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Stanford And Associates Indicted In Ponzi Scheme Case,
by Leroy Baker, Tax-News.com, New York
Wednesday, June 24, 2009
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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