20-20 cricket banker charged with US$8 bln fraud

The Securities and Exchange Commission alleged "massive fraud" against Texan billionaire 'Sir' Allen Stanford overnight, saying he and his close circle raised more than US$8 billion through certificates of deposit into his Stanford International Bank (SIB) in Antigua using fabricated information on long term 'double digit' returns. Houston based broker/dealer Stanford Group Company (SGC) and Stanford Capital Management, which have more than US$50 billion of capital under management, also face fraud allegations. New Zealand readers may know Stanford from his role creating the one-off US$20 million cricket match between England the West Indies last year. J Allen Stanford was granted the 'Sir' title by the Antiguan government. He was criticised for 'handling' the English players wives at the match. 

"As we allege in our complaint, 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. "We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors," she said in a statement here.  

The SEC, alleged that acting through a network of SGC financial advisers, SIB sold about US$8 billion of so-called "certificates of deposit" 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. This story was first broken by a Venezuelan-based analyst and blogger. See here for more details.