Dental charity hit by alleged investment fraud

Feb 23, 2009

A retired oral surgeon in Colorado who has spent more than 30 years of his life working to provide dental and medical care to underserved populations in Mexico and Central America has filed a lawsuit against R. Allen Stanford and the Stanford Group, charging that they bilked his nonprofit group, Foundation for the Development of Healthy Teeth in a Health Body, out of hundreds of millions of dollars.

If the foundation doesn't get at least some of its money back, the organization will not be able to continue providing care to thousands of needy, according to a lawyer for Johan Dahler, M.D., D.D.S.

On February 17, the U.S. Securities and Exchange Commission (SEC) sued Stanford and three of the companies he controls in Dallas federal court, alleging "fraud of shocking magnitude that has spread its tentacles throughout the world," according to a press release issued by the law firms representing Dr. Dahler.

In his complaint, filed last week in Harris County District Court in Texas, Dr. Dahler, founder and trustee of the foundation, claims that nine Stanford companies and executives knowingly bilked investors who bought certificates of deposit (CDs) from the investment firm.

The defendants "fraudulently sold approximately $8 billion of self-styled 'certificates of deposits' by promising high return rates that exceed those available through true certificates of deposits offered by traditional banking institutions," the lawsuit alleges.

Dr. Dahler is seeking a temporary restraining order prohibiting the defendants from transferring or otherwise encumbering the CD funds he invested with them -- more than $772,000 in all. Dr. Dahler entrusted the money with Stanford International Bank of St. John's, Antigua, on behalf of the Rocky Mountain Trust of Denver.

When he became aware of the SEC action against Stanford last week, he immediately took action, the lawsuit claims.

"Plaintiff has demanded the return of his investments by Defendants but they have refused, ignoring Plaintiff's pleas that the funds were needed because the entire Foundation's efforts south of the U.S. border depended on them," the complaint states, adding that Dr. Dahler specifically told Stanford et al that "thousands of natives will not get medical and dental and surgical help, nor will hundreds of orphanages be getting food for their daily lives, if these funds are not received."

According to James A. Dunlap Jr., an Atlanta-based attorney representing Dr. Dahler in the lawsuit, while the foundation is not bankrupt because it has no creditors, "Dr. Dahler will be unable to continue with his mission [in Mexico and Central America] unless he is able to recover some of the funds."

According to news reports, attorney Ralph Janvey of Dallas, the court-appointed receiver for the Antigua-based bank, is freezing its accounts to ascertain Stanford's assets and, eventually, divide the money among creditors. On February 24, the Antigua government seized the bank, renamed it, and divided its shares among the island's government and five Caribbean lenders, the Washington Post reported.

Dr. Dahler first began working to bring dental and medical care to the underserved in Central America in the 1970s when he was a dental student at the University of California, San Francisco. He established the Foundation for the Development of Healthy Teeth in a Health Body in 1996. The foundation currently boasts 465 dental and medical volunteers.

"We enjoyed 13 years of faithful monthly payments from Stanford," he said in a press release.

Now, the retired oral surgeon told news agencies this week, he is living on Social Security and "the foundation is broke."