R. Allen Stanford's investors may now be able to recoup some of their losses more than four years after the Stanford Group Co. founder was sued by the U.S. Securities and Exchange Commission and put out of business. As Bloomberg reports, Ralph Janvey, the receiver appointed by a federal judge to marshal and liquidate Stanford's personal and business assets in February 2009, is asking a judge for permission to make a $55 million interim distribution—or about one penny for each of the $5.1 billion dollars lost in the fraud scheme. The proposed payout trails the more than $5.4 billion paid to victims of Bernie Madoff, who was arrested in December 2008, about $4.9 billion paid clients of the MF Global Inc. brokerage after its parent MF Global Holdings Ltd. failed in October 2011, and the $123 million interim distribution for victims of Peregrine Financial Group Inc. founder Russell Wasendorf, who prosecutors last year said stole $215 million. Read the full story
The star prosecution witness in the trial of convicted Texas financier R. Allen Stanford was sentenced today to five years in prison for helping to bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history. James M. Davis had faced up to 30 years in prison after pleading guilty in 2009 to three fraud and conspiracy charges as part of an agreement with prosecutors. "I am ashamed and I'm embarrassed," Davis said at the sentencing hearing at Houston federal court. "I've perverted what was right, and I hurt thousands of investors. I betrayed their trust and also associates and neighbors and friends and my family." Prosecutors say Stanford persuaded investors to buy certificates of deposit from his Caribbean bank, then used that money to bankroll a string of failed businesses and his own lavish lifestyle, including a fleet of private jets and yachts. At Stanford's trial last year, Davis—the former chief financial officer of Stanford's...
Former Stanford Financial Group Co. finance chief James M. Davis is seeking a prison sentence 26 years shorter than the potential 30-year term he agreed to after pleading guilty to his role in a $7 billion investor fraud, citing his cooperation with prosecutors. Davis, 64, the second-highest ranking officer in the financial services empire of Texas billionaire R. Allen Stanford, will ask today for four years in prison when he is sentenced by U.S. District Judge David Hittner in Houston federal court, according to a defense filing in the case. Stanford, 62, is serving a 110-year prison term after being convicted—in part on testimony and evidence provided by Davis—in March of stealing more than $2 billion from investors for personal use. Davis agreed that he would face a maximum of 30 years in prison and forfeiture of $1 billion when he pleaded guilty to three felony counts pertaining to his role in the Ponzi scheme in August 2009, two months after Stanford was indicted. In...
The Supreme Court will hear an appeal that seeks to shut down class-action lawsuits from investors who lost billions in a massive Ponzi scheme orchestrated by convicted former Texas tycoon R. Allen Stanford. The justices today announced they will review appeals court rulings allowing the suits to proceed against individuals, law firms and investment companies that the investors claim aided Stanford's fraud. At issue is whether a federal law aimed at limiting private lawsuits that allege securities fraud can be used to block the suits investors filed in Louisiana and Texas. A federal judge initially threw them out, but the 5th U.S. Circuit Court of Appeals in New Orleans ruled the suits could go forward. In December, a Baton Rouge judge also cleared the way for anyone in Louisiana who lost money in the debacle to join a class action lawsuit against entities that...
A Baton Rouge judge cleared the way for anyone in Louisiana who lost money in the Stanford Group debacle to join a class action lawsuit against entities that allegedly enabled the $7 billion Ponzi scheme.
A Baton Rouge judge cleared the way today for anyone in Louisiana who lost money in the Stanford Group debacle to join a class action lawsuit against entities that allegedly enabled the $7 billion Ponzi scheme. In a decision issued this morning, 19th Judicial District Judge R. Michael Caldwell ruled that any Louisiana residents who did business with the Stanford Group and any out-of-state investor who did business with the Stanford Trust—a separate entity that mostly handled individual retirement accounts—has the right to join the class, provided their investments were made after Jan. 1, 2007. "This is a big deal," says attorney Phil Preis, who represents the investors. "This is the first class to be certified in the Stanford litigation, and it means the people of Louisiana will finally have their day in court." There is no word on when that day may come, as an appeal is expected by the defendants, which include the Stanford Trust, trust administrator SEI—a major...
For years, Walter Morales was one of the best-known and well-respected money managers in Baton Rouge, with a reputation for delivering consistently better-than-average returns, a portfolio that approached $750 million at its peak, and a roster of clients that included retired local professionals, state pension funds and, even, the billionaire Bass family of Texas.
The attorney for a group of local investors suing Commonwealth Advisors and its principal, Walter Morales, says a lawsuit filed yesterday by the Securities and Exchange Commission against Morales and his money management firm validates what they've been saying since filing their own suit more than two years ago. "I think the SEC suit is a huge moral victory for the people and pension funds who have lost millions in retirement income," says Patrick Broyles, whose father, Joseph Broyles, is the lead plaintiff in the suit. "It gives them tangible hope justice will be served." The SEC suit closely mirrors allegations contained in the investors' suit, which is seeking to recover more than $100 million in pension funds that Commonwealth had invested in risky, residential mortgage-backed securities. According to the SEC, Morales and Commonwealth "lied to investors about the amount and value of the mortgage-backed assets held in the hedge funds, and created phony internal documents to...
As expected, the Securities and Exchange Commission filed suit late this afternoon charging local money management firm Commonwealth Advisors and its principal, Walter Morales III, with securities fraud. The suit centers on an investment vehicle—a collateralized debt obligation, or CDO, named Collybus—into which Commonwealth invested client funds. The SEC, as well as various private and institutional investors who have filed separate lawsuits, allege that Commonwealth along with Cantor Fitzgerald & Co. of New York created Collybus as a way to cover up the losses of several Commonwealth-managed funds that were heavily invested in subprime, mortgage-backed securities. "We are disappointed by the SEC's action, and we seriously dispute the SEC's version of what happened," says Fred Tully, Morales' attorney, adding that Collybus was one of many casualties of the collapse of the market for mortgage-backed financial products. The SEC suit is seeking "disgorgement from ill-gotten...
The Securities and Exchange Commission is expected to file a civil suit before the end of the day alleging securities fraud against local money management firm Commonwealth Advisors and its principal, Walter Morales III. An attorney for Morales confirms the SEC has notified him of the pending suit, which will seek an injunction against Morales and the firm. "I cannot say much about it until I see it," says Morales' attorney Fred Tully. "But [the SEC] has been investigating a lot of the same things that the investor lawsuits allege." Those investor suits blame Morales and Commonwealth for fraud and mismanagement that led to the loss of more than $178 million invested in high-yield but risky subprime, residential, mortgage-backed securities. Commonwealth has denied any wrongdoing and attributed the losses to the 2008 collapse of the mortgage-backed securities market. The firm has also said the investment vehicle at the center of the investigation—a collateralized debt obligation...
Four from Baton Rouge are among 91 people—including a hospital president, doctors and nurses—that a federal strike force is charging with Medicare fraud schemes in seven cities involving $429 million in false billings. At a news conference today, Attorney General Eric Holder said the case reveals an alarming trend in criminal efforts to steal billions of taxpayer dollars for personal gain. Holder called the action one of the largest such law enforcement efforts of its kind. It focused on fraudulent Medicare schemes in Brooklyn, N.Y.; Chicago; Dallas; Houston; Los Angeles; and Miami. Health and Human Services Secretary Kathleen Sebelius says that in addition to filing the newly announced criminal charges, her agency has used new authority under the Obama administration's health care law to stop future payments to many of the health care providers suspected of fraud.
United Companies Financial Corp. began life in 1947 as a two-man, one-room consumer finance company in the old Lafayette Hotel on Lafayette and Main streets. United grew into a quintessential homegrown success story, employing as many as 3,500 people, including 1,200 locally. From 1991 through 1997, the total value of home loans the company made reportedly surged from $253.6 million to $1.5 billion.
From the very beginning, the purported certificates of deposit sold to Baton Rouge-area investors by the Stanford Group delivered extraordinarily high rates of return. Investors were told the Stanford International Bank in Antigua was in a tax-free jurisdiction, and maintained low overhead, passing the savings along to them.
A top executive in the now-defunct empire of disgraced Texas financier R. Allen Stanford was sentenced to three years in prison today for her role in helping the once jet-setting businessman bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history. Former Stanford Chief Investment Officer Laura Pendergest-Holt's sentence was part of a plea agreement reached with federal prosecutors. She had pleaded guilty in June to one count of obstruction of a U.S. Securities and Exchange Commission proceeding in exchange for the sentence. After U.S. District Judge David Hittner handed down the sentence, he revoked Pendergest-Holt's bond and she was taken into custody. She waved to her husband Jim Holt before she was put in handcuffs and taken from the courtroom by federal marshals. A tearful Pendergest-Holt told Hittner prior to sentencing that she was sorry for putting her trust in Stanford and others in his financial empire, including the former chief...
U.S. securities regulators have charged former officials of Stanford Group Co. for their role in the demise of the brokerage and bank controlled by Ponzi schemer R. Allen Stanford. Reuters reports former Stanford Group Co. president Daniel Bogar, former compliance officer Bernerd Young, and Jason Green—who oversaw parts of the private client group at Stanford—are charged with aiding in the fraud. The U.S. Securities and Exchange Commission alleges that the three executives knew or should have known that offering documents in connection to certificates of deposits sold by Stanford International Bank were false or misleading. Instead, the SEC charges, they encouraged their colleagues to use the incomplete offering documents to help sell the CDs. In a statement, Green's lawyers, John Kincade and George Freeman, say that Green had no knowledge of the fraud. "We look forward to the opportunity to clear Mr. Green's name, and we are confident we will succeed," they say. Lawyers...
U.S. Sen. David Vitter has sent a letter to the U.S. Securities and Exchange Commission Chairwoman Mary Schapiro urging for an appeal of a recent court ruling that the Securities Investor Protection Corporation does not have to compensate those who lost money in the $7 billion Ponzi scheme perpetuated by R. Allen Stanford. "The Stanford Ponzi scheme victims should be first in line for protection, not last in line way behind SIPC's Wall Street members," Vitter says in a statement. Sen. Mary Landrieu signed the letter in support, as did a dozen other senators from Alabama, Arkansas, Florida, Georgia, Illinois, Mississippi, Missouri, Pennsylvania and Texas. Blaine Smith of Baton Rouge, an outspoken victim of the Ponzi scheme who pegs his losses at $1 million, recently sent an email to several media outlets saying: "I really can't find a whole lot to live for anymore. I have had...
A New Orleans City Councilman says he will plead guilty to a federal criminal charge involving the misuse of federal money intended to help a nonprofit organization after Hurricane Katrina. In a statement released by his attorney today, Jon Johnson says he made the decision after meeting with federal officials. He also says he will resign from the council. Johnson's statement came moments after a court filing emerged showing that he would be charged with conspiracy to commit theft of government funds and to submit false documents. The 63-year-old Johnson is accused of diverting money intended for the Ninth Ward Housing Development Corp. for personal use, including expenses for his failed 2007 campaign for a seat in the Louisiana Senate. The documents say Johnson controlled the finances of the housing development group, which obtained Federal Emergency Management Agency grants for house gutting and mold remediation after the August 2005 storm and resulting flood. Prosecutors say...
In response to Tuesday's ruling by U.S. District Judge Robert Wilkins that victims of R. Allen Stanford's $7 billion Ponzi scheme aren't eligible for reimbursement of their losses by the Securities Investor Protection Corporation, Houston Chronicle columnist Loren Steffy says, "The message to all investors is clear: SIPC is essentially a sham." In his ruling, Wilkins says Stanford investors actually deposited money in the bank, where the CDs they purchased were held. While Stanford's brokerage firm was an SIPC member, the bank wasn't, and therefore investors aren't entitled to any coverage. The Securities and Exchange Commission triggered the legal battle about a year ago when it ordered the SIPC to cover Stanford victims and pay clients—as they did the victims of the Ponzi scheme perpetuated by Bernie Madoff. In other words, Steffy says, Wilkins' ruling means the SIPC "may pay in some cases, if you are fleeced in just the right way, as Bernie Madoff's clients were, but...
A federal district judge delivered a blow to the victims of R. Allen Stanford's $7 billion Ponzi scheme today by rejecting a request for an industry-backed fund to start a court proceeding that could lead to victim compensation, Reuters reports. The Securities and Exchange Commission had sought to force the Securities Investor Protection Corp. to start liquidation proceedings for the victims, some of whom lost millions of dollars to the fraud. The judge found that the SEC did not meet its legal burden of showing why SIPC should be compelled to act. SIPC, which has handled high-profile liquidations such as Bernard Madoff's Ponzi scheme, has long contended that Stanford's offshore bank fell outside the scope of its authority. The law, SIPC argued, limits it to protecting customers against the loss of missing cash or securities in the custody of failing or insolvent SIPC-member brokerage firms. While Stanford's Texas-based brokerage Stanford Group Company was a SIPC member, its offshore...
A Louisiana businessman linked to a federal probe of former New Orleans Mayor Ray Nagin pleaded guilty today to making a $50,000 payoff to a former city official in exchange for favorable treatment for his business interests. Authorities haven't identified the city official whom Frank Fradella allegedly conspired to bribe, but court documents say the official served from May 2002 to May 2010—a period matching Nagin's tenure in office. Prosecutors say Fradella, 56, of Covington, provided truckloads of free granite to the official. Nagin and his two sons obtained a contract to install granite countertops for local Home Depot stores after Hurricane Katrina struck in 2005. Fradella also "facilitated" a consulting agreement and monthly payments of more than $10,000 to the official after he left office, according to a court filing today. Nagin has not been charged. His attorney didn't immediately return a call to The Associated Press seeking comment today. Fradella faces up to seven...
Former jet-setting Texas tycoon R. Allen Stanford, whose financial empire once spanned the Americas, was sentenced in Houston today to 110 years in prison for bilking investors out of more than $7 billion over 20 years in one of the largest Ponzi schemes in U.S. history. "I'm not here to ask for sympathy or forgiveness or to throw myself at your mercy," Stanford told U.S. District Judge David Hittner before the latter handed down the sentence. "I did not run a Ponzi scheme. I didn't defraud anybody." Prosecutors had asked that Stanford be sentenced to 230 years in prison, the maximum sentence possible, after a jury in March convicted the onetime billionaire on 13 of 14 fraud-related counts. Stanford's convictions on conspiracy, wire and mail fraud charges followed a seven-week trial. Stanford's attorneys had asked for a maximum of 44 months, a sentence he could have completed within about eight months because he has been jailed since his arrest in June 2009. During today's sentencing...
Former jet-setting Texas tycoon R. Allen Stanford, whose financial empire once spanned the Americas, was sentenced in Houston today to 110 years in prison for bilking investors out of more than $7 billion over 20 years in one of the largest Ponzi schemes in U.S. history. "I'm not here to ask for sympathy or forgiveness or to throw myself at your mercy," Stanford told U.S. District Judge David Hittner before he handed down the sentence. "I did not run a Ponzi scheme. I didn't defraud anybody." Read more in Daily Report PM.
If federal prosecutors have their way, former jet-setting Texas tycoon R. Allen Stanford could receive a prison sentence that spans two centuries for bilking investors out of more than $7 billion over two decades in one of the largest Ponzi schemes in U.S. history. Calling Stanford a "ruthless predator" who stole from investors "simply to satisfy his own greed and vanity," prosecutors are asking U.S. District Judge David Hittner to sentence the one-time billionaire to 230 years in prison, the maximum sentence he faces at a hearing today. A jury convicted Stanford in March on 13 of 14 fraud-related counts. Stanford's attorneys are asking for a maximum of 44 months, a sentence the 62-year-old could actually complete within about eight months because he has already been in jail since his arrest in June 2009. Prosecutors also want Hittner to order Stanford to forfeit $5.9 billion, but that would be symbolic because Stanford, now penniless, had to rely on court-appointed attorneys to...
Louisiana's former top alcohol and tobacco regulator has made his initial court appearance on federal charges that he illegally gained national crime computer information on a variety of people who were not under criminal investigation. Murphy Painter was allowed to remain free today without posting bail. He was required to surrender his passport and his gun collection. His next court appearance is next week. Painter was indicted May 23 on charges of computer fraud, making false statements and identity theft. Assistant U.S. Attorney Walter Green says Painter allegedly made false statements to the FBI to gain personal information on several people from the computers of the National Crime Information Center. Painter resigned in 2010 as commissioner of the Louisiana Office of Alcohol and Tobacco Control.
Penny-a-dollar payment plan for Stanford victims before judge
R. Allen Stanford's investors may now be able to recoup some of their losses more than four years after the Stanford Group Co. founder was sued by the U.S. Securities and Exchange Commission and put out of business. As Bloomberg reports, Ralph Janvey, the receiver appointed by a federal judge to marshal and liquidate Stanford's personal and business assets in February 2009, is asking a judge for permission to make a $55 million interim distribution—or about one penny for each of the $5.1 billion dollars lost in the fraud scheme. The proposed payout trails the more than $5.4 billion paid to victims of Bernie Madoff, who was arrested in December 2008, about $4.9 billion paid clients of the MF Global Inc. brokerage after its parent MF Global Holdings Ltd. failed in October 2011, and the $123 million interim distribution for victims of Peregrine Financial Group Inc. founder Russell Wasendorf, who prosecutors last year said stole $215 million. Read the full story
Ex-Stanford executive gets 5-year sentence
The star prosecution witness in the trial of convicted Texas financier R. Allen Stanford was sentenced today to five years in prison for helping to bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history. James M. Davis had faced up to 30 years in prison after pleading guilty in 2009 to three fraud and conspiracy charges as part of an agreement with prosecutors. "I am ashamed and I'm embarrassed," Davis said at the sentencing hearing at Houston federal court. "I've perverted what was right, and I hurt thousands of investors. I betrayed their trust and also associates and neighbors and friends and my family." Prosecutors say Stanford persuaded investors to buy certificates of deposit from his Caribbean bank, then used that money to bankroll a string of failed businesses and his own lavish lifestyle, including a fleet of private jets and yachts. At Stanford's trial last year, Davis—the former chief financial officer of Stanford's...
Stanford's ex-finance chief to be sentenced today
Former Stanford Financial Group Co. finance chief James M. Davis is seeking a prison sentence 26 years shorter than the potential 30-year term he agreed to after pleading guilty to his role in a $7 billion investor fraud, citing his cooperation with prosecutors. Davis, 64, the second-highest ranking officer in the financial services empire of Texas billionaire R. Allen Stanford, will ask today for four years in prison when he is sentenced by U.S. District Judge David Hittner in Houston federal court, according to a defense filing in the case. Stanford, 62, is serving a 110-year prison term after being convicted—in part on testimony and evidence provided by Davis—in March of stealing more than $2 billion from investors for personal use. Davis agreed that he would face a maximum of 30 years in prison and forfeiture of $1 billion when he pleaded guilty to three felony counts pertaining to his role in the Ponzi scheme in August 2009, two months after Stanford was indicted. In...
High court may block Stanford investor lawsuits
The Supreme Court will hear an appeal that seeks to shut down class-action lawsuits from investors who lost billions in a massive Ponzi scheme orchestrated by convicted former Texas tycoon R. Allen Stanford. The justices today announced they will review appeals court rulings allowing the suits to proceed against individuals, law firms and investment companies that the investors claim aided Stanford's fraud. At issue is whether a federal law aimed at limiting private lawsuits that allege securities fraud can be used to block the suits investors filed in Louisiana and Texas. A federal judge initially threw them out, but the 5th U.S. Circuit Court of Appeals in New Orleans ruled the suits could go forward. In December, a Baton Rouge judge also cleared the way for anyone in Louisiana who lost money in the debacle to join a class action lawsuit against entities that...
Stanford victims can sue
A Baton Rouge judge cleared the way for anyone in Louisiana who lost money in the Stanford Group debacle to join a class action lawsuit against entities that allegedly enabled the $7 billion Ponzi scheme.
Judge says Stanford victims can move forward with class action suit
A Baton Rouge judge cleared the way today for anyone in Louisiana who lost money in the Stanford Group debacle to join a class action lawsuit against entities that allegedly enabled the $7 billion Ponzi scheme. In a decision issued this morning, 19th Judicial District Judge R. Michael Caldwell ruled that any Louisiana residents who did business with the Stanford Group and any out-of-state investor who did business with the Stanford Trust—a separate entity that mostly handled individual retirement accounts—has the right to join the class, provided their investments were made after Jan. 1, 2007. "This is a big deal," says attorney Phil Preis, who represents the investors. "This is the first class to be certified in the Stanford litigation, and it means the people of Louisiana will finally have their day in court." There is no word on when that day may come, as an appeal is expected by the defendants, which include the Stanford Trust, trust administrator SEI—a major...
Scheme or slump?
For years, Walter Morales was one of the best-known and well-respected money managers in Baton Rouge, with a reputation for delivering consistently better-than-average returns, a portfolio that approached $750 million at its peak, and a roster of clients that included retired local professionals, state pension funds and, even, the billionaire Bass family of Texas.
SEC's lawsuit against Commonwealth Advisors mirrors investors' original suit, says attorney
The attorney for a group of local investors suing Commonwealth Advisors and its principal, Walter Morales, says a lawsuit filed yesterday by the Securities and Exchange Commission against Morales and his money management firm validates what they've been saying since filing their own suit more than two years ago. "I think the SEC suit is a huge moral victory for the people and pension funds who have lost millions in retirement income," says Patrick Broyles, whose father, Joseph Broyles, is the lead plaintiff in the suit. "It gives them tangible hope justice will be served." The SEC suit closely mirrors allegations contained in the investors' suit, which is seeking to recover more than $100 million in pension funds that Commonwealth had invested in risky, residential mortgage-backed securities. According to the SEC, Morales and Commonwealth "lied to investors about the amount and value of the mortgage-backed assets held in the hedge funds, and created phony internal documents to...
News alert: SEC files suit against Commonwealth
As expected, the Securities and Exchange Commission filed suit late this afternoon charging local money management firm Commonwealth Advisors and its principal, Walter Morales III, with securities fraud. The suit centers on an investment vehicle—a collateralized debt obligation, or CDO, named Collybus—into which Commonwealth invested client funds. The SEC, as well as various private and institutional investors who have filed separate lawsuits, allege that Commonwealth along with Cantor Fitzgerald & Co. of New York created Collybus as a way to cover up the losses of several Commonwealth-managed funds that were heavily invested in subprime, mortgage-backed securities. "We are disappointed by the SEC's action, and we seriously dispute the SEC's version of what happened," says Fred Tully, Morales' attorney, adding that Collybus was one of many casualties of the collapse of the market for mortgage-backed financial products. The SEC suit is seeking "disgorgement from ill-gotten...
SEC to file securities fraud suit against Commonwealth Advisors
The Securities and Exchange Commission is expected to file a civil suit before the end of the day alleging securities fraud against local money management firm Commonwealth Advisors and its principal, Walter Morales III. An attorney for Morales confirms the SEC has notified him of the pending suit, which will seek an injunction against Morales and the firm. "I cannot say much about it until I see it," says Morales' attorney Fred Tully. "But [the SEC] has been investigating a lot of the same things that the investor lawsuits allege." Those investor suits blame Morales and Commonwealth for fraud and mismanagement that led to the loss of more than $178 million invested in high-yield but risky subprime, residential, mortgage-backed securities. Commonwealth has denied any wrongdoing and attributed the losses to the 2008 collapse of the mortgage-backed securities market. The firm has also said the investment vehicle at the center of the investigation—a collateralized debt obligation...
Fed charges 91 people, 4 from B.R., in $429M Medicare fraud
Four from Baton Rouge are among 91 people—including a hospital president, doctors and nurses—that a federal strike force is charging with Medicare fraud schemes in seven cities involving $429 million in false billings. At a news conference today, Attorney General Eric Holder said the case reveals an alarming trend in criminal efforts to steal billions of taxpayer dollars for personal gain. Holder called the action one of the largest such law enforcement efforts of its kind. It focused on fraudulent Medicare schemes in Brooklyn, N.Y.; Chicago; Dallas; Houston; Los Angeles; and Miami. Health and Human Services Secretary Kathleen Sebelius says that in addition to filing the newly announced criminal charges, her agency has used new authority under the Obama administration's health care law to stop future payments to many of the health care providers suspected of fraud.
United falls
United Companies Financial Corp. began life in 1947 as a two-man, one-room consumer finance company in the old Lafayette Hotel on Lafayette and Main streets. United grew into a quintessential homegrown success story, employing as many as 3,500 people, including 1,200 locally. From 1991 through 1997, the total value of home loans the company made reportedly surged from $253.6 million to $1.5 billion.
The big swindle
From the very beginning, the purported certificates of deposit sold to Baton Rouge-area investors by the Stanford Group delivered extraordinarily high rates of return. Investors were told the Stanford International Bank in Antigua was in a tax-free jurisdiction, and maintained low overhead, passing the savings along to them.
Ex-Stanford exec gets 3 years for role in $7B swindle
A top executive in the now-defunct empire of disgraced Texas financier R. Allen Stanford was sentenced to three years in prison today for her role in helping the once jet-setting businessman bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history. Former Stanford Chief Investment Officer Laura Pendergest-Holt's sentence was part of a plea agreement reached with federal prosecutors. She had pleaded guilty in June to one count of obstruction of a U.S. Securities and Exchange Commission proceeding in exchange for the sentence. After U.S. District Judge David Hittner handed down the sentence, he revoked Pendergest-Holt's bond and she was taken into custody. She waved to her husband Jim Holt before she was put in handcuffs and taken from the courtroom by federal marshals. A tearful Pendergest-Holt told Hittner prior to sentencing that she was sorry for putting her trust in Stanford and others in his financial empire, including the former chief...
SEC charges former Stanford Group executives
U.S. securities regulators have charged former officials of Stanford Group Co. for their role in the demise of the brokerage and bank controlled by Ponzi schemer R. Allen Stanford. Reuters reports former Stanford Group Co. president Daniel Bogar, former compliance officer Bernerd Young, and Jason Green—who oversaw parts of the private client group at Stanford—are charged with aiding in the fraud. The U.S. Securities and Exchange Commission alleges that the three executives knew or should have known that offering documents in connection to certificates of deposits sold by Stanford International Bank were false or misleading. Instead, the SEC charges, they encouraged their colleagues to use the incomplete offering documents to help sell the CDs. In a statement, Green's lawyers, John Kincade and George Freeman, say that Green had no knowledge of the fraud. "We look forward to the opportunity to clear Mr. Green's name, and we are confident we will succeed," they say. Lawyers...
Senators ask for appeal of ruling against Stanford victims
U.S. Sen. David Vitter has sent a letter to the U.S. Securities and Exchange Commission Chairwoman Mary Schapiro urging for an appeal of a recent court ruling that the Securities Investor Protection Corporation does not have to compensate those who lost money in the $7 billion Ponzi scheme perpetuated by R. Allen Stanford. "The Stanford Ponzi scheme victims should be first in line for protection, not last in line way behind SIPC's Wall Street members," Vitter says in a statement. Sen. Mary Landrieu signed the letter in support, as did a dozen other senators from Alabama, Arkansas, Florida, Georgia, Illinois, Mississippi, Missouri, Pennsylvania and Texas. Blaine Smith of Baton Rouge, an outspoken victim of the Ponzi scheme who pegs his losses at $1 million, recently sent an email to several media outlets saying: "I really can't find a whole lot to live for anymore. I have had...
N.O. councilman to plead guilty in post-Katrina fraud
A New Orleans City Councilman says he will plead guilty to a federal criminal charge involving the misuse of federal money intended to help a nonprofit organization after Hurricane Katrina. In a statement released by his attorney today, Jon Johnson says he made the decision after meeting with federal officials. He also says he will resign from the council. Johnson's statement came moments after a court filing emerged showing that he would be charged with conspiracy to commit theft of government funds and to submit false documents. The 63-year-old Johnson is accused of diverting money intended for the Ninth Ward Housing Development Corp. for personal use, including expenses for his failed 2007 campaign for a seat in the Louisiana Senate. The documents say Johnson controlled the finances of the housing development group, which obtained Federal Emergency Management Agency grants for house gutting and mold remediation after the August 2005 storm and resulting flood. Prosecutors say...
Columnist: SIPC is 'essentially a sham'
In response to Tuesday's ruling by U.S. District Judge Robert Wilkins that victims of R. Allen Stanford's $7 billion Ponzi scheme aren't eligible for reimbursement of their losses by the Securities Investor Protection Corporation, Houston Chronicle columnist Loren Steffy says, "The message to all investors is clear: SIPC is essentially a sham." In his ruling, Wilkins says Stanford investors actually deposited money in the bank, where the CDs they purchased were held. While Stanford's brokerage firm was an SIPC member, the bank wasn't, and therefore investors aren't entitled to any coverage. The Securities and Exchange Commission triggered the legal battle about a year ago when it ordered the SIPC to cover Stanford victims and pay clients—as they did the victims of the Ponzi scheme perpetuated by Bernie Madoff. In other words, Steffy says, Wilkins' ruling means the SIPC "may pay in some cases, if you are fleeced in just the right way, as Bernie Madoff's clients were, but...
Stanford victims on the losing end of federal ruling
A federal district judge delivered a blow to the victims of R. Allen Stanford's $7 billion Ponzi scheme today by rejecting a request for an industry-backed fund to start a court proceeding that could lead to victim compensation, Reuters reports. The Securities and Exchange Commission had sought to force the Securities Investor Protection Corp. to start liquidation proceedings for the victims, some of whom lost millions of dollars to the fraud. The judge found that the SEC did not meet its legal burden of showing why SIPC should be compelled to act. SIPC, which has handled high-profile liquidations such as Bernard Madoff's Ponzi scheme, has long contended that Stanford's offshore bank fell outside the scope of its authority. The law, SIPC argued, limits it to protecting customers against the loss of missing cash or securities in the custody of failing or insolvent SIPC-member brokerage firms. While Stanford's Texas-based brokerage Stanford Group Company was a SIPC member, its offshore...
Businessman linked to Nagin pleads guilty
A Louisiana businessman linked to a federal probe of former New Orleans Mayor Ray Nagin pleaded guilty today to making a $50,000 payoff to a former city official in exchange for favorable treatment for his business interests. Authorities haven't identified the city official whom Frank Fradella allegedly conspired to bribe, but court documents say the official served from May 2002 to May 2010—a period matching Nagin's tenure in office. Prosecutors say Fradella, 56, of Covington, provided truckloads of free granite to the official. Nagin and his two sons obtained a contract to install granite countertops for local Home Depot stores after Hurricane Katrina struck in 2005. Fradella also "facilitated" a consulting agreement and monthly payments of more than $10,000 to the official after he left office, according to a court filing today. Nagin has not been charged. His attorney didn't immediately return a call to The Associated Press seeking comment today. Fradella faces up to seven...
Stanford to spend the rest of his life in prison
Former jet-setting Texas tycoon R. Allen Stanford, whose financial empire once spanned the Americas, was sentenced in Houston today to 110 years in prison for bilking investors out of more than $7 billion over 20 years in one of the largest Ponzi schemes in U.S. history. "I'm not here to ask for sympathy or forgiveness or to throw myself at your mercy," Stanford told U.S. District Judge David Hittner before the latter handed down the sentence. "I did not run a Ponzi scheme. I didn't defraud anybody." Prosecutors had asked that Stanford be sentenced to 230 years in prison, the maximum sentence possible, after a jury in March convicted the onetime billionaire on 13 of 14 fraud-related counts. Stanford's convictions on conspiracy, wire and mail fraud charges followed a seven-week trial. Stanford's attorneys had asked for a maximum of 44 months, a sentence he could have completed within about eight months because he has been jailed since his arrest in June 2009. During today's sentencing...
News alert: Stanford to spend rest of his life in prison for $7B swindle
Former jet-setting Texas tycoon R. Allen Stanford, whose financial empire once spanned the Americas, was sentenced in Houston today to 110 years in prison for bilking investors out of more than $7 billion over 20 years in one of the largest Ponzi schemes in U.S. history. "I'm not here to ask for sympathy or forgiveness or to throw myself at your mercy," Stanford told U.S. District Judge David Hittner before he handed down the sentence. "I did not run a Ponzi scheme. I didn't defraud anybody." Read more in Daily Report PM.
Stanford faces life behind bars in sentencing today
If federal prosecutors have their way, former jet-setting Texas tycoon R. Allen Stanford could receive a prison sentence that spans two centuries for bilking investors out of more than $7 billion over two decades in one of the largest Ponzi schemes in U.S. history. Calling Stanford a "ruthless predator" who stole from investors "simply to satisfy his own greed and vanity," prosecutors are asking U.S. District Judge David Hittner to sentence the one-time billionaire to 230 years in prison, the maximum sentence he faces at a hearing today. A jury convicted Stanford in March on 13 of 14 fraud-related counts. Stanford's attorneys are asking for a maximum of 44 months, a sentence the 62-year-old could actually complete within about eight months because he has already been in jail since his arrest in June 2009. Prosecutors also want Hittner to order Stanford to forfeit $5.9 billion, but that would be symbolic because Stanford, now penniless, had to rely on court-appointed attorneys to...
Former La. alcohol regulator released without bail
Louisiana's former top alcohol and tobacco regulator has made his initial court appearance on federal charges that he illegally gained national crime computer information on a variety of people who were not under criminal investigation. Murphy Painter was allowed to remain free today without posting bail. He was required to surrender his passport and his gun collection. His next court appearance is next week. Painter was indicted May 23 on charges of computer fraud, making false statements and identity theft. Assistant U.S. Attorney Walter Green says Painter allegedly made false statements to the FBI to gain personal information on several people from the computers of the National Crime Information Center. Painter resigned in 2010 as commissioner of the Louisiana Office of Alcohol and Tobacco Control.