US regulators have widened their investigation into the alleged fraud at Allen Stanford's banking group, and are now looking at brokers who worked with the bank as well as the bank's top executives.
The Financial Times reported this morning that the Securities and Exchange Commission had notified several brokers, as well as the head of Stanford International Bank's brokerage operations, that it intends to file civil fraud charges against them.
Investigators allege that Stanford's banking operation was in fact an $8bn (£5bn) Ponzi scheme – an investment in which returns to investors are funded either through their own payments or through those of subsequent investors rather than any genuine investment returns.
The FT said that Danny Bogar, head of SIB's brokerage operations, had been notified of the SEC's move by means of a Wells notice, a process used to alert individuals that they might face civil charges. Bogar's lawyer said his client knew nothing about the alleged fraud.
Patrick Cruickshank, a broker who worked in Stanford's office in Austin, Texas from 2006 to 2009, also received a Wells notice, the paper said, citing US regulatory filings. His lawyer said Cruickshank had "done nothing wrong" and "was a victim of the Stanford fraud".
Until now only Stanford, four senior executives at the bank and an Antiguan regulator had been charged in connection with the scheme.
Stanford, who has been held in custody since his arrest in June 2009, denies the allegations. His trial is due to begin in January, although defence lawyers argued last week that the businessman was too heavily medicated to prepare for the proceedings.
Former chief financial officer James Davis has pleaded guilty and is co-operating with the probe. Others accused have denied wrongdoing.
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