SEC charges Stanford Group with fraud

WASHINGTON, Feb. 17 (UPI) -- The U.S. Securities and Exchange Commission Tuesday accused Stanford Financial Group Co. chief Robert Sanford of orchestrating an $8 billion CD fraud.

The SEC said U.S. District Judge Reed O'Connor had issued a temporary restraining order to freeze Stanford's assets and appoint a receiver "to marshal those assets."

Linda Chatman Thomsen, director of the SEC's Enforcement Division said the complaint includes allegations that "Stanford ... perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors."

"We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world," Regional SEC Director Rose Romero said.

The SEC alleges the Stanford International Bank sold about $8 billion of "so-called certificates of deposit" to investors "by promising improbably and unsubstantiated high interest rates."

To give credence to the promises, "the defendants have misrepresented to CD purchasers that their deposits are safe," the SEC said.

The case also overlaps with the New York trader Bernard Madoff's alleged $50 billion Ponzi scheme, now under investigation.

Stanford International Bank "attempted to calm its own investors by falsely claiming the bank has no 'direct or indirect' exposure" to the Madoff scheme, the SEC said.