Legal News

Allen Stanford Pleads Not Guilty; Antiguan Regulator In Custody

By Dionne Searcey

Today, in Houston, Texas billionaire and Caribbean cricket aficionado R. Allen Stanford has pleaded not guilty in federal court to charges he swindled investors out of $7 billion as part of a massive investment scam.

Stanford entered his plea during his arraignment earlier today after being indicted last week by a grand jury on charges that his international banking empire was really just a $7 billion Ponzi scheme run out of Antigua, according to this AP story.

Also appearing in court today were Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt, three Stanford Financial Group executives who are fellow indictees. They also entered not guilty pleas. Stanford finds out later today whether he'll be granted bond when U.S. Magistrate Judge Frances Stacy announces her decision. Stanford’s attorney, Dick DeGuerin, told the court that his client had turned to alcohol to deal with the stress of the investigation but is now on anti-anxiety medication, according to this Reuters story.

Missing from the hearing today was Leroy King, the former chief executive officer of Antigua’s Financial Services Regulatory Commission, who also has been indicted. The AP says he was taken into custody by island authorities and will now face extradition proceedings, according to a government official who spoke on condition of anonymity because she was not authorized to discuss the case.

King is accused of accepting more than $100,000 in bribes to turn a blind eye to irregularities and of helping Stanford look good to the SEC when they came knocking in the past. (Here’s the WSJ story.)

LB talked to King back in February when the feds were starting to circle Stanford, reaching him in his Antiguan office. King stuck up for Stanford in that phone interview.

"We've been around 20 years, and have not seen anything untoward with (Stanford's Antiguan) bank. We've never had a customer complain," King said. "In all the years I've been here I've never heard a customer say Mr. Stanford has not complied with any obligation."

King said that he'd done proper due diligence while conceding the SEC had been looking into Stanford's operations for years. He said he'd suggested a few years back that he enter into a memorandum of understanding with the SEC to share information about Stanford's operations but was rebuffed.

King said that Stanford propped up a good part of the island nation's economy and if he was a fraud, "it would really, really damage Antigua."

Photo: AP

Full post as published by Law Blog - WSJ.com on June 25, 2009 (boomark / email).