SEC official pressed on 12-year delay to Ponzi case
WASHINGTON - Senators pressed the Securities and Exchange Commission's chief enforcement official, Robert Khuzami, Wednesday to explain why the agency has yet to demote or fire staffers who waited 12 years to bring charges against a major Ponzi scheme.
SEC Inspector General David Kotz has found that the agency first knew in 1997 that R. Allen Stanford was likely operating a Ponzi scheme. But it didn't charge the billionaire until February 2009. The charges came a few months after the massive pyramid scheme of financier Bernard Madoff surfaced.
SEC enforcement officials discouraged cases that couldn't be resolved quickly, the inspector general found in his report last spring.
Senate Banking Committee Chairman Christopher Dodd (D-Conn.) asked SEC Enforcement Director Khuzami Wednesday why no one at the SEC has been fired or demoted for the excessive delay. Other senators on the panel also wanted an answer during the hearing on the issue.
"We seem to have an instance in which one side of the agency was screaming that there was a fire, and the other side said that the fire was too hard to put out," Dodd said.
Khuzami told the panel the disciplinary process is under way. That prompted Sen. Jim Bunning (R-Ky.) to say: "It's been 13 years. Isn't that enough of a chance?" Khuzami responded that the details of the SEC's failure in the case have been known only since the inspector general's report was issued in April.
Khuzami also said the agency has toughened its efforts to shut down financial misconduct since the past failures. He said the SEC is working to provide "maximum recovery" to investors hurt in Stanford's alleged $7-billion fraud.
Stanford has been in federal prison since his indictment in June 2009 on criminal charges that his international banking business was really a pyramid scheme. He is disputing the charges. He faces a life sentence if convicted.
Inspector General Kotz also found that the former head of enforcement in the SEC's Fort Worth, Texas, office, who helped quash investigations of Stanford, later represented the billionaire as a private lawyer. Kotz said he has referred the matter to the Justice Department for possible criminal prosecution.-
Out East with Doug Geed: Wine harvests, a fish market, baked treats and poinsettias NewsdayTV's Doug Geed visits two wineries and a fish market, and then it's time for holiday cheer, with a visit to a bakery and poinsettia greenhouses.
Out East with Doug Geed: Wine harvests, a fish market, baked treats and poinsettias NewsdayTV's Doug Geed visits two wineries and a fish market, and then it's time for holiday cheer, with a visit to a bakery and poinsettia greenhouses.
