Associated
Press
HOUSTON –
Disgraced Texas financier R. Allen Stanford's former chief investment officer
for his now defunct financial empire pleaded guilty Thursday for her role in
helping the once jet-setting businessman bilk investors out of more than $7
billion.
A tearful
Laura Pendergest-Holt changed her original not guilty plea a week after
Stanford was sentenced to 110 years in prison following his conviction on
fraud-related charges for orchestrating one of the biggest Ponzi schemes in
U.S. history.
As part of
an agreement with federal prosecutors, Pendergest-Holt, 38, pleaded guilty to
one count of obstruction of a U.S. Securities and Exchange Commission
proceeding in exchange for a three-year prison sentence. The obstruction count
carries a maximum prison term of five years. As part of the plea deal,
prosecutors will drop 20 other counts, including conspiracy, wire and mail
fraud.
U.S.
District Judge David Hittner said he will consider the deal, including the
sentencing recommendation, when he sentences her on Sept. 13.
Pendergest-Holt,
a native of Baldwyn, Miss., her attorney, Chris Flood, and prosecutors all
declined to comment after the hearing.
Prosecutors
said Stanford, 62, used the money from investors who bought certificates of
deposit, or CDs, from his bank on the Caribbean island nation of Antigua to
fund a string of failed businesses, bribe regulators and pay for a lavish
lifestyle that included yachts, a fleet of private jets and sponsorship of
cricket tournaments. The one-time billionaire was convicted in March on 13 of
14 fraud-related counts
Prosecutors
said Stanford lied to investors from more than 100 countries, telling them
their funds were being safely invested in stocks, bonds and other securities.
During
Thursday's court hearing, Pendergest-Holt admitted she gave the impression to
investors and employees that she knew what assets made up the bank's investment
portfolio, which was divided into three tiers. According to authorities,
Pendergest-Holt didn't know most of the bank's assets were tied up in Tier 3,
which was made up of real estate purchases whose value had been overinflated by
billions and by up to $2 billion in personal loans to Stanford.
"Her
management of (the bank's) investments was confined to Tier 2, which made up
only about 12 percent of the bank's assets," said prosecutor Jason
Varnado.
When the
SEC began investigating, officials say Stanford, Pendergest-Holt and other
company executives conspired to hide the bank's true financial health and
provide misleading testimony to the federal agency in 2009.
During the
court hearing, Hittner prodded Pendergest-Holt to offer details of her actions,
asking her to "tell me what you did."
Pendergest-Holt,
who was the first person indicted in the case, told Hittner she was not
completely truthful with the SEC when she testified before the agency in Fort
Worth, Texas, in February 2009, a week before authorities shut down Stanford's
companies.
"I
knew I was delaying" the SEC's investigation, she said.
Varnado
told Hittner that at least $350,000 that had been held by Pendergest-Holt was
frozen by a U.S. receiver who took over Stanford's companies and those funds
will be given to victims.
During
Stanford's trial, the financier's defense attorneys had tried to use an affair
Pendergest-Holt had with James M. Davis, the former chief financial officer for
Stanford's companies and the prosecution's star witness, to discredit Davis,
who has pleaded guilty and faces up to 30 years in prison.
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