RSS

Annuity Watch

Billionaire indicted on $8 billion Ponzi scheme

On Thursday, news broke that a Texas billionaire -- Allen Stanford -- and four co-conspirators would be charged on Friday with 21 total counts of fraud. The allegations?  8 billion dollars in allegedly fake CDs issued from an Antigua-based bank that bears the billionaire's name. 8. Billion. Dollars. The news reported that he fraudulently sold certificates of deposit with improbably high interest rates from his Stanford International Bank, headquartered in Antigua. Improbably high interest rates! There's a huge warning sign. Why was this one bank no subject to the pressures causing other banks to keep their interest rates on CDs very very low? That should have tipped people off. If you want interest rates higher than CDs, you have to go find a different financial vehicle that is currently returning interest rates higher than CDs. Now, fixed deferred annuities -- also called CD-type annuities -- are one of those vehicles. But his bank wasn't selling those, it seems.

Even more damning was this: the former chairman of Antigua’s Financial Services Regulatory Commission, the agency responsible for bank regulation in the country, was also charged in conjunction with this alleged scheme. We've all heard the stories of "offshore bank accounts". Sounds like this one is shaping up to be one for the movies.

We wrote about all of that on Friday in our Annuity Watch section of our website. Today, we learned from Bloomberg that the SEC did infact indite Mr. Stanford, and that at least 30,000 investors were taken in by this alleged scheme. 

Here's a quote from Robert Khuzami, director of the U.S. Securities and Exchange Commission’s Division of Enforcement:

Stanford’s investors were simply looking for safe investments and low risk. With Stanford they thought they had found such an opportunity. But what they actually found was a complicated array of phony financial statements, fabricated performance and sham audits. 

According to the article, Assistant U.S. Attorney General Lanny Breuer said:

Stanford 'misused and misappropriated' assets, including diverting at least $1.6 billion into undisclosed personal loans to himself.

Stanford of course claims he did nothing wrong. Also note: Last year, Forbes Magzine ranked Stanford as the 650th richest person in the world. 

Now again, we must stress that these are allegations. Stanford and his associates have been charged, but not yet convicted. Regardless, this case highlights the fact that maturing investors MUST be ever vigilant when it comes to protecting their assets. There are real live scammers out there trying to get rich off of your money. And they succeed. Don't let it happen to you.

To help with that, we've just made available a free ebook, How to Avoid Ponzi Schemes. The book is free. It's short and designed to be easily read on your computer or printed out. You can share it with your friends. In fact, PLEASE share it with your friends. People get taken advantage of every day. Don't let it happen to you or your friends. Again, the ebook is free. Download it today.