CaribWorldNews, LONDON, England, Mon. May 11, 2009: Allen R. Stanford, the financier accused of a giant ponzi scheme by the U.S. Securities and Exchange Commission, may have been an informant for the U.S. DEA, a new report says.
The BBC`s Panorama investigation claims that the Texas-born businessman, turned Antiguan, may have worked as a US government informer, feeding information to the US Drug Enforcement Administration on money laundering by Latin American drug cartels.
Panorama says it is aware of `strong evidence` that Sir Allen was a `confidential agent` for the DEA as far back as 1999 and turned over details of money laundering by clients from Colombia, Mexico and Ecuador.
The Panorama report claims that Sir Allen, paid a $3.1 million to the DEA in 1999 after that sum was invested in his bank by another Mexican drug gang, the Juarez cartel of Amada Carillo Fuentes.
The report also claims that Sir Allen was initially investigated by the SEC over suspicions he was running a Ponzi scheme in 2006, but the inquiry was over by the winter of that year because of a request by another government agency.
The DEA declined to comment to the BBC on its allegations. Stanford denies any wrongdoing. He has not been charged with any crimes to date but insists he will fight the civil charges even though his assets have all been frozen and he clams he has no money to even pay his lawyer.
The Securities and Exchange Commission has charged that Stanford and three of his companies orchestrated a fraudulent, multi-billion dollar investment scheme centering on an $8 billion CD program.
According to the SEC’s complaint, the defendants misrepresented to CD purchasers that their deposits were safe, falsely claiming that the bank re-invested client funds primarily in the portfolio; monitored the portfolio through a team of 20-plus analysts; and was subject to yearly audits by Antiguan regulators.
The SEC’s complaint also alleges that an additional scheme relating to $1.2 billion in sales by SGC advisers of a proprietary mutual fund wrap program, called Stanford Allocation Strategy (SAS), by using materially false historical performance data. According to the complaint, the false data helped SGC grow the SAS program from less than $10 million in 2004 to more than $1 billion, generating fees for SGC (and ultimately Stanford) of approximately $25 million in 2007 and 2008. The fraudulent SAS performance was used to recruit registered investment advisers with significant books of business, who were then heavily incentivized to reallocate their clients’ assets to SIB’s CD program.
The SEC’s complaint charges violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act, and registration provisions of the Investment Company Act.