The Securities and Exchange Commission has shut down Stanford Financial Group, alleging an $8 billion "fraud of shocking magnitude."

Federal agents raided the company's offices in Houston and other U.S. cities including Memphis, prompting an unexpected call to Tennessee State Senator Paul Stanley (R-Memphis), a "wealth manager" with the company, informing him that his office was being searched.

According to the Memphis Commercial Appeal, Stanley said he was "amazed and dumbfounded," and that he was not involved in any of the alleged fraud nor were any of his colleagues as far as he knows.

The SEC enforcement action charges company founder Robert Allen Stanford, Stanford International Bank chief financial officer James Davis and Stanford Financial Group chief investment officer Laura Pendergest-Holt with "orchestrating a fraudulent, multi-billion dollar investment scheme." No other employees or associates are implicated at this time.

The SEC complaint alleges that so-called CD deposits, which were misrepresented as "safe," were funneled to Stanford's bank in Antigua where depositors were told they would be invested in "liquid financial instruments monitored by a team of 20-plus analysts" and "subject to yearly audits by Antiguan regulators." Instead, the SEC says the funds were placed in "illiquid investments, such as real estate and private equity," and were monitored by only two people, Stanford and Davis, and not audited by Antiguan regulators.

Bloomberg has more on Stanford Financial Group and the alleged scheme to sell CDs offering "improbable, if not impossible" returns.

According to Reuters UK, Stanford is a bi-partisan kind of guy, and in fact Democrats were the beneficiaries of more than two-thirds of his campaign donations. The article will likely be a source of embarrassment for some high-profile Democrats whose names are mentioned.

UPDATE: Manhunt: Accused Financier Scammer Stanford Missing