Class action lawsuit filed against Stanford

HOUSTON (KTRK) -- Billions of dollars have been frozen by the U.S. government and countless investors can't get to their money. In the middle of it is a Houston billionaire who is accused of bad business.

[LEARN MORE: Class action lawsuit filed against Stanford Financial]

Eyewitness News was the first to show you federal marshals starting their investigation at the Stanford Financial Group's Galleria-area headquarters.

Now, Eyewitness News is first to report that a class-action lawsuit was filed late Tuesday night in federal court by four investors alleging Allen Stanford, the company and four individual officers knowingly committed fraud.

Add to it another lawsuit filed in January by two former employees and the SEC charges filed Tuesday, Stanford is facing a lot of trouble.

Numerous organizations which benefited from the company's generosity are also in limbo.

As soon as word spread about the federal charges against Stanford Financial, investors rushed to its Galleria offices in a panic.

"I'm half in a state of shock and hoping it's not true," said Stanford client Romina Sumpter.

They were met by a sign on the door that said they're closed. Federal marshals turned people away as investigators sent employees home and went to work inside.

The Securities and Exchange Commission Tuesday filed civil charges against billionaire Robert Allen Stanford, three companies he operates, two of which are Houston-based, and two of their officers saying they committed "massive fraud" against investors. They are accused of running an $8 billion CD scheme based on false promises and fake double digit returns.

Brett Zagone estimates half her life savings is invested with Stanford. She choked back tears.

"I feel like I've been scammed," she said. "Initially, we put our money in this institution because we were nervous with the market and we thought it was a safe place. I'm so upset right now I can't even talk about it."

It's not just investors who may be affected as Stanford spends thousands of dollars each year supporting the community. The Children's Assessment Center, the American Heart Association, the Museum of Fine Arts, the Museum of Natural Science and Theater Under The Stars all are, or have been, beneficiaries. Stanford is also a major sponsor of the Houston Polo Club and the Houston Rockets.

Now those organizations don't know what's going to happen, sharing the same uncertainty with individual investors.

"I find this disgusting," John Painter said. He invested $10 million with Stanford.

"You put your money in an institution and think everything is fine and then you find out that it isn't fine. That's not good," said Painter.

A federal judge has frozen all the company's assets. The company is in receivership and with this it faces more legal problems. A spokesperson for Stanford declined to answer questions, only referring us to federal investigators.

      Headline check | 100 most recent local stories | News alerts
            Slideshow archive | ABC13 wireless | Help solve crimes

Get more Local »

local, jessica willey

• Comment Now
• Email
• Print
• Report a typo
•