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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF TEXASHOUSTON DIVISIONUNITED STATES OF AMERICA §§v. §Crim. No. H-09-342§ROBERT ALLEN STANFORD§a/k/a Sir Allen Stanford §a/k/a Allen Stanford §
MOTION FOR REVOCATION OF RELEASE ORDER The United States requests revocation of the release order issued by themagistrate court and entry of an order detaining Stanford pending trial. DetainingStanford is the only way to reasonably assure his appearance at trial in light of theevidence presented that Stanford is a citizen of Antigua, that his Antiguan passport ismissing (a passport he did not disclose to pretrial services), that upon conviction helikely faces the rest of his life in prison, that he has extensive international businessand social contacts, that he has realistic access to huge sums of money, some of whichmay remain in offshore bank accounts, and that the bulk of his claimed ties to thisdistrict are fleeting and of recent vintage.I. BACKGROUNDA.The IndictmentA federal grand jury found probable cause to return an indictment alleging thatStanford and his co-defendants sold billions of dollars of certificates of deposits (CDs)
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to investors by touting Stanford International Bank Ltd.’s investment strategy of minimizing risk and maintaining liquid investments and by claiming year-after-year increasing profits and asset value. By the end of 2008, SIBL had sold in excess of $7 billion of CDs to investors and claimed to have over $8 billion in assets. As of March2009, however, the Receiver appointed to preserve SIBL’s assets has found less than$2 billion in assets. In reality, fraudulent diversions of funds to Stanford himself andentities he controlled, bogus record-keeping and inflated valuations had resulted in a“hole” in the actual value of SIBL’s assets approaching $5 billion.
See
Indictment ¶¶21.Stanford and his conspirators created the massive hole in the assets anddefrauded investors in SIBL’s CD program by: (1) using billions of dollars fromSIBL’s CD deposits to both acquire and maintain other unprofitable companiescontrolled by Stanford and used to fund his lifestyle; (2) paying out over a billiondollars to Stanford in exchange for undisclosed, unsecured personal loans from SIBL;(3) falsely boosting the value of SIBL’s revenue through false monthly accountingentries in SIBL’s books; (4) falsely boosting the value of SIBL’s investments throughartificial “roundtrip” purchases of property at grossly inflated values; and (5) bribingAntiguan bank regulators to assist in concealing the fraudulent scheme. Additionally,in order to perpetuate and prevent detection of the fraud, Stanford and his conspirators
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also made and caused to be made false and misleading statements to SEC staff attorneys to corruptly obstruct the SEC investigation into SIBL’s financial conditionand the content and value of SIBL’s investment portfolio.
See
Indictment ¶¶ 36-39. Representative of the continuous deceit upon investors that Stanford engagedin to perpetuate this fraud is his conduct during the half year prior to the appointmentof the Receiver. Faced with an ever-widening hole between SIBL’s fictitious,reported assets and its actual assets, in mid-2008 Stanford engineered a fraudulentland transaction to artificially generate more than $3 billion. Beginning aroundsummer 2008, SIBL sold to other Stanford-owned entities two undeveloped island properties it had purchased during the previous few months for $63.5 million. These property interests were then sold back to SIBL at a value of $3.2 billion. This $3.2 billion “price” SIBL purportedly paid to buy back the properties was in the form of settling a substantial portion of loans Stanford owed SIBL, which h and in supposedcapital contributions Stanford personally made to bank during fall 2008 exceeding$700 million.
See
Indictment ¶¶ 37(c), 81, 82, 85, 87; Gov. Ex. 6. During fall 2008and early 2009, Stanford and others touted these “capital contributions,” which in factwere simply the grossly inflated value of the island properties, in an attempt toreassure investors that the bank was in solid financial condition.
See
Indictment ¶¶
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