Stanford Financial Group | R. Allen Stanford Arrested | Allen Stanford Corruption Charges Car Fraud | Stanford Financial Group H

Stanford Financial Group | R. Allen Stanford Arrested | Allen Stanford Corruption Charges Car Fraud | Stanford Financial Group Huston Texas | Alan Stanford Arrested

Antigua-based billionaire Allen Stanford has been charged with fraud by US authorities according to the Reuters agency. The Securities and Exchange Commission (SEC) said that it was "alleging a fraud of shocking magnitude".

The ECB reacted to the news with a statement saying it and the West Indies board had "suspended negotiations with Stanford and his financial corporation concerning a new sponsorship deal".

Speaking to journalists in Antigua, the ECB chairman, Giles Clarke admitted that his organisation may have made an error of judgement in getting involved with Stanford, but added that they had done so "with the best of intentions".

"The ECB carried out due diligence prior to making their long-term agreement with Stanford last summer," said Clarke. "He was conducting a banking operation, which, at the time, based on the information from the work that was done, showed no indication that there was anything that could prevent him from paying his obligations. We did what we did because we believed we were doing the right thing to raise funds for West Indies cricket and, indeed, our own game."

England's last dealing with Stanford came in November last year, when they contested and lost the US$20 million 20/20 for 20 in Antigua. The ECB nevertheless earned US$3.5 million as a participation fee, with Clarke insisted had been paid up.

"We have a situation where a court case has been filed," Clarke said. "The matter is therefore sub judice. We also have contractual rights with this particular situation. At the moment, all of the obligations with regard to the game that was played have been met, and all of the various people who were expected to do various things for that match have received their remuneration, as far as I am aware."

This summer, a four-team quadrangular tournament is due to take place at Lord's, with Sri Lanka and New Zealand also expected to feature. "We will clearly consider that situation but, as we have suspended all negotiations, there is a strong possibility that will now not take place," said Clarke.

Linda Chatman Thomsen, director of the SEC's division of enforcement, said: "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. We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors."

A US district judge granted the SEC's request to impose a temporary restraining order on the Stanford operations and to freeze the defendants' assets, and appoint a receiver to marshal those assets.

Federal agents were also reported to have entered the Houston office of Stanford Financial Group, according to a Reuters eyewitness.

Earlier today the SEC had filed a complaint in federal court in Dallas accusing Stanford, the head of the Stanford Financial Group, of fraud in the sale of about US$8 billion of high-yielding certificates of deposit held in the firm's bank in Antigua. James M. Davis, a director and chief financial officer of Stanford Group, was also arrested.

The SEC said it could not account for the US$8 billion in assets that were housed in the Antigua bank after issuing subpoenas for bank records and to various witnesses. Most of those subpoenaed, including Davis and Stanford, failed to testify or produce documents relating to the assets. The group as a whole has 30,000 clients and investments totalling around US$50 million.

The SEC went on to describe claims by the bank that it paid "significantly" higher returns on its CDs because of the high quality of its investments as "improbable, if not impossible".

The SEC's investigation into Stanford Financial Group comes at a time it is under considerable pressure inside the USA for its inaction regarding the multi-billion Bernard L. Madoff case [via]