Robert Allen Stanford: CD Ponzi Scams Had Global Network
Religious ties, nepotism, and the tenacity of Robert Allen Stanford himself appear to be the common theme that produced what the Securities and Exchange Commission (SEC) calls a $9 billion massive Ponzi fraud. Stanford, chairman of the Stanford Financial Group, and employees James Allen and Laura Pendergest-Holt were sued last month by the SEC for allegedly conducting the second biggest securities fraud to emerge in just three months, following the Bernard “Bernie” Madoff case.
On Feb. 26, Pendergest-Holt was arrested and charged with obstructing a federal investigation. All three individuals, Stanford, Allen and Pendergest-Holt are accused of taking part in issuing fraudulent certificates of deposit through Stanford International Bank in Antigua, as well as a further scheme relating to $1.2 billion in sales. As in Madoff’s Ponzi scheme, Stanford’s CDs carried improbable high interest rates of return, as much as 15.7%. That is four times what banks in the United States offer on similar accounts.
As reported March 9 by Bloomberg, Stanford knew Davis, the company chief financial officer, in college. Davis then later brought in Pendergest-Holt as chief investment officer. Davis had met Pendergest-Holt at the Baptist Church in Baldwyn, Mississippi.
Employees of Stanford’s company apparently relied heavily on church and community to attract clients. Religion also was a big part of the corporate culture at Stanford’s companies. According to the Bloomberg article, employees say it was common for Davis, based in Memphis, Tennessee, to “clasp the shoulders of employees, look them in the eyes and pray for them.”
Now the prayers should be for investors. So far, only $90 million of the missing $8 billion has been found. Stanford’s assets, as well as those of his companies, have been frozen and placed into receivership by a U.S. federal judge.
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