FBI Makes First Arrest in Stanford Financial Probe

Criminal complaint reveals $1.6 billion loan to "Executive A"

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    NEWSLETTERS

    TK
    ASSOCIATED PRESS

    The FBI arrested the chief investment officer of Stanford Financial Group in Houston on Thursday, the first criminal charges in a massive fraud investigation.

    The charges also alleged a top SFG executive, presumably founder Allen Stanford, loaned himself $1.6 billion.

    Laura Pendergest-Holt was charged with obstructing the $8 billion fraud probe by lying to government investigators.

    Pendergest-Holt's attorney said she has done nothing wrong.

    "She unequivocally committed no crime," attorney Dan Cogdell told the Houston Chronicle. "Before today she cooperated with authorities and even flew here to cooperate. We were shocked at the way she was arrested."

    The complaint, filed in federal court in Dallas, said that the FBI's investigation began in June 2008.

    At least three Stanford executives who are cooperating with the FBI attended key meetings in Miami the week of Feb. 2. At the meetings, Stanford officers and attorneys plotted how to respond to inquiries by the Securities and Exchange Commission, the document said.

    In a sign the FBI may have secretly recorded the meetings, the complaint includes several quotes from people who were there.

    "The party is over," an unidentified attorney told a cooperating witness, who also was not identified.

    In a phone call two days later, the same attorney said, "The earnings calculations were not calculated properly. The assets may or may not be there," an FBI agent wrote in the complaint.

    In Miami, some cooperating witnesses said they were shocked to learn about a $1.6 billion loan to a "shareholder" who they believed was actually an executive, identified in the complaint only as "Executive A." But he was named in some reports as Stanford.

    Executive A "pounded on the table" and insisted "the assets are there" after several others said they wanted to tell authorities the truth, according to the complaint.

    An FBI witness said he felt like he "had been kicked" when informed of the huge loan, the complaint said.

    The following week, Pendergest-Holt lied under oath when questioned by SEC investigators in Fort Worth, the document said.

    Pendergest-Holt falsely testified that she had met with nobody other than her attorney to prepare for her testimony, the complaint said.

    She also failed to reveal anything about the loan, the complaint said.

    A federal judge in Dallas has seized Stanford's assets.

    Allen Stanford has been sued by the SEC but does not face any criminal charges.

    The case has a number of Texas connections.

    Stanford attended high school and college in Fort Worth and Baylor University in Waco, his father lives in Mexia, and his company is based in Houston. The SEC regional office in Fort Worth is coordinating the civil investigation.

    Click here to read the criminal complaint.