A federal judge has officially closed the U.S. Securities and Exchange Commission’s (SEC) 16-year-old lawsuit over financier Allen Stanford’s massive $7.2 billion Ponzi scheme, imposing billions in fines that are unlikely to be collected.
Judge Orders Billions in Fines
In a ruling on Wednesday, Chief Judge David Godbey of the Dallas federal court ordered Stanford to pay a $5.9 billion civil fine. Stanford, now 74, is serving a 110-year prison sentence after being convicted in 2012 of defrauding around 18,000 investors. He is ineligible for release until 2103 and was declared indigent in 2010, making it unlikely that any of the fines will be paid.
Stanford Financial Group’s former chief financial officer, James Davis, was ordered to pay $17.66 million, including a $5 million fine, while former chief accounting officer, Gilberto Lopez, must pay $3.42 million.
Decades-Long Fraud Scheme
Authorities say Stanford operated his Ponzi scheme for over two decades, selling fraudulent high-yielding certificates of deposit through his Antigua-based Stanford International Bank. Instead of investing the funds as promised, he used investors’ money to finance risky ventures and fund a lavish lifestyle.
Victims Recover Some Funds
Despite the financial penalties imposed, billions of dollars owed by various Stanford entities have been deemed satisfied due to the efforts of court-appointed receiver Ralph Janvey. Janvey has successfully recovered more than $2.5 billion for fraud victims, including $1.2 billion from Toronto-Dominion Bank.
Case Officially Closed
Judge Godbey ruled that there was “no just reason for delay” in finalizing the payments and closing the case. The SEC originally sued Stanford in February 2009, just two months after Bernie Madoff was charged in an even larger Ponzi scheme.
Key Figures in the Fraud
James Davis, who was Stanford’s top government witness and testified against his former college roommate, was sentenced in 2013 to five years in prison. Lopez was convicted separately and sentenced to 20 years in prison.