US and Canadian banks face investigation of US prosecutors over Stanford’s fraud

According to reports from CNBC a number of banks including two in the US are facing a new probe by the investigators who are trying to get to the truth in the alleged Allen Stanford Ponzi scheme. The regulators and prosecutors want to learn what the banks and regulators knew about massive deposits and withdrawals from Stanford over the years.

US regulators have always maintained that one of their biggest obstacles in uncovering the alleged fraud was that it involved certificates of deposit from Stanford's offshore bank in Antigua. A forensic accountant Karyl Van Tassel of FTI Consulting, who was hired by the court-appointed receiver in the Securities Exchange Commission civil case against Stanford, filed a report that says no investor money actually went to Antigua. Instead, it went to Stanford company accounts at banks in the US and Canada.

Between Jan. 1, 2008 and Feb. 17, 2009, the report says, $2.1 billion in deposits went to Toronto Dominion Bank in Canada. Another $624 million went to Trustmark National Bank, which is based in Mississippi, and $801 million went to the Bank of Houston. None of the banks has been accused of any wrongdoing.

According to the report the bank deposits were used to pay "returns" to earlier Stanford investors, which is a typical sample of a Ponzi scheme.