PENDING CRIMINAL DIVISION CASES

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

This case is assigned to U.S. District 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.

Settlement Agreement Reached: The Department of Justice has entered into a Settlement Agreement and Cross-Border Protocol with the Joint Liquidators (JLs) of the Stanford International Bank Ltd., the U.S. Receiver for the Stanford Financial Group and all related entities, the U.S. Examiner and the U.S. Securities and Exchange Commission (SEC) that will expedite the distribution of assets to victims of R. Allen Stanford’s Ponzi Scheme and will resolve litigation involving approximately $296 million in assets frozen in Canada, Switzerland and the United Kingdom.

In June 2012, R. Allen Stanford, the former board of directors’ chairman of Stanford International Bank (SIB), was convicted by a federal jury of orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion form SIB to finance his personal businesses. He was later sentenced to a total of 110 years in prison. The jury also found that 29 financial accounts located abroad and worth approximately $330 million were proceeds of Stanford’s fraud and should be forfeited. As a result, as part of Stanford’s sentence, the court imposed a personal money judgment of $5.9 billion, which is an ongoing obligation for Stanford to pay back criminal proceeds.

Prior to the conviction, the United States, among other entities, sought to restrain certain SIB funds that were proceeds of the fraud. The funds involved in the settlement agreement have been subject to restraint for several years pending the criminal prosecution of Stanford and during this time have become the subject of litigation involving the JLs, the U.S. Receiver and the Justice Department. Acceptance of the settlement agreement would end piecemeal litigation over the funds and allow the parties to make an earlier distribution to the fraud victims.

The settlement agreement creates a plan for the near-term distribution of assets frozen in the United Kingdom, Canada and Switzerland. Under the settlement agreement, it is expected that approximately $260 million will be made available for distribution to victims. The distribution of the frozen funds will be made solely to creditor-victims of SIB and not to the U.S. Internal Revenue Service or the Antiguan Government.

The settlement agreement provides that the JLs and the U.S. Receiver will work cooperatively with regard to their respective claims and distribution processes, and will coordinate their litigation by dividing responsibility for some litigation and developing coordination mechanisms for others.

On April 8, 2013, Justice C. Henry in the Eastern Caribbean Supreme Court in Antigua and Barbuda entered an order approving the Settlement Agreement and on April 11, 2013, Judge Godbey in the U.S. District Court for the Northern District of Texas entered an order in Securities and Exchange Commission v. Stanford International Bank, Ltd., et al., case number 3:09-CV-0298-N, and In re Stanford International Bank, Ltd., case number 3:09-CV-0721, approving the Settlement Agreement. The settlement agreement will now be presented to the U.K. Central Criminal Court for approval of the terms relating to the funds restrained in the U.K. If the Agreement is approved by the U.K. Central Criminal Court, it will become effective and, pursuant to the terms of the Agreement, the parties will pursue the release of funds via appropriate legal processes in the respective countries, including Canada and Switzerland.

Further information, along with a copy of the settlement agreement, will be posted on the U.S. Receiver’s website at www.stanfordfinancialreceivership.com, on the JLs’ official website at www.sibliquidation.com, and on the U.S. Examiner’s website at www.lpf-law.com.

Conviction and Sentencing of Robert L. Stanford: On June 14, 2012, Robert Allen Stanford, the former Chairman of Stanford International Bank (SIB), was sentenced to 110 years in prison for orchestrating a 20 year investment fraud scheme in which he misappropriated $7 billion from SIB to finance his personal businesses and lifestyle. Stanford was convicted on March 6, 2012, following a six week trial and approximately three days of deliberation on 13 of 14 counts in the indictment. Stanford was convicted of one count of conspiracy to commit wire and mail fraud, four counts of wire fraud, five counts of mail fraud, one count of conspiracy to obstruct a U.S. Securities and Exchange Commission (SEC) investigation, one count of obstruction of an SEC investigation and one count of conspiracy to commit money laundering. The jury also found that 29 financial accounts located abroad and worth approximately $330 million were proceeds of Stanford's fraud and should be forfeited.

After considering all the evidence, including more than 350 victim impact letters that were sent to the court, U.S. District Judge Hittner sentenced Stanford to 20 years for conspiracy to commit wire and mail fraud, 20 years on each of the four counts of wire fraud as well as five years for conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) investigation and five years for obstruction of an SEC investigation. Those sentences will all run consecutively. He also received 20 years for each of the five counts of mail fraud and 20 years for conspiracy to commit money laundering which will run concurrent to the other sentences imposed today for a total sentence of 110 years.

As part of Stanford's sentence, the court also imposed a personal money judgment of $5.9 billion, which is an ongoing obligation for Stanford to pay back the criminal proceeds. The court found that it would be impracticable to issue a restitution order at this time. However, all forfeited funds recovered by the United States will be returned to the fraud victims and credited against Stanford's money judgment.

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, Gilbert 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 simply 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

  1. On February 14, 2013, Gilbert T. Lopez Jr., the former chief accounting officer of Stanford Financial Group Company, and Mark J. Kuhrt, the former global controller of Stanford Financial Group Global Management, were each sentenced to 20 years in prison and 3 years of supervised release. Lopez was also ordered to pay a $25,000 fine. Judge Hittner also found that both defendants obstructed justice by committing perjury at trial. The sentences follow their November 19, 2012 conviction of one count of conspiracy to commit wire fraud and nine counts of wire fraud for their roles in helping Robert Allen Stanford perpetrate the scheme involving Stanford International Bank. For more details on the conviction and sentencing of Lopez and Kuhrt go to http://www.justice.gov/criminal/vns/caseup/holt-lopez-kuhrt.html.
  2. Laura Pendergest-Holt Convicted and Sentenced: On September 13, 2012, Laura Pendergest-Holt, the former chief investment officer of Stanford Financial Group, was sentenced to 36 months in prison, followed by 3 years supervised release, and was immediately remanded into custody. Judge Hittner noted that Pendergest-Holt did not have the financial ability to pay a fine. The sentence follows her guilty plea to obstructing a U.S. Securities and Exchange Commission (SEC) investigation into Stanford International Bank (SIB), the Antiguan offshore bank owned by convicted financier Robert Allen Stanford (Count 20: 18 U.S.C. § 1505) charged in the June 2009 indictment stemming from a $7 billion investment fraud scheme.
  3. Related cases: On January 22, James M. Davis, the former chief financial officer of Stanford International Bank (SIB) and Houston-based Stanford Financial Group, was sentenced to five years in prison for his role in helping Robert Allen Stanford perpetrate a fraud scheme involving SIB, and for conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) investigation into SIB. The court also sentenced Davis to serve three years of supervised release and imposed a personal money judgment of $1 billion, which is an ongoing obligation for Davis to pay back criminal proceeds. The sentence follows Davis’ guilty plea to a three count information, charging him with one count of conspiracy to commit wire, mail and securities fraud, one count of mail fraud and one count of conspiracy to obstruct a Securities and Exchange Commission (SEC) investigation. During the sentencing proceeding, Judge Hittner noted that Davis began cooperating with the government in early 2009, shortly after SIB’s collapse. Judge Hittner also noted that over the following three years, Davis provided substantial assistance to the authorities in the investigation and prosecution of others, including testifying at Stanford’s trial; testifying during the trial of Gilbert T. Lopez Jr. and Mark J. Kuhrt, Stanford’s former chief accounting officer and global controller, respectively; and preparing to testify against Laura Pendergest-Holt, Stanford’s chief investment officer. The press release can be seen at: http://www.justice.gov/opa/pr/2013/January/13-crm-092.html.

    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: The remaining co-defendant, a former Antiguan regulator, awaits extradition to the United States.

Victim Impact Statement Form

Order Withdrawing the September 2011 Trial Setting

Scheduling Order for September 12, 2011 Trial

Superseding Indictment

Order for a Psychiatric Evaluation

Order of Excludable Delay

Gag Order

Order Authorizing Alternative Notice to Victims

Government's Motion for an Order Regarding Victim Notification

Order Granting Motion for Severance

Scheduling Order for Trial

Order Setting Status Conference

Order Setting Status Conference

Order Cancelling Status Hearing

Amended Scheduling Order

Order Granting Continuance

Detention Order

Indictment
 

Updated June 15, 2015