Laura Pendergest-Holt, the Stanford Financial Group Co. executive accused of obstructing the U.S. Securities and Exchange Commission’s probe into an alleged $8 billion Ponzi scheme, was indicted by a federal grand jury.
Pendergest-Holt, 35, faces one count of conspiracy to obstruct and one count of substantive obstruction related to the federal investigation of her boss, Texas billionaire R. Allen Stanford.
“The federal court in Houston will be issuing an order summoning Pendergest-Holt to appear in the near future for arraignment,” the Justice Department said yesterday. She has been free on a $300,000 bond since first being charged on Feb. 26 with a single obstruction count in a criminal complaint.
The U.S. Securities and Exchange Commission sued Stanford, Pendergest-Holt and the company’s finance chief, James Davis, on Feb. 17, alleging they defrauded investors through the sale of $8 billion in bogus certificates of deposit from Antigua-based Stanford International Bank Ltd.
The initial obstruction charge arose from Pendergest-Holt’s Feb. 10 meeting with SEC representatives at the commission’s Fort Worth, Texas, regional office, according to a prior Justice Department statement. She had been subpoenaed to discuss the investment portfolio and strategies of Stanford Financial Group and Stanford International Bank.
Planning Sessions
Pendergest-Holt allegedly held several planning sessions with other Stanford executives — identified in the indictment only as Executives A and B and a SFG attorney — before meeting with the SEC in Fort Worth and Memphis, Tennessee, on two dates in February, according to yesterday’s Justice Department statement.
At these sessions, she helped prepare documents reflecting the composition of the company’s so-called Tier III investment portfolio, which contained about 80 percent of the Stanford bank’s purported $8.5 billion in assets.
Investors were told Stanford International Bank’s assets were highly liquid securities when in reality, the department alleged, about $3.2 billion represented investments in “artificially valued real estate” and another $1.6 billion were “notes on personal loans to SFG Executive A,” identified in the SEC civil suit as SFG’s sole shareholder Allen Stanford.
Pendergest-Holt didn’t disclose the sessions or her knowledge of the Tier III investments to investigators, according to the DOJ. At a Feb. 17 meeting with SEC attorneys in Memphis, the indictment alleges she “falsely represented that if she ‘knew anything about Tier III’ she would tell them,” the department said.
First Criminal Charges
Hers are the first criminal charges filed against any of the Stanford executives or entities.
Houston attorney Dan Cogdell, one of the lawyers representing the executive, confirmed she had been indicted, and said she would likely not be required to appear in court for “at least 10 days.” He declined to immediately comment further.
Cogdell has previously said his client is innocent.
Pendergest-Holt, who was in Houston to consult with Cogdell, also declined to immediately comment.
Stanford, 59, has denied any wrongdoing and is fighting the SEC allegations. Davis, 60, is cooperating with government investigators and is in plea negotiations to resolve criminal and civil liability, according to his lawyer.
“Jim is cooperating with the investigation 24/7,” David Finn, Davis’s lawyer, said in an e-mail yesterday. “He signed more paperwork today giving the Department of Justice access to overseas bank accounts in Europe.”
Dick DeGuerin, Stanford’s criminal attorney, declined to comment on Pendergest-Holt’s indictment, saying he hadn’t yet read it.
‘Hearsay Evidence’
“It is standard for the government to charge a conspiracy because it lessens the burden of proof and allows hearsay evidence in a big way,” he said in a phone interview. “It’s a much simpler case for the government. Somebody smarter than me said: ‘Conspiracy is the darling of the prosecutor’s nursery,’ and I believe it.”
If convicted on both counts, Pendergest-Holt faces a maximum of 10 years in prison and a fine of $500,000.
She is fighting the court-ordered freeze of all her personal assets as well as the authority of Stanford’s court- appointed receiver over her affairs in the SEC case, which is pending in Dallas federal court.
The civil case is SEC v. Stanford International Bank, 09- 00298, U.S. District Court for the Northern District of Texas (Dallas).
The criminal case is U.S. v. Laura Pendergest-Holt, H-09- 250, U.S. District Court, Southern District of Texas (Houston).
To contact the reporters on this story: Andrew M. Harris in Chicago at [email protected] ; Laurel Brubaker Calkins in Houston at [email protected].
Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2RFkrY8zbwE
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