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Authorities Make First Arrest in Stanford Fraud Case

The first arrest coming out of the Stanford Financial Group scandal -- in which Houston investment manager R. Allen Stanford is accused of bilking clients out of $8 billion -- is not Stanford himself.

Instead, it's one of his top executives, chief investment officer Laura Pendergest-Holt, who was arrested yesterday on charges of obstruction of justice, with the government saying that she lied to federal investigators.

Pendergest-Holt's lawyer, Dan Cogdell, said his client is innocent of any crimes and was actually cooperating with federal authorities investigating the Stanford scandal when she was arrested during a lunch break in the talks.

“She thought she was going to get lunch, but instead she got taken into custody,” Cogdell said, according to Bloomberg.

This is classic prosecutor strategy: If you don't have enough dirt yet on the big dog, go after the biggest underling you can charge and give them a deal so they'll sing on their boss.

Stanford Financial is accused of selling bogus certificates of deposit, which they advertised as earning twice the typical rate of return.

Allen Stanford has been charged by the SEC but not arrested.

Stanford has the distinction of being at the center of the second-largest investor scandal to emerge from the current economic crisis, the winner so far being self-confessed $50 billion Ponzi scammer Bernie Madoff, under penthouse arrest in Manhattan.

-- Frank Ahrens
The Ticker is Twittering!

By Frank Ahrens  |  February 27, 2009; 11:04 AM ET
Categories:  The Ticker  | Tags: Allen Stanford, Bernie Madoff  
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