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Stanford indicted on charges in alleged $7 billion swindle

The onetime billionaire sports enthusiast has proclaimed his innocence since the SEC brought accusations against him in February.

By Staff writer of The Christian Science Monitor / June 20, 2009

Assistant Attorney General Lanny Breuer, at podium, speaks at a news conference at the Justice Department in Washington, Friday, regarding the recent surrender of Texas billionaire R. Allen Stanford for fraud charges.

Gerald Herbert/AP

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Robert Allen Stanford, the ostentatious Texas real estate and banking tycoon, was indicted along with four others Friday on charges of scheming to defraud investors of $7 billion while corrupting regulatory officials and obstructing justice.

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The onetime billionaire sports enthusiast, who was made a knight by Antigua for reviving cricket in the Caribbean, is accused of fraudulently inflating the value of his Stanford International Bank from just over $1 billion in 2001 to $8.5 billion in 2008. He and his cohorts are also accused of conning investors into buying $7 billion in certificates of deposit, promising those funds were in "safe and secure" investments. He assured them the bank's strategy was to "minimize risk and achieve liquidity," despite the unusually high rates of return.

"In the end, [those promises] were simply too good to be true in light of the bank's actual investments and assets," said Assistant Attorney General Lanny Breuer, who announced the details of the charges at a press conference Friday in Washington. "According to the indictment, Stanford and his co-conspirators allegedly misused and misappropriated most of those investment assets, including diverting $1.6 billion into undisclosed personal loans to Stanford himself."

The mogul has insisted on his innocence since the Securities and Exchange Commission first accused him in February of running a "massive ongoing fraud." He did again Friday through his lawyer.

After disappearing for weeks after the initial SEC charges, Mr. Stanford went on a media offensive, calling the charges "baloney" and insisting he was not involved with a Ponzi scheme, like the $50 billion one that Bernard Madoff eventually pleaded guilty to in March. Stanford told major news organizations including ABC News that the government was going after him because it failed in its oversight of other banks and investment houses. In a teary-eyed interview in April with ABC's Brian Ross, he added: "I am the maverick, rich Texan that they can put the moose head on the wall."

The indictment unsealed Friday also charges him with making false statements to investors about how well regulators were supervising his bank and other investments.

"Stanford and his co-defendants made false and misleading representations about the regulatory scrutiny of the bank by Antiguan authorities when in fact Stanford and his co-defendants were making corrupt payments to the former head of Antigua's Financial Services Regulatory Commission [FSRC] to ensure the regulator did not actually and accurately audit and verify the assets reported in the bank's financial statements," Mr. Breuer said.

Stanford is alleged to have paid Leroy King, the former head of the FSRC who was also charged in the indictment, more than $100,000 to turn a blind eye to the bank's activities.

Stanford turned himself in to the Federal Bureau of Investigation Thursday night.

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