Stanford Financial Group Co. and its chairman, Houston billionaire R. Allen Stanford, were sued by a Colorado investor over claims the company’s alleged $8 billion fraud may have wiped out a charity’s investment.
Johan Dahler, the trustee for a Colorado-based charity benefiting poor people in Mexico and Central America, alleged Stanford employees engaged in fraud and conspiracy by lying about returns on investments at Antigua-based Stanford International Bank, according to a complaint filed yesterday in state court in Harris County, Texas.
“The Stanford investment products appeared to offer a means of safely increasing the trust’s income, which would allow the foundation to expand the scope of its work and improve the lives of even more people,” according to Dahler, who said he invested more than $772,000 in Stanford certificates of deposit from 2004 to 2007 for the Rocky Mountain Trust.
The U.S. Securities and Exchange Commission sued Stanford and three of his companies on Feb. 17, accusing the financier of running a “massive” fraud that touted “improbable, if not impossible” returns at the bank. No criminal charges have been filed against Stanford, who was served yesterday with an SEC subpoena by the FBI in the Fredericksburg, Virginia, area.
Stanford and two of his officers “knowingly and recklessly made false and material misrepresentations” about the CDs, and failed “to state material facts which made their representations misleading,” Dahler said in the complaint. The suit doesn’t specify money damages.
Dahler’s lawsuit was filed as attorney Ralph Janvey of Dallas, the court-appointed receiver for the Antigua-based bank, is freezing its accounts to ascertain Stanford’s assets and, eventually, divide the money among creditors.
Dahler “has demanded the return of his investments by defendants, but they have refused, ignoring plaintiff’s pleas that the funds were needed because the foundation’s efforts south of the U.S border depended on them,” according to the complaint.
Pershing LLC, the Jersey City, New Jersey-based clearing firm that handled Stanford accounts, told clients today that they couldn’t retrieve their money from Stanford International Bank because the accounts had been frozen.
The lawsuit also names Stanford’s chief financial officer, James M. Davis, and chief investment officer, Laura Pendergest- Holt.
Stanford Financial Group claims to have more than $50 billion in assets under management, according to its Web site.
Dahler first heard of Stanford’s “apparently exceptional” returns from an acquaintance in Mexico who invested in Stanford through the company’s Houston office, according to the complaint.
When Dahler contacted Stanford Group, he was encouraged to buy CDs from the Antigua-based bank because of the company’s “history of consistently paying higher interest rates,” said Dahler, who uses the funds for medical, dental and nutritional programs for orphanages, according to the complaint.
Janvey didn’t immediately return a call for comment.
The case is Dahler v. Stanford Group Company, U.S. District Court, Harris Country, Texas.
