WASHINGTON – A federal grand jury in Houston returned a two-count indictment today charging Laura Pendergest-Holt, the chief investment officer of Houston-based Stanford Financial Group (SFG), with conspiring to obstruct a U.S. Securities and Exchange Commission (SEC) proceeding investigating SFG, as well as a substantive count of obstructing the SEC proceeding, Assistant Attorney General of the Criminal Division Lanny A. Breuer and acting U.S. Attorney for the Southern District of Texas Tim Johnson announced.
The federal court in Houston will be issuing an order summoning Pendergest-Holt to appear in the near future for arraignment. Pendergest-Holt has been free on a $300,000 bond since being charged with obstruction in a criminal complaint issued from the Northern District of Texas on Feb. 26, 2009.
According to the indictment, Stanford International Bank Ltd. (SIBL), marketed certificates of deposits (CDs). In a December 2008 monthly report, SIBL purported to have more than 30,000 clients and $8.5 billion in assets. The indictment alleges that investors were not advised of the fact that SIBL internally segregated its investment portfolio into three tiers: "Tier I," which represented cash and cash equivalents; "Tier II," which contained investments with "outside portfolio managers;" and "Tier III," described as "other assets."
Internal SIBL documents show that as of June 30, 2008, Tier III contained more than 80 percent of SIBL’s purported investments, according to the indictment. The indictment also alleges that approximately $3.2 billion of the purported Tier III value included investments in artificially valued real estate and approximately $1.6 billion included notes on personal loans to SFG "Executive A."
The indictment alleges that in December 2008, as part of an ongoing investigation, the SEC made official inquiries of SFG regarding the value and content of SIBL’s purported investments and provided notice that it intended to schedule testimony of witnesses. The indictment further alleges that on or about Jan. 21, 2009, at a meeting in Miami, Pendergest-Holt and SFG Executives "A" and "B" and an attorney for SFG, discussed how to respond to the SEC subpoenas. In addition, the indictment alleges that at a meeting in Houston on or about Jan. 23, 2009, the attorney for SFG requested that the SEC defer the subpoenas to Executives A and B and represented that Pendergest-Holt and the president of SIBL would be better witnesses because, the attorney claimed, Executives A and B were not knowledgeable about the details of SIBL’s assets. The indictment alleges that prior to her SEC testimony, Pendergest-Holt suggested at a meeting in Miami that she only disclose the June 30, 2008, financials as those numbers "looked better," and that she received a phone call from Executive B in which he reminded her to only discuss Tier II. According to the indictment, as early as November 2008, Pendergest-Holt was aware of the current value of Tier III and the real estate holdings in Tier III. The indictment further alleges that just prior to her SEC testimony, Pendergest-Holt participated in preparing a document reflecting the value of Tier III and the assets in Tier III.
The indictment alleges that on Feb. 10, 2009, Pendergest-Holt provided sworn testimony to the SEC in Fort Worth, Texas, where in response to questions by the SEC, she did not disclose the Miami meetings to prepare for her testimony and falsely represented that she did not know the content or allocations of the Tier III assets. The indictment further alleges that on Feb. 12, 2009, after her false testimony, Pendergest-Holt caused $4.3 million in SIBL funds to be wire-transferred to SIBL’s operating account in Houston.
Finally, on Feb. 17, 2009, as the indictment alleges, at a meeting with SEC attorneys in Memphis, Tenn., Pendergest-Holt falsely represented that if she "knew anything about Tier III," she would tell them.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt.
The maximum penalties for each of the conspiracy and obstruction counts are five years in prison and a fine of $250,000.
The case is being investigated by the FBI’s Houston Field Office, Internal Revenue Service-Criminal Investigation and the U.S. Postal Inspection Service. The case is being prosecuted by Senior Litigation Counsel Jack Patrick, Trial Attorney Matthew Klecka and with assistance from Allan Medina, Law Clerk, Forfeiture Support Associates, assigned to the Fraud Section, as well as Assistant U.S. Attorney Gregg Costa of the U.S. Attorney’s Office for the Southern District of Texas.