Tags: Allen | Stanford | scheme

U.S. Clients Sought in Texas Ponzi Scheme

Thursday, 03 Dec 2009 10:55 AM

 

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The U.S. Justice Department asked a court on Wednesday for permission to seek the names of American clients of Texas financier Allen Stanford who may be hiding assets abroad to evade taxes.

U.S. authorities have accused Stanford of masterminding a $7 billion Ponzi scheme centered on fraudulent certificates of deposits through his Stanford Group Co. In June, Stanford was indicted for mail, wire and securities fraud and he remains in jail awaiting trial.

The government asked the U.S. District Court for the Northern District of Texas in Dallas to let it serve a so-called "John Doe summons" on Ralph Janvey, the court-appointed receiver for Stanford and related entities.

Prosecutors used the same kind of summons to go after giant Swiss bank UBS AG and win eventual access to the names of 4,450 U.S. clients.

The Obama administration has aggressively sought to crack down on Americans hiding assets overseas from the Internal Revenue Service.

George Clarke, a white collar tax attorney in Washington D.C., said the Justice Department request was another step in the government's effort to eradicate opportunities for U.S. taxpayers to hide assets offshore.

"It should be a wake-up call for folks who thought that the enforcement action against UBS would be a one-hit wonder," he said.

Janvey was not available for comment. He had previously sued to recover proceeds from several hundred investors in the firm's offshore accounts, who redeemed their CDs in the weeks before civil fraud charges were filed, the firm's assets seized and customer accounts frozen. An appeals court denied his bid.

Angela Shaw, founder of the Stanford Victims Coalition, representing some 6,000 Stanford investors, thought it unlikely the IRS would find wrongdoing, with many Stanford victims invested using retirement accounts.

"Everyone is just so shocked; it seems ridiculous," said Shaw.

But in a declaration to the court, IRS agent Daniel Reeves cited interviews with two unnamed Stanford employees who said they left over concerns about "improprieties" at the firm, including failure to report foreign accounts.

The government wants information from Janvey on any U.S. clients who had accounts through Stanford units from 2002 through 2008.

Most of Stanford's fortune came from Stanford International Bank, based in Antigua, according to Reeves, which he called the "Crown Jewel" in his empire. The bank's financial papers show total deposits of $8 billion in 2008, he said.

Stanford's operations formed and managed trusts, foundations and international corporations for clients.

Reeves said the IRS' experience with offshore funds has been that such entities are frequently used to hide income-producing assets.

The case is Securities and Exchange Commission v. Stanford International Bank LTD, U.S. District Court, Northern District of Texas, No. 9-2290.

© 2014 Thomson/Reuters. All rights reserved.

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