Alleged Ponzi schemer Stanford indicted, turns himself in
Jun 19th 2009 7:00AM
Updated Dec 4th 2009 2:29PM
R. Allen Stanford, the billionaire investor whose firm has been under investigation for allegedly defrauding clients, was indicted by a Houston grand jury and taken into custody Thursday night, according to news reports.
Stanford surrendered to law enforcement agents at his girlfriend's Virginia home, the Houston Chronicle reported. Details of the charges against him were scarce, but he's been at the center of a Securities and Exchange Commission probe for allegedly stealing billions of dollars from investors in a "massive Ponzi scheme."
The indictment could mean more charges against Laura Pendergest-Holt, the chief investment officer at Stanford's firm, who was indicted in February on charges of conspiring to obstruct a fraud investigation and obstruction of justice, according to the Chronicle.
Stanford hadn't faced criminal charges in the alleged fraud until Thursday. But in a civil lawsuit filed in February, the SEC accusing him and his company of selling phony certificates of deposit through his off-shore bank and using the proceeds to buy real estate, make private equity investments and funnel cash into his own pocket through bogus loans.
To sell the CDs, Stanford's employees received rich financial incentives and were pitted against each other in cutthroat sales competitions, The Wall Street Journal has reported.
In addition to the SEC and criminal investigations, the Internal Revenue Service is looking for some $227 million in back taxes it says Stanford owes.
Stanford's alleged fraud began to come to light when he and James M. Davis, his business partner, told Houston-based Stanford Financial Group's employees that they'd misappropriated clients' money and altered records to cover their tracks, according to the SEC's complaint.
Though he wasn't under arrest, Stanford had surrendered his passport to authorities in February, after allegedly trying to flee the country on a private jet the same day his firm's offices were raided by investigators.