Final Defendant Sentenced in $7B Stanford Ponzi Scheme
By Anand Vasu
Leroy King, 74, of Dickerson Bay, Antigua, the former chief of Antigua’s Financial Services Regulatory Commission (FSRC) was sentenced on Feb. 24 to 10 years in prison for his role in connection with a $7 billion Ponzi scheme involving the Stanford International Bank (SIB). He pleaded guilty to one count of conspiracy to obstruct justice, and one count of obstruction of justice for his role in obstructing the Securities and Exchange Commission (SEC) investigation into SIB, according to a Justice Department press release.
The Stanford Ponzi scheme was the second largest in U.S. history, behind only the Bernie Madoff scandal that broke a few months after.
King, who is a dual citizen of the United States and Antigua, was extradited to the United States in November 2019. Beginning in about 2002, he served as the administrator and CEO of the FSRC, an agency of the Antiguan government. As part of his duties, he was responsible for Antigua’s regulatory oversight of Stanford International Bank Limited’s (SIBL) investment portfolio, including the review of SIBL financial reports and responses to requests by foreign regulators, including the SEC, for information and documents about SIBL’s operations.
In 2005, the SEC began investigating R. Allen Stanford and Stanford Financial Group (SFG) and made official inquiries with the FSRC regarding the value and content of SIBL’s purported investments.
King admitted that Stanford’s cash payments to King totaled approximately $520,963.87 over the course of the conspiracy. Stanford also provided King tickets to both Super Bowl XXXVIII in Houston (2004) and Super Bowl XL in Detroit (2006). In addition, Stanford provided King with repeated flights on private jets Stanford or SFG entities owned.
King later denied the SEC’s request for help, and he wrote that the FSRC “had no authority to act in the manner requested and would itself be in breach of law if it were to accede to your request.” In reality, the FSRC did have this authority and failed to exercise it because of the payments and other benefits Stanford gave to King.
A federal jury found Stanford guilty in June 2012 for his role in orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion from SIB to finance his personal businesses. He is serving a 110-year prison sentence. Five others were also convicted for their roles in the scheme and received sentences ranging from 3 to 20 years in federal prison
A key difference between the Stanford scheme and the Madoff one was that Stanford’s victims — more than 18000 of them — did not end up recouping the money they lost. Madoff’s victims recovered approximately 75 cents to the dollar on their investments. Investigators could not find roughly 90% of the funds that investors had lost in the Stanford case.
Among other things, Stanford created a cricket tournament, the Stanford Twenty20 Cup, for which he built his own cricket ground in Antigua. The Stanford 20/20 tournament was played in 2016 and 2018 and later an announcement was made that a third event — a five-match series between a West Indies All Stars XI and England — with a total prize money of $20m would be played. This would have been the highest prize offered for a single tournament, at the time, but it fell through.
When news of Stanford’s widespread fraud broke, cricketing authorities in England and the West Indies cut all ties with the promoter.
The sentencing of King brings to an end the legal proceedings in the Stanford case.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division and U.S. Attorney Ryan K. Patrick of the Southern District of Texas made the announcement.
The Houston Field Offices of the FBI, IRS-CI, and U.S. Postal Inspection Service investigated the case.
Trial Attorney Brittain Shaw of the Criminal Division’s Fraud Section and Assistant U.S. Attorney John Pearson of the Southern District of Texas prosecuted the case.