Texas financier R. Allen Stanford, accused of defrauding investors of $7 billion, paid Antigua’s top bank regulator more than $100,000 to conduct fake audits and mislead U.S. investigators, according to an indictment unsealed Friday.
Federal prosecutors said the alleged bribes helped Stanford and colleagues conceal an elaborate Ponzi scheme that lured about 30,000 investors, many in the U.S.
Stanford, three executives of his firm and Leroy King, the former chief bank regulator of the nation of Antigua and Barbuda, were indicted Thursday on fraud and obstruction charges.
Stanford, 59, was arrested Thursday in Virginia. He appeared Friday in federal court in Richmond, Va. A judge there ordered that he stay in custody until a hearing in Houston.
In 2005, the indictment says, the Securities and Exchange Commission began investigating Stanford Financial Group and making inquiries with Antigua’s financial regulators. The indictment alleges that King showed Stanford the SEC’s inquiries and once responded to the agency with material prepared by Stanford.
King, a dual citizen of Antigua and Barbuda and the U.S., has been suspended from his post. The U.S. is seeking his extradition from Antigua.
Also named in the 21-count indictment are Laura Pendergest-Holt, Stanford Financial’s chief investment officer; Gilberto Lopez, its chief accounting officer; and Mark Kuhrt, global controller of an affiliate.
James Davis, Stanford International Bank Ltd.'s chief financial officer, was charged in a separate fraud indictment.
Prosecutors said Stanford enticed about 30,000 investors, many in the U.S., with promises of unusually high interest on bank certificates, but in fact ran a scheme in which new investor money, instead of being invested as promised, was used to pay “profits” to earlier clients.
In February, the SEC filed a civil fraud complaint against Stanford, Davis and Pendergest-Holt. Stanford has denied any wrongdoing. Lawyers for others named in the indictment couldn’t be reached for comment Friday.