Feds Raid Stanford Financial

  • FAST FACTS:
  • Stanford Financial’s Memphis office one of at least three raided by federal agents Tuesday
  • The company and executives accused of orchestrating $8 billion fraud
  • Investors told team of anaylists in Memphis were watching over the company’s investment portfolio

Scott.Noll@wreg.com

(Memphis, 2/17/2009) From Houston to Memphis, to Tupelo, Mississippi, federal agents spent Tuesday morning raiding the offices of Stanford Financial.

Regulators say the company, and top executives orchestrated an $8 billion rip-off.

The allegations are part of a complaint filed by the Securities and Exchange Commission.

The SEC says Stanford misled investors by promising double-digit rates of return. That’s something the feds call improbable.

According to the complaint filed by the feds, investors were told the company’s multi-billion dollar investment portfolio was monitored by a team of analysts in Memphis.

But, in reality, the SEC says only two people know the full details of those investments.

Now, both R. Allen Stanford, and James Davis are defendants in the case.

By lunchtime, word was already spreading through the Crescent Center in East Memphis.

“Stanford Financial Group was raided,” said Margo Stover, who works one floor above Stanford’s Memphis office.

Security stopped News Channel 3 from walking into the building, but late Tuesday afternoon, the Securities and Exchange Commission confirmed agents, along with US Marshals raided the offices.

No one answered when News Channel 3 Investigators tried calling up to the 3rd floor of the Crescent Center, but a recording gave a glimpse of the company’s future.

“Our offices are temporarily closed until further notice,” said the recording.

Along with company chairman, R. Allen Stanford, the feds say chief financial officer James Davis put together the fraud.

The 25 page complaint alleges only Stanford and Davis truly know the details of most of the company’s investments.

According to investigators, the company claimed double-digit returns on certificates of deposits over the last 15 years, something experts call improbable.

Instead of liquid assets, the complaint alleges Stanford Financial actually invested a large portion of its money in real estate, and private equity.

It was Davis who convinced the company to open an office in Memphis, to be closer to his home in Baldwyn Mississippi.

Federal regulators say Davis often worked from the Poplar Avenue office in Memphis, where news of Tuesday’s raid was met with a mix of emotions.

“It was surprising that something is happening locally, where you’re working,” said Stover. “But as far as with everything and what’s going on with all the financial institutions, it’s not surprising at all.”