By Laurel Brubaker Calkins
April 9 (Bloomberg) — Stanford Group Co. Chief Financial Officer James M. Davis, accused by federal regulators of helping his boss, R. Allen Stanford, run a multibillion dollar Ponzi scheme, will enter plea negotiations with prosecutors.
Davis was sued by the U.S. Securities and Exchange Commission along with Stanford. Davis will negotiate to resolve potential criminal and civil liability related to a suspected $8 billion Ponzi scheme, his attorney said.
âWe anticipate beginning those conversations as early as next week,â? David Finn, Davisâs lawyer, said today in a phone interview. âThings are accelerating rapidly. We are starting to shift gears and starting to look forward for a resolution.â?
The SEC sued Stanford, Davis, Chief Investment Officer Laura Pendergest-Holt and three affiliated companies, accusing them of running a âmassive ongoing fraudââ selling certificates of deposit through Antigua-based Stanford International Bank.
Davis, 60, began cooperating with federal investigators March 25, Finn said. Until now, discussions focused exclusively on helping to locate Stanford assets around the world, including roughly $105 million in Stanford-linked London bank accounts frozen last week by a U.K. High Court order.
âWeâve not had plea negotiations to this point, but weâre making plans to start going down that road,ââ Finn said today. âThus far virtually all of the time that weâve spent with the SEC and DOJ investigators has focused on locating assets and helping them understand what did and did not happen.â?
Neither Stanford nor Davis has been charged with a crime. Finn said insuring that talks resolve any potential criminal charges Davis faces would âobviously be the most pressing concern.â?
âWeâd love to wrap it all up at once,â? Finn said. âOur priority will be on the criminal front. The tail wonât be wagging the dog, and the SEC case would be the tail in this situationâ?
Stanford, 59, said April 6in an interview with ABC News that he might be criminally indicted within the next two weeks. Dick DeGuerin, the Houston lawyer Stanford hopes to hire if he can access court-frozen funds, has denied Stanford did anything wrong.
Pendergest-Holt was charged with criminal obstruction of the investigation and released on $300,000 bail. Her lawyer said she is innocent. Pendergest-Holt agreed to extend the governmentâs deadline to formally indict her until April 28.
Ian McCaleb, spokesman for the Justice Department, declined to comment on the investigation.
The SEC case is SEC v. Stanford International Bank, 09- 00298, U.S. District Court, Northern District of Texas (Dallas).
Last Updated: April 9, 2009 14:37 EDT
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