In Dallas Federal Court, Those Swindled by Allen Stanford Sue SEC For Failing to Stop Him

Categories: Crime
AllenStanfordMug.jpg
R. Allen Stanford
Spencer Barasch is a partner at the downtown Dallas law firm Andrews Kurth, where he is in charge of the corporate governance and securities enforcement team. But before that, and for close to 20 years, he worked for the Fort Worth office of the Securities and Exchange Commission, including a tenure as head of its enforcement program. It was under his watch that Allen Stanford swindled billions out of investors.

Eleven month ago, the SEC's inspector general all but blamed Barasch for allowing the Texas financier's Ponzi scheme to prosper, insisting in a 151-page report that for years he looked the other way on Stanford's behalf. Barasch never responded, but his friends claimed he'd been scapegoated by the feds -- even though Barasch wound up doing some work for Stanford in 2006, shortly before the SEC filed charges against Pete Sessions's pal.

Yesterday, but blocks away from the attorney's downtown office, some of the investors swindled by Stanford filed a federal suit against the government, claiming that the SEC and Barasch's refusal to shut down Stanford's operation years earlier -- say, in 1997, when he first appeared on the feds' radar screen -- resulted in their pockets being picked clean. Long story short:
This complaint is filed on behalf of the plaintiffs ... who, because of the negligence and misconduct of employees of the United States Securities and Exchange Commission ("SEC"), lost their investments in Stanford International Bank, Ltd ("SIBL"). The SEC employees were at all times material acting within the scope and course of their offices and employment, and under circumstances in which their employer, the United States, if a private person, would be liable to the plaintiffs in accordance with the law of the place where their acts or omissions occurred.

SIBL and its affiliated or related companies, including Stanford Group Company (SFG), were known at all times material by the SEC to be participants in a massive Ponzi scheme, and the SEC, which has a mandate to protect the public interest, in this case had both the authority and the duty to put an end to this scheme. 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 SIBL investments, as the following facts, and admissions by the SEC, show.
The entire suit filed at the Earle Cabell, which includes a recap of the 2010 report, follows. Stanford Investors v USA
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8 comments
mrmanhattan
mrmanhattan

SIBL was a bank owed by an Antiguan citizen and Knight, located in Antigua, chartered and "regulated" by Antigua's FSRC.

What does the US SEC have to do with it?

P L
P L

Does that guy look like Randy Galloway or what?

Doug
Doug

Amazing...fundamentally, THE job of people who work for operations like the SEC (and get paid pretty well for doing so...I'd guess) is to prevent these kinds of shenanigans...and it's amazing how the supposed safe-guards that are in place can so easily be circumvented by people with connections and the ability to BS.

Mister_Mean
Mister_Mean

So I wonder if Pete Sessions will wish him well like he did when this scandel broke in the news? Reminds me of Idi Amin sending Richard Nixion a get well card for watergate.

J. Erik Jonsson
J. Erik Jonsson

Geez. I don't know what was going on at the Ft. Worth office of the SEC in the last 15 years, but this is the second top cop from that office to get into legal trouble.

Goin4broke
Goin4broke

Allen Stanford is a U.S. citizen not an Antiguan. The SEC are being held responsible because the CD's were being sold through brokers and Stanford Financial Group in the U.S.

mrmanhattan
mrmanhattan

Stanford was born in Texas, but only managed to bankrupt a health club there. He was MADE in Antigua. On Antigua he was a Knight (that was his title, although he was treated as halfway between king and god), the largest employer behind the government and, yes, Antiguan citizen. As for Antiguan CDs being considered US investments, this was an offshore bank, isn't "not subject to US regulation" pretty much the definition of "offshore bank"?

Insider
Insider

The Stanford International Bank CDs were sold as SECURITIES to US citizens by an SEC-registered broker dealer, Stanford Group Company. More than 200 SEC-registered Financial Advisors licensed by FINRA marketed and sold the CDs to more than 5,000 US citizens in 46 states. SGC only operated in the US and it had more than 30 offices throughout the US. That's why the SEC is involved in this!

Oh yeah, and the money supposed to buy the fake CDs -- it never even went to Antigua. It was stolen by the SEC-registered broker dealer -- and the SEC knew this was happening for more than a decade, according the SEC Inspector General's report published in April 2010.

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