Several banks, including two in the U.S., face new scrutiny as investors and regulators try to sort out the alleged Allen Stanford Ponzi scheme, CNBC has learned. At issue: what the banks and regulators knew about massive deposits and withdrawals from Stanford over the years.
At the heart of the questions is a report filed in court by forensic accountant Karyl Van Tassel of FTI Consulting. Van Tassel was hired by the court-appointed receiver in the Securities Exchange Commission civil case against Stanford.
While US regulators have always maintained that one of their biggest obstacles in uncovering the alleged fraud was that it involved certificates of deposit from Stanford's offshore bank in Antigua, the accountant's report says virtually no investor money actually went to Antigua. Instead, it went to Stanford company accounts at banks in the US and Canada.
Between Jan. 1, 2008 and Feb. 17, 2009, the report says, $2.1 billion in deposits went to Toronto Dominion Bank in Canada. Another $624 million went to Trustmark National Bank, which is based in Mississippi, and $801 million went to the Bank of Houston.
Trustmark National Bank, in a statement e-mailed to CNBC, said the firm "performed due dilligence on a regular basis on the Stanford relationship and has complied fully with all regulatory requirements." The statement said that the transactions had not raised indications of illegal activities. The other institutions did not respond to CNBC's requests for comment.
The forensic accountant says the bank deposits were used to pay "returns" to earlier Stanford investors—the definition of a Ponzi scheme—as well as to fund other Stanford ventures and the lavish lifestyle of CEO Allen Stanford.
While financial institutions typically maintain accounts at other banks, known as correspondent banks, Stanford investors say the accounts could have provided a window for regulators to investigate what eventually became widespread concerns about fraud at Stanford.
According to records of FINRA, the brokerage industry's self-regulatory arm, more than two dozen Stanford employees were involved in arbitration cases against the company since 2003. They included Leyla Wydler, who alleged in a 2003 counterclaim that Stanford "is engaged in a Ponzi scheme to defraud its clients."
Wydler lost the arbitration case in 2004, and it is unclear whether FINRA—then known as NASD—followed up on the Ponzi scheme allegations.