Lafayette/Houston/Dallas businessman Michel Moreno took a big hit when Stanford Group was shut down by regulators in 2009.
Lafayette businessman Mike Moreno got more than half of his money out of Stanford Group but still had $20 million invested in the company when regulators shut it down in February 2009, according to court testimony last week.
Allen Stanford, 61, is on trial in Houston, accused of masterminding a $7 billion Ponzi scheme centered on the sale of so-called CDs at the Stanford International Bank, based on Antigua. Court testimony in the fraud trial revealed Moreno's substantial losses. Jason Green, a former Baton Rouge-based financial adviser, testified that Moreno tried to pull his money out before the company crashed, but his request was denied. Bloomberg reported Friday on the ongoing trial:
A former Stanford Group Co. executive told a jury that one client of R. Allen Stanford's securities brokerage lost at least $20 million before the business was closed by U.S. regulators.
Jason Green, who led Stanford Group's private-client group, offered the figure while being cross-examined by the defense on the fifth day of Stanford's investor fraud trial in federal court in Houston.
Stanford's lawyers have said that customers who bought the certificates of deposit issued by Antigua-based Stanford International Bank Ltd. and sold by the brokerage were able to withdraw every penny of their money until the Securities and Exchange Commission sued in February 2009.
Asked by defense attorney Ali Fazel if anybody had not gotten their money back before then, Green replied, "Yes, one person I know of specifically" was denied $20 million. Green later identified the client as Michael [stet] Moreno, who had residences in Lafayette, Louisiana, and in Houston.
As the INDsider previously reported, Moreno was among 49 investors Stanford receiver Ralph Janvey listed in July 2009 court filings who either cashed out some of their holdings before Stanford was shut down or moved their money into non-Stanford accounts. Those 49 investors took out a total of $494 million, $47 million of that withdrawn out by Moreno. Green testified that Moreno needed the money to settle tax obligations, according to Bloomberg.
Moreno, [Green] said, entrusted Stanford's business with almost $50 million before withdrawing some of those funds to address a tax obligation. The $20 million withdrawal request was made shortly before Stanford stopped allowing clients to redeem CDs before their maturity date to stanch the outflow of capital as the global financial crisis deepened.
Receiver Janvey tried unsuccessfully in 2009 to claw back Moreno and other investors' proceeds. Read more on that here.
In their opening last week, prosecutors said Stanford treated the savings of thousands of investors as his "personal piggy bank" to buy two airlines, build a cricket team and stadium, funnel money to a Swiss bank account and otherwise live a life of luxury on the Caribbean island of Antigua, The New York Times reported.
Stanford faces 14 charges of defrauding nearly 30,000 investors from 113 countries.
Moreno said in mid-October that he has been living temporarily in Dallas, raising $300 million to start a new fracking company.
Read the Bloomberg story here.