Friday, February 20, 2009

After a US$50 billion fraud case, comes a US$8 billion fraud case

Last year, the global credit crisis exposed one of the greatest financial fraudster in the history of mankind in (former) Wall Street heavyweight Bernard Madoff. Accused of running a scam that cost his investors US$50 billion, the man is now under house arrest pending trial.

However any notion that Madoff is a one-off incident is now dead in the water because U.S financier R. Allen Stanford is now accused of committing an US$8 billion fraud. Although it pale in comparison to Madoff’s US$50 billion scam, US$8 billion is still a lot of money. Stanford is accused of committing the fraud by lured investors with promises of improbable and unsubstantiated high returns on certificates of deposit. With the stock market wipe-out, it is believed that most of these “certificates of deposit” are now close to worthless.

Like Madoff, Stanford is a very well-known personality. At 58, he has a personal fortune estimated at $2.2 billion and is known to bankroll public works and cricket tournaments. He is a major donator in U.S. politics, owns homes and operates his businesses everywhere from the U.S to Europe. He even has a knighthood in Antigua in recognition of his charity work.

And just like Madoff, Stanford’s victims include some pretty well known names; Vijay Singh and Micheal Owen are among the victims this time as people rushed to withdraw their money from Stanford International Bank and its affiliates in a half-dozen other countries. With another multi-billion fraud coming just 2 months after the Madoff, I have to wonder what the hell the U.S Securities and Exchange Commission (SEC) is doing. How can they miss TWO multi-billion fraud case?

If this is the standard in the U.S, I wonder about the future. With the Dow at a 6 year low, I wonder just how many more scams and how many more billions of dollars are lost now due to these fraudsters.

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