Stanford’s Red Flags

The SEC Presents its Case


Fraud in the News 

Allen Stanford represented a larger-than-life image of modern prosperity and success to his clients and potential investors. The 58-year-old multibillionaire dressed in expensive suits, displayed the confidence of a business leader and influencer, and spoke with a native Texas accent that seemed to lend a degree of familiarity and trust.

A Stanford Financial Group marketing video (highlighted by Business Week in its online news coverage) opens with Stanford speaking comfortably to the viewer from the firm’s downtown Houston offices, touting the firm’s personal attention to the client. “Our head office reflects our commitment to the highest level of personal service including a full-time client concierge desk, our five-star Eagle dining room, private parking facilities, and our Lotus Room – a state-of-the-art multimedia theater,” Stanford said. “Our corporate flight department provides our clients with safe and convenient transportation between our global offices – another sign of our commitment to excellence.”

At this portion of the presentation, the video lingers on images of a luxurious corporate jet, first taxiing from a hangar and then taking off – presumably on its way to pick up one of Stanford’s 30,000 clients who has loosened the purse strings to invest with the firm.

With the ink still fresh on the newspaper articles about Bernie Madoff’s Ponzi scheme, Stanford Financial Group’s investors must have felt a deep foreboding when media reported a federal raid on the global financial services firm’s downtown Houston offices and the firm was placed under operational control of a court-appointed receiver.

The very public raid began the morning of  Feb. 17 after the U.S. Securities and Exchange Commission (SEC) filed a formal complaint alleging fraud perpetrated by the finance company. The SEC didn’t mince words in its complaint, in which it sought “emergency relief to halt a massive, ongoing fraud orchestrated by R. Allen Stanford and James M. Davis and executed through companies they control.” (Davis is CFO of Stanford Financial Group.)

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