Dozens of financial advisors for the defunct Stanford Financial Group, which sold millions of dollars worth of allegedly fraudulent certificates of deposit to unsuspecting customers, were added to a federal lawsuit by the court-appointed Receiver in the case.
Dallas attorney Ralph Janvey, who was appointed by a federal judge in February to take control of Stanford’s assets and distribute them to investors, late last week added 187 advisors to the 66 he sued earlier this year. Janvey says the advisors — 253 in all — netted more than $133 million in proceeds from the alleged scam, and he says the money should be returned to investors.
The proceeds came in the form of lavish commissions paid to the advisors for selling the CDs. The commissions totaled as much as $3.3 million to a single advisor in a two-year period. Janvey argues the high commissions were Stanford’s way of keeping the fraud going.
“This fraud endured, in part, by incentivizing a sales force with big commissions for selling CDs,” Janvey wrote in a motion filed last week.
The Securities and Exchange Commission and a federal grand jury have charged Stanford sold more than $7 billion in bogus CDs, meaning the money Janvey is seeking is a small fraction of what was lost.
An attorney who represents many of the advisors, Michael Stanley of Houston, has previously denied his clients were part of the fraud, and noted to CNBC earlier this year that clients played a role in the decision to purchase the CDs.
Source: http://www.cnbc.com/id/32635401
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