Category: Awareness

United States v. Robert Allen Stanford et al. Court Docket Number: H-09-342

United States v. Robert Allen Stanford et al.
Court Docket Number: H-09-342

This case is assigned to Judge David Hittner, United States District Court for the Southern District of Texas, Courtroom 8A, 8th Floor, United States Courthouse, 515 Rusk Avenue, Houston, Texas. On June 16, 2010, Judge Hittner issued an order approving certain alternative notice procedures to be followed by the Government in alerting victims to future court proceedings relating to this case, as required by the Justice For All Act of 2004. The full text of the Court’s Order is below:

Background: On June 19, 2009, the U.S. District Court for the Southern District of Texas unsealed a 21-count indictment returned by a federal grand jury on June 18, 2009, against defendants Robert Allen Stanford, Laura Pendergest-Holt, Gilberto Lopez, Mark Kuhrt, and Leroy King, charging each with one count of conspiracy to commit mail, wire and securities fraud (Count 1: 18 U.S.C. § 371); seven counts of wire fraud (Count 2: 18 U.S.C. § 1343); ten counts of mail fraud (Counts 9-18: 18 U.S.C.§ 1341), and one count of conspiracy to commit money laundering (Count 21: 18 U.S.C. §1956(h)) stemming from a $7 billion investment fraud scheme. The indictment also charges Stanford, Pendergest-Holt and King with one count of conspiracy to obstruct a Securities and Exchange Commission investigation (Count 19: 18 U.S.C. §371) and one count of obstruction of an SEC investigation (Count 20: 18 U.S.C.§1505).
According to the indictment, which also seeks forfeiture from all the defendants (18 U.S.C. §§981(a)(1)(c) and 982(a)(1)), Stanford and his co-defendants engaged in a scheme to defraud investors who purchased approximately $7 billion in certificates of deposit administered by Stanford International Bank Ltd. (SIBL), an offshore bank controlled by Stanford and located on the island of Antigua. Stanford and his co-defendants allegedly misused and misappropriated most of those investor assets, including diverting more than $1.6 billion into undisclosed personal loans to Stanford himself, while misrepresenting to investors SIBL’s financial condition, its investment strategy and the extent of its regulatory oversight by Antiguan authorities. The indictment alleges the following:

That the defendants allegedly falsely claimed that SIBL’s assets grew from approximately $1.2 billion in 2001 to approx. $8.5 billion in December 2008. The indictment alleges that, in fact, approx. $5 billion of SIBL’s reported assets consisted of notes on loans to Stanford and grossly overstated interests in “island properties,” including more than $2 billion added to the books in 2008 from an allegedly artificial real estate deal that Stanford and his co-conspirators conceived to inflate the bank’s reported assets;

That Stanford and his co-defendants allegedly falsely represented to investors that SIBL’s investment strategy was to “minimize risk and achieve liquidity” and promised rates of return on CDs that in the end were sim0ly too good to be true in light of the bank’s actual investments and assets; and

That Stanford and his co-defendants allegedly made false and misleading representations about the regulatory scrutiny of the bank by Antiguan authorities, when, in fact, Stanford was making corrupt payments of more than $100,000 to King to ensure that the Antiguan bank regulatory authority that he headed did not accurately audit, or verify the assets reported in the bank’s financial statements.

Also according to the indictment, Stanford, Pendergest-Holt and King conspired to conceal the fraud from the U.S. Securities and Exchange Commission (SEC) in order to fend off an SEC investigation. King allegedly provided Stanford and others with confidential information that he had received from an official SEC inquiry into a possible fraud on investors by SIBL so that additional false representations concerning SIBL’s financial health and Antiguan regulatory oversight could be made. In addition, Stanford, Pendergest-Holt and others allegedly agreed that Pendergest-Holt would provide false information to the SEC about the true value of SIBL’s investment portfolio. See copy of Indictment below.

Filing of a Superseding Indictment against Stanford: On May 4, 2011, a grand jury returned the superseding indictment attached below against Robert Allen Stanford. The superseding indictment adds to the notice of forfeiture additional bank accounts that have been uncovered in the criminal investigation. Adding these accounts to the forfeiture notice allows the United States to seek an order forfeiting these accounts (and repatriating the foreign funds to the United States) upon a conviction in Stanford’s case. Any such forfeited funds would then be applied to a restitution order in favor of Stanford victims. In addition, since the district court severed Stanford’s case from that of his codefendants, the superseding indictment focuses on Stanford’s conduct that will be the focus of his trial.

September 12, 2011 trial date for Stanford has been reset: Stanford’s trial, which is severed and separated out from the trial of the other defendants, will commence January 23, 2012. A copy of the June 21, 2011 Order withdrawing the September 2011 Trial Setting is below. The other defendants are set to be tried following Stanford’s trial.
A gag order is currently in effect: Previously, on September 30, 2010, the court issued an order barring anyone, including the alleged victims and all other potential witnesses expected to be called by either side, from giving a statement related to the trial, the parties, the witnesses or the issues in the case to “any public communications media” due to the court’s concern that the jury pool in the upcoming trials might be tainted because of such publicity. A copy of the order is below.
Related cases: : In a related case before Judge Hittner, United States v. James M. Davis (Court Docket H 09- 335), James Davis pleaded guilty on April 27, 2009, to a three count information charging him with conspiracy to commit mail, wire, and securities fraud; mail fraud; and conspiracy to obstruct an SEC investigation. Davis is cooperating with the government’s ongoing investigation and has agreed to the entry of a preliminary order of forfeiture of fraud proceeds in the amount of $1 billion. No date has been set for Davis’ sentencing. In another related case, United States v. Perraud and Thomas Raffanello (Court Docket H 09- 601029-CR-Zloch), on February 12, 2010, in the Southern District of Florida, while the jury was deliberating, U.S. District Court Judge Richard W. Goldberg acquitted Bruce Perraud, a former global security specialist at the Ft. Lauderdale, Florida, office of Stanford Financial Group (SFG), headquartered in Houston, Texas, and Thomas Raffanello, the former global director of security at SFG ‘ s Ft. Lauderdale office, granting the defendants’ motions for judgment of acquittal pursuant to Rule 29. Perraud and Raffanello each were charged with one count of conspiracy to obstruct a Securities and Exchange Commission (SEC) proceeding and to destroy documents in a federal investigation, one count of obstruction of a proceeding before the SEC, and one count of destruction of records in a federal investigation in a September 2009 superseding indictment stemming from a $7 billion investment fraud scheme.

Status of Leroy King: Defendant King remains under house arrest in Antigua as the Caribbean island processes a request for his extradition to the United States.

Source: USDOJ