Billionaire ordered held in fraud case

INDICTMENT: Conspiracy to commit mail, wire and securities fraud

Texas billionaire R. Allen Stanford made his first and last appearance in federal court in Richmond yesterday, requesting a detention hearing in Houston where he was indicted Thursday.

Facing 21 charges that could net him life in prison in an alleged $7 billion fraud, the tall, neatly groomed Stanford appeared before U.S. Magistrate Judge M. Hannah Lauck. Stanford, 59, wore leg shackles but no tie or belt.

Lauck granted his request and asked the U.S. Marshals Service to move him from Virginia to Texas as quickly as possible. Arrested Thursday night at his fiancée's family's home near Fredericksburg, Stanford will remain in custody at least until the hearing in Houston.

Christina Sarchio, one of Stanford's lawyers, argued that Stanford was not a flight risk, his assets were frozen, his passport surrendered and that he need not be held in custody. "We've known this indictment was forthcoming for some time," Sarchio said.

She said he has been staying in recent months both in Fredericksburg and Houston, commuting often by train from Fredericksburg to Washington to work with his lawyers on a civil action filed against him by the Securities and Exchange Commission in February.

But Steven A. Tyrrell, with the U.S. Department of Justice, said the government wanted him held in custody as both a flight risk and because of the risk he would obstruct, or attempt to obstruct, justice.

"This is an extraordinary case involving a decade-long scheme to defraud thousands of investors . . . of billions of dollars," argued Tyrell.

"A billion dollars is unaccounted for, five billion is just gone, it's just lost, and only a billion and a half has been recovered," said Tyrrell. He said Stanford could well have access to the money that is not accounted for.

In the end, Lauck, citing the seriousness of the charges and the potential sentence, sided with the government and told Stanford he could either have his detention hearing here or in Houston.

However, she noted she could not order when he will be moved, except to ask it be done expeditiously. Kevin Trevillian, with the Marshals Service, told Lauck that once an order was issued, "we will move ASAP."

Stanford, chairman of the Houston-based Stanford Financial Group, was named in the indictment unsealed yesterday that alleges the defendants engaged in a scheme to defraud investors who purchased approximately $7 billion in certificates of deposit.

The certificates were administered by Stanford International Bank Ltd., an offshore bank on the island of Antigua.

Stanford and his co-defendants allegedly misused and misappropriated most of the money, diverting more than $1.6 billion into undisclosed personal loans to Stanford, the indictment charges.

Last year, Forbes magazine listed him as the 205th wealthiest American with an estimated worth of $2.2 billion. Media accounts said he used the title "Sir" in 2006 after he was knighted by the leaders of Antigua and Barbuda.

Also charged in the indictment was Laura Pendergest-Holt, 35, SFG's chief investment officer; Gilberto Lopez, 66, the chief accounting officer; Mark Kuhrt, 37, the global controller; and Leroy King, 63, the former administrator and CEO of Antigua's Financial Services Regulatory Commission.

They are charged with one count of conspiracy to commit mail, wire and securities fraud; seven counts of wire fraud; 10 counts of mail fraud; and one count of conspiracy to commit money laundering.

The indictment accuses Stanford, Pendergest-Holt, and King with conspiracy to obstruct the SEC proceeding. Authorities allege that Stanford and his co-defendants made false and misleading representations about the regulatory scrutiny of the bank by Antiguan authorities.

Stanford was allegedly making "corrupt payments" of more than $100,000 to King to ensure that the Antiguan bank regulatory authority that he headed did not accurately audit, or verify the assets reported in the bank's financial statements.

The indictment seeks forfeiture of the proceeds of the fraud from all defendants, including forfeiture of foreign bank accounts.

The Richmond office of the Stanford Financial Group at Riverfront Plaza was closed in February, as were other Stanford offices across the nation.

Contact Frank Green at (804) 649-6340 or .