With a Stanfordian echo, news has arrived of yet another scandal involving falsified certificates of deposit. US regulators have put a halt to a suspected $68 million Ponzi scheme at Millenium Bank, based in St Vincent and the Grenadines.
There have been rumours for some time that Millenium bank was offering CD’s at implausibly high rates, but this is the first time the alledged scam has been made public.
Millenium bank has apparently been marketing its financial products to wealthy US citizens since 2004, and described itself as subsidiary of a Swiss bank, United Trust of Switzerland SA. The investors, lured by the prospect of high investment returns offered by banking offshore, happily snapped them up.
“The defendants disguised their Ponzi scheme as a
legitimate offshore investment and made promises about exuberant
returns that were just too good to be true,” said the director of SEC’s texas office Rose Romero.
“Investors need to be especially cautious when placing
money with entities that may be outside the reach of U.S.
regulators,” Romero added.
“None of the investor funds were used for any investment
purpose,” the SEC said in a court hearing. Instead the fraudsters made off with the vast majority of the funds, keeping only a small amount to pay off existing investors.
Clients were asked to send checks to the Caribbean, where they were forwarded to California, the SEC said, The money was then deposited in a Las Vegas bank account opened by some of the conspirators.
Only $3million of the collected funds was returned to investors, according to the SEC.