Fraud – it brings people together. As Bloomberg reported on Wednesday:

Victims of Bernard Madoff and accused Ponzi schemer R. Allen Stanford are banding together to lobby Congress for a law that could require Wall Street firms to pay billions of dollars to cover some of the losses they suffered.

…

Together, the groups hope to persuade Congress to add a requirement to the regulatory overhaul bill, now under Senate consideration, that brokerage firms pay about $4 billion in additional fees to the Securities Investor Protection Corp. fund. SIPC protects U.S. investors’ accounts against fraud or bankruptcy. The victims also want Congress to require the fund to compensate them up to $500,000 each in losses.

As we’ve noted before on FT Alphaville, alleged fraudsters tend to go in for quite targeted marketing. Which means the nascent Stanford-Madoff victims coalition will be a bit of an interesting mix, as Bloomberg pointed out:

The result is a coalition of the Democratic-backed, East Coast, and mostly Jewish investors defrauded by Madoff, with the Republican-backed, largely Christian, Sunbelt residents victimized by Stanford. The disparate groups now find themselves bound by a common notion: They’ve been cheated, and they want the government to make them whole.

Speaking of targeting, the SEC warned on Wednesday of a “phony website targeting Madoff fraud victims”:

The Securities and Exchange Commission is alerting investors about a Web site that falsely claims to have recovered $1.3 billion in funds hidden by convicted Ponzi schemer Bernard Madoff in Malaysia. The site asks Madoff victims to submit information to verify that they are on a refund list — a ploy commonly used by con artists to further rip off financial fraud victims.

The phony Web site claims to be home to the “International Security Investor Protection Corporation” — a fictitious entity. The “ISIPC” Web site bears a certain likeness to the Securities Investor Protection Corporation’s (SIPC) Web site, mimicking its look, feel, and content in an attempt to achieve an aura of authenticity with Madoff victims. The “ISPIC” Web site claims to partner with several governments including the United States, and links to actual government Web sites to signify an affiliation. “ISIPC” also falsely claims to be sponsored by the United Nations, the International Monetary Fund, and the World Bank.

Cunning.

As for the man formerly known as Sir Allen Stanford, his one-time friends and allies are abandoning him in droves.

The Jamaica Observer reported on Wednesday that the Antiguan government — various politicians within which had actively supported, and been backed by, Stanford in recent years — was distancing itself from the Texan businessman:

“The current Government, which assumed office in March 2004, did not sell any Crown lands to Stanford, received no loans from Stanford, and was not a beneficiary of any largesse of Stanford. In fact, R Allen Stanford considered this administration as his enemy,” the Antiguan Government said in a statement.

Related links:
What do Ponzi operators spend their money on? – FT Alphaville
Court rules Madoff victims cannot sue UBS – FT

This entry was posted by Stacy-Marie Ishmael on Wednesday, March 10th, 2010 at 22:21 and is filed under Capital markets, People. Tagged with Allen Stanford, Bernard Madoff, fraud, Ponzi, sec, Sir Allen Stanford. Edit this entry.