Last month, the US District Court for the Northern District of Texas entered final judgments against Defendants Robert Allen Stanford, James Davis, Gilberto Lopez, Stanford International Bank, Ltd, Stanford Group Company, and Stanford Capital Management, LLC. The court simultaneously entered final judgments against relief defendants Stanford Financial Group Company and The Stanford Financial Group Building, Inc.

As alleged in the SEC’s second amended complaint filed way back in June 2009, Stanford and Davis, with the assistance of the other defendants, perpetrated a massive $8 billion Ponzi scheme and misappropriated billions of dollars of investor funds through the offer and sale of fraudulent, offshore “certificates of deposit.”

The final judgments ordered permanent injunctions of the antifraud provisions of the securities laws against all of the defendants and also Section 7(d) of the Investment Company Act for the corporate defendants, plus disgorgement and the civil penalties noted below.

Civil penalties

The disgorgement ordered to recompense defrauded investors and civil monetary penalties imposed were as follows:

• Robert Allen Stanford: $5.9 billion penalty and $6.7 billion in disgorgement.
• James Davis: $13.5m disgorgement and a $5m civil money penalty.
• Gilberto Lopez: Disgorgement of $3.4m and no civil money penalty.
• Stanford International Bank: Disgorgement of $6.7 billion jointly and severally with Stanford and Stanford Group Company, and no civil money penalty.
• Stanford Group Company: Disgorgement of $6.7 billion jointly and severally with Stanford and Stanford International Bank, and no civil money penalty
• Stanford Capital Management: Disgorgement of $23m and no civil money penalty.
• Stanford Financial Group: Disgorgement of $2.2 billion and no civil money penalty.
• The Stanford Financial Group Building: Disgorgement of $6.4m and no civil money penalty.

Rule violations

The court found the parties had violated the antifraud provisions of the Investment Advisers Act of 1940 (SEC Rule 206(1) and SEC Rule 206(2)), the antifraud provisions of the Exchange Act under SEC Rule 10(b)-5, and the recordkeeping rule applicable to broker-dealers, SEC Rule 17(a) of the Securities Act of 1933.

Prior, related actions

In 2009, the SEC charged Mark Kuhrt and Gilberto Lopez, accountants for Stanford-affiliated companies, for allegedly fabricating financial statements to give investors the false illusion that their investments were solid, safe and secure.

And a federal jury found Stanford guilty in June 2012 for his role in orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion from Stanford International Bank to finance his personal businesses. He is serving a 110-year prison sentence. Five others were also convicted for their roles in the scheme and received sentences ranging from three to 20 years in federal prison.

In 2020, Leroy King pleaded guilty to obstruction of justice for his role in obstructing the SEC’s investigation into these matters by accepting thousands of dollars per month in bribes to ignore the Stanford Ponzi scheme and supply Stanford himself with confidential information about the SEC’s investigation.