February 16, 2009

Golf Awaits Fallout From Stanford Scandal

Stanford Financial Group, sponsor of the Stanford St. Jude Championship, and its founder, R. Allen Stanford, have been charged with a "massive" fraud by the SEC

PGA Tour Commissioner Tim Finchem said Tuesday afternoon that the Stanford St. Jude Championship will be played as scheduled despite the fact that U.S. authorities have charged the chairman and founder of Stanford Financial Group Inc. with fraud.

According to published reports, the Securities and Exchange Commissioner filed a complaint Tuesday in federal court in Dallas accusing R. Allen Stanford and other executives at Stanford Financial Group Inc. of "massive" fraud relating to high-yielding certificates of deposit. The SEC alleges that Stanford orchestrated a bogus investment scheme involving $8 billion in funds.

Stanford's assets, along with those of three of his companies, according to a Reuters story, have been frozen. Reuters also reports that a sign was taped to the window of Stanford's Houston headquarters stating "We are temporarily closed. The company is still in operation but under the management of a receiver."

Stanford Financial, based in Houston, has a significant presence in golf. In addition to sponsoring the St. Jude Classic in Memphis in June, the company recently signed on to sponsor the season-ending Tour Championship on the LPGA Tour. The Stanford St. Jude Championship, slated for June 11-14 at TPC Southwind, offers a purse of $6.1 million. The Stanford Tour Championship, which replaced the ADT Championship and is scheduled for Nov. 19-22 in Houston, offers a $2 million purse.

In addition, Vijay Singh, Camilo Villegas and Morgan Pressel have marketing deals with the firm that manages over $50 billion in assets for approximately 30,000 clients. Herb Krickstein, Pressel's grandfather, told Golf World at the LPGA's SBS Open in Hawaii that the company said it would honor Pressel's deal.

Finchem issued a statement at 5:25 p.m. EDT stating: "We have no comment regarding the situation with Allen Stanford and certain of his companies at this time. However, we want to categorically state that the PGA Tour event in Memphis will be played as scheduled this year."

Added Kevin Krisle, executive director of the Stanford St. Jude Championship, in a statement: "Our goals and objectives have not changed. We remain busy planning for and excited about hosting the 52nd PGA Tour event in Memphis this June."

According to the Commercial Appeal in Memphis, FBI agents on Tuesday began seizing documents from a Stanford office in Memphis where the company's charitable foundation is housed.

Meanwhile, the LPGA was less certain initially how the news impacted its new event, which still seeks a site.

"The LPGA has been closely monitoring the developments regarding the situation with Allen Stanford and some of his companies," LPGA Chief Communications Officer David Higdon said in a statement. "We remain in close contact with our tournament owner of the Houston event sponsored by Stanford Financial, and they will continue to update us on any new developments related to this matter."

Brian Bertsch, a Stanford Financial Group spokesman, had said Monday in a story for Golf World's February 23 edition that the months-long SEC probe, which also included the FBI, was a "routine examination." Bertsch, based in New York, was not available for comment Tuesday and in a voice message forwarded all inquiries to the SEC office in Fort Worth. A message left for SEC representative Rose Romero, who is listed as the lone media contact on Stanford Financial Group's website, was not returned.

The 25-page SEC complaint filed against Stanford follows on the heels of an alleged $50 billion fraud scheme by Wall Street financier Bernard Madoff. Additionally, last month professional golf was dealt a blow when Ginn Sports Entertainment and Ginn Development Co. pulled out of sponsorship of the Ginn Championship on the Champions Tour and the Ginn Open on the LPGA Tour.