Stanford faces criminal charges

By Jim Kim

We haven't seen a lot criminal charges in the still-unfolding financial crisis, but that might be changing. A criminal indictment unsealed in Houston, Texas, charges Allen Stanford committed a host of jail-worthy sins: He paid "more than $100,000 to Leroy King, former chief executive of Antigua's Financial Services Regulatory Commission, to carry out sham audits of Antigua-based Stanford International Bank and shield it from regulatory scrutiny," reports the Financial Times.

King allegedly helped Stanford evade SEC scrutiny. Prosecutors also say Stanford's private jets were "used to courier financial records to be burned in Antigua." All this as part of scheme that bilked investors to the tune of $1.6 billion. He faces up to 250 years, and he turned himself into the FBI last week. Stanford has indicated a willingness to fight. We'll see if it gets to trial, but I doubt it.

Article

Stanford faces criminal charges
B
y Joanna Chung in New York, Stacy-Marie Ishmael in Trinidad, and Tom Braithwaite in Washington

Published: June 19 2009 19:17 | Last updated: June 20 2009 00:20

Federal prosecutors have filed criminal charges accusing Sir Allen Stanford, the Texan billionaire, of taking part in a $7bn Ponzi scheme that also allegedly involved cash payments to a senior Caribbean regulator.

The criminal indictment unsealed in Houston, Texas, on Friday alleged that Sir Allen paid more than $100,000 to Leroy King, former chief executive of Antigua’s Financial Services Regulatory Commission, to carry out sham audits of Antigua-based Stanford International Bank and shield it from regulatory scrutiny.

EDITOR’S CHOICE
Full text: SEC indictment - Jun-20
DOJ statement - Jun-19
Regulator lists lengths taken to hide ‘Ponzi’ - Jun-19
Then-head of Antiguan regulator defended tycoon - Jun-19
Stanford surrenders to FBI - Jun-19
In depth: Stanford scandal - Jun-19
The indictment also claimed that Sir Allen’s private jets were used to courier financial records to be burned in Antigua.

Sir Allen and his co-defendants sold $7bn worth of certificates of deposit through SIB by promising high rates of return.

They then misappropriated most of the money, including diverting more than $1.6bn in undisclosed personal loans to Sir Allen, the indictment said. About $1bn of funds controlled by Sir Allen remain missing, a federal prosecutor said.

If convicted of fraud and obstruction charges, Sir Allen could face up to 250 years in prison. Sir Allen’s attorney said: “Allen Stanford will continue to fight these allegations. He is confident that a fair jury will find him not guilty of any criminal wrongdoing.”

Mr King and three executives of his Stanford Financial Group, including Laura Pendergest-Holt, a top Stanford deputy who was already facing obstruction of justice charges, were also charged.

Ms Pendergest-Holt has always denied any wrongdoing. The other individuals did not return requests for comment or could not be reached.

James Davis, chief financial officer of Stanford, faces similar allegations in another government filing but has not been indicted. Mr Davis’s lawyer said he would “continue to cooperate with the investigation”.

The indictment claimed that Sir Allen and his associates conspired to conceal the fraud from the Securities and Exchange Commission, with Mr King allegedly providing them with confidential information from an official SEC inquiry.

The SEC’s investigation started in 2005 but it only filed its initial civil complaint in the matter in February this year.

On Friday, the regulator introduced fresh charges to include allegations against Mr King and two company accountants.