The SEC alleges financier Robert Allen Stanford is running a Madoff-like scheme.
Texas financier R. Allen Stanford is accused of cheating 50,000 customers out of $8 billion dollars but despite raids Tuesday of his financial empire in Houston, Memphis, and Tupelo, Miss., federal authorities say they do not know the current whereabouts of the CEO.
The Securities Exchange Commission alleges Stanford ran a fraud promising investors impossible returns, much like Bernard Madoff's $50 billion alleged Ponzi scheme.
Investigators Tuesday shut down and froze the assets of three of the companies Stanford controls and they say the case could grow to be as big as the Madoff scandal. Like Madoff's clients, Stanford's investors are in shock.
"Initially we put our money in this institution and in a CD because we were nervous about the markets and thought it was a safe place," said investor Brett Zagone. "I'm so upset right now I can't even talk about it."
But in addition to angry clients, Stanford, like Madoff, has many friends in Washington.
Stanford's business is headquartered on the Caribbean island of Antigua. In the last decade, Stanford and his companies have spent more than $7 million on lobbyists and campaign contributions in efforts to loosen regulation of offshore banks.
Among the top recipients: Senator Bill Nelson (D-Fla.), Congressman Pete Sessions (R-Texas), Sen. John McCain (R-Ariz.), Senator Chris Dodd (D-Conn.) and Senator John Cornyn (R-Texas), one of the members who took a trip to Antigua where he was entertained by Stanford.
Sen Cornyn's office has said the trip "was strictly a fact-finding trip," and at the time, "there was nothing untoward or unseemly" about Stanford Financial.
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