Stanford Investors Sue Willis Group Over Alleged 'Ponzi'

NU Online News Service, July 22, 3:55 p.m. EDT

A Venezuelan investor has sued London-based insurance broker Willis Group Holdings Ltd. and its U.S.-based subsidiary, Willis of Colorado, for providing false assurances that Certificates of Deposit offered by Stanford International Bank of Antigua were insured.

The lawsuit, seeking class-action status, was filed by Reinaldo Ranni of Venezuela on behalf of a group of Latin American investors, alleging that the Willis Group "played an instrumental role in enabling Allen Stanford [founder of SIB] to perpetuate a massive multibillion-dollar fraud against scores of investors."

According to the lawsuit, from 2005 to 2008 Willis provided letters to investors indentifying policies issued by Lloyd's of London, verifying SIB's practices. The letters also claimed that SIB had undergone an independent audit.

However, the lawsuit states that none of this was true. It says there was no insurance policy from Lloyd's backing investors' CDs and the independent audit was conducted by a small Antiguan firm controlled by Mr. Stanford.

The letters also declared those at Stanford International Bank to be "first-class business people" and that all "dealings with the bank have been conducted in a professional and satisfactory matter," according to the lawsuit.

From 1998 through February of 2009, the lawsuit stated, Allen Stanford used SIB and the affiliated Houston-based Stanford Group Company to execute a large-scale Ponzi scheme where he embezzled billions of dollars worth of investor funds through these false CDs.

Mr. Stanford was indicted in June on 21 counts of fraud, conspiracy and obstruction of justice. He was denied bond and is now in custody, facing a maximum of 250 years in prison.

A large portion of these false CDs were issued to South American investors through the Miami office of the Stanford Group Company. Mr. Ranni, along with these other investors, relied on the assurances from the Willis letters to finally decide on investing in a CD, the lawsuit said.

"Willis provided these letters to Stanford, and sometimes directly to investors, knowing these statements were false, or with severe recklessness as to the letters' veracity," the lawsuit alleged. "Willis had every expectation investors would be relying on the letters in deciding to invest in what they believed were safe, insured high-yield CDs."

A spokesperson from Willis declined to comment on the allegations.

The lawsuit was filed on Friday in Miami federal court, charging Willis with negligence, fraud, misrepresentation and violation of Florida and U.S. security laws. It seeks undetermined damages for as many as 2,100 investors, with Mr. Ranni claiming approximately $2.5 million in losses.

According to news reports, a similar lawsuit was filed against Willis for assurances of Stanford CDs on July 2 in a Dallas federal court by 3,000 Mexican investors, claiming damages possibly surpassing $1 billion.