A federal grand jury in Houston has returned a new, 14-count
indictment against alleged fraudster Allen Stanford, who
was already accused in 2009 of running a $7 billion Ponzi
scheme. But the new charges are unlikely to move the case
closer to a trial.
Stanford was initially charged along with three former
executives and the former top banking regulator in Antigua, the
home of Stanford's offshore bank. But the co-defendants'
cases were separated from Stanford's last year. The new
indictment charges Stanford alone.
As in the earlier case, he is accused of conspiracy, wire fraud, mail fraud, obstruction of an SEC investigation and
conspiracy to commit money laundering.
The new indictment removes two counts of wire fraud and five counts of mail fraud, and Stanford is no longer accused
of conspiracy to commit securities fraud. Still, Stanford faces up to 250 years in prison.
A Justice Department spokeswoman declined to comment, citing a court-imposed gag order in the case.
While the new indictment sharpens the focus on Stanford as a
lone defendant, it is unclear whether it will do much to
advance a case that has
been hopelessly stalled for months.
Stanford's original trial, scheduled for January, was
postponed indefinitely after he became addicted to prescription
drugs while in federal custody and a judge ruled him
incompetent. Because of that, he is also unable to answer the new
charges against him and will not attend an arraignment
scheduled for May 19. Stanford's court-appointed defense attorney,
Ali Fazel, says that as a matter of law, Stanford cannot
enter a plea.
"He has been found incompetent," Fazel said. "We are on standby."
The fate of Stanford's initial co-defendants—former chief
investment officer Laura Pendergest-Holt, former accounting
executives Mark Kuhrt and Gilbert Lopez, and former Antiguan
banking regulator Leroy King—also remains unclear.
Pendergest-Holt, Kuhrt and Lopez have all pleaded not guilty.
King, who holds dual citizenship in the U.S. and Antigua,
has been fighting extradition to the U.S.
Fazel notes that as a matter of law, the judge in the case
could put the co-defendants on trial at any time, but instead
has chosen to delay their cases until after Stanford's trial,
which has been postponed indefinitely.
"The other defendants are free on bond and have had months to
study the charges," Fazel said. Citing the judge's gag order,
however, Fazel to speculate on why the co-defendants are
being allowed to wait for trial.
"Make of that what you will," he said.
The new indictment comes at a time when investors and others
touched by the Stanford scandal have been turning up the
heat on the authorities in hopes of moving the case along.
The delays have confounded efforts by a court-appointed
receiver to recover assets for Stanford's alleged victims,
because most of the missing funds are believed to be in
overseas accounts. Without a guilty verdict and a forfeiture
order, the funds are off limits to U.S. authorities,
meaning investors are likely to see just pennies on the
dollar.
The receiver, Dallas attorney Ralph Janvey, has instead been
focusing his efforts in the U.S. Janvey has filed dozens
of so-called "clawback" claims, including against dozens of
former Stanford employees and investment advisors. One such
claim targets two advisors widely credited with helping
authorities make their case against Stanford:
Charles Rawl and Mark Tidwell of Houston.
The two sued Stanford in 2007, saying they left the company due to rampant fraud, which the company denied. Rawl and
Tidwell say they brought their evidence to the SEC, which sued Stanford in 2009.
(Read about other whistleblower cases
and how the SEC rewards tipsters here.)
Rawl, who has not spoken publicly about the case in two years, told CNBC exclusively this week that he and Tidwell
contacted the SEC seeking help with the suit by the receiver, but were told they are on their own.
"The SEC attorneys informed us that, you know,
We've got your back guys, you're good with
us," Rawl said. But apparently that goodwill only went so far. Rawl said they were told, "
We
like you, you're our guys, but we don't control the receiver. There's nothing we can do to help you."
An SEC spokesman did not respond to CNBC's request for a comment.
Secrets of the Knight: The Allen
Stanford Story
Rawl believes
the government is intentionally dragging its feet because authorities took so long to move in on Stanford.
A 2010 SEC Inspector General's report found the agency was
aware of issues at Stanford as far back as 1997. Rawl alleges
the delays in Stanford's criminal case are part of what he calls a cover-up.
"
The further that people dig, the more embarrassment on the government's part," Rawl said.
"I think certain people hope it just fades away."
An amazing twist in the case of Allen Stanford. Two years
after the scandal, government's prosecution has ground to a halt.
Scott Cohn has been investigating. "It is impossible to nail
down, to run down all of the conspiracy theorys that attended
this case, but the longer this draws out, the longer the
theory have to run. This case is on hold because somehow, while
in custody, he became addicted to prescription drugs. That
means 28,000 investors are in limbo and so wonder if authorities
really care.
(One of the whistleblowers) Charlie Wall worked for two years in Stanford's palatial Houston headquarters. He still
finds it hard to come back here".
CW: "It makes my heart race. makes me nervous. and -- i'd like to go".
He left Stanford in 2007, claiming the company was writhe
with fraud. Never wanted to be a whistleblower, "but that's
what we've been deemed". He claims the government is
deliberately delaying the case as part of a cover up.
SC: "What is the government covering up"?
CW: "Their own embarrassment."
"There is plenty to be embarrassed about at the S.E.C., where
an internal report knew about issues about Stanford as far
back as 1987, but didn't act until 12 years later. Despite
reforms at the S.E.C., that report would come up in a trial,
but the longer the trial is delayed, the more conspiracy
theorys gain steam. Even before stanford's indictment, there
was speculation he was a government informant, which we asked
him about in 2009.
Allen Stanford: "You talking about the cia?"
SC: "you tell me."
AS: "I'm not going to talk about that".
"What about antigua? Stanford helped write the banking
regulations there, so why did the state department supply thousands
of dollars worth of computer equipment to antigua's banking
regulator in 2001? As part of the audit, it was part of a
drug enforcement program. Charlie just wonders if the truth
will ever come out.
CW: "In a certain way, seems like Stanford's still winning".
Neither the justice department nor the S.E.C. is commenting.
The S.E.C.'s hands are tied. As far as the criminal case goes,
the justice department has four prosecutors on the case, but
much of the work is effectively come to a halt because the
main defendant is in rehab. For the 28,000 investors, that is
a huge problem because a vast majority of the money is in
offshore accounts, so without a guilty verdict, authorities
can't touch the money and investors here are stuck with
pennies on the dollar. It's in marked contrast to the madoff
case. now, the Stanford losses are right up there with the
madoff ones."
