Stanford Indicted in Ponzi Fraud (Update)

(Update: Adds detail on the Stanford indictment from a Department of Justice press conference Friday afternoon.)

Alleged ponzi-schemer and reported con artist R. Allen Stanford has finally been indicted after a protracted, years-long investigation by several federal law-enforcement agencies.

The Texas-born founder of the Antigua firm Stanford Financial has proved strangely elusive. Almost since the founding of his banking business in the 1980s, federal agencies have been investigating him and his company. And well before the Justice Department brought its criminal charges Thursday, the Securities and Exchange Commission filed a civil lawsuit against Stanford, in February, accusing him and his chief lieutenants of an $8 billion fraud involving certificates of deposit that paid impossibly high interest rates.

A grand jury in Houston, another of Stanford's home bases, returned the criminal-fraud charges Thursday evening. The Justice Department held a press conference at noon Friday to unveil the indictment.

"The Department of Justice will vigorously root out and expose financial crimes that wreak havoc on innocent investors," said Lanny A. Breuer, an assistant attorney general at the DOJ's criminal division.

Hunkered down at the home of his girlfriend in northern Virginia since his company began unraveling with February's SEC lawsuit, Stanford surrendered to agents of the Federal Bureau of Investigation on Thursday night. He was scheduled to appear in court in Richmond, Va., on Friday.

Stanford's chief investment officer, Laura Pendergest-Holt, was also charged with fraud under the indictment, as were three other key executives: Gilberto Lopez, the company's chief accountant; Mark Kuhrt, the controller; and Leroy King, Antigua's former head banking regulator.

Both Stanford and Pendergest-Hold, who was earlier charged with obstruction of justice for lying to the SEC in sworn testimony, had until recently proclaimed their innocence.

Stanford's chief financial officer, James Davis, has been cooperating with authorities, but was also charged with conspiracy to commit fraud.

The DOJ is seeking the forfeiture from Davis of an astonishing $1 billion that he evidently appropriated. Prosecutors area also looking for Stanford and the other defendants to turn over an undisclosed sum held in a series of bank accounts.

Specifically, the indictment alleges that Stanford and his lieutenants stole some $7 billion from customers who believed they were buying certificates of deposit. It also accuses Stanford et. al. of falsely claiming that the assets of Stanford International Bank grew more than seven-fold to $8.5 billion in the space of seven years, between 2001 and 2008, and of paying $100,000 in bribes to King, the Antiguan regulator.

The former owner of a failed chain of Texas health clubs whose improbable rise to swashbuckling, cricket-loving billionaire came crashing down in cinema-like fashion, Stanford and his organization have been investigated by no less than five U.S. federal agencies: The FBI, the SEC, the DOJ, the Internal Revenue Service and the Drug Enforcement Agency. (The government at one point suspected Stanford of using his bank as a money-laundering shell for Latin American drug cartels.) It took nearly twenty years -- and billions of dollars in bilked customers -- for the government at last to throw the book at Stanford.

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