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WASHINGTON - — Brash Texas billionaire R. Allen Stanford was indicted and jailed Friday on charges his international banking empire was a Ponzi scheme built on lies, bluster and bribery.

The Justice Department announced charges against Stanford and six others in connection with a $7 billion swindle. At a hearing in Richmond, Va., a federal judge agreed that Stanford poses a flight risk and ordered him to remain in custody until a detention hearing in Houston.

Among those also charged were executives of Stanford Financial Group and a former Antiguan bank regulator who prosecutors say should have caught the fraud but took bribes to let it continue.

Robert Khuzami, the enforcement director for the Securities and Exchange Commission, said investigators have built “an impressive criminal case from the rubble of this massive fraud.” If convicted of all charges in the 21-count indictment, Stanford could face 250 years in prison, officials said.
Dick DeGuerin, Stanford’s lawyer, said in a statement that Stanford was “confident that a fair jury will find him not guilty of any criminal wrongdoing.”

The indictment unsealed Friday in Houston charged Stanford and other executives at his firm falsely claimed to have grown $1.2 billion in assets in 2001 to roughly $8.5 billion by the end of 2008. The operation had roughly 30,000 investors, officials said.

Investigators say that as Stanford touted healthy returns for investors, he was diverting more than $1.6 billion to himself.

Court papers charge Stanford and top executives advised clients to buy certificates of deposit from the Antigua-based Stanford International Bank. Stanford and the others were charged with wire fraud, mail fraud and conspiracy to commit securities fraud. Stanford was also charged with conspiring to obstruct an SEC proceeding.

Stanford, 59, has been trying since February to challenge what his attorney called “the false accusations against him.” DeGuerin said, “The present insolvency of the Stanford Cos. was caused by the SEC’s heavy-handed actions.”

A group of Stanford investors said in a statement that their losses “are devastating, as senior citizens are losing their homes, going without medical care, and becoming a burden on their children and families.”

Stanford surrendered to the FBI on Thursday and appeared in federal court in Richmond, Va., Friday afternoon, where authorities persuaded Magistrate Judge Hannah Lauck to keep him behind bars.

Asst Attorney General Lanny Breuer reads the charges against Sir Allen

Texan billionaire Sir Allen Stanford has been charged in the US with fraud and obstruction.

Announcing the indictment, the justice department said it related to a $7bn ($4.2bn) scheme to defraud investors.

Soon after, the 59-year-old appeared in court in Virginia and was remanded in custody pending a full detention hearing to be held in Texas.

He already faces civil charges over an alleged fraud worth $8bn - charges he denies.

Sir Allen turned himself in to the FBI on Thursday after a warrant was issued for his arrest.

‘Too good to be true’

Sir Allen and six others are facing charges.

He is confident that a fair jury will find him not guilty of any criminal wrongdoing Dick DeGuerin, Sir Allen’s lawyer,

The justice department said the 50-page indictment accused Sir Allen and some of the other alleged co-conspirators of engaging in a scheme to defraud investors who purchased $7bn in certificates of deposit from Stanford International Bank, located in Antigua.

It said they “promised returns that were too good to be true”.

US Assistant Attorney General Lanny Breuer said the indictment “charges Stanford with conspiracy to commit wire fraud, mail fraud and securities fraud”.

He listed the charges as: “Seven counts of wire fraud, 10 counts of mail fraud, conspiracy to obstruct an investigation for the Securities and Exchange Commission, obstruction of an investigation by the SEC and conspiracy to commit money laundering.”

If convicted on all counts, Sir Allen could face up to 250 years in prison.

Sir Allen hosted a $20m cricket extravaganza in Antigua last year

A few hours after the announcement, Sir Allen appeared in court in Richmond, Virginia.

The BBC’s Greg Wood in Richmond says Sir Allen wore an open-necked white shirt and stood in court as the 21 charges against him were read out.

He told Magistrate Hannah Lauck he understood the charges but he was not asked to enter a plea.

Sir Allen’s lawyers argued for his release pending the trial but the prosecution said he had spun a web of deceit over 10 years and there was a danger he might flee.

The judge ordered Sir Allen be held pending a full detention hearing, saying there was “sufficient evidence to warrant” one. Sir Allen chose to have the hearing in Houston, Texas.

Asked to comment on the issue earlier, White House spokesman Robert Gibbs said: “Whether it’s this indictment or previous indictments… There are those whose outsized greed robbed millions of people of their savings.”

The other Stanford Financial Group executives charged are Laura Pendergest-Holt, 35, Gilberto Lopez, 66, and Mark Kuhrt, 37.

The indictment also said Sir Allen made corrupt payments to Leroy King, 63, a former head of Antigua’s financial services regulatory commission, who has also been charged.

Stanford employee Bruce Perraud, 42, has been charged with destruction of records.

A separate indictment charged Stanford executive James M Davis, 60, with fraud and obstruction.

‘Ponzi’ denial

Dick DeGuerin, Sir Allen’s lawyer, has said his client will fight the allegations.

WHAT IS A PONZI SCHEME? A fraudulent investment scheme paying investors from money paid in by other investors rather than real profits Named after Charles Ponzi who notoriously used the technique in the United States in the 1920s Differs from pyramid selling in that individuals all tend to invest with the same person Profile: Sir Allen Stanford

“He is confident that a fair jury will find him not guilty of any criminal wrongdoing,” Mr DeGuerin said.

In 2006 Sir Allen became the first American to be knighted by Antigua and Barbuda.

The cricket impresario in 2008 staged a $20m, winner-takes-all match between a West Indian XI and England at his stadium in Antigua.

The SEC has said he lured investors with promises of improbable and unsubstantiated high returns on certificates of deposit and other investments - what is known as a Ponzi scheme.

In an interview with ABC earlier this year Sir Allen insisted no money was lost by customers dealing with his financial services companies.

“If it was a Ponzi scheme, why are they finding billions and billions of dollars all over the place?” he said at the time.

A number of governments have frozen the assets associated with Stanford banks.

 http://news.bbc.co.uk/1/hi/world/americas/8110074.stm

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