Stanford receiving an award for his contributions to charity, in 2008. Extract from his firm's website: As Chairman of the privately held, wholly owned Stanford Financial Group of companies, Sir Allen Stanford, a fifth-generation Texan, heads a global wealth management and financial services organization with offices across North America, Latin America, Europe and the Caribbean. Stanford companies presently serve clients from 140 countries on six continents with assets under management or advisement of $50 billion. His grandfather, Lodis, founded the first Stanford Company during the midst of the Great Depression in 1932, in the small central-Texas town of Mexia. His philosophy of hard work, clear vision and value for the client remains the cornerstone of Stanford’s success today. He resides in St. Croix, US Virgin Islands, and holds dual citizenship, having become a citizen of Antigua and Barbuda ten years ago. He is the first American to be knighted by that British Commonwealth nation and was appointed Knight Commander of the Most Distinguished Order of the Nation. He was presented this honor by the Governor-General of Antigua and Barbuda, Sir James B. Carlisle in a ceremony attended by His Royal Highness Prince Edward, Earl of Wessex, in celebration of the country's Silver Jubilee in November 2006.

The US Securities and Exchange Commission on Tuesday charged Texas billionaire Sir Allen Stanford with an $8 billion fraud, alleging in a civil complaint that he lured investors with promises of high returns on certificates of deposit (CD) but put their money into a "black box" of hard-to-trade assets.

Following the Ponzi-scheme charges against investor Bernard Madoff, the charges against Stanford, who is a prominent cricket sponsor, will trigger further worries among investors in such vehicles as hedge funds. On Tuesday, Federal marshals searched the Houston offices of the Stanford Financial Group, and customers rushed to withdraw money from a bank Stanford owns in Antigua, the Caribbean island nation where his offshore banking operations are based.

The SEC says  Stanford representatives told people who bought CDs from Stanford International Bank that it was putting their money in easy-to-trade assets; had more than 20 analysts monitoring the portfolio; and underwent yearly audits by Antiguan regulators. However, the SEC allege, the bulk of the money went into real estate and private equity, and the investments were reviewed by only two people: Stanford and James M. Davis, the bank's chief financial officer and Stanford's onetime classmate at Baylor University.

The SEC allege, that "Stanford and the close circle of family and friends with whom he runs his businesses perpetrated a massive fraud based on false promises and fabricated historical return data to prey on investors," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement."We are moving quickly and decisively in this enforcement action to stop this fraudulent conduct and preserve assets for investors."

Rose Romero, Regional Director of the SEC's Fort Worth Regional Office, added, "We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world."

The SEC's complaint, filed in federal court in Dallas, alleges that acting through a network of SGC financial advisers, SIB has sold approximately $8 billion of so-called "certificates of deposit" to investors by promising improbable and unsubstantiated high interest rates. These rates were supposedly earned through SIB's unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for the past 15 years.

According to the SEC's complaint, the defendants have misrepresented to CD purchasers that their deposits are safe, falsely claiming that the bank re-invests client funds primarily in "liquid" financial instruments (the portfolio); monitors the portfolio through a team of 20-plus analysts; and is subject to yearly audits by Antiguan regulators. Recently, as the market absorbed the news of Bernard Madoff's massive Ponzi scheme, SIB attempted to calm its own investors by falsely claiming the bank has no "direct or indirect" exposure to the Madoff scheme.

According to the SEC's complaint, SIB is operated by a close circle of Stanford's family and friends. SIB's investment committee, responsible for the management of the bank's multi-billion dollar portfolio of assets, is comprised of Stanford; Stanford's father who resides in Mexia, Texas; another Mexia resident with business experience in cattle ranching and car sales; Pendergest-Holt, who prior to joining SFG had no financial services or securities industry experience; and Davis, who was Stanford's college roommate.

The SEC's complaint also alleges an additional scheme relating to $1.2 billion in sales by SGC advisers of a proprietary mutual fund wrap program, called Stanford Allocation Strategy (SAS), by using materially false historical performance data. According to the complaint, the false data helped SGC grow the SAS program from less than $10 million in 2004 to more than $1 billion, generating fees for SGC (and ultimately Stanford) of approximately $25 million in 2007 and 2008. The fraudulent SAS performance was used to recruit registered investment advisers with significant books of business, who were then heavily incentivized to reallocate their clients' assets to SIB's CD program.

The SEC's complaint charges violations of the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act, and registration provisions of the Investment Company Act. In addition to emergency and interim relief that has been obtained, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the relevant provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.