The demise of the Stanford Group has caused quite a whirlwind in the Baton Rouge area, where I practice, since ithad a significant presence here. As a result, there will be many clients searching for a new advisor. To this end, I have purchased 32 local radio advertising spots and am holding two seminars with the intention of helping clients through this situation. I will also discuss the current economy and financial markets.
The fraud involved here has indeed created a very sad situation for those who had invested their money in Stanford's high-yielding CDs. It has also altered the lives of the Stanford employees. I suspect when it's all said and done, clients will end up losing most, if not all, of their investments.
To make matters worse, these clients paid income taxes on the interest the CDs earned over the years. The problem is, if it turns out to be a Ponzi Scheme, then it was not a CD, and since no interest was paid, no taxes would have been due. It would be classified as a return of their investment which is not taxable. To further complicate matters, you can only go back three years to amend an income tax return. So it would seem that investors who paid taxes on the interest before that are out of luck.
