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Tuesday
Nov202012

Two Former Stanford Accounting Executives Convicted of Fraud Charges

A Houston federal jury found two former Stanford Group accounting executives guilty of multiple fraud charges as criminal prosecutions draw to a close in those accused of playing a role in R. Allen Stanford's $7 billion Ponzi scheme.  Gilbert Lopez Jr., 70, and Mark Kuhrt, 40, were each convicted of nine counts of wire fraud, as well as one count of conspiracy to commit wire fraud.  Each of those charges carries a maximum term of twenty years in prison.  Prosecutors had accused the two of conspiring to inflate the value of certain assets to meet massive shortfalls in Stanford's scheme, including trying to flip a Caribbean resort property among various Stanford entities to inflate its value from $63 million to over $3 billion - in a matter of months.  

According to the superseding indictment, both Lopez and Kuhrt joined Stanford Financial Group ("SFG") in 1997.  Lopez was hired as SFG's assistant controller, while Kuhrt initially served as the fixed aset manager of SFG affiliate Stanford Leasing Company.  Lopez rose up the ranks to become SFG's Chief Accounting Officer in 2006, while Kuhrt was named Global Controller of Stanford Financial Group Global Management ("SFGGM").  

During the course of their employment, Lopez and Kuhrt participated in a series of sham transactions designed to both inflate the amount of capital contributions purportedly made by Stanford and misrepresent the extent of Stanford's repayment of billions of dollars in personal loans made by Stanford International Bank ("SIB").  Emails between Lopez and Kuhrt discussing the sham payments were featured prominently in the charging documents and used by prosecutors to show their awareness and culpability.  

Defense lawyers sought to sway jurors by claiming that Lopez and Kuhrt were simply following Stanford's instructions and never intended to commit any crimes.  Rather, it was Stanford's 'inner circle', which included former Chief Financial Officer James Davis and Chief Investment Officer Laura Pendergast-Holt, who kept other Stanford executives in the dark about the true nature of the scheme.  But the jury didn't buy this explanation, and instead sided with prosecutors in convicting the pair.  Sentencing has been scheduled for February 14, 2013, where each defendant will likely face a hefty prison sentence.

The convictions also mark the end of a string of prosecutions brought against Stanford and other executives.  Along with Stanford, who received a 110-year sentence after standing trial earlier this year, others convicted for their role in the scheme include: 

  • Laura Pendergast-Holt - Chief Investment Officer - sentenced to 3-year prison term for obstructing SEC investigation;
  • Jim Davis - Chief Investment Officer - After entering plea agreement with prosecutors in April 2009, has cooperated extensively and served as government's star witness at several trials;
  • Tom Raffanello and Bruce Perraud - Stanford security team - Acquitted on charges relating to shredding of documents, where judge called evidence "extremely thin."

Davis, whose sentencing had been delayed while he provided extensive cooperation to prosecutors, is likely to see his sentencing date set in the near-future now that there are no pending trials.  While Davis will no doubt seek leniency for his cooperation, the charges to which he pled guilty to - conspiracy to commit mail/wire/securities fraud, mail fraud, and conspiracy to obstruct an SEC investigation - are serious charges with lengthy possible prison terms.  

A copy of the superseding indictment is here.

Previous Ponzitracker coverage of the Stanford scheme is here

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