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Friday, March 26, 2010

Magistrate Dithers on Leroy King Extradition Decision

Leroy King, the former head of the Financial Services Regulatory Commission (FSRC), will have to wait a bit longer to find out whether he will be committed for extradition to the United States (US).

King appeared in the St. John’s Magistrates’ Court yesterday before Chief Magistrate Ivan Walters, who informed him that he (Walters) was not ready with his decision.

Chief Magistrate Walters adjourned the matter until 26 April and told King that his bail will continue in the same terms as before.

The former FSRC head has been charged by the United States Securities and Exchange Commission (SEC) with taking hundreds of thousands of dollars in bribes to ignore wrongs in relation to the alleged Sir Allen Stanford $8 billion Ponzi scheme. He is facing 10 counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to obstruct the SEC, and conspiracy to launder illegal proceeds.

The SEC’s complaint alleges that King facilitated the Ponzi scheme by ensuring that the FSRC conducted sham audits and examinations of Stanford International Bank Limited’s (SIBL’s) books and records. They also allege that in exchange for bribes paid to him over several years, King made sure the FSRC did not examine SIBL’s investment portfolio.

In January, King’s lawyer, Dane Hamilton QC, made submissions before the court as to why his client should not be sent to the US to stand trial for his alleged involvement in a Ponzi scheme with Sir Allen Stanford and others.

Hamilton said it has not been

shown in anyway whatsoever that King benefitted from sums of monies lodged with Stanford Bank in the USA by investors Jonathon Davis and William Julian.

He said SIBL was an offshore banking corporation that was registered in Antigua and Barbuda and fell under the regulatory purview of the FSRC. Hamilton explained that the regulatory body (the FSRC) is headed by a board of directors and King was the administrative head of the commission at the material time.

Hamilton stated that King had no control of the processes of the FSRC and added that there was no evidence to show that in any way, he (King) influenced the examination of the supervisor of banking over SIBL.

Director of Public Prosecutions (DPP), Anthony Armstrong, in his submissions said the government’s case was based on three areas- direct, circumstantial and documentary evidence.

The DPP told the court that King wrote to Elizabeth Jacobs, the deputy director of SEC on 10 Feb., 2006, assuring her that the FSRC had examined SIBL’s conduct some five months before and that the bank was complying with all the applicable laws and regulations. King also assured that all the other relevant things were examined and were in place.

According to Armstrong, King’s role in the conspiracy was indeed critical because of what he said in his letter-that on site examination proved that the bank was complying with depositors’ safety and insolvency.

Armstrong said in 2005, King was put on notice by the SEC that all was not well at SIBL. The DPP said the SEC had disclosed that evidence was gathered by its staff about legitimacy of the CDs, which King had assured were safe and solvent.

King, Armstrong said was put on guard in no uncertain manner.

It is alleged that King sought advice from Sir Allen Stanford’s legal counsel pertaining to questions being raised by the Eastern Caribbean Central Bank (ECCB.)

Armstrong said in one of the hand-written letters King writes, "My good friend (referring to the attorney.) In another letter written to the attorney, he (King) again writes, "To America’s best and greatest attorney. Maurice (Alvarado), I am sending you two versions- one short and one long with a little more knock out punch. I prefer the shorter version, a little more subtle and diplomatic."

It was further quoted in that letter by King to Alvarez, "Any other idea? Must conclude tomorrow. Will send you a package to include the annual report for SIBL and STCL. I am sending a message to these guys that the institutions concerned are not run of the mill, they are great quality institutions and the numbers speak for themselves. Please do not bill me (laugh) Thanks a million, Lee (short for Leroy.)"

The DPP questioned why King would be sending these letters from the ECCB concerning SIBL and STCL to his "good friend Maurice Alvarado" when he is refusing to disclose any information to the US regulatory body (the SEC.)

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