Billionaire financier Allen Stanford is accused of swindling investors out of billions. Wall Street Journal reporter Glenn Simpson gives an update.
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The Securities and Exchange Commission has charged Texas financier R. Allen Stanford with an estimated $8 billion fraud. It's related to the sale of certificates of deposit in Antigua-based Stanford International Bank.
Two days after being accused, the businessman was tracked to this home in Virginia, where FBI agents served him with an SEC civil complaint. Authorities have frozen Stanford's numerous business holdings, many of which are based in Latin America and the Caribbean.
Yesterday, the Venezuelan government seized the bank's subsidiary there and barred depositors from making withdrawals to avoid its collapse.
These people aren't moving. The line is not moving.
There was a run yesterday on a Stanford-controlled bank in Antigua, and today authorities took control of it. Stanford is known worldwide for his profligate spending, rich lifestyle, and passion for the sport of cricket. He remains free, and no criminal charges have been filed against him.
For more, I'm joined by Glenn Simpson of the Wall Street Journal. He's an investigative reporter specializing in financial crime.
Glenn, it's good to have you with us. There's some pretty grand language in this SEC complaint, quote, "a fraud of shocking magnitude that has spread its tentacles throughout the world." What exactly is the SEC saying that he did?
GLENN SIMPSON, Wall Street Journal:
The SEC is only saying right now that he misrepresented the returns on his investments, he misled investors on his ability to bring them high returns. They're indicating that they think that more is amiss than that, but they're also saying they don't know where this money is.
Now, certificates of deposit involved. Help us understand how that works.
If you're accustomed to banking in the United States, sometimes you will buy a certificate of deposit for a short-term safe investment, usually yields a very small, modest interest rate.
He was pitching a similar product through his off-shore bank that yielded a much more generous rate, and he was telling investors that he could produce this rate through unique global strategy of investments.