By: Laurel Brubaker Calkins
This appeared on bloomberg.com, see full story
Texas financier R. Allen Stanford, accused by regulators of an $8 billion investor fraud, invoked his right against self-incrimination under the U.S. Constitution and said he won’t testify in the case against him.
Stanford’s declaration was among papers filed yesterday in federal court in Dallas by lawyers for the U.S. Securities and Exchange Commission, which sued Stanford, two associates and three affiliated companies on suspicion of running a massive fraud involving the sale of high-yield certificates of deposit, or CDs, through Antigua-based Stanford International Bank.
“I hereby assert my privilege against self-incrimination under the Fifth Amendment to the U.S. Constitution and decline to testify or provide an accounting, and will continue to decline to testify, provide an accounting or produce any documents” related to the accusations, Stanford said in an affidavit signed March 9.
Stanford said he wouldn’t provide any information about his personal background or assets, conduct related to the Stanford Financial Group of companies, his communications with co- defendants, or regarding any funds he received or transferred related to the CDs at the heart of the government’s allegations.
The SEC also filed a copy of a Feb. 24 deposition of James Stanford, Allen’s father, who also repeatedly invoked his Fifth Amendment right against self-incrimination. The elder Stanford, a member of Stanford International Bank’s board, refused to answer questions about the bank’s operations, its structure or the source of his son’s money.
‘Massive Ponzi Scheme’
Neither Allen Stanford, the chairman and sole shareholder of the Stanford Financial Group of companies, nor Chief Financial Officer James M. Davis has been accused of a crime. Davis filed court papers Feb. 27 asserting his right against self-incrimination and hasn’t answered the SEC’s claim that he and Stanford ran a “massive Ponzi scheme,” in which old investors were paid using money from new participants.
Chief Investment Officer Laura Pendergest-Holt, who also was sued Feb. 17 by the SEC in the fraud allegation, was charged with criminal obstruction and released on $300,000 bond. Her lawyer, Dan Cogdell, said she is innocent and had been cooperating with investigators when she was arrested Feb. 25.
U.S. District Judge David Godbey froze all of Stanford’s personal and corporate assets and named Dallas lawyer Ralph Janvey as receiver. Stanford said in his affidavit that he was served with papers notifying him of the SEC complaint, requesting his deposition and freezing his assets.
Along with Stanford’s statement, the SEC yesterday filed copies of internal e-mails between Stanford, Davis and top Stanford officials from Feb. 4 through Feb. 16. The SEC said the messages support its allegations.
In an e-mail dated Feb. 13, Lena Stinson, Stanford’s director of global compliance, told Allen Stanford that she would resign and take her concerns to the SEC unless he immediately disclosed certain transactions with Stanford International Bank and inaccuracies in the company’s financial statements.
The case is SEC v. Stanford International Bank, 3:09-cv-00298-N, U.S. District Court, Northern District of Texas (Dallas).
