Auditor Sued In Stanford Ponzi Scheme Case

May 31 2011 | 9:20am ET

Victims of the alleged $10.7 billion R. Allen Stanford Ponzi scheme have sued his auditors, accusing BDO USA of ignoring signs that Stanford was running an illegal hedge fund.

Stanford Financial Group investors filed suit against BDO USA and its parent in Dallas federal court last week. The lawsuit alleges that BDO continued recommending Stanford International Bank's certificates of deposit despite evidence that they were hedge fund shares "disguised as CDs."

"Despite the pervasive fraud that infected Stanford Financial Group's operations, BDO repeatedly issued unqualified audit opinions on its Stanford client's annual financial statements," the suit alleges. Stanford was arrested almost two years ago; he has pleaded not guilty and is scheduled to stand trial in September.

"BDO's cozy relationship with the Stanford Financial Group was steeped in conflicts of interest and required ongoing deception and duplicitous manipulation of the facts to enable the Ponzi scheme to grow exponentially for over a decade," the complaint complains. "The result is the loss of thousands of investors' life savings" in a hedge fund "illegally disguising itself as a bank."

BDO denies the allegations.

"The fact that this complaint was not filed until now—years after the Stanford fraud came to light and after many other investor complaints were filed—reflects a transparent understanding that the allegations lack merit," spokesman Jerry Walsh said.

In Depth

Q&A: Biotech Investing with Crossover Fund RA Capital

Sep 15 2015 | 5:40pm ET

Boston-based RA Capital Management is an intriguing mix of sophisticated life sciences...


Citadel Supports Manhattan Real Estate With Record Deal

Sep 16 2015 | 3:04pm ET

Never count hedge funds out of a big property deal. The Manhattan real estate market...

Guest Contributor

Hedge Fund Marketing To Independent RIA Firms

Sep 30 2015 | 1:56pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth Inc. explains...


Editor's Note

Upcoming Events