Federal prosecutors have filed criminal charges accusing Sir Allen Stanford, the Texan billionaire, of taking part in a $7bn Ponzi scheme that also allegedly involved cash payments to a senior Caribbean regulator.
The criminal indictment unsealed in Houston, Texas, on Friday alleged that Sir Allen paid more than $100,000 to Leroy King, former chief executive of Antigua’s Financial Services Regulatory Commission, to carry out sham audits of Antigua-based Stanford International Bank and shield it from regulatory scrutiny.
The indictment also claimed that Sir Allen’s private jets were used to courier financial records to be burned in Antigua.
Sir Allen and his co-defendants sold $7bn worth of certificates of deposit through SIB by promising high rates of return.
They then misappropriated most of the money, including diverting more than $1.6bn in undisclosed personal loans to Sir Allen, the indictment said. About $1bn of funds controlled by Sir Allen remain missing, a federal prosecutor said.
If convicted of fraud and obstruction charges, Sir Allen could face up to 250 years in prison. Sir Allen’s attorney said: “Allen Stanford will continue to fight these allegations. He is confident that a fair jury will find him not guilty of any criminal wrongdoing.”
Mr King and three executives of his Stanford Financial Group, including Laura Pendergest-Holt, a top Stanford deputy who was already facing obstruction of justice charges, were also charged.
Ms Pendergest-Holt has always denied any wrongdoing. The other individuals did not return requests for comment or could not be reached.
James Davis, chief financial officer of Stanford, faces similar allegations in another government filing but has not been indicted. Mr Davis’s lawyer said he would “continue to cooperate with the investigation”.
The indictment claimed that Sir Allen and his associates conspired to conceal the fraud from the Securities and Exchange Commission, with Mr King allegedly providing them with confidential information from an official SEC inquiry.
The SEC’s investigation started in 2005 but it only filed its initial civil complaint in the matter in February this year.
On Friday, the regulator introduced fresh charges to include allegations against Mr King and two company accountants.