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Allen Stanford and Five Others Indicted on Fraud Charges - Bloomberg — Transcript

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0:00let's go to this press conference today
0:02are my colleagues Rob Kazami director of
0:05the division of enforcement at the
0:07Securities and Exchange Commission US
0:10Attorney Tim Johnson of the Southern
0:12District of Texas Kevin Perkins
0:15assistant director of the Criminal
0:17Investigation Division of the FBI
0:19Eileen Maher chief of the IRS Criminal
0:23Investigations and Greg Campbell Deputy
0:27Chief Inspector of the u.s. postal
0:29investigation service today in the
0:33Southern District of Texas an indictment
0:35charging are allen Stanford chairman of
0:39the Houston based Stanford Financial
0:41Group and four other individuals was
0:43unsealed the indictment alleges that
0:47Stanford and his co-defendants engaged
0:49in a scheme to defraud investors who
0:52purchased approximately 7 billion
0:55dollars in certificates of deposit see
0:58these administered by Stanford
1:00International Bank Limited an offshore
1:03bank controlled by Stanford and located
1:07in the island of Antigua according to
1:10the indictment Stanford and his
1:12co-defendants allegedly misused and
1:15misappropriated most of those investment
1:18assets including diverting at least 1.6
1:22billion dollars into undisclosed
1:25personal loans to Stanford himself all
1:29the while Stanford and his
1:31co-conspirators allegedly misrepresented
1:34to investors the financial condition of
1:37Stanford international Bank its
1:39investment strategy and the extent of
1:42regulatory oversight by the Antiguan
1:44authorities for example the indictment
1:48alleges the following that the
1:50defendants falsely claimed that Stanford
1:52international banks assets grew from
1:55approximately 1.2 billion dollars in
1:582001 to approximately eight point five
2:02billion dollars in December of 2008 as
2:05alleged in the indictment approximately
2:08five billion dollars of the reported
2:10asset
2:11consisted of notes on loans to Stanford
2:15and grossly overstated interests in
2:18island properties but Stanford
2:20international banks reported assets were
2:23heavily manipulated through the
2:25inclusion of personal loans of at least
2:27one point six billion dollars made from
2:30investor funds to Stanford as well as a
2:33round-trip real-estate transaction that
2:36saw Stanford International Bank spent
2:40sixty three million dollars in Antiguan
2:43real estate last June only to sell the
2:46undeveloped property through Stanford
2:48control entities back to itself claiming
2:52its value this time at the end of last
2:54year to be an excess of two billion
2:57dollars from sixty three million to two
2:59billion that stanford and his
3:02co-defendants one falsely represented to
3:05investors that stanford international
3:07banks investment strategy was to
3:10minimize risk and achieve liquidity and
3:12that clients the client funds were
3:16placed in safe and secure investments
3:18and promised returns on cds that in the
3:22end were simply too good to be true in
3:25light of the bank's actual investments
3:27and assets that stanford and his
3:31co-defendants made false and misleading
3:34representations about the regulatory
3:36scrutiny of the bank by Antiguan
3:39authorities when in fact stanford and
3:41his co-defendants were making corrupt
3:43payments to the former head of Antiguans
3:46financial services Regulatory Commission
3:49to ensure that the regulator did not
3:52actually and accurately audit or verify
3:55the assets reported in the bank's
3:58financial statements the indictment
4:00charges stanford with conspiracy to
4:02commit wire fraud mail fraud and
4:05securities fraud seven counts of wire
4:08fraud ten counts of mail fraud
4:11conspiracy to obstruct an investigation
4:14by the SEC obstruction of an
4:17investigation by the SEC and conspiracy
4:20to commit money laundering
4:22mr. stanford was taken into custody by
4:24federal agents in virginia last night
4:27also charged today and arrested this
4:30morning in Houston was Gilberto Lopez
4:33the Stanford Financial Group's chief
4:36accounting officer and Mark Kirk the
4:39global controller for Stanford Financial
4:42Group management all are expected to
4:45make court appearances this afternoon
4:47also charts today is Leroy king the
4:51former administrator and chief executive
4:53officer of Antigua's financial services
4:56Regulatory Commission an agency of the
4:59Antiguan government that is responsible
5:01for monitoring and regular turf and
5:04regulating banking activity on the
5:06island as alleged in the indictment
5:08Stanford paid King hundreds of thousands
5:11of dollars for his assistance in
5:14insuring that Stanford international
5:16bank was not the subject of close
5:19scrutiny by Antiguan as well as US
5:21regulators Laura Pendergast hauled the
5:25chief investment officer of Stanford
5:27Financial Group who was also charged
5:30today was indicted in Houston last month
5:32for obstruction in an SEC investigation
5:35based on false representations that she
5:38has alleged to have made at an SEC
5:41proceeding in Fort Worth earlier this
5:43year we expect miss Pendergast Hall to
5:46appear in federal court in Houston next
5:49week and James Davis the chief financial
5:52officer of sfg has been charged in a
5:55criminal information for his alleged
5:58role in the conspiracy in addition in
6:01the Southern District of Florida an
6:04indictment was unsealed today charging
6:07bruce perot
6:07in SFG security specialists with
6:11destruction of company records after a
6:14federal judge had ordered that all SFG
6:18documents be retained Crowe was in was
6:21arrested in Broward County Florida this
6:23morning the Department of Justice will
6:27vigorously root out and expose financial
6:29crimes that wreak havoc on innocent
6:32investors investors new
6:35access to accurate and truthful
6:36financial information in order to make
6:39decisions about how to invest their
6:41hard-earned savings their savings and
6:44indeed the integrity of our capital
6:46markets are jeopardized when investors
6:49are deceived these difficult economic
6:51times make the mission of the department
6:54all the more important in addition to
6:58identifying investigating and
7:00prosecuting massive financial fraud the
7:03department is committed to assisting in
7:05the recovery of investor assets and
7:07funds when the SEC announced in its
7:10first civil actions against Stanford and
7:13as many corporate entities in February
7:15the federal district court in Dallas
7:18appointed a receiver that so far has
7:20identified less than two billion dollars
7:23in recoverable assets our continued
7:26close cooperation with the SEC and the
7:29receiver has resulted in the freezing of
7:32more than 300 million dollars in
7:34investor funds in bank accounts in
7:36Switzerland the United Kingdom and
7:38Canada in addition the receiver has
7:41determined that an estimated 1 billion
7:43dollars in funds controlled by Stanford
7:45still cannot be located we are working
7:48diligently to locate further recoverable
7:51assets unraveling massive international
7:54financial fraud schemes can be a
7:56daunting task through the strength of
7:59our cooperative multi-agency
8:01relationships the Department of Justice
8:03and the FBI working together with the
8:06SEC the IRS and the US Postal Inspector
8:10Inspection Service were were able to
8:12expose this long-standing alleged
8:15conspiracy
8:16there are many thank yous to go around
8:19here first and foremost I want to thank
8:21the Securities and Exchange Commission
8:23for its tireless work on this
8:25complicated case their resilient
8:28dedication in the face of alleged
8:30continuous obstructive behavior is to be
8:33commended I want to thank the
8:35investigative efforts of the FBI and the
8:38postal inspectors and I want to thank
8:40the US Attorney Tim Johnson of the
8:43Southern District of Texas for the
8:45magnificent work of his office
8:47I want to thank the fraud section of the
8:49criminal division as well as the asset
8:52money for and love the asset forfeiture
8:55and money-laundering section of the
8:56criminal division as well and in
8:59particular I want to thank attorneys
9:00Jack Patrick Matt cueca and Paul
9:03Pelletier of the fraud section as well
9:05as assistant US attorney Greg Koster of
9:08the Southern District of Texas who are
9:11diligently working in Texas on this case
9:13as we speak
9:15financial fraud of any type is
9:18intolerable and the American people
9:21should be assured by today's actions
9:23that the Justice Department and its the
9:25partners will remain vigilant in rooting
9:28out all such fraud I now want to hand
9:31the podium over to my friend and
9:32colleague a terrific lawyer and public
9:35servant pot Robert Kazami from the SEC
9:43Thank You Lani good afternoon my name is
9:46Robert Kazami and I am proud to
9:48represent the men and women of the SE
9:50C's division of enforcement as its
9:52director on February 17th the SEC
9:56charged allen Stanford and two of his
9:58associates with a massive fraud at that
10:01time we alleged that Stanford committed
10:03that fraud through a close-knit network
10:05of associates with today's charges we
10:08see the inner workings of how that
10:10network worked and it paints a very
10:12disturbing picture we have alleged in
10:15today's charges that three additional
10:17persons enabled Stanford to both operate
10:20his scheme and avoid detection
10:22two who helped him cook his books and a
10:25third who helped him who look the other
10:28way
10:28in our amended complaint we charge
10:31accountants Marc Kurt and Gilbert Lopez
10:33with committing and aiding and abetting
10:35securities fraud Kurt and Lopez
10:38fabricated the financial statements that
10:40enabled Stanford to lie to investors
10:42about the circumstances surrounding
10:44their investment placed in a position of
10:47trust these men manufactured the
10:49performance numbers to tell investors a
10:52fictional story about how their
10:54investments were safe solid and secure
10:57and in a shocking twist to this story
11:00Stanford's scheme also corrupted a
11:03foreign regulator today we charged Leroy
11:06King the administrator and CEO of the
11:09Antigua financial services regulatory
11:11commission or F SRC with aiding abetting
11:14securities fraud by accepting thousands
11:17of dollars in bribes on a regular basis
11:19to ignore the Stanford Ponzi scheme we
11:23allege that King saw to it that audits
11:24and examinations of Stanford's
11:26operations were a sham he made sure that
11:29the FS RC did not examine the underlying
11:32investment portfolio and in a stunning
11:35breach of confidence for any regulator
11:37King provided Stanford himself with
11:40access to the FS are seized confidential
11:43regulatory file on Stanford which
11:46included the SEC information requests
11:49about Stanford's operation and indeed
11:52kinguin so far is to allow Stanford to
11:54essentially
11:55Tate the responses that the FS RC would
11:58give to the SEC in response to their
12:00information requests thus when King
12:03assured the SEC that Stanford was safe
12:06and was solid these were not the
12:09conclusions of an independent regulator
12:11following a thorough audit or inspection
12:13these were just more of Stanford's laws
12:16dressed up in the letterhead of a
12:18supposedly impartial regulator who had
12:21in fact been bought and paid for through
12:23bribes and corruption let me read from
12:26the complaint what King told the SEC in
12:31his letter of 2006 and this is in
12:33paragraph 22 of our complaint we wish to
12:37assure the SEC that the FS are seized
12:39most recent on-site examination
12:42conducted just five months ago confirmed
12:45Stanford international banks compliance
12:47with all areas of depositor safety and
12:50solvency as well as all other rules and
12:53regulations by doing these deeds the
12:57your King put personal greed ahead of
12:59his public trust he abused his position
13:02of authority and instead of being the
13:04investors protector he was their enemy
13:07perhaps what is most disturbing about
13:09this case is that Stanford's victims
13:12were not looking for one of those
13:13get-rich-quick schemes that we hear so
13:15much about and seem somewhat obvious to
13:19avoid Stanford's investors were simply
13:21looking for safe investments and
13:23low-risk opportunities and with Stanford
13:27they thought they had found such an
13:28opportunity but what they had actually
13:30found was a complicated array of phony
13:32financial statements fabricated
13:35performance and sham audits all to
13:37create the illusion of safety and
13:39liquidity and it was an illusion created
13:42in part by these three men that we have
13:43charged today all of whom rented out
13:46their expertise and their positions of
13:48authority as we were investigating this
13:50case and trying to raise the curtain on
13:52this fraud they were doing everything
13:54they could to keep that curtain down I
13:56want to conclude by thanking Lanny
13:59Breuer and my former colleagues at the
14:00Department of Justice who have worked
14:02tirelessly to build an impressive
14:04criminal case from the rubble of this
14:07a fraud the DOJ prosecutors deserve
14:10special recognition not only for today's
14:12charges but for their tireless efforts
14:14in locating and security investor assets
14:17in many

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