theftlossdeduction.com

Stanford executives admitted they had falsified financial statements and misappropriated funds as Stanford and Davis fabricated the performance of the bank’s investment portfolio.

02/27/09 - Memphis Daily News -

The U.S. Securities and Exchange Commission filed an amended complaint in Texas this afternoon against three executives of the Stanford Financial Group family of companies charged last month by the SEC with defrauding investors.

Among other things in the SEC’s amended complaint, the agency for the first time describes the alleged fraud as a "massive Ponzi scheme."

The three executives named in the SEC’s civil complaint are Stanford chairman and Texas billionaire R. Allen Stanford, Stanford’s chief financial officer James Davis and Stanford’s chief investment officer Laura Pendergest-Holt.

Neither Stanford nor Davis face criminal charges at this point.

Pendergest-Holt worked in Stanford’s East Memphis office in the Crescent Center from the mid-1990s through 2007. She supervised a group of analysts spread from Memphis to Tupelo, Miss., to St. Croix in the U. S. Virgin Islands.

Davis, a college roommate of Stanford’s chairman, also had an office here.

“In an effort to conceal their fraudulent conduct and maintain the flow of investor money into (Stanford’s banking unit’s) coffers, Stanford and Davis fabricated the performance of the bank’s investment portfolio,” the amended complaint reads. “Each month, Stanford and Davis decided on a pre-determined return on investment for (the bank’s) portfolio. Using this pre-determined number, (the bank’s) internal accountants reverse-engineered the bank’s financial statements to report investment income that the bank did not actually earn.”

The SEC also alleges in its complaint that Stanford and Davis met with a small group of senior employees in Miami – including Pendergest-Holt – between February 2 and February 6 and admitted they had falsified financial statements and misappropriated funds. That timeframe is the week prior to testimony Pendergest-Holt gave to the SEC.

Pendergest-Holt was arrested on criminal charges related to the investigation Thursday night. She was to be arraigned Friday.

FBI agents, Internal Revenue Service Criminal Investigation special agents and U.S. Postal Inspectors have been investigating the Stanford allegations since June 2008, according to an affidavit filed this week in Texas by FBI Special Agent Vanessa Walther. That investigation has paralleled an investigation being conducted out of the SEC’s Regional Office in Forth Worth, Texas.