On February 26, 2009, the SEC accused Robert Allen Stanford of executing a “massive Ponzi scheme” over the last decade, in which he and his cohorts misappropriated funds and made more than \($1.6\) billion in “bogus” loans to Stanford and his bank—the Stanford International Bank.

The agency also accused Stanford of falsifying financial statements to investors who bought \($8\) billion worth of certificates of deposit with promised large returns that turned out to be too good to be true. Numerous interviews with former Stanford employees and testimony provided in court documents indicate that over time, top managers surrounded themselves with a team of friends, family, and acquaintances who had little financial experience, but were as close-knit as the small Southern towns from which several of them came. The SEC said these ties created an environment that left “no independent oversight” over the assets of his bank. As many as 17 lawsuits that were brought by former investors for money lost in the alleged \($8\) billion Ponzi scheme were consolidated into a multidistrict litigation in Texas federal court. Stanford was indicted in June 2009 for his alleged role in defrauding thousands of investors through the sale of fraudulent certificates of deposit in his bank. He and some of his top corporate officers are accused of lying to investors about the rates of return they could expect on their investments.

As of February 2010, Stanford had pleaded not guilty and remained in custody in a Houston-area lockup, where various reports say he recently came out on the losing end of a prison braw] with a broken nose, black eyes, and other injuries.

Evaluate the ethics of a person such as Bernie Madoff and Allen Stanford who develops a Ponzi scheme by using Kohlberg’s stages of moral development ad with reference to the discussion about ethical behavior.