Allen Stanford was indicted June 19 on charges of conspiracy to commit securities, mail and wire fraud. Six others were also indicted with the 59-year old Texas native and CEO of the Stanford Financial Group. Stanford surrendered to the FBI in Fredericksburg, Va.
Two indictments naming eight individuals involved in the $7 billion Ponzi scheme allegedly carried out by Stanford were handed down by a U.S. federal grand jury. The first indictment — a 57-page document that contains 21 counts — was filed in Houston and named six individuals: Allen Stanford (CEO), Laura Pendergest-Holt (the CIO) Gilbert Lopez (the chief accounting officer), Mark Kuhrt (Stanford's global controller) and Leroy King, a former executive in Antigua's financial services regulatory commission. The second indictment, filed in Miami, named Bruce Perraud, who was employed as “global security specialist” for Stanford in Fort Lauderdale, Florida, as well as James Davis, the company's CFO.
Stanford, who is being represented by Dick DeGuerin, a prominent Houston defense attorney, faces up to 20 years in prison if convicted of the most serious charges of fraud.
The indictment alleges that Leroy King, a former CEO of the Antiguan regulatory authority, was paid to make sure the regulators looked the other way. Further, it alleges, he facilitated sham audits and examinations of Stanford's Antiguan bank, SIB.
The SEC obtained a court order halting an $11 million Ponzi scheme run by David Hernandez, convicted felon and Chicago-based stock promoter who allegedly promised investors high returns from investments in “payday advance stores.” The SEC's complaint, filed in U.S. District Court in Chicago, alleges that Hernandez solicited funds from more than 100 investors in at least 12 different states through his company Next Step Financial Services, Inc. Hernandez solicited investors from February 2008 until the SEC's emergency action, and he did so both in person and through Next Step Financial's Web site. He claimed that investor funds were covered by insurance policies from nationally known carriers.
The SEC alleges that Hernandez promised 10-16 percent returns per month and lied about the use of investor proceeds and the safety of the investments. He never bought insurance policies or invested in the payday advance stores. Instead, he placed investor funds into bank accounts of companies he controlled, and used new investor funds to pay old ones in classic Ponzi fashion. He used some of the funds to buy a piano, purchase cars and jewelry and start up a Chicago sports talk website called “Chicago Sports Webio” featuring sports figures and reporters from Chicago.