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Robert Trigaux

Epidemic? More fraud of 'shocking magnitude'



Allenstanfordright When it comes to financial fraud, when it rains it pours. Today, in an action eerily similar to that of Ponzi King Bernie Madoff, federal regulators charged Texas financier-billionaire R. Allen Stanford (that's him on the left in an AP photo celebrating a cricket game in the Caribbean) and three of his firms with a "massive" fraud centered around high-interest-rate certificates of deposit, and raided some of the companies' offices. In a complaint filed in federal court in Dallas, the Securities and Exchange Commission alleged Stanford orchestrated a fraudulent investment scheme centered on an $8 billion CD program that promised "improbable and unsubstantiated high interest rates."

"We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world," Rose Romero, director of the SEC's Fort Worth office, said Tuesday. Stanford spokesman Brian Bertsch did not immediately return calls seeking comment. Here's the SEC's 25-page legal complaint.

Stanford's assets, along with those of the three companies, were frozen. Stanford's firms include Antigua-based Stanford International Bank, broker-dealer Stanford Group Co. and investment adviser Stanford Capital Management, which are both based in Houston. Read the AP coverage here.

As the SEC charges were made public Tuesday morning, U.S. marshals and Federal Bureau of Investigation agents raided Stanford offices in Houston. The Texas native was listed by Forbes magazine as the 605th-richest man in the world, 205th richest in America, with an estimated net worth of $2 billion.

Why do we care here in Tampa Bay?

First because the charges come amid an investigation lasting more than three months that includes the SEC, the Financial Industry Regulatory Authority, the U.S. brokerage industry's self-policing body, and the Florida Office of Financial Regulation. Investigators visited the Florida offices of Stanford Group last month, the AP story reports.

Second, because Stanford International Bank has more than 200 employees in its Miami and Boca Raton offices. Its U.S. operations include an investment brokerage, wealth management, a private client group, stock research and merchant banking, according to the South Florida Business Journal. The company also has Florida offices in Vero Beach on the east coast and Longboat Key, just south of Tampa Bay.

Third, because Stanford International Bank, according to Bloomberg News, is the principal shareholder of Tampa-based Health Systems Solutions, which sells medical software. Last week, a pending merger fell through between Health Systems Solutions and Emageon Inc., a medical tech firm in Birmingham, Ala. Health Systems said it could not get the funding it needed from Stanford International Bank to complete the $62 million deal . Emageon, a health care information technology company headquartered in Birmingham, Ala., received $9 million that was in escrow in connection with the deal.

Though Health Systems lists Tampa as its headquarters on SEC filings, it has relocated much of its operations to New York City.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 11:24am]


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