Text Size

Email Post

Print Post

Comments (8)

Save Article

Police from various agencies wait in the lobby of the Stanford Financial Group building in the Galleria. Federal marshals and other investigators were in both buildings, which were shut down.

Houston, TX - Texas financier R. Allen Stanford is accused of cheating 50,000 customers out of $8 billion dollars but despite raids Tuesday of his financial empire in Houston, Memphis, and Tupelo, Miss., federal authorities say they do not know the current whereabouts of the CEO.

The Securities Exchange Commission alleges Stanford ran a fraud [reported by VIN News] promising investors impossible returns, much like Bernard Madoff’s $50 billion alleged Ponzi scheme.

Investigators Tuesday shut down and froze the assets of three of the companies Stanford controls and they say the case could grow to be as big as the Madoff scandal. Like Madoff’s clients, Stanford’s investors are in shock.

“Initially we put our money in this institution and in a CD because we were nervous about the markets and thought it was a safe place,” said investor Brett Zagone. “I’m so upset right now I can’t even talk about it.”

But in addition to angry clients, Stanford, like Madoff, has many friends in Washington.

Stanford’s business is headquartered on the Caribbean island of Antigua. In the last decade, Stanford and his companies have spent more than $7 million on lobbyists and campaign contributions in efforts to loosen regulation of offshore banks.

Among the top recipients: Senator Bill Nelson (D-Fla.), Congressman Pete Sessions (R-Texas), Sen. John McCain (R-Ariz.), Senator Chris Dodd (D-Conn.) and Senator John Cornyn (R-Texas), one of the members who took a trip to Antigua where he was entertained by Stanford.

Senator Will Return Campaign Contributions from Stanford

Sen. Nelson said late Tuesday that he would return money received by Stanford. “I will give to charity any campaign contributions from him or his employees,” Nelson said through his spokesman.

Some say the investigation into Stanford should include an examination of his relationships with members of Congress.

“Surely there has to be a part of the investigation to look at what was done in Congress and whether the money that was spent to lobby and make political contributions played any role in all of this,” said Sheila Krumholz of the Center for Responsive Politics.

Once again, this could be another case of the SEC asleep at the switch. Allegations of fraud and possible drug money laundering have been made against Stanford in the past ten years, but the SEC took action only after two former employees filed a lawsuit in civil court.

Sen Cornyn’s office has said the trip “was strictly a fact-finding trip,” and at the time, “there was nothing untoward or unseemly” about Stanford Financial.

More of today's headlines

“London - A house in Golders Green has been used as a school for more than five years, despite not being granted permission to set up in the first place. Beis Hamedrash...” London - Golders Green Yeshiva Defies Order to Close “Jerusalem - Rav Shlomo Epstein, one of the last remaining talmidim of the Chofetz Chaim, passed away on Tu B'Shvat at the age of 95. He was born in 1914 in Vilna, the...” Jerusalem - Rav Shlomo Moshe Epstein, One of The Last Remaining Talmidim Of The Chofetz Chaim, Zt"l