Several media outlets have now upped the tally on the alleged Stanford fraud from $8 billion (which is approximate) to $9.2 billion. We must come to the defense of Stanford on this one. It's really just $8 billion from the Antigua Bank (so far).
The other $1.2 billion arise from another part of the SEC Complaint which refers to a Mutual Fund Wrap program that Stanford Financial started in 2005. For those who don't know, a mutual fund "wrap" is like a Fund of Funds for mutual funds. Invest in one and you diversify over a series of mutual funds, each of which is supposedly also diversified. Double your diversification and double the fees you pay also.
Stanford Financial isn't accused of missappropriating (stealing) that $1.2 billion, but of misrepresenting the performance of the program. The program started in 2005, but Stanford already had a track record, which apparently was carefully "made up". And as they operated this program, they also "enhanced" the returns they were actually made. So the $1.2 billion should still be there for investors, but the $25 million they collected in fees...that maybe they shouldn't have.
This is also what the "disgruntled employees" were complaining about. (I was always wondering about that)
So why would Stanford set up a program like that and fudge the numbers to make a measly $25 million. Well, they brought a lot of advisors on board with it and those advisors were encouraged to...you guessed it...sell Antigua CDs.
I guess it shows where Stanford's real strength lied: in making up numbers.
Someone joked that the much ballyhooed "Stanford Investment Model" (SIM), actually stood for SIMulated.