The U.S. Securities and Exchange Commission has charged Houston financier Robert Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an US$8 billion CD program, the regulator said Tuesday.

Stanford’s companies include Antiguan-based Stanford International Bank, Houston-based broker-dealer and investment advisor Stanford Group Co., and investment advisor Stanford Capital Management. The SEC also charged Stanford International Bank CFO James Davis as well as Laura Pendergest-Holt, chief investment officer of Stanford Financial Group, in the enforcement action.

Pursuant to the SEC’s request for emergency relief for the benefit of defrauded investors, U.S. District Judge Reed O’Connor entered a temporary restraining order, froze the defendants’ assets, and appointed a receiver to marshal those assets.

“We are alleging a fraud of shocking magnitude that has spread its tentacles throughout the world,” said Rose Romero, regional director of the SEC’s Fort Worth regional office, in a release.

The SEC’s complaint, filed in federal court in Dallas, alleges that acting through a network of Stanford Group Co. financial advisors, Stanford International Bank has sold approximately US$8 billion of so-called “certificates of deposit” to investors by promising improbable and unsubstantiated high interest rates. These rates were supposedly earned through Stanford International Bank’s unique investment strategy, which purportedly allowed the bank to achieve double-digit returns on its investments for the past 15 years.

According to the SEC’s complaint, the defendants have misrepresented to CD purchasers that their deposits are safe, falsely claiming that the bank re-invests client funds primarily in “liquid” financial instruments; monitors the portfolio through a team of 20-plus analysts; and is subject to yearly audits by Antiguan regulators.

According to the SEC’s complaint, Stanford International Bank is operated by a close circle of Stanford’s family and friends.

The SEC’s complaint also alleges an additional scheme relating to US$1.2 billion in sales by Stanford Group Co. advisors of a proprietary mutual fund wrap program, called Stanford Allocation Strategy, by using materially false historical performance data.

The SEC’s investigation is continuing. No of the allegations have been proven in court.

The SEC charges mark the second time in as many months that U.S. regulators have stepped in to allege a multi-billion fraud that promised investors unrealistically high returns. It was only in December that the SEC and criminal authorities charged Bernard Madoff, a former chairman of the Nasdaq Stock Market, with leading a US$50 billion swindle.

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