Allen Stanford Indicted in $8 Billion Ponzi Scheme

Allen Stanford, the Texas tycoon and chairman of the international Stanford Financial Group banking and investment empire, has been indicted by a federal grand jury on charges he orchestrated a Ponzi scheme that netted his company as much as $8 billion and was centered around the fraudulent sale of certificates of deposit in the bank.

In February, Stanford and two of his top corporate executives faced civil charges brought by the U.S. Securities and Exchange Commission in connection with the “massive” investment fraud. Officials said Stanford peddled investments in his Antigua-based bank by promising extraordinarily high interest rates that were not realistic.

In the days after the SEC charges were announced, thousands of nervous investors around the world flooded into Stanford banking offices seeking to withdraw their funds. In many cases, investors were told they simply were out of luck.

Ponzi Scheme Alleged

Prosecutors allege the entire investment program was nothing more than an elaborate Ponzi scheme, in which no actual profits were earned by clients and early investors to the program were paid purported profits from funds contributed to the scheme by later investors.

Stanford and his attorney have said all along that the investments were legitimate and legal and that he has done nothing wrong.

Indictment to Be Unsealed Today

Members of a federal grand jury in Houston, where Stanford Financial is headquartered, apparently disagreed and returned an indictment that is to be unsealed today. Stanford surrendered to federal authorities in Virginia on Thursday night. He reportedly approached officers who were staking out his girlfriend’s house, asked if they had a warrant to arrest him, and was taken into custody.

He is expected to appear before a judge in Virginia today before returning to Houston to fight the indictment charges.

Before he was implicated in the allegations of investment fraud, Stanford was a flamboyant billionaire and one of the world’s richest people, with a personal worth of about $2 billion. He held dual citizenship in both the United States and Antigua, where he lived and supported the sport of cricket.

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