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Standford Financial

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Submitted By lynn1985
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Case #2- Stanford Financial
Former Chairman and CEO of Stanford Financial, R. Allen Stanford has been convicted of 13 out of 14 counts of fraud which caused investors to loss over $7 billion in Assets. Stanford has been sentenced to serve 110 years in prison as of June 2012. Stanford's crimes included conspiracy, wire fraud, obstruction and money laundering (new york times). Stanford's scheme affected over 20,000 individuals and caused many them to lose their savings, retirement funds, and in more extreme cases their homes. Outraged investors everywhere are asking questions, where were the auditors? How can such a scheme go uncovered by accounting professionals? Did Stanford's auditors perform their duties in accordance to Generally Accepted Auditing Standards (GAAS)?

According to various sources apparently there were two accounting firms named in the scandal that were involved with Stanford Financial, CAS Hewlett, and BDO USA LLP. According to Andrew Clark's article "Confusion surrounds 'auditor' of Allen Stanford's business empire"(The Guardian) it was alleged that CAS Hewlett, a small Antigua based firm was responsible for the auditing of Stanford International Bank (SIB). However when the small firm had been approached about the accusations they denied having any knowledge of who Allen Stanford even was. Apparently the only person who would have had that information was CAS Hewlett's chief executive Charlesworth Hewlett who died January 1st 2009. BDO USA LLP was responsible for the auditing of Stanford Group Company another component of Stanford's business. According to Michael Cohen's article "Stanford Investors Sue BDO"(Accounting Today) A Spokesperson of BDO stated that "BDO was never the auditor of Stanford International Bank - the entity where the fraud took place."

Investors of Stanford Financial filed suit against BDO USA LLP in May of 2011

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