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Sir Allen Stanford: inmate # 35017-183; a case study of a Ponzi scheme and its aftermath

Kevin Flynn (Department of Accounting, College of Business and Public Affairs, West Chester University of Pennsylvania, West Chester, Pennsylvania, USA)
Phyllis Belak (Department of Accounting, West Chester University of Pennsylvania, West Chester, Pennsylvania, USA)
Sean Andre (Department of Accounting, West Chester University of Pennsylvania, West Chester, Pennsylvania, USA)

Publication date: 8 July 2020

Issue publication date: 2 October 2020

Abstract

Research methodology

This case involves a real-life Ponzi scheme perpetrated by Sir Allen Stanford, a man who bribed Antiguan regulators and a certified public accountant firm to perpetuate his scam. The case includes the process of making victims whole, which involves a court-initiated clawback process: taking back payouts to investors or charities to redistribute the funds to other fraud victims who did not receive their fair payout. Students apply theory learned in an upper-level fraud or forensic accounting course. Finally, the case addresses the aftermath of a fraud scheme.

Case overview/synopsis

Ponzi schemes – one of the most common types of investment fraud – have caused investors to lose billions of dollars. Because of the prevalence of Ponzi schemes and the ramifications to investors, it is important for business students to understand the nature of these schemes and to learn how to recognize them. As future business professionals, students will be charged with recognizing a Ponzi scheme early and uncovering it before investors lose their investments.

Complexity academic level

This case is designed for upper-level undergraduate students or graduate students taking a fraud or forensic accounting course, which is best introduced after professors cover Ponzi schemes and also these concepts: fraud triangle, fraud diamond and fraud red flags.

Keywords

Acknowledgements

Disclaimer. This case is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources.

Citation

Flynn, K., Belak, P. and Andre, S. (2020), "Sir Allen Stanford: inmate # 35017-183; a case study of a Ponzi scheme and its aftermath", , Vol. 16 No. 4, pp. 433-454. https://doi.org/10.1108/TCJ-07-2019-0069

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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