Stanford impatiently awaits criminal charges
Three months after regulators shut down billionaire Allen Stanford's banks for an alleged 9.2 billion-dollar fraud, the colorful cricket mogul has yet to be charged with a crime.
The wait has gotten so long that Stanford -- who vehemently proclaims his innocence -- even tried turning himself into federal marshals in a publicity stunt earlier this month.
Legal experts say the delay is likely due to behind-the-scenes machinations to get his lieutenants to trade information for amnesty.
The indictment of chief investment officer Laura Pendergest-Holt on conspiracy and obstruction of justice charges last week is widely seen as a scare tactic to get her to cooperate with federal prosecutors in gathering evidence against her former boss.
"It's a teaser indictment," said Jacob Frenkel, a former federal prosecutor who now directs the white-collar crime practice at Shulman, Rogers, Gandal, Pordy & Ecker in Maryland.
"If she doesn't cooperate, they'll go back and charge her with fraud."
Or else, he said, they could convict her on the narrower charges and then she would be stripped of her Fifth Amendment right against self-incrimination and could be forced to testify in a trial against Stanford.
Federal agents raided Stanford Financial Group's headquarters in Houston, Texas, in February and froze company assets as well as the personal accounts of Stanford, Pendergest-Holt and chief financial officer James Davis.
Frantic investors pressed their noses against the windows of Stanford's closed offices and affiliated banks across the United States, Europe and Latin America and the Caribbean.
In its complaint, the Securities and Exchange Commission accused the Stanford Financial Group of operating "a massive Ponzi scheme" by paying investors returns on certificates of deposit using money from other investors rather than from gains on investments.
Moreover, the SEC complaint charges that Stanford (transparently referred to as "Executive A"), Davis ("Executive B") and Pendergest-Holt conspired in multiple meetings to obstruct its investigation.
Federal prosecutors used much of the same evidence offered in the SEC complaint in its indictment of Pendergest-Holt, 35, who pleaded not guilty on Thursday.
A court-appointed receiver is currently trying to locate missing Stanford Financial Group funds to repay investors, a task for which he requested 20 million dollars in fees on Friday.
The receiver, Ralph S. Janvey, said in a recent report that "much of the critical information about Stanford's operations within its own systems and records has been difficult to locate and is incomplete and inaccurate."
Finding these funds is perhaps in part what has held up further indictments in the case, said Thomas Gorman, a former SEC enforcement officer who now defends white collar criminals for Porter, Wright, Morris & Arthur in Washington.
"Prosecutors need to make sure the money is actually missing before they proceed," he said.
"They want to be able to establish where it is -- was the money funneled into jets or private accounts or something else."
Davis, the company's chief financial officer and Stanford's former college roommate, has been helping authorities locate and access secret Swiss bank accounts, according to his lawyer David Finn.
"He has met several times with Department of Justice and SEC officials," Finn told AFP.
"He's told them the good, the bad and the ugly."
Finn maintains that Stanford pressured his client to put fictitious financial data in quarterly reports to investors.
In response, Stanford told reporters assembled last month in his lawyer's Houston office: "That is an absolute lie."
Stanford also pugnaciously said the receiver is a "jerk" and his deputies who are looking for hidden funds "couldn't find their rear end from a hole in the ground."
Moreover, Stanford said if any money was lost it was because of the "Gestapo tactics" of the government.
Stanford has repeatedly said that the government is after him because he is a "maverick, rich Texan" and they want a trophy or "moose head on the wall".
Born in dusty, rural Mexia, Texas, Stanford now has the clipped mustache and Saville Row style of English aristocracy.
Stanford, who was behind the high-profile Stanford Super Series Twenty20 cricket competition, goes by "Sir Allen" after having received a knighthood in 2006 from the governor-general of Antigua, where his company was the second largest employer.