Stanford CFO Pleads Guilty to Obstruction of Justice

Just days after R. Allen Stanford received his 110-year prison sentence, the Department of Justice ("DOJ") announced that Stanford's former chief investment officer will plead guilty to charges that she obstructed the government's investigation of Stanford's scheme.  Laura Pendergest-Holt ("Holt"), 38, who was scheduled to stand trial in September, will now plead guilty to a single count of 18 U.S.C. 1505 relating to obstruction of the Securities and Exchange Commission's ("SEC") investigation of Stanford and his financial empire.  In exchange for her guilty plea, the DOJ has agreed to recommend a sentence of thirty-six months in prison, a three-year period of supervised release following her completion of the sentence, and a fine to be determined by the Court.

Holt was originally indicted along with Stanford and several other executives on June 19, 2009 and charged with twenty-one counts of mail fraud, conspiracy, and obstruction.  Along with her alleged role in the fraud, the indictment also highlighted efforts by Holt and others to impede an SEC investigation into Stanford International Bank, Ltd.'s ("SIBL") operation in January 2009.  After the SEC subpoenaed Stanford and another employee to provide testimony concerning Stanford's assets, a Stanford attorney convinced the SEC that Holt would be better off giving the requested testimony. Following weeks of meetings in which the executives discussed the testimony Holt would give, Holt gave testimony before the SEC in February 2009 that omitted her recent discussions with other executives about the fragile state of SIBL's finances and omitted or misrepresented other pertinent information.  

Of particular note is the DOJ's choice of a plea agreement pursuant to Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure.  Called a "(c)(1)(C)" plea in legal parlance, the agreement is notable in that it leaves little to the discretion of the sentencing judge.  In those situations, the proposed sentence is included in the plea agreement submitted to the court.  Thus, if a judge accepts the plea agreement, the judge is bound to sentence the defendant to agreed-upon sentence and has no ability to depart from the sentence in a downward or upward fashion as is permitted under other forms of plea agreements.  If a judge decides that one or more parts of the plea agreement are unacceptable, the defendant is then given the option to withdraw from the plea agreement. The agreements are often disfavored by judges, who feel that a (c)(1)(C) plea effectively ties their hands.  Judge Hittner will ultimately decide as to the sufficiency of the plea agreement.

A hearing is scheduled for 11:00 a.m. on June 21, 2012 before Judge David Hittner in which Holt is expected to enter her guilty plea.  A copy of the plea agreement will then be filed with the Court.

A copy of the indictment is here.