WASHINGTON – Texas billionaire R. Allen Stanford was indicted and jailed Friday on charges his international banking empire was really just a Ponzi scheme built on lies, bluster and bribery.
The Justice Department announced charges against Stanford and six others who allegedly helped the tycoon run a $7 billion swindle.
At a court hearing in Richmond, Va., a federal judge agreed with prosecutors that Stanford poses a flight risk and ordered him to remain in custody until a future detention hearing in Houston.
The others indicted in the case were Stanford executives Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt.
A separate indictment unsealed in Florida accused a fourth Stanford worker, Bruce Perraud, of destroying records important to the investigation.
Prosecutors charged Leroy King, the former chief executive officer of Antigua’s Financial Services Regulatory Commission, with conspiracy to obstruct an SEC investigation.
Newly filed SEC documents accuse 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 not indicted
Davis has been cooperating with federal investigators and was not indicted, but is charged with a separate “criminal investiggation” instrument. If the charges stick, he could be ordered to pay up to $1 billion.
Pendergest-Holt and Davis are Baldwyn natives and had offices in Stanford Financial Group’s Tupelo location.
Jeff Tillotson, who represents Pendergest-Holt, Stanford’s chief investment officer, told The Associated Press, “We obviously deny that our client has committed any crime.” He has said she was “set up” by Stanford.
Robert Khuzami, the enforcement director for the Securities and Exchange Commission, said investigators have built “an impressive criminal case from the rubble of this massive fraud.”
If convicted of all charges in the 21-count indictment, Stanford could face as much as 250 years in prison, officials said.
Dick DeGuerin, Stanford’s lawyer, said in a written statement that Stanford was “confident that a fair jury will find him not guilty of any criminal wrongdoing.”
The indictment unsealed Friday in Houston charged Stanford and other executives at his firm falsely claimed to have grown $1.2 billion in assets in 2001 to roughly $8.5 billion by the end of 2008.
The operation had roughly 30,000 investors, officials said.
Investigators say that even as Stanford claimed healthy returns for those investors, he was secretly diverting more than $1.6 billion in personal loans to himself.
Prosecutor Steven Tyrrell said at the hearing that more than $1 billion from Stanford’s alleged scheme remains unaccounted for, and if anyone has access to it, it’s Stanford.
Delvin Barrett/The Associated Press