Class Action Lawsuit filed against Stanford International Bank
April 23, 2009 by admin
Filed under Consumer Fraud
The Law Offices of Stephen F. Malouf, P.C. announced today that it has commenced a class action in the United States District Court for the Northern District of Texas on behalf of purchasers of Stanford International Bank Ltd. (”SIB”) certificates of deposit (”CDs”) or shares in SIB’s Stanford Allocation Strategy proprietary mutual fund wrap program (”SAS”) between January 1, 2000 and February 17, 2009 (the “Class Period”).
The complaint alleges that during the Class Period, SIB and other Stanford related entities and individuals fraudulently sold CDs based upon “historical rates of return” that were, in fact, false. To induce investors that their CDs were safe investments, SIB and the other defendants represented that SIB’s investments were liquid and diversified. Nearly 80% of SIB’s investments, however, were concentrated in just two high-risk, illiquid categories: private equity and real estate; categories which have since suffered significant losses.
The complaint also alleges that defendants misled investors in SIB’s SAS program, picking a handful of mutual funds that had performed extremely well in 1999-2004 and claiming that the returns of those high-performing funds as the historical returns of the SAS program. Defendants also inflated the claimed returns of the SAS program in 2006 and 2007.
Additionally, it is alleged that when investors became concerned that SIB might have invested in Bernard Madoff’s $50 billion Ponzi scheme, SIB sent them each a letter unequivocally stating that “Stanford International Bank did not have any exposure to the Madoff Fund.” Just two days before this letter was sent, an SIB analyst informed all three of the individual defendants, including R. Allen Stanford (”Stanford”), that SIB had invested in Meridian, a New York-based hedge fund that used Tremont Partners as its asset manager. Tremont, in turn, had invested a portion of Meridian’s - and SIB’s - money with Madoff.
On February 16, 2009, the SEC filed a complaint against SIB, SGC, and SCM, as well as against defendants Stanford, James M. Davis and Laura Pendergest-Holt, accusing them of participating in a “massive, ongoing fraud.” According to press reports, the FBI has also begun an investigation.
Plaintiff seeks to recover damages on behalf of all purchasers of SIB CDs or shares in the SAS program during the Class Period (the “Class”). The plaintiff is represented by The Law Offices of Stephen F. Malouf, P.C. which has expertise in prosecuting class actions and in actions involving financial fraud.
Any member of the class may seek appointment as lead plaintiff through counsel of their choice. Persons wishing to serve as lead plaintiff, must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, David Evans of The Law Offices of Stephen F. Malouf, P.C. at (800) 214-2651 or (214) 969-7373 or via e-mail at devans@smalouf.com.
