SEC takes its time with Stanford's $8 billion fraud


As you read about the $8 billion Stanford scandal, you may experience deja vu. It's like the Madoff scandal done Latin American style. Where Madoff targeted Jews in his affinity investing scheme, Allen Stanford preyed on the Latin American community with his CDs sold as investments through his bank in Antigua. For investors there were two key clues something wasn't kosher:

* The CDs were not insured by the FDIC.

* The promised returns were at least double what was being offered by most other banks.

But the returns, especially on five-year CDs of 7.05 percent sold in 2007, looked too good to pass up by many investors. The minimum deposit was $50,000. It now appears that most of the funds were invested in private equity and real estate at the top of the bubble, so initial suspicions are that most of that money is gone. The full extent of the scandal is still emerging because, like Madoff, Stanford CDs were distributed through a number of channels aside from his own, including family offices and feeder fund-type entities.

Originally published