Trustee Seeks Return of $40 Million in Commissions on Sales of Fraudulent Stanford Financial Investments

Stanford Financial Group financial advisers should hand over $40 million in commissions they earned for selling fraudulent certificates of deposit at the center of an $8 billion Ponzi scheme, a court-appointed trustee says in a new lawsuit.

Ralph Janvey, the attorney appointed by the court to oversee operations of Stanford Financial during a federal probe of securities fraud against the company, is seeking repayment of fees collected by 66 of the company’s financial advisers. His lawsuit was filed today in U.S. District Court in Dallas.

Proceeds of Crime Targeted

The millions paid in commissions on sales of the investments “came not from revenue generate by legitimate business activities, but from monies contributed by defrauded investors,” Janvey said in his lawsuit.

Since 2007, the dozens of Stanford financial investors earned commissions of between $200,000 and $2.6 million for promoting and selling the fraudulent certificates, according to Janvey.

SEC Charges Filed

Texas billionaire Allen Stanford and two of his top corporate officers were charged in February 2009 by the Securities and Exchange Commission in connection with an alleged Ponzi scheme involving sales of high-yield certificates of deposit in Stanford International Bank, based in Antigua. Investors were promised unrealistically high returns on the investments in what turned out to be nothing but an elaborate financial shell game, according to securities regulators.

Stanford has refuted the charges of investment fraud and said he plans to fight the SEC accusations.

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