The Securities and Exchange Commission on June 19 charged two accountants who are alleged to have produced bogus financial statements and an Antiguan regulator who allegedly took bribes to look the other way as Robert Allen Stanford conducted an alleged USD8 billion Ponzi scheme. Robert Allen Stanford was indicted on June 18, and is set to reappear in a Texas court on June 24.
The SEC previously charged Stanford and his companies — Antiguan-based Stanford International Bank (SIB), Houston-based broker-dealer and investment adviser Stanford Group Company (SGC), and investment adviser Stanford Capital Management — as well as SIB chief financial officer James Davis and Stanford Financial Group chief investment officer Laura Pendergest-Holt with securities fraud in an enforcement action filed in federal court in Dallas on February 17.
The SEC has now amended its complaint to additionally charge Mark Kuhrt and Gilberto Lopez, accountants for Stanford-affiliated companies who allegedly fabricated financial statements to give investors the false illusion that their investments were solid, safe and secure. The SEC also charged Leroy King, the administrator and chief executive officer of Antigua's Financial Services Regulatory Commission (FSRC), for accepting thousands of dollars per month in bribes to ignore the Stanford Ponzi scheme and supply Stanford himself with confidential information about the SEC's investigation. King obstructed the SEC's case, according to the SEC, from 2005, when its investigation into Stanford began.
"Instead of buying the safe and sound investments he promised his clients, Stanford bought Antigua's top securities cop," said Robert Khuzami, Director of the SEC's Division of Enforcement. "While Stanford quarterbacked his massive Ponzi scheme, he paid the referee to spy on the huddles and provide an insider's play-by-play of the SEC's investigation," he continued.
Rose Romero, Regional Director of the SEC's Fort Worth Regional Office, added: "Phony financial statements, fabricated performance numbers, and sham audits are at the heart of Stanford's fraudulent scheme that swindled billions of dollars from investors worldwide. King, Kurht and Lopez abused their expertise and positions of authority to help make it all possible."
The SEC's additional charges are in coordination with criminal authorities. The US Department of Justice (DOJ) simultaneously announced federal fraud charges against Stanford, Davis, Pendergast-Holt, King, Kuhrt, and Lopez. The DOJ also charged King, Kuhrt, and Lopez with conspiracy to obstruct the SEC's investigation. The DOJ previously charged Pendergast-Holt with obstruction of justice in the SEC's investigation.
According to the SEC's complaint, Kuhrt and Lopez used a pre-determined return on investment number (typically provided by Stanford or Davis) to reverse-engineer the SIB's financial statements and report investment income that the bank did not actually earn. Information in SIB's financial statements and annual reports to investors bore no relationship to the actual performance of the bank investments, allege the authorities.
According to the SEC's complaint, King is a citizen of the US as well as Antigua and Barbuda, West Indies. He maintains residences in both Atlanta and Antigua. Lopez lives in Spring, Texas, and worked in SFG's Houston office as the chief accounting officer of SFG and its affiliate, Stanford Financial Group Global Management, LLC (SFGGM). Lopez provided accounting services to many entities under Stanford's control, including SIB, SFG and SFGGM. Kuhrt is a resident of Christiansted, St. Croix, US Virgin Islands, and is the global controller for SFGGM. He provided accounting services to many entities under Stanford's control, including SIB, SFG, and SFGGM. Kuhrt reported at various times to Lopez and Davis, but also directly to Stanford. Neither Lopez nor Kuhrt is a certified public accountant (CPA).
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