Saturday June 20, 12:40 AM
Texan cricket mogul, four others charged with fraud
By Olivia Hampton
WASHINGTON (AFP) - Texan billionaire financier and cricket mogul Allen Stanford and four others were charged Friday with 21 counts of fraud, money-laundering and obstruction in a huge eight-billion-dollar scam.
The five -- including Stanford's chief investment officer Laura Pendergest-Holt and former Antigua financial regulatory agency chief Leroy King -- were accused of masterminding a decade-long scheme.
Stanford, 59, had become a larger than life figure in Antigua, where his company was the largest employer and where he was even knighted in 2006 by the Caribbean island nation's governor-general.
He could face up to 250 years in prison if convicted on all charges, said Assistant Attorney General Lanny Breuer in announcing the indictment.
In a 57-page indictment, the US Department of Justice also charged Stanford-affiliated accountants Mark Kuhrt and Gilberto Lopez in the scam, which dated back to September 1999 and continued until about February 17 this year.
"Placed in a position of trust, these men manufactured the numbers to tell investors a fictional story about how their investments were solid, safe and secure," Securities and Exchange Commission (SEC) enforcement director Robert Khuzami told reporters.
Some 30,000 investors from across the world, including thousands of Americans, were defrauded under Stanford's fraudulent investment plan, according to a Department of Justice official.
"Their savings and indeed the integrity of our capital markets are jeopardized when investors are deceived," said Breuer, noting that over 300 million dollars in investor funds in Switzerland, Britain and Canada had been frozen.
A court-appointed receiver in Dallas, Texas has identified less than two billion dollars in recoverable assets so far.
In their amended complaint, federal prosecutors charged that by the end of 2008, Stanford International Bank, Ltd. had sold more than 7.2 billion dollars in fraudulent certificates of deposit while other Stanford advisers sold more than one billion dollars of a proprietary mutual fund wrap program since 2004.
Stanford also pocketed personal loans of at least 1.6 billion dollars originating from investor funds.
The indictment came from a grand jury in Houston, Texas that had been investigating Stanford Financial Group, whose headquarters in the city were raided in February by federal authorities when the sprawling financial empire collapsed.
The company's assets were also frozen, along with the wealthy financier's personal accounts.
King, Khuzami said, received thousands of dollars each month from Stanford in bribes to "look the other way" and provided Stanford himself with confidential information about the SEC's investigation on the scheme.
"When King assured the SEC that Stanford was safe and solid, these were not the conclusions of an independent regulator following a thorough audit or inspection," Khuzami said.
"These were just more of Stanford's lies, dressed up in the letterhead of a supposedly impartial regulator who had in fact been bought and paid for through bribes and corruption."
The hard economic times, with the United States facing its worst recession since the Great Depression of the 1930s, have revealed more financial fraud schemes as worried investors try to withdraw funds that never materialize, said Khuzami.
"Ponzi schemes and other securities fraud are one of the top priorities of the FBI's Criminal Investigative Division," said Kevin Perkins, the unit's assistant director.
Pendergest-Holt was the first Stanford executive to face criminal charges, indicted on May 12 on two counts of obstruction of justice before facing the additional charges brought on Friday.
Stanford's case is highest profile alleged fraud since the SEC charged Wall Street financier Bernard Madoff in a 50-billion-dollar pyramid scheme in December. Madoff has plead guilty and faces a maximum 150 years in jail.
Several governments have seized Stanford banks and frozen their assets, concerned the global reach of the billionaire's banking operations could complicate the return of an estimated 50 billion dollars in investor funds.
Stanford was due to appear in a federal court later Friday after surrendering to the FBI a day earlier. Lopez and Kuhrt were arrested Friday and were set to make appearances in a Houston court, officials said.
Pendergest-Holt, the first Stanford official to face criminal charges, will appear in a Houston court next week on fresh charges.
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