Financier Stanford indicted in $7 billion fraud scheme

[JURIST] Texas financier Allen Stanford [BBC profile] appeared Friday in the US District Court for the Eastern District of Virginia [official website], after being indicted [text, PDF; DOJ press release] on fraud and obstruction charges related to a $7 billion fraud scheme. Stanford, through his investment companies Stanford International Bank (SIB), Stanford Group Company (SGC) and Stanford Capital Management (SCM), is accused of violating the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 [texts]. Also indicted Friday were SFG chief investment officer Laura Pendergest-Holt, SFG chief accounting officer Gilberto Lopez, SFG gobal controller Mark Kuhrt, and former administrator and CEO of Antigua’s Financial Services Regulatory Commission Leroy King. Each defendant is charged with one count of conspiracy to commit mail, wire, and securities fraud, seven counts of wire fraud, 10 counts of mail fraud, and one count of conspiracy to commit money laundering. Stanford, Pendergest-Holt, and King are also charged with with conspiracy to obstruct a Securities and Exchange Commission (SEC) [official website] proceeding. If convicted, Stanford faces up to 250 years in prison.

In March, a judge in the US District Court for the Northern District of Texas [official website] indefinitely froze the assets [order, PDF] of Allen Stanford. The judge also issued an order [text, PDF] releasing most customer brokerage accounts over $250,000 that had been frozen since February]. The previous month, a federal judge issued a temporary restraining order [text, PDF] to freeze Stanford's assets, as customers rushed to withdraw their investments from SIB branches in Antigua and Venezuela. Stanford was charged [complaint, PDF; JURIST report] in February with orchestrating a fraudulent $7 billion investment scheme by selling certificates of deposits on the promise of improbably high interest rates.



 

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