2 Baltimore financial advisers targets of legal action

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2 Baltimore financial advisers targets of legal action

A court-appointed receiver is trying to get back the $11 million paid to two veteran financial advisers when they opened a Baltimore affiliate of Stanford Financial Group, saying the money rightfully belongs to clients the government alleges were defrauded in an extensive Ponzi scheme.

Ralph S. Janvey, the receiver overseeing the Stanford businesses, is suing Christopher C. Aitken and Stephen L. Thacker in federal court in Dallas for payments the suit says “constitute fraudulent transfers.” The two men, who left jobs at Smith Barney, received the money in November. Three months later, the Securities and Exchange Commission accused the parent company’s chairman of orchestrating a multibillion-dollar investment scheme.

Aitken and Thacker did not respond to messages Thursday seeking comment.

The suit doesn’t allege that the two men defrauded clients. It says instead that the money paid to them did not come from “legitimate business activities,” and “there is no indication that they provided any meaningful services in that brief period that would establish a legitimate right to retain over $11 million.”

Authorities say much of the company’s revenue came from selling fraudulent certificates of deposit to customers. The promised high interest rates were paid by diverting the money collected from new investors. All told, the SEC says, investors handed over $8 billion for these “so-called ‘certificates of deposit.’ “

But not all clients were sold bad CDs. Institutional investment consultants – a group that includes Aitken and Thacker – often send customers’ assets to money-management firms, getting a cut of the fees in return.

The two men advised Loyola University Maryland for most of the decade, and the college made the jump with them to Stanford. But Stanford never had Loyola’s assets. They’re in a custodial account at an outside firm.

“It was a satisfactory advisory relationship,” said a Loyola spokeswoman, Courtney Jolley. “Our funds during this period were housed with Charles Schwab and not with Stanford Financial itself, so there was no loss incurred.”

Aitken, who has worked in the financial services industry for more than 20 years, has been ranked among Barron’s “Top 100 Financial Advisors,” according to a news release Stanford issued when the office opened at the end of last year. Thacker has about 16 years of financial services experience, most of it working with Aitken.

When the company opened its office in a window-filled building just north of the city, Aitken said in a news release that its “sophisticated client base requires a broader choice of solutions than most firms can deliver.

“In deciding to join Stanford Institutional Consulting, we were guided by a number of considerations of significant importance; the most essential was that it offers the freedom and support to seek out and deliver these solutions,” he said.

Aitken was paid nearly $8.7 million as he opened the office, according to the lawsuit. Thacker received almost $2.6 million.

R. Allen Stanford, chairman of the more than 75-year-old parent company, is facing criminal charges in Houston. Federal regulators accuse him of taking at least $1.6 billion of investor money “through bogus personal loans.”

James A. Dunlap Jr., an Atlanta attorney who’s trying to pursue a class-action lawsuit against Stanford, said defrauded investors might never get their money back – or just a small amount.

“In a lot of Ponzi schemes, they just collapse and there’s nothing left,” Dunlap said.

Baltimore Sun researcher Paul McCardell contributed to this article.

Source: The Baltimore Sun

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