Stanford Financial CFO Refuses to Aid Government Probe

The chief financial officer for Stanford Financial Group, the Texas investment and banking firm accused in an $8 billion scheme to defraud investors, is refusing to cooperate with the government investigation into the company, federal authorities said.

James Davis, who was charged by the Securities and Exchange Commission along with group founder Allen Stanford, asserted his Fifth-Amendment rights against self-incrimination and refused “to testify or provide an accounting … or produce any documents related to the matters set forth in the Commission’s complaint,” prosecutors said in a federal court filing.

Davis and Stanford are charged in a civil SEC complaint alleging the men ripped off investors through the sale of fraudulent certificates of deposit promising unrealistic rates of return. Thousands of investors across the United States, Europe, the Caribbean, and Latin America were taken by the scam, investigators said. Investigators have called the investment fraud “massive.”

No criminal charges have been filed as of yet, but the federal investigation continues, officials said.

Another Stanford Exec Jailed

Davis is not the only Stanford Financial executive who is refusing to cooperate with the federal probe of the company, according to authorities. Last week, the company’s chief investment officer, Laura Pendergest-Holt, was arrested on charges she was obstructed the investigation. Pendergest-Holt is accused of failing to disclose her knowledge of the company’s investments. She was arrested at Stanford’s Houston headquarters, but later released after posting a $300,000 bond as bail.

Billions of Assets Frozen

As the federal investigation into Stanford’s business dealings continues, his personal and professional assets – estimated at about $51 billion – remain under the control of a court-appointed receiver, attorney Ralph Janvey. So far, Janvey has identified only about $90 million in Stanford assets, officials said.

Asset Seizure Extended

On March 2, 2009, a federal court judge extended a previous court order to freeze the financier’s assets pending the investigation into alleged fraud. U.S. District Judge David Godbey left in place the temporary restraining order that was initially granted on February 17 until March 12, when another hearing is scheduled in federal court in Dallas.

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