Friday, June 19, 2009

Robert Allen Stanford, 4 Others Formally Indicted

Robert Allen Stanford, 59, of Houston, Texas and the Chairman of Stanford Financial Group, along with three other executives and the former chief executive officer of the Antiguan bank regulatory agency were indicted yesterday on fraud and obstruction charges related to a $7 billion scheme to defraud investors. The others indicted include Laura Pendergest-Holt, 35, CFO; Gilberto Lopez, 66, CAO; Mark Kuhrt, 37, controller; and Leroy King, 63, the former administrator and CEO of Antigua’s Financial Services Regulatory Commission. According to the indictment, the defendants conspired to defraud investors who purchsed $7 billion in certificates of deposit with the company's offshore entity, Stanford International Bank Ltd. ("SIBL"). The indictment includes the following charges, among others:
  • That the defendants allegedly falsely claimed that SIBL’s assets grew from approximately $1.2 billion in 2001 to approximately $8.5 billion in December of 2008. The indictment alleges that, in fact, approximately $5 billion of SIBL’s reported assets consisted of notes on loans to Stanford and grossly overstated interests in “island properties,” including more than $2 billion added to the books in 2008 from an allegedly artificial real estate deal that Stanford and his co-conspirators conceived to inflate the bank’s reported assets;
  • That Stanford and his co-defendants allegedly falsely represented to investors that SIBL’s investment strategy was to “minimize risk and achieve liquidity” and promised rates of return on CDs that in the end were simply too good to be true in light of the bank’s actual investments and assets; and
  • That Stanford and his co-defendants allegedly made false and misleading representations about the regulatory scrutiny of the bank by Antiguan authorities, when, in fact, Stanford was making corrupt payments of more than $100,000 to King to ensure that the Antiguan bank regulatory authority that he headed did not accurately audit, or verify the assets reported in the bank’s financial statements.
Read FraudTalk's original post on this story here.

Read the story here and here.

Read the FBI announcement here.

Update (3/6/12): Stanford, now 61, has been convicted on 13 out of 14 felony fraud charges in connection to the $7 billion Ponzi scheme he operated over a period of some 20 years.  Stanford faces up to 230 years if the sentences are served consecutively.

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