US securities regulators have broadened their investigation into the alleged $8 billion Ponzi scheme run by Allen Stanford, the Texan billionaire, to include brokerage executives who invested their clients’ money in Stanford International Bank products.
The Securities and Exchange Commission has notified Danny Bogar, former president of Stanford International Bank’s brokerage operations, and several brokers in recent months that it intends to file civil fraud charges against them in connection with the probe, according to lawyers involved in the case and a regulatory filing.
The SEC declined to comment. The move marks an expansion of the government’s probe beyond the top officers of the bank to include the army of brokers who attracted millions of dollars from investors.
In June 2009, the US Department of Justice filed criminal charges against Mr Stanford, four senior officers and an Antiguan regulator in connection with the alleged Ponzi scheme. The investigation is continuing.
Mr Stanford is fighting the allegations and is set to go to trial in January. James Davis, the former chief financial officer of the Stanford bank, pleaded guilty to charges in the case last year and is co-operating with investigators.
The other people charged have denied wrongdoing.
Tom Taylor, a lawyer for Mr Bogar, confirmed that his client had received a Wells notice, the process the SEC uses to notify individuals that they may face civil charges.
Mr Taylor said his client had no knowledge of the alleged fraud. Mr Taylor added that he had met SEC investigators to plead his client’s case. “He certainly wasn’t privy to what was going on [at the bank],” Mr Taylor said.
Mr Bogar is a brother-in-law of Mr Davis.
Patrick Cruickshank, a broker who worked in Stanford’s Austin, Texas, office from 2006 until 2009, also received a Wells notice, according to an update to his record filed with the Financial Industry Regulatory Authority the brokerage industry’s regulator.
The SEC said it planned to sue him on civil charges of securities fraud and aiding the Stanford fraud, according to the filing.
A lawyer for Mr Cruickshank said his client “has done nothing wrong” and “was a victim of the Stanford fraud”.
Mr Stanford, who has been in prison since his arrest in June 2009, was a larger-than-life businessman in the Caribbean nation of Antigua-Barbuda, which is part of the British Commonwealth.
He owned a cricket team, newspaper, restaurants and property and was knighted in 2006. His knighthood was revoked after criminal charges were filed.
Last week, a lawyer for Mr Stanford argued for his release saying Mr Stanford’s mental health had deteriorated.