James Davis and Laura Pendergest-Holt became friends after they met at church when she was a teenager in a small town. He mentored her and helped get her a job that paid $1 million a year. Now his evidence could put her behind bars for a long time.
Pendergest-Holt, who was chief investment officer in alleged swindler Allen Stanford's financial group, is a target for prosecutors in the $7 billion fraud case.
Davis, Stanford Financial Group's former chief financial officer, has been cooperating with the government for six months. On August 27, he pleaded guilty to fraud, conspiracy and obstruction of justice, and he signed a plea deal with prosecutors that puts Pendergest-Holt in a very tight spot.
Pendergest-Holt has pleaded not guilty to 21 felony counts of fraud, conspiracy and obstruction. Her criminal defense lawyer said previously that she will fight the charges at trial. The 36-year-old faces the possibility of life in prison -- a maximum penalty of 375 years -- if convicted on the charges.
Few female executives have ever faced such a litany of charges in a white-collar case.
"Typically what happens in a federal criminal action is the first people who cooperate get the best deal," Ken Springer, a former FBI agent and president of consulting firm Corporate Resolutions Inc.
Pendergest-Holt would have to have a very good defense to justify battling the charges in a post-Bernard Madoff era where juries and judges will likely take a harsher view of white-collar criminals, Springer and others said.
"If she had come around four months ago when she first got arrested, that would have been the time to cooperate because she could have delivered Davis," Springer said.
Pendergest-Holt is free on a $300,000 bond. Her criminal defense lawyer did not respond to requests for comment.
DEVIL IN DETAILS
The plea agreement with Davis details Pendergest-Holt's alleged involvement in a scam where Stanford clients were said to be duped into believing their investments were safe.
Instead, U.S. prosecutors said the funds were put into an illiquid pool of real estate and private equity investments, a fact they say Pendergest-Holt sought to hide from investors and research analysts who worked for her.
From 2005 through at least February 2009, Stanford, Pendergest-Holt and Davis attended investor conferences "where they would falsely tout the assets and earnings" of the offshore bank's assets and earnings, the plea deal said.
She is also accused of lying to investigators from the U.S. Securities and Exchange Commission. At the direction of Davis, Pendergest-Holt falsely told the SEC that she did not know about the offshore bank's alleged bogus assets, the plea agreement said.
Pendergest-Holt was also named to the offshore bank's investment committee in 2005, and "held herself out to investors" and others as managing the bank's entire investment portfolio, according to the June 18 indictment.
Davis' plea agreement contains an unusual amount of new information about the government's case that may signal the prosecutors' next move, said Gurbir Grewal, an attorney at Howrey LLP and former federal prosecutor.
"I think what they are trying to do is encourage a plea or have people come in and cut a deal," Grewal said.
The government has Stanford in their sights and will be eager to line up people to testify against him, so any new information from Pendergest-Holt, if she decided to cooperate, will likely be welcomed.
"If she has another piece of this case that Davis doesn't have, it might help," Corporate Solutions' Springer, said, adding that she could already be helping the government.
At first, after civil fraud charges were filed in February, Pendergest-Holt cooperated with the SEC.
But several days later, she was suddenly arrested in the lobby of Stanford Financial Group's Houston headquarters and stopped her cooperation, her lawyer said in court hearings.
BALDWYN CONNECTION
Davis, 60, and Pendergest-Holt met in a church in Baldwyn, Mississippi. At the time she was a teenager, but the pair remained close and years later Davis and Stanford hired her out of graduate school in 1997 as a research analyst.
Pendergest-Holt zoomed through the ranks at Stanford Financial Group and last held the job of chief investment officer, a job that paid her about $1 million per year in salary and bonus.
Davis was her direct supervisor, so his cooperation with the government sets up an uncomfortable showdown between the two small-town neighbors.
"It puts her in a difficult position to move forward," Howrey's Grewal said. "Here you have a mentor that is going to be requested to provide additional details about her conduct."
David Finn, Davis' attorney, said after a court hearing in July that his client agreed to cooperate because he felt very guilty. The attorney added that Davis was driven by greed.
"He had a heavy heart the very first time I met him," Finn told reporters outside federal court in Houston. "Ultimately he knew he did wrong," he said, adding that the evidence in the case was "overwhelming."
Showing posts with label Pleads. Show all posts
Showing posts with label Pleads. Show all posts
Saturday, 5 September 2009
Saturday, 29 August 2009
Friday, 28 August 2009
Ex-Stanford CFO Davis Pleads Guilty in Fraud Case (Update2)
James M. Davis, chief financial officer of Stanford Financial Group Co., pleaded guilty to helping R. Allen Stanford in a $7 billion Ponzi scheme and prosecutors said he will testify against his former colleagues.
Davis, 60, admitted three felony counts today before U.S. District Judge David Hittner in Houston and agreed to forfeit $1 billion. Davis has been “cooperating like crazy” with authorities investigating the company, said his defense attorney, David Finn of Dallas.
“Mr. Davis knows he’s looking at very, very stiff punishment down the road,” Finn said after the plea hearing. “Probation is out of the question in this case.”
The Justice Department will request leniency in Davis’s sentencing if it deems his cooperation “sufficient,” Assistant U.S. Attorney Paul Pelletier told Hittner. Davis has met for hundreds of hours with federal investigators, helping them find hundreds of millions of dollars that he claimed Stanford stashed in European banks, Finn said.
“You’ll see just how far back this goes,” Finn said of the alleged fraud. “This didn’t get cooked up overnight.”
Stanford, the company founder who is being held without bail, was to appear before Hittner later today for a hearing on his legal defense. Instead, he was taken to a medical center with what a court aide said was an elevated pulse rate.
‘Getting Together’
“I think it had everything to do with my client and Hittner and the government getting together in court today,” Finn said of Stanford’s health emergency. “You could call it serendipity, but what are the odds?”
Stanford’s assets were frozen by the court at the U.S. Securities and Exchange Commission’s request and his current lawyer has asked to leave the case, saying he might not get paid. A U.S. grand jury indicted Stanford and Chief Investment Officer Laura Pendergest-Holt for fraud in June.
Davis waived indictment and was charged separately with conspiracy to commit mail, wire and securities fraud, as well as mail fraud and conspiracy to obstruct an SEC investigation.
The SEC in a civil suit accused Stanford, Davis and Pendergest-Holt of running a fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. Stanford and Davis promised “improbable if not impossible” returns on the CDs, the SEC said.
After today’s hearing, Finn told reporters Davis’s cooperation included a visit to his family farm in rural Mississippi, where he helped a government dive team search for evidence in tanks and ponds.
Not a Dime
Asked what the nature of that evidence was, Finn replied, “you’ll find out.” Davis is working as a laborer on a Michigan farm, where he’s being paid $10 an hour, and is penniless, his lawyer said.
“He doesn’t have a dime,” Finn said. “He can’t even pay me.”
Since his July 13 arraignment, Davis has been free on $500,000 bond, which includes a $5,000 cash deposit. He faces as many as 30 years in prison and won’t be sentenced until the government no longer needs his cooperation.
Finn said Davis’s cooperation has focused on two fronts: locating assets Stanford stashed overseas and helping the U.S. extradite Antigua’s top banking regulator, Leroy King, who was indicted along with Stanford for allegedly taking bribes to conceal the fraud.
“Cash payments were being made under the table in an airplane hanger by Allen Stanford to the regulator,” Finn said.
King, who is under house arrest, is scheduled for an extradition hearing in Antigua next month, according to prosecutors.
The case is U.S. v. Davis, 4:09-cr-00335, U.S. District Court, Southern District of Texas (Houston).
Davis, 60, admitted three felony counts today before U.S. District Judge David Hittner in Houston and agreed to forfeit $1 billion. Davis has been “cooperating like crazy” with authorities investigating the company, said his defense attorney, David Finn of Dallas.
“Mr. Davis knows he’s looking at very, very stiff punishment down the road,” Finn said after the plea hearing. “Probation is out of the question in this case.”
The Justice Department will request leniency in Davis’s sentencing if it deems his cooperation “sufficient,” Assistant U.S. Attorney Paul Pelletier told Hittner. Davis has met for hundreds of hours with federal investigators, helping them find hundreds of millions of dollars that he claimed Stanford stashed in European banks, Finn said.
“You’ll see just how far back this goes,” Finn said of the alleged fraud. “This didn’t get cooked up overnight.”
Stanford, the company founder who is being held without bail, was to appear before Hittner later today for a hearing on his legal defense. Instead, he was taken to a medical center with what a court aide said was an elevated pulse rate.
‘Getting Together’
“I think it had everything to do with my client and Hittner and the government getting together in court today,” Finn said of Stanford’s health emergency. “You could call it serendipity, but what are the odds?”
Stanford’s assets were frozen by the court at the U.S. Securities and Exchange Commission’s request and his current lawyer has asked to leave the case, saying he might not get paid. A U.S. grand jury indicted Stanford and Chief Investment Officer Laura Pendergest-Holt for fraud in June.
Davis waived indictment and was charged separately with conspiracy to commit mail, wire and securities fraud, as well as mail fraud and conspiracy to obstruct an SEC investigation.
The SEC in a civil suit accused Stanford, Davis and Pendergest-Holt of running a fraud scheme centered on the sale of certificates of deposit by Antigua-based Stanford International Bank Ltd. Stanford and Davis promised “improbable if not impossible” returns on the CDs, the SEC said.
After today’s hearing, Finn told reporters Davis’s cooperation included a visit to his family farm in rural Mississippi, where he helped a government dive team search for evidence in tanks and ponds.
Not a Dime
Asked what the nature of that evidence was, Finn replied, “you’ll find out.” Davis is working as a laborer on a Michigan farm, where he’s being paid $10 an hour, and is penniless, his lawyer said.
“He doesn’t have a dime,” Finn said. “He can’t even pay me.”
Since his July 13 arraignment, Davis has been free on $500,000 bond, which includes a $5,000 cash deposit. He faces as many as 30 years in prison and won’t be sentenced until the government no longer needs his cooperation.
Finn said Davis’s cooperation has focused on two fronts: locating assets Stanford stashed overseas and helping the U.S. extradite Antigua’s top banking regulator, Leroy King, who was indicted along with Stanford for allegedly taking bribes to conceal the fraud.
“Cash payments were being made under the table in an airplane hanger by Allen Stanford to the regulator,” Finn said.
King, who is under house arrest, is scheduled for an extradition hearing in Antigua next month, according to prosecutors.
The case is U.S. v. Davis, 4:09-cr-00335, U.S. District Court, Southern District of Texas (Houston).