Ponzi suspicions not probed for decade

NEW YORK, April 17 (UPI) -- U.S. regulators suspected Texas financier R. Allen Stanford was running a Ponzi scheme for a decade before seriously investigating him, a report says.

The Wall Street Journal says the report, by the inspector general of the Securities and Exchange Commission, found SEC examiners concluded four times between 1997 and 2004 Stanford's businesses were fraudulent but decided each time not to pursue him.

The report says Spencer Barasch, the former head of the SEC enforcement office in Fort Worth, Texas, prevented investigations, then tried to represent Stanford in private practice. Barasch, who the inspector general recommended for possible disbarment, could not be reached for comment.

Stanford was indicted in June 2009 on charges of operating a Ponzi scheme that swindled investors out of $7 billion. He has pleaded not guilty.

The Journal said the Stanford investigation intensified after Bernie Madoff's massive Ponzi scheme surfaced in December 2008.

In the report, SEC Inspector General David Kotz suggested the failure to pursue the Stanford case early reflected a commission tendency to pursue easily resolved cases over more complicated ones. Because the Stanford case was not deemed a "quick-hit" and "slam-dunk," examiners were discouraged from pursuing it, Kotz found.

SEC Chairwoman Mary Schapiro said the SEC has improved its examinations since Kotz's investigation. "Much has changed and continues to change regarding the agency's leadership, its internal procedures and its culture of collaboration," she said.