Justice Served Up Daily

Laura Pendergest Holt

Justice Served Up September 14, 2012

English: Mug shot of Allen Stanford.

English: Mug shot of Allen Stanford. (Photo credit: Wikipedia)

Stanford Financial Chief Investment Officer Gets 3 Years in Prison (Bloomberg) - Talk about the deal of the century for prison time, Laura Pendergest Holt (39) was scheduled to begin defending herself at trial about this time but instead took a plea deal to avoid the same fate of her boss Allen Stanford (serving 110 years in prison).  Prosecutors had settled on a take-it-or-leave-it deal for U.S. District Judge David Hittner of 36 months for Holt on the charge of obstructing justice (nothing associated with the Ponzi scheme itself).  Even though Hittner agreed to accept the plea and the sentence, he had received a number of letters from victims telling him to reject the deal in an effort to get her more prison time.  Holt was not allowed to self-report to prison and was taken into custody.  She leaves behind a husband to care for her 16 month old daughter.

Do Ethics Courses Fall Short In Business Schools (Daily Herald) - Perhaps it is a call for business schools to look at doing something different.  With large white-collar cases involving graduates of Harvard, Wharton (Penn), Southern Cal and more .... it may be time for a change in the way ethics is taught.  Perhaps the answer is that there is a little ethical fading in all of us that we need to be aware of in order to fend off that temptation that is surely coming our way.

10 More Arrested in Long Island Rail Road Disability Fraud (NY Times) - I think this is a fascinating case of usually hard-working people who found an easy way out by claiming they were unable to work ... a kind of self-retirement because "I deserve it!"  Ten more people from the LIRR were arrested on Tuesday, bringing to total to 32 being charged for getting a doctor to say they could not work and collected benefits.  Perhaps this is a wake up call to the many who cheat on workers compensation claims .... but I doubt it.

CA Woman Steals $550k From Employer Only To Be Scammed Herself (Acorn) - A once loyal employee of Advantek (promotional marketing company) based in California, was caught taking $550k by passing 170 checks to herself over a year's period.  When busted, she told why she needed the money ... to bail out her on-line boyfriend from Spain who was said to be held in U.S. Immigration.  It turned out, that the boyfriend was a scammer himself who was part of a Nigerian criminal enterprise.

Federal Inmate's Family Gets Settlement For Missed Diagnosis of Cancer (Press & Guide) - The federal prison system does have healthcare for inmates, but here's a story of pure neglect.  Timothy Bell was sentenced to a 30 month prison term for a non-violent drug charge.  For 18 month, he complained to prison doctors and adminstrators of discomfort he was feeling near the pits of his arms.  Finally, after several attempts to get some medical attention, he was transferred to a medical prison where he was diagnosed with stage 4 non-Hodgkin's lymphoma.  Bell was released from prison on November 10, 2009, a year later he died at the age of 39.  Yesterday, the federal government agreed to pay his family nearly a million dollars as a settlement.  So much for government healthcare.

 

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Allen Stanford Verdict - Guilty

English: Mug shot of Allen Stanford.

Image via Wikipedia

After deliberating for almost 4 days, the jury in the Allen Stanford trial returned a verdict today, GUILTY.  The nearly 6 week trial was 4 weeks of prosecution and a little over a week of defense in the trial that accused Stanford of running a $7 billion ponzi scheme.  The jury was deadlocked as of yesterday, but Judge David Hittner told them to go back to it....and they did, delivering a guilty verdict on 13 of 14 charges.  Stanford was not guilty on the charge of wire fraud related to giving Super Bowl tickets to an Antiguan bank regulator....not that that will make much difference at sentencing.  Stanford will be going to prison for many years.

The prosecution said that Stanford used the finance companies he had set up as "personal ATMs", spending money that investors thought was going into safe certificates of deposit with banks.  Instead, the government presented a case of a high-flying lifestyle of yachts, homes, and some small failed businesses....including a Caribbean airline.

The defense has claimed all along that Stanford was innocent and that even his defense was hampered from the start.  Shortly after being arrested in 2009, Stanford was beaten in a prison fight which caused him trauma to the head and, subsequently, an addiction to anti-depressants.  He was transferred from a prison in Houston to Butner, NC (same prison as Bernard Madoff) to undergo treatment.  He was returned to Houston last year and given a clean bill of health, though his defense team claimed lingering effects of the beating caused a loss of memory, which prohibited Stanford from helping with his own defense.  The government said he was faking and that the trial should proceed.

After the medical issues were cleared, Stanford's defense team said they wanted out of the trial because they had not been paid for their services (Stanford's legal bill is being footed by the U.S. Taxpayer).  In addition to the attorneys not being paid, there were a number of expert witnesses, banking experts and forensic accountants, whose bills had not been paid.  An appellate judge ordered some payments sent to the defense team and told them to get back to work.

The main witness against Stanford was his old friend and college roommate from Baylor University, James Davis, who was the former Chief Financial Officer.  Davis portrayed Stanford as a master manipulator who was actively running the company despite Stanford's defense claims that he was a passive owner.

At sentencing, Stanford faces decades in prison.  The next trial to tak place for those charged with Stanford Financial will be Chief Investment Officer, Laura Pendergest Holt, whose trial is scheduled to begin in April.   She is currently free on bail and won an earlier appeal to have her case tried separately from Stanford.  Today, that looks like a good call.

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Allen Stanford Trial - Week Two

English: Mug shot of Allen Stanford.

Image via Wikipedia

It takes some of these long trials to get going, but the Allen Stanford trial ramped up big this week. 

On Tuesday, Stanford, if he did not know it already, had really ticked off a woman in Antigua.  Marian Althea Crick said she remembers Allen Stanford as trying to use his charm to pursuade her to overlook regulations in the small island nation where she was a director of a regulatory agency that oversaw financial institutions like Stanford's bank he opened there in the 1990's.  Ms. Crick, who is now chairman of the Financial Services Regulatory Commission in Antigua, said she complained to Antiguan authorities when Stanford was also put on the board that regulated banks in Antigua....a clear conflict.  Her quote on the stand was, "It reminded me of a saying we have at home, it was a classic case of the rat being put in charge of the cheese." However, there was no clear violation that she could point to that incriminated Stanford...but the there is plenty of that to come in this trial.  You have to admit, once you clear out the regulators, it looks like you set the stage for some big things.

Crick resigned as a regulator in 2002 and was replaced by Leroy King.  King was accused of taking a part in hiding Stanford's alleged fraud as well as a few million dollars in payments from Stanford financial....along with a few Super Bowl tickets (tis the season).  King is still in Antigua fighting extradition to the U.S. to face charges.

Another witness for the government was Mark Collinsworth, who was a research analyst at Stanford Financial Group, Co. in the U.S.  Collinsworth painted a picture of Stanford as not being that engaged with the business and that he never received any direction from Stanford to falsify financial statements.  He also said that James Davis, former CFO at Stanford and is cooperating with government, had hired people who had no business working for a financial institution. Davis once hired one of his former farm hands as a commodities analyst and his preacher as an analyst for Middel Easter affairs.  What's the harm if the whole thing was a fraud.

And what is a good fraud if you can't have some fun in the midst of it.  Henry Amadio, a former accountant for Stanford in Houston, testified that he kept a secret report for Allen Stanford to track the flow of over $2 billion from the Antiguan bank to other entities controlled by Mr. Stanford.  Prosecutors believe that the promises Stanford made to depositors who thought they were investing in a safe investment, was nothing but a rouse to fund yachts, homes, jets or far flung enterprises that were risky.  Amadio worked directly for Mark Kuhrt at Stanford Financial.  Kuhrt was arrested and charged in the scandal in June 2009, the day after Allen Stanford was arrested.

On Thursday, it was James Davis, Stanford's former roommate at Baylor, former friend and former CFO at Stanford Financial, who took the stand.  Davis said in his testimony that, "I was involved in faking the numbers, but he was the chief faker."  Sounds like a new business term.  Davis (63), who is a government witness after pleading guilty in 2009, has a lot riding on this testimony as he is hoping to get a prison sentence that will be short enough that he can live out some of it in the free world.  Davis had some admissions of his own as he talked about his 3-year affair with Stanford Financial's Chief Investment Officer, Laura Pendergest Holt.  He noted that Stanford approved of the affair by saying, "That's good; she'll be loyal." Holt is still planning on going to trial later this year, so I'm sure this story is going to be repeated again in a few months.

Davis said that he knew Stanford was a fraud back in 1991 (18 years prior to his arrest), so why did he stay, "I believed in Mr. Stanford - wrongfully so.... but I continued to stay there and lie with him," he told Assistant U.S. Attorney William Stellmach under questioning.

Davis has a lot to say.  He is expected to be on the stand next week as well.

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