Stanford Faces Arraignment on Fraud Charges

Stanford Faces Arraignment on Fraud Charges - 6/19/2009

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Stanford Faces Arraignment on Fraud Charges , R. Allen Stanford Is Scheduled To Appear In Federal Court Today To Hear Criminal Charges Over Allegedly Bogus Certificates Of Deposit
Ben Levisohn

BusinessWeek.com. June 19, 2009
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EXCERPT: Former financier R. Allen Stanford, accused of an $8 billion fraud over allegedly bogus certificates of deposit, faces arraignment on June 19, one day after federal agents arrested him in Virginia. A grand jury has been investigating Stanford, who has said in several interviews that he expected to be indicted, since the Securities & Exchange Commission filed civil fraud charges against him. Stanford is scheduled to appear Friday in a Richmond (Va.) federal court to hear the charges, the Associated Press reported. In February, regulators charged Stanford, 59, with misleading investors about the security of high-yielding certificates of deposit sold by the Antigua bank that he controls. That outfit, Stanford International Bank, is at the heart of Stanford's empire and purports to have more than $8 billion in assets. The charges were later amended to allege that Stanford operated an illegal Ponzi scheme, paying old investors with cash from new ones. Regulators in Antigua have seized the bank. An amended complaint by the SEC has accused Stanford and his finance chief, James M. Davis, of conducting a "massive Ponzi scheme" in which early investors were paid returns from money put in by later investors. Davis promised in April to cooperate with federal investigators. Charges Expected for Other Executives Stanford's lawyer Dick DeGuerin disputes the Ponzi scheme charge. "This is not a Ponzi scheme," DeGuerin told BusinesWeek in March. "The SEC is using Stanford as a distraction from its failures in Madoff. This is not Madoff." DeGuerin told the AP that Stanford had turned himself in to the FBI on June 19. Gilbert Lopez, the company's chief accounting officer, was arrested in Houston, and new charges are expected to be brought against Laura Pendergest-Holt, Stanford's chief financial officer. She has already been charged with obstruction.

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