Ponzi Scheme Leads to Suit Filed Against the SEC
A Ponzi scheme involving approximately $18.7 million of investor's money has led to a lawsuit filed against the U.S. Securities and Exchange Commission (SEC). The suit was filed with the United States District Court, Northern District of Texas, Dallas Division, on Thursday, March 24, 2011.
The suit was filed by eight individuals who claim the SEC's negligence and misconduct over its investigation into the alleged Stanford International Bank, Ltd Ponzi scheme led to $18.7 million in investment losses. Houston and Louisiana resident, Cynthia R. Dore, claims that she lost nearly $3.1 million in the scam. The remaining investors are Louisiana residents.
The founder of Stanford Financial Group, R. Allen Stanford, is currently awaiting trial on fraud charges associated with the $8 billion investment scheme.
The investors said that the SEC should have investigated and detected Stanford Financial Group's activities earlier.
"But for the negligent acts and omissions, misconduct and breaches of duty by Spencer Barasch, a former SEC regional enforcement director, the negligent supervision of Barasch by his SEC supervisors, and other inexcusable acts of negligence by SEC employees, the plaintiffs would not have made, and lost, their investments," the lawsuit states.
Mr. Stanford's operations were seized by the SEC in February 2009.