Five banks have settled litigation against them brought by investors in the Stanford Financial Group. All five banks avoided facing a jury in the trial, which was set to start on February 27, 2023. Two settled in the weeks or months prior to trial. Three settled “on the courthouse steps” the day the trial was scheduled to begin. A total of $1.6 billion was agreed to be paid by the group of five banks.
Toronto-Dominion Bank, HSBC Bank PLC, and Independent Bank f/k/a Bank of Houston reached settlements on Monday, February 27. Société Générale Private Banking (Suisse) S.A. and Trustmark National Bank settled previously.
The banks, which denied any wrongdoing, were accused by the investors and the court-appointed receiver for Stanford International Bank (SIB) of ignoring “red flag” indications of money laundering. The attorney representing the investors and the receiver said that the banks aided the $7 billion Stanford Financial Ponzi scheme by participating in large, rapid back-and-forth transactions with no apparent connection to investments that Stanford International Bank said it was making.¹
U.S. regulators seized Stanford’s assets in February 2009 and R. Allen Stanford was sentenced on June 14, 2012 to 110 years in prison for his role in the $7 billion fraud scheme.²
“Over 10 years is far too long for this final settlement to be obtained,” said Charles W. Rawl, noted “whistleblower” in the case³, who helped guide authorities in shutting down the Stanford Financial Group in Houston. “These funds add to the approximately $1 billion in assets collected previously and are likely the final recovery,” he said.
Charles W. Rawl joined Stanford Financial Group in 2005. He continued his due diligence and over time, uncovered “red flag” warnings. He resigned from Stanford in December 2007 to move his clients to safety. His departure triggered an epic legal battle with Stanford, who fought fiercely to prevent clients from moving their funds away and to retaliate for blowing the whistle. He worked perilously over the next two years helping federal and state authorities shut down the fraudulent enterprise.
¹ Laura Brubaker Calkins and Bloomberg. “A $7 billion Ponzi scheme that busted 14 years ago just settled for $1.6 billion the day a trial was set to begin.” https://fortune.com/2023/02/27/r-allen-stanford-ponzi-scheme-1-6-billion-settlement-td-bank-hsbc/
² U.S. Department of Justice. June 14, 2012. “Allen Stanford Sentenced to 110 Years in Prison for Orchestrating $7 Billion Investment Fraud Scheme.” https://www.justice.gov/opa/pr/allen-stanford-sentenced-110-years-prison-orchestrating-7-billion-investment-fraud-scheme
³ Chris Baltimore. Reuters. Feb. 19, 2009. “Stanford whistleblowers had concerns since 2005.” https://www.reuters.com/article/us-stanford-whistleblowers-sb/stanford-whistleblowers-had-concerns-since-2005-idUSTRE51J09L20090220. Accessed Dec. 27, 2019.