Athletes in Court

Cricket Bats and Federal Court: Part II

Posted in Cricket, Federal Fraud

This is an update to a previous post (found here) regarding the trial of Ponzi scheme leader/cricket teaming owner Allen Stanford. Last we heard Stanford had failed to convince a federal judge that he was mentally unfit to stand trail for an alleged $7 billion scheme to defraud investors.

Now, a former employee of the Securities and Exchange Commission stands accused of obstructing at least three separate investigations into the activities of the Stanford Financial Group. The employee has settled civil charges brought by the Justice Department against him accusing him of violating conflict-of-interest rules when he later represented Stanford before the SEC.

U.S. Attorney from the Eastern District of Texas, John M. Bales, announced that Spencer C. Barasch, enforcement director for the SEC’s Forth Worth office from 1998-2005, had agreed to settle the dispute and would pay a $50,000 fine as a result. Though that represents a whopper of a fine, the highest possible fee for a violation of conflict-of-interest rules, it’s far better than if the Justice Department had pushed for a criminal prosecution. A separate case continues on involving Mr. Barasch at the SEC.

Mr. Barasch’s attorney, Paul Coggins, said that case was settled to avoid unnecessary expenses and lengthy litigation. He said his client’s actions were expressly permitted and that Mr. Barasch had done nothing wrong by representing Stanford after leading investigations against him.

Barasch has also found himself the subject of a nearly 150-page report by the SEC’s inspector general, which was issued in March 2010. The report concluded that Barasch repeatedly blocked further investigation into Stanford Financial by his staff at the SEC and that he later represented Stanford in talks with SEC officials about other investigations. The SEC is pursuing a settlement with Barasch, possibly including a permanent ban from any additional work before the commission.

The SEC inspector general said in a statement that the recent settlement “sends a strong message that former federal officials cannot abuse the public trust by attempting to profit personally from matters on which they worked as government servants before joining the private sector.”

According to terms of the settlement, Barasch denied any wrongdoing, saying that he lacked any authority to obstruct investigations and that he received specific instructions from superiors in DC to direct attention towards other instances of fraud.

Sir Allen Stanford, former cricket magnate and founder of Stanford Financial, remains scheduled for trial on January 23, 2012 at the U.S. District Court in Houston, Texas. Stanford is currently charged with 21 counts of defrauding investors who were bilked out of nearly $7 billion after buying bogus certificates of deposit at Stanford’s bank in Antigua. Rather than going towards investments the money was instead diverted towards maintaining Stanford’s cushy lifestyle, international cricket can be an expensive hobby, especially the way Allen Stanford plays the game.

Cricket Ground

Read:Ex-Official at S.E.C. Settles Case for $50,000,” by Edward Wyatt, published at NYTimes.com

Earlier:

Cricket Bats and Federal Court

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