In 2009, the DOJ unsealed a criminal indictment against Robert Allen Stanford, Leroy King (pictured) and others charging each with one count of conspiracy to commit mail, wire and securities fraud; seven counts of wire fraud; ten counts of mail fraud, and one count of conspiracy to commit money laundering stemming from a $7 billion investment fraud scheme. The indictment also charged Stanford and King with one count of conspiracy to obstruct a Securities and Exchange Commission investigation and one count of obstruction of an SEC investigation.
Although never charged with FCPA offenses, the DOJ alleged that Stanford and his co-defendants made false and misleading representations about the regulatory scrutiny of the Stanford International Bank Ltd. (SIBL) (an offshore bank controlled by Stanford and located on the island of Antigua) by Antiguan authorities, when, in fact, Stanford was making corrupt payments of more than $100,000 to King (the former chief of Antigua’s Financial Services Regulatory Commission) to ensure that the Antiguan bank regulatory authority that he headed did not accurately audit, or verify the assets reported in the bank’s financial statements.
In 2012, Stanford was convicted at trial of one count of conspiracy to commit wire and mail fraud, four counts of wire fraud, five counts of mail fraud, one count of conspiracy to obstruct a SEC investigation, one count of obstruction of an SEC investigation and one count of conspiracy to commit money laundering. The jury also found that 29 financial accounts located abroad and worth approximately $330 million were proceeds of Stanford’s fraud and should be forfeited. Stanford was sentenced to 110 years in prison and other co-defendants were also convicted and sentenced to prison.
The case against King lingered, but in 2020 King pleaded guilty to one count of conspiracy to obstruct justice and one count of obstruction of justice for his role in obstructing the SEC investigation. In 2021, King was sentenced to 10 years in prison. As part of the plea agreement, King admitted that Stanford’s cash payments to King totaled approximately $520,963.87 over the course of the conspiracy. Stanford also provided King tickets to both Super Bowl XXXVIII in Houston (2004) and Super Bowl XL in Detroit (2006). In addition, Stanford provided King with repeated flights on private jets Stanford or SFG entities owned.
Earlier this week, the SEC released this administrative order.
The background section states:
“King, a dual citizen of both the United States and Antigua and Barbuda (“Antigua”), served as the Administrator and Chief Executive Officer of the Financial Services Regulatory Commission (“FSRC”), an agency of the Antiguan government, from approximately 2002 to 2009. As such, King was responsible for Antigua’s regulatory oversight of the investment portfolio of Stanford International Bank, Ltd. (“SIBL”), which sold purported certificates of deposit to investors. In 2009, King was a member of the board of directors of ASD Financial Services Corp (“ASD Financial”), a U.S. registered broker-dealer and investment adviser based in Miami, Florida. King, 76 years old, is currently in custody at the FCI Butner Medium I.
On January 30, 2020, King pleaded guilty to (1) obstructing a proceeding before the Commission, in violation of 18 U.S.C. § 1505 and § 2, and (2) conspiracy to obstruct a Commission proceeding, in violation of 18 U.S.C. § 371, before the United States District Court for the Southern District of Texas. On March 2, 2021, a judgment was entered in the criminal case against King. The court sentenced King to a prison term of 120 months, three years of supervised release following his jail term, and a $200 fine.”
As noted in the SEC order:
In connection with his plea agreement, King admitted that:
(1) As the Administrator and Chief Executive Officer of FSRC, an agency of the Antiguan government, he was “responsible for Antigua’s regulatory oversight of SIBL’s investment portfolio, including the review of SIBL financial reports and the response to requests by foreign regulators, including the SEC, for information and documents about SIBL’s operations.”
(2) He accepted approximately $520,963.87 in cash payments, Super Bowl tickets, and “repeated flights on private jets owned and controlled by Stanford or SFG entities,” in exchange for:
(a) “Causing the FSRC to fail to exercise its regulatory function by independently verifying the existence and value of SIBL’s investments, instead relying on the numbers provided by Stanford, Davis, and others;
(b) Corruptly providing to Stanford, Davis, and others information about official inquiries that the FSRC had received from multiple regulators, including the SEC…;
(c) Allowing Stanford and his employees to draft responses back to these regulators that contained false and misleading statements and assertions, after which FSRC letterhead would be attached, and the letter would be sent out as if it had been prepared by the FSRC; and
(d) Making false representations in response to the official inquiries of regulators, including the SEC.”
As stated in the SEC order:
In view of the allegations made by the Division of Enforcement, the Commission deems it necessary and appropriate in the public interest that public administrative proceedings be instituted to determine:
A. Whether the allegations … are true and, in connection therewith, to afford Respondent an opportunity to establish any defenses to such allegations;
B. What, if any, remedial action is appropriate in the public interest against Respondent pursuant to Section 15(b) of the Exchange Act; and
C. What, if any, remedial action is appropriate in the public interest against Respondent pursuant to Section 203(f) of the Advisers Act.”