A court-appointed receiver is trying to get back the $11 million paid to two veteran financial advisers when they opened a Baltimore affiliate of Stanford Financial Group, saying the money rightfully belongs to clients the government alleges were defrauded in an extensive Ponzi scheme.
Ralph S. Janvey, the receiver overseeing the Stanford businesses, is suing Christopher C. Aitken and Stephen L. Thacker in federal court in Dallas for payments the suit says "constitute fraudulent transfers." The two men, who left jobs at Smith Barney, received the money in November. Three months later, the Securities and Exchange Commission accused the parent company's chairman of orchestrating a multibillion-dollar investment scheme.
Aitken and Thacker did not respond to messages Thursday seeking comment.
The suit doesn't allege that the two men defrauded clients. It says instead that the money paid to them did not come from "legitimate business activities," and "there is no indication that they provided any meaningful services in that brief period that would establish a legitimate right to retain over $11 million."
Authorities say much of the company's revenue came from selling fraudulent certificates of deposit to customers. The promised high interest rates were paid by diverting the money collected from new investors. All told, the SEC says, investors handed over $8 billion for these "so-called 'certificates of deposit.' "
But not all clients were sold bad CDs. Institutional investment consultants - a group that includes Aitken and Thacker - often send customers' assets to money-management firms, getting a cut of the fees in return.
The two men advised Loyola University Maryland for most of the decade, and the college made the jump with them to Stanford. But Stanford never had Loyola's assets. They're in a custodial account at an outside firm.
"It was a satisfactory advisory relationship," said a Loyola spokeswoman, Courtney Jolley. "Our funds during this period were housed with Charles Schwab and not with Stanford Financial itself, so there was no loss incurred."
Aitken, who has worked in the financial services industry for more than 20 years, has been ranked among Barron's "Top 100 Financial Advisors," according to a news release Stanford issued when the office opened at the end of last year. Thacker has about 16 years of financial services experience, most of it working with Aitken.
