We saw it coming. It was like OJ in the Bronco. Last night, Sir R. Allen Stanford stepped out of his girlfriend’s house in Virginia, walked over the the FBI car parked out front and asked if they had an arrest warrant. They did. The grand jury had released its indictment.
The surprise was who else is included in the charges. I expected Laura Pendergest-Holt, chief investment officer of Stanford Financial. We knew about her problems as part of her Lawyer’s Noisy Withdrawal from Stanford Case. (He wasn’t her lawyer, which led to all kinds of trouble.)
Prosecutors also alleged that the fraud was aided by Leroy King, administrator of the Financial Services Regulatory Commission in the island nation of Antigua and Barbuda, where the Stanford firms were headquartered. Mr. King is charged with accepting $100,000 in bribes. They claim Leroy King facilitated the Ponzi scheme by ensuring that the FSRC “looked the other way” and conducted sham audits and examinations of Stanford’s books. Mr. King also provided Stanford with access to the FSRC’s confidential regulatory files, including requests by the SEC for assistance in investigating a possible Ponzi scheme.
The complaints also targeted Gilberto Lopez and Mark Kuhrt, accountants for Stanford-affiliated companies. It claims that they fabricated financial statements. Using a pre-determined return on investment number, Lopez and Kuhrt reverse-engineered the bank’s financial statements to report investment income that the bank did not actually earn. Information in Stanford’s financial statements and annual reports to investors about the bank’s investment portfolio bore no relationship to the actual performance of the bank investments.
We also learned that James Davis, chief financial officer of Stanford Financial, is cooperating with the investigation. He was named as a co-conspirator, but was not charged.
In other Stanford news, Vijay Singh walked out on the ninth green this morning sporting his sponsor’s logo and attire. The sponsor? Stanford Financial Group. I guess they are still sending him endorsement checks.
- DOJ: US v. Stanford Indictment – hosted by JDsupra
- SEC: Second Amended Complaint– hosted by JDsupra
- Financier, Associates Indicted in $7B Fraud Scheme By Zachary A. Goldfarb of the Washington Post
- U.S. Files Criminal Charges in Stanford Case by Evan Perez of the Wall Street Journal
- Billionaire Financier Stanford Surrenders to FBI by Bloomberg News
- Vijay Singh Still Sporting Stanford by Darren Rovell for CNBC