Robert Allen Stanford, Head of Stanford Financial Acused of Massive Fraud to Tune of $9.2 Billion

Photo: Robert Allen Stanford, ABC News

UPDATE

According to ABC News, Mr. Stanford, who is accused of cheating 50,000 customers out of $8 billion dollars, is reportedly missing. Federal authorities raided his financial empire in Houston, Memphis, and Tupelo, Miss., and have said that they do not know his current whereabouts.

Well, we are on to Bernie Madoff No. 2. The Securities and Exchange is investigating what it calls “massive ongoing fraud,” as it accused Robert Allen Stanford, the chief of the Stanford Financial Group, of fraud in the sale of about $8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. Also named in the suit were two other executives and some affiliates of the financial group. Fi fie fo fum, the smell of a prison cell is in the air! This is big because federal agents with the U.S. Marshals Service entered the Houston office of the company this morning.

In the complaint, filed in Federal District Court in Dallas, the SEC accused Mr. Stanford and two associates — James M. Davis, a director and chief financial officer of Stanford Group and the Antigua-based bank affiliate, and Laura Pendergest-Holt, the chief investment officer of both organizations — with misrepresenting the safety and liquidity of the uninsured CDs. The CDs were sold by Stanford International Bank through the firm’s registered broker-dealer and investment adviser, which are in Houston. Both the bank, which claims $8.5 billion in assets and 30,000 clients in 131 countries, and the brokerage unit, which operates about 30 offices in the United States, were named in the SEC suit. Stanford Financial asserts that it advises about $50 billion in assets.

In its complaint, the S.E.C. said it could not account for the $8 billion in assets that were housed in the Antigua bank after issuing subpoenas for bank records and to various witnesses. Most witnesses, including Mr. Stanford, Mr. Davis, and the Antigua-based bank’s president, failed to appear to testify nor did they produce documents shedding light on the assets.

The S.E.C. accused the bank and its affiliates of falsely stating in marketing materials that client funds were placed in liquid financial instruments, when in fact they were invested in private equity funds and real estate. On Nov. 28, Stanford International Bank quoted a rate of 5.375 percent on a $100,000 three-year CD, compared with rates of less than 3.2 percent at American banks. The bank recently has offered rates of more than 10 percent on five-year CDs, the filing stated. Source: Wall Street Journal

These people need to go to prison for a long, long time. Sheriff Leon in Richland County, South Carolina, was so worried about Michael Phelps’ alleged marijuana use, law enforcement everywhere need to worry about these criminals dressed in suits and running these financial corporations. They need to be locked away for 15 to life or whatever. Sorry, but as the economic meltdown continues, more of these dirt bags will come out of the woodwork.

Filed under: $8 Billion, American Banks, Bernard Madoff, High-Yielding Certificates, Massive Fraud, Robert Allen Stanford, Securities Exchange Commission, Stanford Financial

Joseph Forte Sued by Commodity Futures Trading Commission, SEC for Running $50 Million Ponzi Scheme

Another money manager bites the dust. According to Dow Jones Wire, the U.S. Commodity Futures Trading Commission and the Securities and Exchange Commission have brought civil charges against Joseph S. Forte of Pennsylvania, who is accused of running a $50 million Ponzi scheme.

Authorities said Forte, of Broomall, Pa., recently confessed to federal officials after his alleged Ponzi scheme fell apart. It was unclear if criminal charges have been filed. According to the SEC, Forte obtained the $50 million from as many as 80 different investors through the sale of securities in the form of limited partnership interests in his firm, Joseph Forte, L.P. They claim he told the investors he would invest their money into an account that trades in securities futures contracts, including S&P 500 stock index futures.

The CFTC’s complaint, filed in a U.S. district court in Pennsylvania, accuses Forte of solicitation fraud, misappropriation of commodity pool funds, sending customers false account statements, and failing to register as a commodity pool operator. The charges against Forte come at a time when Ponzi schemes are at the center of attention after it was revealed that Bernard L. Madoff, a renowned investor, was allegedly operating a $50 billion Ponzi scheme and managed to evade regulators for at least a decade.

Yep, I hear criminal charges coming soon for Mr. Forte and he will be sent up the river for a long time, when convicted and sentenced. He should be held to the same standard as the common criminal.

To read the SEC’s complaint, CLICK HERE.

Filed under: Commodity Futures Trading Commission, Joseph Forte, Joseph Forte LP, Ponzi scheme, Securities Exchange Commission

Wealthy Investors Duped by Bernard Madoff May Be Protected by Government

Once again, the federal government may come to the rescue of yet another wealthy group. Former NASD chief and disgraced investor Bernard Madoff may have duped his investors out of $50 billion, but a federal judge may be the life line these wealthy people may need through an order of protection. Meanwhile, a federal judge on Monday threw a lifesaver to investors who may have been duped, saying they need the protection of a special government reserve fund set up to help investors at failed brokerage firms. U.S. District Judge Louis L. Stanton ordered that clients of Madoff’s private investment business seek relief under a federal statute created to rescue cheated investors. Stanton also ordered that business be liquidated under the jurisdiction of a bankruptcy court and named attorney Irvin H. Picard as trustee to oversee that process. So, when rich folks get duped, there’s a life line thrown at them, but when Main Street needs help against foreclosure, they are undeserving of any government assistance to stay in their homes.

Stanton signed the order after the Securities Investor Protection Corporation asked that steps be taken to protect investors in the scheme, which has ensnared several major banks and prominent figures as victims and could result in as much as $50 billion in losses.

Congress created the SIPC in 1970 to protect investors when a brokerage firm fails and cash and securities are missing from accounts. Funds can be used to satisfy the remaining claims of each customer up to a maximum of $500,000. The figure includes a maximum of up to $100,000 on claims for cash.

The order came just days after federal prosecutors charged Madoff with securities fraud, saying he had admitted to orchestrating a massive Ponzi scheme. Madoff is free on $10 million bail after he was charged with securities fraud last week. Source: ABC News.

One thing I have learned is that the rich always strive to be richer, no matter what. So, this man comes along and offers them a big return and they fall for his “game.” Yes, he gamed them and they ought to feel really stupid. What about portfolio diversification? Don’t put all your eggs in one basket is the golden rule, but I guess the prospect of big returns clouded the judgments of many of these people. The sad reality is that it will affect the “little people” because many institutions and charities also got burned.

The scheme was operated out of the so-called “Lipstick Building” on Third Avenue. Bernard Madoff Investment Securities LLC occupies three floors and may have bilked investors of $50 billion. Prosecutors have said that it was a classic Ponzi scheme. The firm paid-off earlier investors with money from new investors. It collapsed amid a nervous economy when some people wanted their money out.

I guess the list of victims could get larger as more people claim they lost millions. The list of victims is quite interesting–Mets owner Fred Wilpon; former Philadelphia Eagles owner Norman Braman; investors such as Joan Sinkin who claims to be of modest means and lost her entire life savings; a charitable fund set-up by the family of Senator Frank Lautenberg of New Jersey; several major banks including Spain’s Grupo Santander SA, Britain’s HSBC Holdings PLC, Royal Bank of Scotland Group PLC and Man Group PLC, France’s BNP Paribas and Japan’s Nomura Holdings reported falling victim to Madoff’s alleged Ponzi scheme.

I would like to know how this man flew under the Securities and Exchange Commission radar for so long. I am pretty sure that there were warning signs, but what is indicative of the lax regulatory oversight on Wall Street, this should come as no surprise. The man is a crook and deserves to be incarcerated in a prison for violent offenders. Since the government is only too happy to help rich folks out, then they ought to help the millions of struggling homeowners across the country get affordable mortgages.

Filed under: Bernard Madoff, Ponzi scheme, Securities Exchange Commission, Securities Investor Protection Corporation, Struggling Homeowners, Wealthy Duped

Larry Langford, Mayor of Birmingham, Al., Arrested on Federal Charges

Another mayor bites the dust. According to media reports, Birmingham Mayor Larry Langford was arrested this morning on federal charges and is being held at the federal courthouse, the FBI and other federal officials confirm. The last place this old man needs to be is behind bars.

A special grand jury for several months has been investigating county bond deals and Langford’s financial dealings. Langford was Jefferson County Commission president 2002-06. Al LaPierre, a close friend of Langford’s who also was part of the federal investigation, will be surrendering today, said his attorney, Tommy Spina. David McKnight, Montgomery banker Bill Blount’s attorney, said Blount is on his way to Birmingham from Montgomery to surrender. The Langford, LaPierre and Blount indictments are under seal, so details of the charges are not available.

Langford, LaPierre and Montgomery investment banker Bill Blount have been accused in a U.S. Securities and Exchange Commission lawsuit of not disclosing $156,000 in payments to Langford. The SEC has accused Blount of paying Langford through LaPierre as part of a plan to secure Jefferson County financial business when Langford was Jefferson County Commission president. Have these people not learned from the fall of former Atlanta mayor Bill Campbell? Or former Detroit mayor Kwame Kilpatrick?

Former Jefferson County Commissioner John Katopodis was indicted in October on fraud charges stemming from his involvement with Computer Help for Kids, a charity established by Langford when Langford was mayor of Fairfield. Katapodis was arraigned on those charges in mid-November. Details of those charges. The man is a crook no matter how you look at this situation.

This statement was released from the mayor’s chief of staff, Deborah Vance-Bowie.:

“As you know, the Mayor was detained this morning by federal authorities. We do not know the details of his detention at this time. City business will go on as usual as we are all here to do a job and we’ll continue to do our jobs to ensure we deliver the best services to the taxpayers of Birmingham. This is certainly no surprise to us — we anticipated something happening soon especially knowing Alice Martin’s days in office are numbered with the swearing in of a new president in late January — just a little over a month from now. We are glad the mayor will finally have his day in court. As members of his team, we stand behind him and look forward to the day when we can return the focus to the important issues before the city.”

Well, I guess the chickens have come home to roost for Mayor Langford. He’s just another dirty politician about to be brought low. I have no sympathy for these people. I hope they throw the book at him, if he is proven guilty in a court of law.

Filed under: Al LaPierre, Bill Campbell, Birmingham Mayor, David McKnight, John Katopodis, Kwame Kilpatrick, Larry Langford, Securities Exchange Commission