The SEC has charged Sir Allen Stanford, chairman of family-owned Stanford Financial Group, and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an $8 billion "certificates of deposit" programme.
SFG is a privately-held global network of independent financial services companies founded by Sir Allen's grandfather, Lodis B Stanford, in 1932. The group has $50 billion in assets under management or advisement.
"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.
The charge relates to Antiguan-based Stanford International Bank (SIB), which the SEC claims is operated by a close circle of Stanford's family and friends, including Stanford's father.
Specifically, SIB is accused of selling approximately $8 billion certificates of deposit – a debt instrument that claims to offer higher rates of return than most comparable investments in exchange for tying up invested money for the duration of the certificate's maturity – to investors by promising improbable and unsubstantiated high interest rates.
These rates were supposedly earned through SIB's unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for the past 15 years.
Neither Sir Allen nor the SFG has made any comment.