Lawmakers want banks punished over massive Ponzi scheme

Lawmakers are asking a top federal regulator to crack down on several banks connected to a mid-2000s Ponzi scheme, arguing the government hasn’t done enough to get victims compensation.

The lawmakers called on the Office of the Comptroller of the Currency (OCC) to punish several banks for holding funds for Allen Stanford, convicted in 2012 of running the second-largest Ponzi scheme in United States history.

In a letter to acting Comptroller Keith Noreika dated Aug. 8, Reps. Roger Williams (R-Texas), Bill Posey (R-Fla.), Charlie Crist (D-Fla.) and Vicente González (D-Texas) asked the OCC to update them on efforts to hold the banks accountable, compensate victims and prevent similar schemes from happening again.

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Stanford stole billions from customers who thought they purchasing certificates of deposit. In reality, Stanford enriched himself off the $8 billion investment scheme and is serving a 110-year sentence in federal prison.

Though Stanford will likely spend the rest of his life in prison, his victims are still attempting to claim restitution from banks that acted as the U.S. connections to Stanford’s Antigua-based bank. Such firms provided correspondent banking services in the U.S. for Stanford, allowing him access to the country’s financial system.

Groups representing Stanford victims are suing several of these banks in the Northern District of Texas and in Canada, including TD Bank, for failing to stop Stanford’s scheme when they should have seen signs of fraud. The victims also claim TD Bank should have known not to deal with Stanford, who previously had been investigated and penalized by U.S. and British regulators.

“Some of these foreign banks are growing their presence in the U.S. without having shown any willingness to acknowledge or account for the victims harmed in the Stanford Ponzi scheme,” the lawmakers wrote. “The thousands of victims in the U.S. who entrusted their life savings with Mr. Stanford and lost everything as a result have yet to receive any meaningful compensation.”