Texas A&M Faces $4.4M Lawsuit Stemming from Alleged $8B Investment Fraud
Texas A&M is currently facing a multi-million dollar lawsuit related to the $8 billion investment fraud scheme allegedly orchestrated by Robert Allen Stanford, sole proprietor of Stanford Financial.
As reported in a NY Times article two years ago, the SEC charged Robert Allen Stanford and his chief lieutenant, James M. Davis, in Feb. of 2009 with orchestrating and executing a "massive Ponzi scheme" that involved $8 billion in CDs. (For more information, read the full article here.)
Regulators subsequently froze Stanford's assets, but the case didn't progress because Stanford was deemed incompetent to stand trial. Investors - many of who lost their entire savings - then turned to the Securities Investor Protection Corporation (SIPC), which has been integral in helping Madoff victims receive restitution, for help.
When the SIPC said it didn't think Stanford's investors would be eligible for SIPC protection, a flurry of lawsuits were filed against secondary institutions that may have received tainted funds from Stanford. The lawsuit against Texas A&M is one such lawsuit.
"The Stanford parties were running a Ponzi scheme and paid Texas A&M with funds taken from unwitting... investors," the complaint alleges. "The plaintiffs are, therefore, entitled to disgorgement of the CD proceeds the Stanford parties fraudulently transferred to Texas A&M."
The complaint alleges that A&M received 11 payments from Stanford Financial from 2004 to 2008. A spokesman for the university said the payments were part of a sponsored research agreement. No further statements were made.