Monday, May 11, 2009

The Stanford Financial Group Web Begins to Spread

As someone who lives in Houston and monitors financial articles, I have been particularly interested in the Stanford Financial story. Today, the Fox Business Channel has taken the lead on providing information on this hot topic.

Today I read that "Laura Pendergest-Holt, Stanford Financial Group’s chief investment officer, is likely to be indicted on Tuesday on criminal charges" at FoxBusiness.com. The total scope of the indictment is unknown at the time of this writing, but the article points out that "At minimum, the indictment will be on a charge of obstruction of justice, though her legal team thinks there could be a number of other charges brought against her as well." Knowing the way the government has pursued these type of cases, we can expect more, maybe many more. It is through the leveraging of these charges that the government gets pleas and information on others involved.

Pendergest-Holt is joining the firm’s founder, Chairman and CEO Robert Allen Stanford in the brewing hot water. Stanford, and three of his companies, have been charged by the Securities Exchange Commission (SEC) of orchestrating an $8 billion fraud related to a Certificate of Deposit program. Although he has not yet been charged with any crime at this point, accusations are flying and it seems to be a question of "when" and not "if" he will be facing charges. The indictment of Pendergest-Hold cannot bode well for Stanford.

In fact, the focus on Pendergest-Holt first, could be a part of the government's efforts to make sure that the bigger penalties fall on Stanford. It is not at all unusual for the government to go after the underlings in criminal cases first in order to assure a conviction and to get a heavy sentence for the ring leader.

Pendergest-Holt is the youngest of the Stanford senior executives and, at 35, may seem to be an unlikely central character in this story, but her knowledge of the inner workings of the firm and the relationships that drive it, makes her a very connected personality in this drama and a potentially attractive target to the government indeed.

Historically, an $8 billion fraud case would be considered massive and virtually unheard of; but thanks to the era of Bernie Madoff and his $50 billion Ponzi scheme, the Stanford story has largely been under the radar screen. Fortunately, Fox Business is being serious in its due diligence. Fox's prowess is a story in itself. Increasingly the new cable business network is becoming the leading network and is putting its older competitors (CNBC and Bloomberg) on notice, on the importance of being first.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

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