Texas Securities Fraud: Ex-Stanford Chief Investment Officer Gets 3-Year Prison Term for Her Part in $7 Billion Ponzi Scam

Three months after pleading guilty to obstruction of an SEC proceeding related to its probe of the Stanford Ponzi scam, ex-Stanford Financial Group chief investment officer Laura Pendergest-Holt, 38, has been sentenced to three years behind bars. Texas financier R. Allen Stanford defrauded investors of over $7 billion. Pendergest-Holt was the first person indicted in the case involving him.

According to prosecutors, a number of former Stanford executives worked to conceal the true financial health of the bank and gave the SEC misleading information during its investigation into the Ponzi scheme in 2009. Pendergest-Holt had been scheduled to go to trial on 21 criminal counts before she decided to plead guilty to the single count of obstruction.

She owned up to lying to the firm’s financial advisers and investors, including telling them that the international money managers that she oversaw had placed most of the bank’s assets in investments that were liquid and conservative. She also claimed to supervise the bank’s whole investment portfolio, when she was actually only familiar with about two portions of it comprising just 12% of total assets. It wasn’t until 2009 that she found out that the portfolio’s third and biggest tier was made up of real estate that was overvalued, high-risk private equity investments, and a $1.6 billion personal loan issued to Stanford himself. Pendergest-Holt admitted that when she met with the SEC after making that discovery she purposely tried to stall the Commission’s investigation. She said that she had wanted to give the company-not Mr. Stanford-an opportunity to amend the disclosures so they “could fall into line.”

According to Assistant U.S. Attorney Jason Varnado, Pendergest-Holt was allowed to plead guilty to just one criminal count because she didn’t know that Stanford was running a Ponzi scam until it was almost over. However, although her legal team tried to get her confinement moved from prison to her home or a halfway house, Varnado opposed the change of venue. He pointed out that because of federal sentencing guidelines, this could have left her with a much shorter sentence. Her efforts to have another month at home with her family, including her 16-month old daughter, were also rejected. (Pendergest-Holt’s friends and family have promoted the image of her as just another Stanford Ponzi scam victim who also lost a great deal financially, Varnado, however, said that he didn’t think Pendergest-Holt, who also gave her own statement in court, was taking responsibility for her actions, which included misleading investors. He said that not only was she not a victim, but “she is a federal felon.”)

Meantime, Stanford is serving his 110 years behind bars in Florida. His Stanford International Bank in Antigua sold fake CDs to investors and he took their money to fund a number of businesses that failed, support his lavish lifestyle, and bribe regulators. All the while, investors from over 100 countries were wrongly led to believe that their money was being invested in bonds, stocks, and other securities.

Ex-Stanford Exec Gets 3 Years for $7B Swindle, ABC News/AP, September 13, 2012

Stanford Ex-Investment Chief Pendergest Holt Gets 3 Years, Bloomberg News, September 13, 2012

United States v. Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt, Court Docket Number: H-09-342, US Department of Justice

More Blog Posts:
Ex-Stanford Group Compliance Officer, Now MGL Consulting CEO, Says SEC’s Delay Over Whether to Charge Him in Ponzi Scam is Denying Him Right to Due Process, Stockbroker Fraud Blog, July 24, 2012

Stanford Ponzi Scam Investors File Class Action Lawsuit Suing The Securities and Exchange Commission, Stockbroker Fraud Blog, July 25, 2012

Texas Financier Allen Stanford’s Ponzi Scam: SIPC Asks District Court to Toss Out SEC Lawsuit Seeking to Reimburse Fraud Victims, Stockbroker Fraud Blog, March 5, 2012
Our Texas securities lawyers at Shepherd Smith Edwards and Kantas, LTD LLP represents investors throughout the state.

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