Stanford’s No. 2 Davis Cooperating in Probe
The No. 2 executive at Stanford Financial Group, James M. Davis, is cooperating in federal criminal and civil fraud investigations of the business group, according to Mr. Davis’s attorney.
The development could advance the inquiries, which haven’t been able to secure information from Texas financier R. Allen Stanford, say people familiar with the matter. The Securities and Exchange Commission said earlier this month that Mr. Stanford had asserted his Fifth Amendment right against self-incrimination in its civil case against him.
R. Allen Stanford
“We are fully cooperating with the federal investigations, ” said David Finn, a Dallas attorney for Mr. Davis, and a former federal prosecutor.
Mr. Stanford and Mr. Davis, college roommates at Baylor University, were named last month in an SEC civil lawsuit in Dallas that accuses them of engineering “a massive Ponzi scheme” that misappropriated billions of dollars of investor funds.
After the lawsuit was filed, Mr. Stanford’s companies were placed in receivership and have ceased operations, Mr. Davis was CFO of Stanford Financial.
A third Stanford Financial executive, Laura Pendergest-Holt, also was named in the suit and faces a separate criminal complaint accusing her of obstruction of justice.
No other criminal charges have been filed in the Stanford matter. But, even if Mr. Davis provides federal authorities with evidence against Mr. Stanford — whom Mr. Finn said “has hurt a lot of good people” — Mr. Davis still faces his own legal problems.
Mr. Davis, Mr. Stanford and Ms. Pendergest-Holt are subjects of a federal criminal investigation into Mr. Stanford’s financial empire, according to people familiar with the matter.
A Justice Department spokesman declined to comment. The criminal investigation is being overseen by Paul Pelletier, principal deputy chief of the agency’s fraud section in Washington.
Mr. Stanford couldn’t be reached for comment. Through an attorney, Ms. Pendergest-Holt, Stanford Financial’s chief investment officer, has denied any wrongdoing.
Mr. Davis’s cooperation in the federal and civil probes marks a switch. According to the SEC lawsuit, he “refused to provide documents and information accounting for the bank’s multi-billion dollar investment portfolio.” He later also asserted his Fifth Amendment rights.
Mr. Davis served as a director and chief financial officer of both Stanford Financial and Stanford International Bank, based in Antigua.