RICHMOND, Va., (Reuters) – Texas billionaire Allen  Stanford, three associates and a top Caribbean regulator were  indicted on fraud, conspiracy and obstruction charges in an  elaborate $7 billion pyramid scheme to bilk investors, U.S.  Justice Department officials said yesterday.

Allen Stanford

A federal judge in Virginia ordered Stanford, a flamboyant  59-year-old financier, to be transferred to Houston for a  hearing on whether he should be granted bail on charges he  orchestrated the fraud through his bank on the Caribbean island  of Antigua.

He could face life in prison if convicted on all of the  charges brought by a grand jury in Texas, assistant Attorney  General Lanny Breuer told reporters in Washington.

Stanford, who surrendered to FBI agents outside his  girlfriend’s house in Virginia late on Thursday, entered a  Richmond federal courtroom in ankle shackles and sat straight  with his chin in his hands during a brief hearing before U.S.  Magistrate Hannah Lauck.

“To go to Texas, yes ma’am,’“ he said when Lauck asked if  he preferred to have his bail hearing in Houston or Virginia.  Stanford, who has a moustache and salt-and-pepper hair, was  dressed in a white shirt and dark pants.

Stanford and executive Laura Pendergest-Holt, accountants  Gilberto Lopez and Mark Kuhrt and Antigua’s top regulator,  Leroy King, were hit with 21 charges alleging they concocted a  broad ruse to deceive investors, fabricate financial statements  and hide their fraud.

“This scheme was carefully orchestrated to make sure the  true information never saw the light of day,” said Robert  Khuzami, head of the Securities and Exchange Commission’s  enforcement unit.

Stanford, who lived lavishly and whose passion for cricket  translated into generous backing for the sport in the  cricket-loving West Indies, has denied any wrongdoing. His  lawyer said yesterday the financier would fight the  allegations.

“He is confident that a fair jury will find him not guilty  of any criminal wrongdoing,” attorney Dick DeGuerin said in a  statement.
His attorneys argued in Lauck’s court that Stanford was not  a flight risk, but she said: “I do think there’s sufficient  evidence here to warrant a detention hearing.”

AUTHORITIES VOW
TO ROOT OUT
FRAUD
Stanford’s case is the first major financial crimes  prosecution brought under the administration of President  Barack Obama, who has vowed to crack down on economic  malfeasance amid a deep global recession.

Breuer said economic troubles made such regulation even  more important and vowed the government “will remain vigilant  in rooting out all such fraud.”

Kevin Perkins, assistant director of the FBI, said the  agency has opened 100 new probes into phony pyramid investment  schemes in recent months.
With many Americans already angered by the financial sector  crisis, investigators have been under heavy pressure to crack  down on financial and corporate fraud cases after the  government failed to respond to warnings over the years that  money manager Bernard Madoff was running a massive swindle.

Madoff was arrested last year and admitted in March to  orchestrating the biggest financial scam in Wall Street  history.
Breuer said Allen and associates misappropriated most of  the $7 billion held in investors’ funds and so far less than $2  billion in recoverable assets had been identified.

Stanford already faces civil charges by the U.S. Securities  and Exchange Commission — brought in February — that he  fraudulently sold $8 billion in certificates of deposit with  improbably high          interest rates from his Stanford International  Bank Ltd, headquartered in Antigua.
The SEC filed new civil charges yesterday against the  company officials and the Antigua regulator, saying they aided  Stanford in the Ponzi scheme.

‘PERSONAL PLAY
GROUND’
The new SEC complaint on Friday said Pendergest-Holt and  James Davis, his one-time roommate at Baylor University,  misappropriated billions of dollars and falsified company  financial statements.

It said Davis, Lopez and Kuhrt developed elaborate methods  to handle and hide financial information, transferring it to  portable memory drives and deleting it from U.S.-based servers  and flying paper files on Stanford’s private jets to Antigua,  where they were burned.

Stanford used some of the funds to finance his “personal  playground” in Antigua, the complaint alleged, including a  restaurant called the “Sticky Wicket” and “Stanford 20/20,” an  annual cricket tournament boasting a $20 million purse.

Stanford, who holds dual U.S. and Antigua and Barbuda  citizenship, became the first American to be knighted by  Antigua and Barbuda in 2006 and is known as “Sir Allen” in the  Caribbean.

A fifth-generation Texan, he 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 leveled the fraud charges, his personal  fortune was estimated at $2.2 billion by Forbes magazine. His  wealth-management clients once included professional golfer  Vijay Singh and he owned homes in Antigua, St. Croix, Florida  and Texas.