are turning up the heat on money-management firms that appear to be performing significantly better than their peers.
This is not the first time Stanford’s business operations have raised eyebrows.
Stanford, a diversified financial firm that offers a broad array of services, including investment banking and research, holds about $8 billion in deposits at its bank and has about $50 billion in assets in its wealth management affiliate, according to its spokesman.
However, a wrongful-termination suit filed in a state court in Texas last summer alleges the asset sizes may have been inflated. The two former Stanford brokers who filed the suit said they had left the firm amid fears they could be implicated in the various “unethical and illegal business practices” they claim to have witnessed.
In their suit, they claim Stanford overstated the asset value of individuals in order to mislead potential investors, failed to file mandatory forms disclosing its clients’ offshore accounts, and purged electronic data from its computers in response to an S.E.C. investigation. A lawyer representing the two men did not return a call.
Stanford, which filed a countersuit against the two men seeking repayment of certain loans, denied the men’s accusations.
“These allegations were made by disgruntled employees and are totally without merit. Our company follows industry standards in generating marketing and sales plans, we are rigorously managed and fully compliant with all U.S. regulations,” the company said in a statement.
A colorful and controversial figure, Mr. Stanford has claimed ties to Leland Stanford, the former governor of California who started Stanford University in the 1800s. The university, however, has said there is no genealogical relationship between the two.
Mr. Stanford and his firm have also emerged in recent years as major contributors to various lawmakers, appearing to focus particularly on legislators considering bills that would change offshore banking rules.
And a decade ago, Mr. Stanford told The Associated Press that he had flown a Roman Catholic priest displaying signs of “stigmata,” or bleeding wounds on his wrists and ankles, from the tiny Caribbean island of Antigua to New York City on his jet.
Mr. Stanford, who his firm said was unavailable for comment, ranked 205th last year on the Forbes annual list of the richest people in the United States, with an estimated net worth of $2.2 billion. On Antigua, he is akin to royalty, being knighted by the former prime minister, referring to himself as “Sir Allen Stanford” on the company’s Web site.
Paul Marin -19 is one thing, 20 is a whole other matter. It gets even worse if they win the UCL. *groan*. 
05/18/2011.MU fans naah cough, but all a unuh a vomit?-Lazie 1/11/2015
Gamma, the eternal optimist.
...... is west indies cricket boss....when mi granny indoctrinate mi, mi get di FULL dose!
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