Complaint Filed in Federal Court Details How Major Banks Knowingly
Aided and Abetted the Stanford Financial Group at the Expense of
Thousands of Americans
Legal Claims Focus on the Purported Actions of Banking Entities,
Including TD Bank and SocGen, That Have a Documented History of Being
Fined and Sued Over Alleged Wrongdoings
Stanford Claimholders Seek Justice and Meaningful Recoveries After 10
Years of No Results
Victims in Louisiana, Florida, and Texas Deserve the Same Type of
Justice Received by High-Net Worth and Institutional Parties Defrauded
by Bernard Madoff
NEW YORK & WASHINGTON, D.C.–(BUSINESS WIRE)–Members of the Stanford Claimholders Coalition and certain individual
investors that unknowingly purchased fraudulent certificates of deposit
(“CDs”) issued by Stanford International Bank, Ltd. prior to 2009
(collectively, the “Plaintiffs” or “Victims”) today filed
claims in federal court against the correspondent banks that
assisted Allen Stanford and his criminal enterprise (collectively, the
“Stanford Financial Group”) as they carried out the second largest Ponzi
scheme in history. Approximately $7 billion in CDs held primarily by
individual investors turned out to be worthless when it was discovered
that the Stanford Financial Group had been systematically
misappropriating investment capital for years.
The Plaintiffs illustrate in their complaint that as CDs were issued and
misrepresented to thousands of Americans, including many who lost their
life savings, some of the world’s most recognizable banking entities
(collectively, the “Defendants”) aided, abetted, and conspired with the
Stanford Financial Group to maximize their own profits. To date, Victims
have recovered approximately $0.05 for every dollar that they allege was
stolen from them.
The named Defendants in the Victims’ complaint include Toronto-Dominion
Bank (“TD Bank”), Societe Generale Private Banking S.A. (“SocGen”), HSBC
Bank, PLC (“HSBC”), Trustmark National Bank (“Trustmark”), and
Independent Bank f/k/a as Bank of Houston (“BoH”). Although a common set
of banking standards require that the Defendants should have known and
understood their client, the Victims assert that these sophisticated
institutions helped conceal and prolong the fraud because of their
long-term, profitable relationship with the Stanford Financial Group.
Their betrayal of the public’s trust is punctuated by the following
summaries of allegations detailed at length in the full complaint filed
today:
-
TD Bank – The Stanford Financial Group had become TD Bank’s
largest correspondent banking client in the years before its Ponzi
scheme was exposed, making it an important and lucrative relationship.
We believe records show that billions in CD investor funds flowed into
TD Bank over the years, but they were never invested in sufficient
volume or in a proper fashion to come close to earning the returns
that the bank knew the Stanford Financial Group had promised its
investors. We believe that although evidence shows TD Bank held deep
and abiding suspicions about the legitimacy of the CDs for years, it
would not report the fraud or cut its ties due to its profit motives.Our
view is that this legacy of ignoring fraudulent behavior at the
expense of individual investors is particularly troubling when one
takes into account that TD Bank has a large direct interest in TD
Ameritrade, a major North American brokerage firm with a massive
retail customer base. We also believe it is very noteworthy that TD
Bank previously agreed to pay tens of millions of dollars in fines to
the U.S. government for its alleged involvement in Scott Rothstein’s
$1.2 billion Ponzi scheme.1 -
HSBC – We view the Stanford Financial Group’s relationship with
HSBC, a bank that paid $1.92 billion in penalties for its involvement
in money-laundering on behalf of drug entities2, as
particularly peculiar and troubling. HSBC handled the purchases of CD
investors in Euros and Pounds Sterling. Investor funds were simply
parked in accounts uninvested and, thus, unable to earn the returns
that HSBC knew had been promised to CD investors. While CD investors
could not have known this, it was plain as day to HSBC. We believe the
bank chose to look the other way and continue supporting the Stanford
Financial Group at the expense of ordinary Americans. -
SocGen – We believe SocGen, which recently agreed to pay more
than $1 billion to resolve alleged sanctions and money-laundering
violations3, played a central role in the Stanford Ponzi
scheme. Allen Stanford and the Stanford Financial Group were very
long-standing clients of SocGen, dating back to the late 1980s through
its predecessor (Compagnie Bancaire Genève). We believe records show
that SocGen hosted a secret “slush fund” that was held off the books
of any of the Stanford Financial Group’s entities. The fund provided
tens of millions of dollars of personal payments to Allen Stanford and
also served as the source of bribes paid to Stanford International
Bank, Ltd.’s auditor and to regulators. Moreover, our complaint
highlights how SocGen ignored warnings about the Stanford Financial
Group that were provided by its own external risk consultants. We
contend that it was clear to SocGen – for years – that the broader
Stanford empire was using investor funds in an obviously improper and
illegal manner. -
BoH – BoH regularly received enormous transfers of money from
Stanford Financial Group accounts at other banks. We believe that BoH
knew these were transfers of CD investor funds, but readily
facilitated the transfer of funds to other entities controlled by
Allen Stanford that provided no value to investors. We believe the
banking relationship was so lucrative for the relatively tiny BoH that
it was unwilling to report the fraudulent activity. -
Trustmark – Trustmark carried out hundreds of millions of
dollars in unusual check “pouching” activities, wherein investors’
checks to purchase CDs were bundled by the dozen on a daily basis and
mailed in pouches from Houston to Antigua and back to Houston. CD
investor funds were routinely transferred in large, round sums to
other Stanford entities in order to fund those entities.
Andrew K. Glenn and Dean Z. Pamphilis of Kasowitz Benson Torres LLP are
serving as legal counsel to the Stanford Claimholders Coalition and
Victims named in the complaint filed today.
About the Stanford Claimholders Coalition
The Stanford Claimholders Coalition represents the interests of parties
impacted by the $7 billion Stanford Ponzi scheme, which was carried out
by Allen Stanford’s fraudulent business empire and aided by
correspondent banking partners. Its mission is to ensure claimants
receive meaningful recoveries after being impacted by one of history’s
most heinous financial crimes. In addition to its legal efforts, the
Coalition is committed to educating the general public and policymakers
about the human impact of Allen Stanford’s crimes, which were aided by
major financial institutions.
_____________________________
1 “TD Bank Fined $52.5
Million for Role in Ponzi Scheme,” The Wall Street Journal,
September 23, 2013 (link)
2
“HSBC to pay $1.9 billion U.S. fine in money-laundering case,” Reuters,
December 11, 2012 (link)
3
“Societe Generale to pay $1.4 billion to settle cases in the U.S,” Reuters,
November 19, 2018 (link)
Contacts
For Media:
Profile
Greg Marose / Ashley Areopagita,
347-343-2999
[email protected]
/ [email protected]
