Texas mogul Stanford surrenders to FBI

Billionaire accused of running massive Ponzi scheme to face criminal charges.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

What investment strategy will you follow for the rest of the year?
  • Aggressively buying stocks
  • Slowly adding more stocks
  • Beefing up bonds and cash
  • Not changing a thing
10 biggest CEO paychecks
Including salary, bonuses, stock and options, these public company CEOs took home pay packages last year worth up to $104 million.

HOUSTON (Reuters) -- Texas billionaire Allen Stanford will appear in federal court in Virginia Friday to answer allegations he orchestrated a massive fraud through his Antigua bank that bilked investors out of billions of dollars.

Stanford, 59, arrived at the courthouse to face criminal charges at a 1:30 EDT hearing before federal magistrate Hannah Lauck after surrendering to FBI agents outside his girlfriend's house in Virginia late on Thursday.

His case will be the first major financial crimes prosecution brought under the administration of President Barack Obama, who has vowed to crack down on economic malfeasance.

Stanford already faces civil charges brought by the U.S. Securities and Exchange Commission that he fraudulently sold $8 billion in certificates of deposit with improbably high interest rates from his Stanford International Bank Ltd, headquartered in Antigua.

The SEC filed new civil charges against accountants and an Antigua regulator, saying they aided Stanford in orchestrating an $8 billion Ponzi scheme, or pyramid investment plan, according to documents filed in U.S. district court in Dallas.

"He surrendered," Dick DeGuerin, Stanford's Texas attorney, told Reuters by telephone Thursday night after speaking with his client. "He's in FBI custody."

Justice Department officials, including the U.S. attorney from Houston, planned a news conference at noon EDT in Washington to announce the criminal charges.

Stanford, who holds dual U.S. and Antigua and Barbuda citizenship, denies any wrongdoing and has said he would put up "the fight of my life" if indicted.

"If the SEC had not come in and disemboweled a living, breathing strong organization the way they did, there's no question on God's green earth that everyone would have been made whole and we would have had a lot of money left over," Stanford told Reuters in an interview in April.

'Massive Ponzi scheme'

In its civil case, the SEC in February accused Stanford, his college roommate and three of their companies of carrying out a "massive Ponzi scheme" over at least a decade and misappropriating at least $1.6 billion of investors' money.

"This starts to bring closure for the victims," Jacob Frenkel, a former SEC enforcement official, said of the criminal indictment.

Stanford now faces concrete charges and "is no longer swinging at a pinata," said Frenkel, now an attorney in Rockville, Maryland.

Stanford, a golf and cricket promoter, became the first American to be knighted by Antigua and Barbuda in 2006. He made his first fortune in real estate in the early 1980s and expanded the family firm into a global wealth management company.

Before the SEC leveled the fraud charges, his personal fortune was estimated at $2.2 billion by Forbes magazine. Stanford was a generous sports patron and owned homes in Antigua, St. Croix, Florida and Texas.

To date, the only Stanford official to have faced criminal charges is Laura Pendergest-Holt, the chief investment officer for the Stanford Financial Group. She was arrested by the FBI in February and later freed on bail.

Pendergest-Holt and James Davis, Stanford's one-time roommate at Baylor University who served as the company's chief financial officer, were both named in the SEC's first civil complaint.

Davis has not been charged with criminal activity and is cooperating with federal authorities, although his attorney has said he expects his client to be indicted.

Nigel Hamilton-Smith, the Antiguan official named to oversee the liquidation of the offshore bank that was run by Stanford, has accused the tycoon of using client funds to pay for jets, lavish homes and yachts.

Stanford's Antiguan liquidators and the company's U.S.-based receiver have been locked in a battle over control of the offshore bank.

Ralph Janvey, the Dallas lawyer appointed by U.S. District Judge David Godbey to oversee Stanford's assets and operations, has filed court papers arguing he should oversee the Antigua bank along with the U.S.-based Stanford entities he controls.

The Antiguan liquidators disagree. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.