International Law

On June 19, 2009, the Securities and Exchange Commission charged two accountants who produced bogus financial statements and an Antiguan regulator who took bribes to look the other way as Robert Allen Stanford conducted an alleged $8 billion Ponzi scheme.

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 amended its complaint today 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 since 2005, when its investigation into Stanford began.

The SEC's additional charges today are in coordination with criminal authorities. 

The U.S. Department of Justice (DOJ) today 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.

The SEC's complaint alleges that King facilitated the Ponzi scheme by ensuring that the FSRC conducted sham audits and examinations of SIB's books and records. 

In exchange for bribes paid to him over a period of several years, King made sure that the FSRC did not examine SIB's investment portfolio. King also provided Stanford with access to the FSRC's confidential regulatory files on him, including the SEC's requests for information from FSRC in its investigation. 

King went so far as to allow Stanford to essentially dictate the FSRC's responses to the SEC on those information requests. King made false assurances that there was no cause for concern about Stanford International Bank. He collaborated with Stanford to withhold significant information being requested by the SEC.

According to the SEC's complaint, King is a citizen of the U.S. 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, U.S. 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).