Stanford Arrives for bench trial...Indicted financier R. Allen Stanford arrives at the Bob Casey Federal Courthouse in Houston, Texas, U.S,. on Tuesday, Aug. 24, 2010. Lloyd's of London underwriters are attempting to convince a U.S. judge that Stanford committed money laundering so they can avoid paying attorneys to defend him on criminal fraud charges. Photographer: F. Carter Smith/Bloomberg
The Securities and Exchange Commission charged Allen Stanford with 'fraud of shocking magnitude' © Bloomberg

Ten years ago next week, the second biggest Ponzi scheme in history started unravelling in the southeastern part of the US. The Securities and Exchange Commission charged Texas native Allen Stanford with “a fraud of shocking magnitude”. He eventually went to prison for stealing $7bn, largely from retail investors and retirees who had bought certificates of deposit from his offshore bank.

The Stanford fraud was built on the backs of teachers, nurses, firefighters and public servants in states such as Florida, Louisiana and Texas. Lured by the promise of safe securities that offered robust returns, countless working families and retirees suffered a similar fate when the 2008 financial crisis exposed the Antigua-based operation as a house of cards.

When my congressional subcommittee began investigating the scheme, a victim named Stan Kaufman summed up how he and other victims felt when they learnt they had been swindled: “We realised government regulators failed us in an unprecedented manner and that all of our life savings were gone.”

This tragedy today extends to the anaemic recoveries generated for victims. While the trustee pursuing recoveries for investors in Bernard Madoff’s higher-profile Ponzi scheme has tracked down $13.3bn, the receiver charged with doing the same for Stanford victims has come up woefully short. Receiver Ralph Janvey reported in November that he had collected just $500m. He has since inked a $63m settlement with one of the law firms that worked for the scheme.

The US government should be doing more to right this wrong — and not let Stanford’s heartless scheme drift into the dustbin of history. We must secure real recoveries for victims, who have had their lives turned upside down.

Congress must re-engage and find out why the effort to recover money is not working and what can be done. The US government should also pursue legal claims against the banks that helped the Stanford scheme operate.

Maxine Waters, the new head of the House Financial Services Committee, and Al Green, who has taken over my old subcommittee, should convene new hearings. They must ask why Mr Janvey has made minimal progress while racking up an astronomical $224m in fees.

Congress should also investigate how overseas correspondent banks, including TD Bank and HSBC, dealt with money linked to Stanford’s scheme. Victims have sued these lenders alleging that they knew, or should have known, that they were handling transactions on behalf of a criminal enterprise — especially given Stanford’s well-publicised chequered past. But the banks are fighting back in the courts, arguing that they do not owe the victims anything.

Congress should separately ensure that any institution that aids and abets a Ponzi scheme is not allowed to operate in the US without facing appropriate regulatory actions and making restitution. Hearings should also probe the SEC’s role in overseeing Mr Janvey. Although the commission has tried to rein in the receiver’s costs, it should be equally concerned with performance and results. This may mean ultimately petitioning the federal courts in Texas to remove the receiver if the SEC does not feel increased oversight is improving the dismal recovery to date.

Lastly, the US Department of Justice should work with its Swiss counterparts to ensure that the Swiss arm of Société Générale is fully complying with a 2013 settlement that was meant to return $210m to Stanford victims. This is an unresolved issue that a bipartisan group of seven lawmakers asked the DoJ to work on in 2017.

If this cash infusion can be realised, it will translate to a step in the right direction for victims awaiting recoveries. They have suffered for too long. The parties charged with righting this wrong have fallen short to date. Through taking the right actions today, however, there is still a path to accelerating recoveries for the ordinary Americans struggling to bounce back.

The writer, a former US Representative from Texas, chaired the subcommittee that investigated the Stanford Ponzi scheme

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