Indicted billionaire Stanford returned to Texas

HOUSTON — Billionaire R. Allen Stanford has been returned to Texas by authorities to face federal charges he ran a $7 billion scheme to defraud investors with his international banking empire.

Stanford arrived in the Houston area on Tuesday and is being held in the Montgomery County Jail in nearby Conroe, said Dick DeGuerin, his attorney.

Stanford was transferred by U.S. Marshals from Virginia, where he was arrested last week by the FBI after being indicted in Houston on charges that his banking empire was really just a massive Ponzi scheme.

He is scheduled to make his first court appearance in Houston federal court at 11 a.m. EDT Thursday, DeGuerin said. Stanford made an initial court appearance last week in Virginia, where a magistrate judge ordered he be held in custody until a bond hearing in Houston.

DeGuerin said it has been a rough few days for his client since his arrest and return trip to Texas.

“He’s been held incommunicado since Friday and he’s been transferred to five jails in four days,” DeGuerin said. “He’s not been allowed to use the phone. He has had no sleep.”

DeGuerin said all of this could have been avoided if federal authorities had taken Stanford into custody during one of the several occasions he offered to turn himself in, including on April 30 when he went with DeGuerin to the federal courthouse in Houston but was turned away.

“This was entirely unnecessary,” DeGuerin said. “Yet the prosecution insisted on doing it the hard way.”

But authorities weren’t able to take Stanford into custody until charges were filed against him or he was indicted, which didn’t happen until Thursday. Three executives of Houston-based Stanford Financial Group and a former bank regulator from Antigua also were indicted.

They are accused of orchestrating a massive fraud by misusing most of the $7 billion they advised clients to invest in certificates of deposit from the Antigua-based Stanford International Bank.

The indictment charged Stanford and the others with falsely claiming to have grown $1.2 billion in assets in 2001 to roughly $8.5 billion by the end of 2008. The operation had roughly 30,000 investors, officials said.

Investigators say that even as Stanford claimed healthy returns for those investors, he was secretly diverting more than $1.6 billion in personal loans to himself.

The indictment also says Stanford and the other executives misrepresented to investors the Antigua island bank’s financial condition, its investment strategy and how it was regulated by Antiguan authorities.

The others indicted in the case were Stanford executives Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt and Leroy King, the former chief executive officer of Antigua’s Financial Services Regulatory Commission.

Stanford, Pendergest-Holt, Lopez, Kuhrt and King are charged with wire fraud, mail fraud, conspiracy to commit mail, wire and securities fraud and conspiracy to commit money laundering. Stanford, Pendergest-Holt and King are also charged with conspiring to obstruct a Securities and Exchange Commission investigation and obstruction of an SEC investigation.

Stanford could face as much as 250 years in prison if convicted on all charges in the 21-count indictment, officials said.

Lopez, the chief accounting officer, and Kuhrt, the global controller, are set to be arraigned in Houston federal court on Thursday. Both are free on bond.

A criminal information has charged James M. Davis, 60, Stanford Financial Group’s chief financial officer, with conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct an SEC investigation. He is set to make his initial court appearance on July 1.

A separate indictment in Florida accused another Stanford worker, Bruce Perraud, of destroying records important to the investigation.