Robert Allen Stanford, former chairman of the Stanford Financial Group, along with three other executives and an Antiguan bank regulator, have been indicted on fraud charges in connection with a multibillion-dollar Ponzi scheme.
According to the indictment unsealed in Houston, Stanford, 59, and his co-defendants engaged in a scheme to defraud investors who purchased approximately $7 billion in certificates of deposit administered by Stanford International Bank Ltd., an offshore bank controlled by Stanford and located on the island of Antigua. Stanford and his co-defendants allegedly misused and misappropriated most of those investor assets, including diverting more than $1.6 billion into undisclosed personal loans to Stanford himself, while misrepresenting to investors SIBLs financial condition, its investment strategy and the extent of its regulatory oversight by Antiguan authorities.
Also indicted were Laura Pendergest-Holt, 35, SFGs chief investment officer; Gilberto Lopez, 66, SFGs chief accounting officer; Mark Kuhrt, 37, SFGs global controller; and Leroy King, 63, the former administrator and CEO of Antiguas Financial Services Regulatory Commission.
Stanford was arrested in Virginia Thursday night. Lopez and Kuhrt were arrested Friday morning. Pendergest-Holt was previously indicted on obstruction-related charges.
The indictment alleges that the defendants falsely claimed that SIBLs assets grew from approximately $1.2 billion in 2001 to approximately $8.5 billion in December 2008, when in fact, approximately $5 billion of SIBLs 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 banks reported assets.
The indictment also alleges that Stanford and his co-defendants falsely represented to investors that SIBLs 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 banks actual investments and assets. According to prosecutors, 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 banks financial statements. Stanford's attorney vowed to fight the charges.
Another indictment unsealed in Florida accused a fourth SFG employee, Bruce Perraud, of destroying records pertinent to the investigation.
The SEC brought civil charges against Stanford, Pendergest-Holt and CFO James Davis back in February, and on Friday, it amended its complaint to charge Kuhrt and Lopez as well. The SEC estimates the size of the Ponzi scheme at $8 billion.
