Stanford receiver sues firm's brokers seeking $40M

The court-appointed receiver for the Stanford Group Company of Houston yesterday filed suit against 66 Stanford brokers seeking to return of more than $40 million in sales commissions and upfront loans. The compensation paid to the brokers was for the sale of the allegedly fraudulent CDs sold by Stanford, and “not in payment for legitimate services,” said the receiver, Ralph Janvey, in a filing with the U.S. District Court for the Northern District of Texas in Dallas. “The commissions, loans, and other compensation paid to [the brokers] came not from revenue generated by legitimate business activities, but from monies contributed by defrauded investors,” the filing said. Brokers at Stanford could receive a 1% commission and as much as a 1% trail fee on sale of CDs, the suit said. The SEC has alleged that Stanford sold approximately $8 billion of CDs, and that Stanford principals have taken at least $1.6 billion of “bogus personal loans” from the proceeds. One of the accused, company founder Allen Stanford, told ABC News this month that his company had not engaged in a Ponzi scheme.