x Abu Dhabi, UAETuesday 25 July 2017

Allen Stanford in US court over fraud

The Texas billionaire will appear in a federal court in Virginia over allegations of massive fraud involving his Antigua bank.

HOUSTON // Allen Stanford will appear in a federal court in Virginia today over allegations of massive fraud involving his Antigua bank, US officials said after he surrendered to the FBI. The Texas billionaire is expected to be transferred to Houston after his initial court appearance to face criminal charges in a sealed indictment, according to a federal official. The golf and cricket promoter already faces civil charges brought by the US Securities and Exchange Commission (SEC) that he fraudulently sold US$8 billion (Dh29bn) in certificates of deposit with improbably high interest rates from his Stanford International Bank Ltd, headquartered in Antigua.

Sir Allen, 59, was spending the night in a Virginia jail and was due to appear before a federal magistrate judge this morning in Richmond, the federal official said. "He surrendered," said Dick DeGuerin, Sir Allen's Texas attorney, after speaking with his client. "He's in FBI custody." The Justice Department and FBI declined to comment on his arrest. Justice Department officials, including the US attorney from Houston, plan to hold a news conference today in Washington to announce the criminal charges.

Sir Allen, who holds dual US and Antigua and Barbuda citizenship, denies any wrongdoing. "If the SEC had not come in and disembowelled a living, breathing strong organisation the way they did, there's no question on God's green earth that everyone would have been made whole and we would have had a lot of money left over," he said in an interview Reuters in April. The first American to be knighted by Antigua and Barbuda in 2006, Sir Allen made his first fortune in real estate in the early 1980s and expanded the family firm into a global wealth management company.

Before the SEC levelled the fraud charges, his personal fortune was estimated at US$2.2 billion (Dh8bn) by Forbes magazine. Sir Allen was a generous sports patron and owned homes in Antigua, St Croix, Florida and Texas. To date, the only Stanford official to have faced federal charges is Laura Pendergest-Holt, the chief investment officer for the Stanford Financial Group. She was arrested by the FBI in February and later freed on bail.

Ms Pendergest-Holt and James Davis, Sir Allen's one-time roommate at Baylor University who served as the company's chief financial officer, were both named in the SEC's civil complaint. Mr Davis has not been charged with criminal activity and is co-operating with federal authorities, although his attorney has said he expects his client to be indicted. Nigel Hamilton-Smith, the Antiguan official named to oversee the liquidation of the offshore bank that was run by Sir Allen, has accused the tycoon of using client funds to pay for jets, lavish homes and yachts.

Sir Allen's Antiguan liquidators and the company's US-based receiver have been locked in a battle over control of the offshore bank. Ralph Janvey, the Dallas lawyer appointed by US District Judge David Godbey to oversee Sir Allen's assets and operations, has filed court papers arguing he should oversee the Antigua bank along with the US-based Stanford entities he controls. The Antiguan liquidators disagree.

* Reuters