DALLAS (CN) – In a federal class action, Mexican investors in the Stanford Financial Group say British and Houston-based insurance brokers participated in Allen Stanford’s $7 billion Ponzi scheme. They sued Willis Group Holdings Ltd. of the United Kingdom and Bowen, Miclette & Britt. of Houston.
Stanford has been charged with running the scheme by selling certificates of deposit from Stanford International Bank, an Antiguan offshore bank.
The investors in the latest case say the insurers “crossed a line from the role of insurance broker, to acting as sales agents for Stanford Financial” by writing letters validating Stanford Financial investments that could be used to recruit new clients. The class claims Willis in particular put its internationally known name behind Stanford Financial and the Stanford bank, lending it recognition and credibility.
“Defendants Willis and BMB had no reasonable basis to make the statements contained in the letters because they knew or should have known – and were therefore reckless in communicating information to the contrary – that SIB did not undergo ‘stringent’ annual Risk Management reviews, and that any reviews were not conducted by an ‘outside’ audit firm, but rather were conducted by a one man ‘mom and pop’ audit shop in Antigua that was dominated completely by Allen Stanford and Stanford Financial to the extent that it was not ‘outside’ or independent at all,” according to the complaint.
The SEC sued Stanford Financial, Stanford, CFO James Davis and chief investment officer Laura Pendergast-Holt in February, and Stanford Financial was placed under the control of a court-appointed receiver. Federal criminal charges were brought against Stanford in June. He is in federal custody awaiting trial, which is set to begin on Aug. 25.
The plaintiffs in this case seek more than $1 billion in damages. They are represented by Edward Valdespino with Strasburger Price in San Antonio and Edward Snyder with Castillo Snyder in San Antonio.