Allen Stanford Ponzi Scheme

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Stanford Claims Asset Seizure Left Him No Money to Pay a Lawyer

By Andrew M. Harris and Laurel Brubaker Calkins
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_5V6MTwJ.Xg#

April 1 (Bloomberg) -- Texas billionaire R. Allen Stanford, accused by the U.S. Securities and Exchange Commission of running a "massive" fraud through his investment businesses, said he has no money to hire an attorney.

Stanford said he has "been unable to retain counsel due to all of my assets and money having been seized by the actions of the court-appointed receiver," according to a March 30 Dallas court filing that was posted on its Web site yesterday.

The SEC sued Stanford and two associates on Feb. 17, accusing them of running a multibillion-dollar fraud through Antigua-based Stanford International Bank. Denying the SEC's allegations, Stanford, 59, also said the court should transfer the case to Houston where he has a home.

Also named in the SEC suit were the bank's chief financial officer, James M. Davis, 60, and Laura Pendergest-Holt, 35, who was chief investment officer for the Stanford Financial Group.

In February, U.S. District Judge David Godbey froze the assets of the Stanford companies and those belonging to Stanford, Davis and Pendergest-Holt and placed them under the control of court-appointed receiver Ralph Janvey.

Davis is "fully cooperating" with all federal investigations, his lawyer, David Finn, has said. Pendergest- Holt was arrested on Feb. 26 by U.S. Federal Bureau of Investigation agents and accused of obstructing the SEC's probe.

Criminal Charges

The only person criminally charged in the case, Pendergest- Holt, is free on a $300,000 bond. Her lawyer, Dan Cogdell, said she is innocent and that she had been cooperating with investigators until her arrest.

Stanford, a Mexia, Texas, native who was knighted by the government of Antigua and Barbuda in 2006, was ranked by Forbes Magazine last year as the 605th richest person in the world.

He has an estimated net worth of at least $2 billion, according to a March 2008 filing in a Florida paternity case brought by a mother of two children.

Last week, Stanford asked Houston criminal defense lawyer Dick DeGuerin to represent him, although he couldn't pay him a formal retainer. DeGuerin said at the time he wouldn't represent Stanford for free.

"We prepared that filing for him," DeGuerin said yesterday in a phone interview. "It's plain vanilla because he hadn't had any money to defend himself."

DeGuerin said he didn't submit the document on Stanford's behalf because "in the federal court system, any lawyer that signs onto a case is in for the duration."

‘Cheap'

DeGuerin declined to say how much he would charge to defend Stanford, saying his legal services are "cheap at any price."

Stanford plans to seek defense costs from corporate insurance policies and may also ask the court to unfreeze assets to hire counsel, DeGuerin said.

Pendergest-Holt sued Lloyds' of London earlier last month for failing to respond to her request for legal defense funds through the company's directors and officers' policy.

She has also sued Stanford corporate attorney Thomas Sjoblom, a partner in New York-based Proskauer Rose LLP, for malpractice. Pendergest-Holt claims the lawyer accompanied her to a Feb. 10 meeting with the SEC and failed to advise her he wasn't her personal attorney and she had the constitutional right to not answer investigators' questions.

Pendergest-Holt alleged she was arrested as a result of Sjoblom's inaction at that Feb. 10 meeting.

The case is Securities and Exchange Commission v. Stanford International Bank Ltd. 09cv298, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporters on this story: Andrew Harris at the federal court in Chicago: [e-mail], and Laurel Brubaker Calkins in Houston at [e-mail].
Last Updated: April 1, 2009 00:01 EDT

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