- The Washington Times - Friday, June 19, 2009


R. Allen Stanford, the bombastic billionaire who went from a fledgling Texas businessman to an Antiguan knight with a fleet of private jets, has been indicted on charges of fraud and obstruction of justice stemming from what authorities call a $7 billion Ponzi scheme.

The 21-count indictment, handed up by a grand jury in Houston, was unsealed Friday morning and charges Mr. Stanford and four of his employees. Mr. Stanford faces decades in prison if convicted.

A day earlier, Mr. Stanford, a 59-year-old financier, turned himself in to FBI agents in Virginia and was expected to appear Friday in federal court in Richmond, according to Supervisory Special Agent Richard Kolko.

According to the indictment, Mr. Stanford lied to investors about the value of their investments and that he misappropriated their money, including taking a $1.6 billion loan from money investors had deposited.

The Justice Department is expected to hold a press conference Friday afternoon to announce the charges.

The indictment comes as little surprised as the Securities and Exchange Commission accused Stanford in a lawsuit filed in February that made accusations similar to the indictment. The SEC said Mr. Stanford sold fraudulent “certificates of deposit” that promised impossibly high returns.

Civil complaints from the SEC frequently precede criminal charges.

Mr. Stanford has insisted he is innocent. He told Reuters news agency in March that his companies were fine until the SEC “disemboweled” them. “I would die and go to hell if it’s a Ponzi scheme,” Mr. Stanford said in an emotional interview with ABC news in April.

Mr. Stanford is among a series of high-profile businessmen to come under legal scrutiny during the current economic crisis; the list also includes Bernard Madoff, who has pleaded guilty to perpetrating a $50 billion Ponzi scheme and now faces life in prison, and Angelo Mozilo, the former CEO of Countrywide Financial who was charged with insider trading and securities fraud in a civil lawsuit brought by the SEC.

Mr. Stanford, who was knighted in the former British colony of Antigua where he holds dual citizenship, is a well-known bankroller of cricket and tennis tournaments. He has given hundreds of thousands of dollars to U.S. politicians from his personal fortune, estimated at $2.2 billion.

But a judge ordered his assets frozen with the filing of the SEC’s civil suit in February.

The SEC suit also names three of Mr. Stanford’s companies — Antigua-based Stanford International Bank, Houston-based broker-dealer and investment adviser Stanford Group Co., and investment adviser Stanford Capital Management. The suit is also against two other top company officials: Laura Pendergest-Holt, the chief investment officer of the Houston-based Stanford Financial Group, and Stanford International Bank chief financial officer James Davis.

Ms. Pendergest-Holt was charged in the new indictment. Mr. Davis, who had previously agreed to cooperate with investigators, was charged Friday through a document known as a “criminal information,” which indicates a plea agreement may be imminent.

Ms. Pendergest-Holt already faces charges and was the first person accused of a crime stemming from the investigation into Mr. Stanford when the grand jury in Houston indicted her in February on charges of lying to SEC investigators. She has pleaded not guilty and remains free on bond.

For several days after the SEC filed its case there was rampant speculation that Mr. Stanford could not be located. The FBI ultimately found him in Fredricksburg, Va., where he was staying with his girlfriend.

Authorities said Mr. Stanford had not been purposely trying to elude authorities. The agents served Mr. Stanford with court papers and made arrangements for him to turn over his passport, which he has since done.

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