Legal News

Embattled Stanford Indicted, Surrenders

By Ashby Jones

Alas, the other shoe has dropped. Allen Stanford, who for months has been battling a high-profile civil lawsuit with the SEC, was indicted Thursday and charged with orchestrating fraud through his Caribbean-based firm, Stanford Financial Group.

Hours later, he surrendered to federal agents in Virginia. Click here, here, and here respectively, for accounts from the WSJ, NYT and Houston Chronicle, respectively.

The Justice Department is expected Friday to announce the charges returned by a Houston grand jury, according to people familiar with the matter. Dick DeGuerin, Stanford’s attorney, said Stanford surrendered to agents outside the home of his girlfriend in northern Virginia. DeGuerin said he hadn’t seen the indictment but that Stanford was expected to appear in court Friday morning.

The criminal indictment includes new fraud charges against Laura Pendergest-Holt, who was Stanford Financial Group’s chief investment officer, and who prosecutors previously charged with obstructing an SEC investigation of the company.

Dan Cogdell, attorney for Ms. Pendergest-Holt, said he hadn’t seen the indictment but that a Justice Department official said she will be allowed to surrender next week in Houston. Ms. Pendergest-Holt is free on bail. Cogdell added, “Ms. Holt hadn’t committed any crimes. She was innocent before the indictment and she will be innocent after the indictment.”

SEC investigators alleged in February that the Stanford financial empire that stretched from his headquarters in the Caribbean island nation of Antigua and Barbuda to investment offices in such far-flung places as Venezuela, Panama, Houston and Miami was nothing but “a massive Ponzi scheme” that swallowed up billions of dollars from investors.

Stanford in multiple interviews since the SEC’s suit has denied his bank was a Ponzi scheme and pledged to clear his name. In an interview with ABC News, Stanford said “he would die” if his business were, in fact, a Ponzi scheme.

One question we have: If the biblical-like rains ever stop here in New York, and the boys can get on with the business of playing golf out at Bethpage Black, will Vijay Singh still show up flying Stanford’s colors?

Full post as published by Law Blog - WSJ.com on June 19, 2009 (boomark / email).