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MULLETT: SEC Exec. Undermined $7B Ponzi Scheme Inquiry |
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Former SEC official, Spencer Barasch, is expected to be fined $50,000 and banned from appearing in front of the SEC for a period of 6 months for his inappropriate role in the Allen Stanford Ponzi Scheme investigation. Mr. Barasch was the former head other enforcement division of the SEC's Fort Worth, TX office. He left the SEC in 2005 and is now a partner at the law firm of Andrews Kurth in Dallas. The Stanford Ponzi scheme was actually uncovered in 1997 by a team of investigators from the SEC's Forth Worth office. From 1997 to 2005 investigators made a total of four investigations into Stanford's business model and found it to be fraudulent, yet the SEC decided not to pursue the investigations further or bring charges. It was later discovered that on multiple occasions Mr. Barasch played a significant role in quashing the investigation. Barasch may have been financially motivated to end the investigation against what he saw as a potential client. According to the Wall Street Journal, "After Mr. Barasch left the SEC for private practice, he sought repeatedly to get permission from the SEC to represent Mr. Stanford ... Mr. Barasch represented Mr. Stanford briefly in 2006 before he was informed by the SEC Ethics Office that iw as improper for him to do so" (http://goo.gl/6IJC5). It was not until Bernie Madoff disclosed his $50 billion Ponzi scheme to authorities in December 2009 that the SEC took the Stanford case. In 2010 Stanford's $7.2 billion Ponzi scheme was eventually uncovered (http://clicky.me/stanford). In hindsight, Barasch's visions of a financial windfall was merely a mirage. Not only was he not allowed to represent Stanford but Stanford's eventual lawyer tried to beg off of the case due to Stanford's inability to pay his legal bills.
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