Ex-Stanford Employee Warned Regulators About Fraud
February 27th, 2009Via: Reuters:
A former Stanford Group Company employee told broker-dealer watchdogs in 2003 that the financial services firm was engaged in fraud, about five years before U.S. securities regulators charged the firm’s chairman, Allen Stanford, with an $8 billion fraud.
Leyla Basagoitia, who was fired from Stanford Group Company in 2002, told a broker-dealer arbitration panel that the firm was engaged in a Ponzi scheme, according to a document on the website of broker-dealer watchdog Financial Industry Regulatory Authority (FINRA).
In 2003, Basagoitia and the Stanford Group Company were trying to resolve a loan dispute through an arbitration forum run by a FINRA predecessor.
At the time, Basagoitia told the arbitration panel that before accepting her position at Stanford Group she emphasized that it was not her intent to allocate any of her clients’ funds to Stanford Group’s offshore bank, Stanford International Bank — one of the companies named in the government’s civil complaint.
She alleged that the firm was engaged in a Ponzi scheme to defraud its clients, where earlier investors are paid with money from later investors.
