U.S. Court Ends 16-Year SEC Ponzi Scheme Lawsuit
A federal judge has ordered the dismissal of the U.S. Securities and Exchange Commission's (SEC) 16-year-old lawsuit against Allen Stanford's $7.2 billion Ponzi scheme. The ruling requires Stanford and two former colleagues to pay substantial fines, although most will likely remain uncollected.
In a decision issued Wednesday, Chief Judge David Godbey imposed a $5.9 billion civil fine on Stanford, who is serving a 110-year prison sentence for defrauding 18,000 investors. James Davis, Stanford Financial Group's former CFO, was ordered to pay $17.66 million, while Gilberto Lopez, the former chief accounting officer, was fined $3.42 million.
Authorities alleged that Stanford sold fraudulent certificates of deposit through Antigua-based Stanford International Bank for two decades and misused investor funds for risky investments and personal luxuries.
The judge ruled that billions owed by Stanford entities were deemed settled by court-appointed receiver Ralph Janvey, who recovered over $2.5 billion for victims, including $1.2 billion from Toronto-Dominion Bank.
"There is no just reason for delay" in closing the case, Godbey stated. Stanford, once a presumed billionaire, was declared indigent in 2010 and remains ineligible for parole until 2103.
Attorneys for Davis and Lopez have not yet responded to requests for comment. An SEC spokesperson declined comment.
Davis, who testified against Stanford at his trial, was sentenced in 2013 to five years in prison. Lopez separately faced a 20-year sentence.
The SEC initiated legal proceedings against Stanford in February 2009, two months after Bernard Madoff was charged with running an even larger Ponzi scheme.