Part I (background) is here, and Part II (the preparations for the meeting with the SEC) is here, but I’d start with a post describing the locals involved, along with their connections to places like Baldwin and Dry Creek in Northeast Mississippi.
So by this point, Pendergest-Holt had
- Attended preparation meetings in Miami. Also at the meetings were Davis, Stanford, the lawyer Sjoblom, the president of the SIB bank, and CW1, CW2, and CW3.
- Learned about the investments of Tier III (which were over 80% of the $8 billion certificates of deposit) and that they included a $1.6 billion loan to a stockholder, Stanford.
- Learned about a capital contribution of $541M– that it was equity in real estate and not cash from Stanford; and
- She knew she was on the SIB Investment committee.
Possessed of all that knowledge, on Tuesday, February 10th, Pendergest-Holt showed up with Sjoblom at the Fort Worth SEC regional office, for a deposition under oath.
With Sjoblom seated there, she was asked who she met with to prepare her testimony and what information was gathered. She did not tell the SEC about the meetings in Miami. Asked what she did to prepare, she said she had been to Antigua and reviewed statements “and looked through, gosh, other issues, but mainly reviewed the statements of SIB in Antigua.” Asked who she met with, she said Sjoblom. Asked if there was anyone else, she said, “In preparation of my part, no.”
It’s remarkable that Sjoblom, having participated in the meetings noted above, just sat there and watched her say this (and everything noted below) under oath, apparently. I’ve read the deposition, by the by, and Sjoblom really does just sit there and let her say these things.
Asked about the investments in Tier III, she “failed to reveal… the extent of her knowledge.” She agreed that her testimony was that she didn’t know what the assets in Tier III were, and that she learned from Davis that the assets “only included ‘private equity and real estate.” She said that if she needed information about Tier III she would go to Davis and Standford. She did not reveal that she’d learned of the $1.6 billion loan to Stanford.
Asked about loans by SIB, she said she did not know details and did not reveal that she had a removable drive with information about that loan.
She failed to reveal she was a member of the SIB investment committee, which would have provided her with exposure to the Tier III investments. She denied being on that investment committee. Yet she had been present at the board meeting where she was named to the committee and had been introduced at an SIB Top Producers Club meeting on January 10, 2009 as a member of the committee.
Asked about the $541M capital contribution, she did not reveal it was from equity positions in real estate and said she “would assume by” Stanford making a “capital infusion.”
Asked about loans by SIB she said she did not know details.
She denied discussing the assets in Tier III with the SIB Affiliate President.
This was all on Tuesday, February 10th. On February 12th, Sjoblom sent a terse notice to the SEC that he was withdrawing from representing the company in all matters before the commission. On February 14th, he added that he wished “to disaffirm all prior oral and written representations” he had made about the companies.
I can see why. Although having done some affirming, I think there may be a toothpaste-out-of-the-tube problem here.
On February 17th, the SEC interviewed her again in Memphis. Since Sjoblom had bailed at this point, he was not present. Asked about the Tier III assets, she said “If I knew anything about Tier III, I’d tell you… God’s honest truth.” She did not mention what she had learned in the meetings in Miami.
On the 25th, the criminal complaint against Pendergest-Holt accusing her of lying to the SEC was filed in Houston.
Note: Unless specifically stated, the facts are from the FBI affidavit attached to the criminal complaint filed against Ms. Pendergest-Holt. Here it is.
Updated: The post was put up in draft and updated to add a description of the lawyer’s withdrawal and a few other tweaks, along with a link to the criminal complaint.
Deputy Sheriff Barney Fife said it best: “When those steel doors slam shut … no more peanutbutter and jelly sandwiches.”
Sayonara, Lara.
When did Sjoblom “bail”? I look forward to seeing what’s in his future.
From his bio here, he sure wasn’t one of those Stanford hired because he didn’t know what he was doing.
From 1987 to 1999, Mr. Sjoblom served as an Assistant Chief Litigation Counsel in the SEC’s Division of Enforcement, prosecuting an array of civil proceedings before several federal courts across the United States and administratively before the SEC. These cases implicated the entire panoply of securities regulation, including charges of:
market manipulation; unlawful sales practices by brokers;insider trading; financial fraud and SEC reporting;”prime bank” trading schemes;unregistered securities offerings; and offshore and international securities frauds.
I found the answer to my question @2…Feb. 14, three days before the SEC filed suit and 4 days after Pendergest-Holt’s little tete-a-tete with the SEC.
This post is a draft! AWK. I will fix it.
fixed with a couple of additional details and links.
Some background info on Miz P-H’s attorney sez to me this is gonna get entertaining before long.
Serious question, to which I may need to know the answer one day.
What *should* Sjoblom have done at the deposition?
You say it’s “remarkable” that he “just sat there and let her say those things.” What should he have done? What was he *required* to do?
First complicating problem: He’d made clear at the start of the deposition that he was not her lawyer– he was representing (some of) the entities under investigation. So she didn’t have a lawyer there.
Rule 3.3 of the Rules of Professional Conduct says the lawyer shall not knowingly “fail to disclose a material fact to a tribunal when it is necessary to avoid assisting a criminal or fraudulent act by the client” and not “offer evidence that the lawyer knows to be false. If a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures.” The comments say: “When evidence that a lawyer knows to be false is provided by a person who is not the client, the lawyer must refuse to offer it regardless of the client’s wishes. When false evidence is offered by the client, howeve,r a conflict may arise between the lawyer’s duty to keep the client’s revelations confidential and the duty of candor to the court” First the lawyer is to try to talk the client out of it, then, if the client insists and does it anyway, “its false character should immediately be disclosed.” Lawyer has to “take reasonable remedial measures.” Except in the defense of a criminal accused, “if necessary to rectify the situation, an advocate must disclose the existence of the client’s deception to the court or to the other party.”
Remedial measures involve remonstrating with the client to come clean, then withdrawing, and, if that doesn’t remedy the situation, disclosure to the court or tribunal.
Awesome link, Glitter-6…on my way to pop some corn and watch the show!
I don’t think a lawyer has an option of sitting there and lie about something he or she knows first hand is false. Really clear. What do you do? Recess and tell her cut this out. And then? Going to have to disclose.
At one point in this deposition, the lawyer sort of helps her along to one of the false answers, about not meeting with anyone else about the matter.
any guesses about how to pronounce Sjoblom?
Ah. So, if he *wasn’t* her lawyer, but knew she was lying, did he have any duty to speak up or take remedial measures?
Re: civil cases, this bit from the Mass. Bar is interesting:
Your client lied during his deposition rather than before a judge or jury, and the deposition transcript has not been submitted in court. Although there are no Massachusetts cases expressly ruling on the applicability of Rule 3.3 to pretrial discovery, Bar Counsel takes the position that a deposition should be treated in the same manner as a proceeding before a tribunal because of its potential use as evidence and its impact on the judicial process.
The ensuing discussion states that where a material falsehood is at issue, mere withdrawal won’t suffice.
Note also that the present case involved a criminal matter; I don’t find the comment to Rule 3.3 terribly helpful in directing the attorney what to do, but it seems that withdrawal with disaffirmation was at least adequate under Rule 3.3.
NMC @ 12-how ’bout seabloom?
any guesses about how to pronounce Sjoblom?
“Jobless.”
One big question that I have about this Stanford ponzi scheme matter, and the even larger ponzi scheme Madoff matter is this: How in the hell can they get away with such fraudulent activities for so long? Where has the SEC been before now?
With respect to the Madoff matter, his fraud and deception goes all the way back to the very beginnning of his enterprise —in the 60s. There is no evidence that he EVER used the money invested with he/his firm to actually purchase the securities for clients that he was supposed to have purchased and were reflected on the statements he sent to clients as having been purchased. The time line for the Madoff matter, including many supposed past SEC inquiries and investigations, is ugly with respect to the integrity of the SEC. And this fraud started and continued through many different administrations — Kennedy/Johnson/Nixon/Ford/Carter/Reagan/Bush I/Clinton/BushII. It took a collapse of the financial markets to reveal the fraud with both Madoff and Stanford.
I think the SEC needs to be investigated. It is interesting that these former SEC prosecutors and investigators are employed with some of these corrupt and fraudulent financial firms. I suppose they learned enough while with the SEC to understand its weaknesses and how to exploit them.
Everywhere you look these days there is massive fraud and corruption. I am now personally at a point that I don’t trust anything or anyone. My natural skepticism and occasional cynicism are on high alert and growing by the day.
From the heads of these companies having to be bailed out, to the halls of Congress and those in charge of oversight, to the White House and those in charge of oversight, to the hapless SEC, to Madoff, to Stanford, to Worldcom, to Enron, to Global Crossing, to Fannie Mae and Freddie Mac and all who headed it within the last few decades, etc. etc. etc., never have so relatively few people hurt so many in a real and tangible way. I want to see all the corrupt offenders in jail, doing hard time — no more wrist slaps, deals, leniency, etc. The fact that they have family (wife, kids, etc.), too freaking bad —I don’t care. So do all of us. And these folks have robbed all of us of our money just as directly and certain as any common thief would who breaks into our home. They are no better than such a thief, and IMO are even worse.
AFOTL, you are correct that the SEC needs to be investigated about this and other failings to pursue fraud.
Stanford took the position that its Certificates of Deposit did not have to be registered, and took the position that, because the CDs were issued by its Antigua subsidiary, the information about them that they gave to regulators there could not be disclosed to the SEC except through regulators there.
I don’t think the position that the CDs didn’t have to be registered passes the laugh test. That this bureaucracy took years of seeing those marketed all over this country to lumber e-v-e-r s-o s-l-o-w-l-y into action is an outrage.
We also should ask these same questions of state regulators, past and present.
Hopefully the new “boss” can speed things up a bit. According to this WSJ article, one unidentified SEC attorney sez: “Under the previous administration, “the guiding principle was slow it down, shut it down, find a way to bog it down,” says a lawyer in the division. “We are now being given the tools, the ability, and the discretion to use our good judgment.”
“Under the previous administration, “the guiding principle was slow it down, shut it down, find a way to bog it down,” says a lawyer in the division. “We are now being given the tools, the ability, and the discretion to use our good judgment.””
GG, I understand your desire to pin every bad thing that happens on the Bush administration policies(due to your and others affliction with BDS). And yes, there was much during that 8 years that I disagreed with as well. But, this type of ineptness goes much deeper and much, much longer, spanning decades and through both democratic and republican administrations. It cannot be simply explained as “Its George Bush’s fault”. I would have to say that the guiding principles of the SEC, as you quoted above from the unidentified SEC attorney, have apparently been the Standard Operating Procedure of the SEC for a long, long time. There is something wrong with the SEC culture that it cannot or won’t stop such fraud.
How can anyone sufficiently explain the Madoff matter that goes all the way back to the 60s? Wouldn’t a single SEC audit during that long time span, where actual proof of the securities holdings of Madoff’s clients had to be revealed, have revealed the fraud and brought such a house of cards down before reaching the 80 billion level? Hell, even an accounting major fresh out of school working as a junior auditor should have been able to detect that type of fraud.
I wish the Obama administration God speed with any house cleaning efforts aimed at corruption. But, to do so, they will need to have the courage and objectivity to look well beyond the last 8 years. It may indeed lead to many still in Congress. It may indeed lead to many “outstanding citizens” who label themselves as democrats and as republicans. But the effort needs to be made and the chips need to be allowed to fall where they may. The appointment and hiring of several former tax cheats and lawbreakers will not help in this effort.
Actually, afotl, *I* wasn’t trying to pin anything on anyone. I was simply noting what an SEC attorney was saying about his/her “new boss”, Chairman Schapiro.
AFOTL; It is my opinion the failure of the SEC to perform its duties trace to the same cause of Homeland Security’s failure in the event called Katrina, and the failure of FDA in the episodes of Salmonella in tomatoes and peanuts. It derives from government agencies operating under supervisors whose philosophy does not support government control over private enterprise. And you can throw failure of a lot of people to pay the taxes to the IRS into the same pile. These agencies are too small and too adverse to regulatory activities to perform the duties we expect from them. I was a 30 year government employee that lived through the downsizing and gutting of the effectiveness of one agency. I think what I experienced and observed occurred in most if not all Federal agencies.
Sorry GG, I thought your reference to “boss” meant Obama and this new administration. I am so weary of every problem we have being turned into partisan political issues that I sometimes overreact to what I perceive as such. We will never solve many of these issues we face today if the folks in a position to solve them are only worried about who gets the blame for the problems and who gets the credit for fixing them.
As to one aspect of an investigation of the SEC, I strongly suspect that folks within the SEC have been corrupted with $$$ by those violating our laws — that seems to be the most rational explanation to what is otherwise inexplicable when you consider the background and intelligence of many who work with the SEC. No way they could be that incompetent. They must have been corrupt. And this corruption must go back a long time —maybe transforming at some point into part of the SEC culture.
I know nothing of securities law. Can someone here provide a brief summary of the SEC’s duties and responsibilities and its relationship to sellers of investment “things”? Also, is there any interfacing of the SEC and the state secretaries of state or other state officials charged with oversight or other duties regarding sellers of investments?
Over the years, I have been contacted by various investment counselors, portfolio managers, and the like, none of whom impressed as overwhelmingly astute in things financial, and I wondered how they get to do what they do, who they report to, how they gain their credentials, the extent to which they are professionally credentialed, how they are disciplined, etc.
Can anybody educate us country boys?
That’s a big question, Ben. There were two New Deal acts that attempted to set up mechanisms to make the sale of securities honest. One required registration of securities that did not meet technical requirements to be exempt (by being small issues, or within a state, or issued to limited groups of sophisticated investors for instance); another set up anti-fraud provisions. They established the Securities Exchange Commission, which oversees disclosure and registration.
These laws have been amended many times, most recently in a big way by a statute that requires CEOs to sign off on the accuracy of financial statements (Sarrbanes Oxley)
There are also requirements for licensing broker dealers or financial advisors. Finally, states have what were called “Blue Sky Laws” that require registration of securities sold within a state that have similarity to the federal regulatory scheme.
This is a big topic.
Thanks, NMC. You well summarized about all I knew about the subject. What I’m trying to understand is how the Madoffs and Stanfords (and others unknown) can operate so openly, so fully in the limelight, and so fraudulently, for so long. Like AFOTL and many others, it seems to me inconceivable that this could happen so well hidden in plain view.
But as I survey the scene, it appears that gov’t regulators everywhere are, as we say in the Navy, “on the ROAD”—Retired On Active Duty. Meaning they’re collecting their paychecks for playing solitaire all day on their office computers. Mine regulators don’t enforce mine safety standards. Food safety regulators haven’t had their eyes on the ball. Environmental regulators can’t seem to figger out where the environment is. Financial regulators … well that appears to be an oxymoron. What the heck happened to federal regulatory agencies? More important: where do we go from here?
NMC. I dare not say I am an expert, and if I am wrong, I am sure someone will correct me. Based on my time in the industry, and I have been out for 10 years, there is an important distinction when discussing unregistered funds. If you want more information, I think they are governed by SEC Regulation D. They are allowed to operate this way so long as they only allow “Qualified” investors, and in limited numbers. The definition of qualified when I was in the industry was $1 million or more in net worth and $200,000 or more in annual income. These people are supposed to be sophisticated enough to do their own due diligence, or wealthy enough to hire someone. And since the minimum investment in most of these funds was around $250,000-$1,000,000, it would seem to make sense to pay an attorney or CPA $10,000 to check them out. You also often got access to them through firms other than traditional broker/dealers, or what is typically thought of as a brokerage firm.
The importance of being unregistered is it removed limitations on how the fund could invest its assets and where it was allowed to invest, allowed them to employ unlimited leverage, and limited how much information the fund had to disclose to investors and, I would think, the SEC. I am not an attorney and did not deal directly with any unregistered entities, but I would think the SEC would be limited to investigating that the funds trading practices within regulated markets were not illegal, and thus not having a negative impact on anyone outside of the fund. They are allowed to invest in anything they want, so their investments often fall outside of the scope of the SEC.
Securities law experts, correct away
North Shore, I am not a security law expert either, but I have one on retainer. My understanding of this issue is in complete agreement with yours. The biggest blame on these unregistered securities rest with the accounting firms auditing them. I had this CD pitched to me on behalf of some clients in 2006, and we passed. We couldn’t identify a concrete reason why (so I am not patting my own back), but the old “too good to be true” adage proved right once again. The SIB CD we saw was limited to qualified investors which greatly limits the oversight by the SEC.
A small bit of good news for Stanford employees who may, at least, be able to collect unemployment, and perhaps even back pay, and for some investors who may be able to get some/all of their money back . According to this report on WMC-TV, Memphis NBC affiliate, employees are officially being fired and an unidentified financial institution is negotiating, under the purview of the receiver, to purchase Stanford’s broker-dealer assets based in the United States.
Well, there is no doubt that many of these investors who fell victim to these scams were themselves fueled by greed and a lack of common sense. So, I’m sure that some of them probably deserve the screwing they are now getting. But, among the victims were many of our elderly in society whose retirement funds may now be lost. The harsh impact upon this often vulnerable segment of our society (even those “qualified” by having the appropriate amount of money) is what makes these crimes particularly disgusting. Many of these investors are not sophisticated or savvy enough —-which should now be quite obvious.
Private sector regulators, aka securities trial bar had a bigger bat before Bush. Here is an article that I have posted before about the Stoneridge case. A ruling that certainly did not help encourage peer pressure amongst the biz folks.
From Law.com:
http://www.law.com/jsp/article.jsp?id=1187168525349
MBMB @ 27: I may have been visited by the same CD pitcher as you. More than once. He pressed me on how lucky I was to have the opportunity of getting in one of the most exclusive investing offerings I would likely ever see, but I had to sign right then … like signing a contract for aluminum siding . It didn’t smell right either time, so I passed. I never had much luck dodging bullets theretofore, but I avoided those.
I had someone tell me he is aware, first hand, of a Stanford pitch to someone that went something like this: “We understand you are uncomfortable investing your company’s money so why not invest some of your personal assets and see for yourself how well you will do. Then you will want to do the same for your company”. Bait & hook!
Re 12: Audibly I’d guess “SHO-bl’m,” but functionally I bet Anderson 15 has it right.
Some comments about the SEC are in order. One commenter asked why an SEC audit didn’t reveal the Madoff scam. The fact is that the SEC doesn’t perform audits of regulated industries, except in the context of investigations. Instead, they rely on the reports of “outside” auditors retained by the reporting companies — you know, the supposedly “independent” experts who helped WorldCom, Enron, Global Crossing and a host of other companies commit massive securities frauds. Also, the SEC is grossly undersized to actually regulate the US financial markets other than by rulemaking and prosecuting the most flagrant abuses. In the face of that reality, much “enforcement” is left to industry groups, like NASD and the exchanges themselves – something along the line of the self-disciplinary systems of the legal and other professions.
Add to that the revolving door between government and the much-much-much-higher-pay-scale securities industry, which acts as a check on zealous enforcement that might affect one’s future employability.
What you have is the appearance of regulation that actually relies on the trustworthiness of the subjects being regulated. It’s really very like the US tax system, a generally self-reporting system that depends on the majority of taxpayers being law abiding citizens. Only there are fewer checks-and-balances in the securities world.
Unfortunately for a self-regulating system, there is a sizeable group in the securities industry who think, like Gordon Gekko said in Wall Street, that “Greed … is good.”
soms@34, I well understand that the SEC normally does not conduct audits. It REQUIRES audits for publicly traded companies. And these audits are performed by outside auditing firms. The SEC does conduct audits as part of investigations when warranted.
In 1992, one of Madoff’s biggest “feeder funds” was investigated by the SEC. Madoff reimbursed investors for over $441 million before any SEC investigatory action reached him. The SEC failed to pursue it further.
The SEC investigated Madoff again in 1999, finding only minor violations. (That must have been some humdinger of an “investigation”. ANYONE associated with that investigation and results should be terminated if still employed, and investigated for possible corruption).
In 2001, whistleblower Harry Markopolos, a financial analyst, goes to the SEC’s Boston office to explain that Madoff’s investment performance is impossible. No SEC action. Head still in ass.
Again in 2004, there was a limited SEC investigation of Madoff —still no action. (“Limited” ? I would say that’s right. Limited intelligence, limited competence, limited morals, etc. …whatever appropriately fits).
In 2005, the SEC investigates again —still no action. That same year, the above-mentioned whistleblower says that Madoff “is the world’s largest Ponzi scheme”. Still no SEC action. Head still up ass.
In 2006, the SEC staff investigated Madoff again. The finding? ” No evidence of fraud”. (One has to wonder just what in the hell type of investigation was performed to reach this conclusion? ANYONE associated with that investigation should be fired, if not already, and should be investigated for possible corruption).
One would think that at some point since Madoff started this scheme back in the 60s, that at least one audit would have been performed by the SEC as part of an investigation of Madoff. How many f$##$% warnings and red flags does it take for the SEC to finally get its head out of its ass?
And if this type of fraud can go on undetected and with no action by the SEC, then one can only imagine what kind of BS is still going on out there that has not yet been discovered. According to Markopolos, ” If you flew the entire SEC staff to Boston, and sat them in Fenway Park, they wouldn’t be able to find first base.”
I’m burying my money in coffee cans in the back yard (“Cousin Eddie” style).
Stanford had their own whistleblower and no SEC action. Based on the most recent SEC performance, their role seems to be that of the cleanup crew. Once it falls apart then they come in and try to clean it up. No preventative measures there.
afotl @36-just don’t put it under the mattress, that’s where Ben Cole sez you should store your guns.
Be careful afotl. A lady I worked for buried $5,000 in a can in her back yard for the end of the world that was coming on 1/1/2000. A few years later,she admitted she never did find it. I think a regular old bank in the U.S. is still the best place.
afotl@36: I agree with everything you say up to the last graf. That was my point as well. How could anyone exercising even limited oversight fail to realize in both Stanford and Madoff’s case, the supposed outside auditor was a sham? Then again, Arthur Andersen was a huge firm and was just as big a sham in the Enron case.
I fear that a young attorney who once worked on one of my staffs may be sullied by the Madoff mess. He married one of Madoff’s young relatives … a niece, so I’m informed. If you see the name Swanson in any of the Madoff stuff, please let me know.
According to a post on Law Blog, today, there is a question re whether or not Sjoblom gave Ms P-H due notice (prior to the 2/10 meeting with the SEC) that he was not acting as her attorney:
“Sjoblom did, however, have an ethical duty to tell Pendergest-Holt that this was the situation, though whether he did or not is unclear. (Sjoblom did not return AmLaw’s calls seeking comment).”
BC, Eric rings major bells on the Google. Sorry.
You’da a thunk somebody as bright as she would have figured that he was there for the corporation, GG. Makes you wonder if she’d received assurances from elsewhom that she’d be protected.
Oh, GG’s link tells us how to pronounce his name:
GG and DW:
At the start of the deposition, the SEC lawyer says something that implies Sjoblom might be Pendergast-Holt’s lawyer, and he makes absolutely explicit he is not. Then the SEC lawyer asks if she’s willing to proceed without her own lawyer and she says yes.
I can’t imagine putting her up like that without counsel. Her knowing that was what happening isn’t enough.
It’s clear from the deposition about preparations that she was fenced off from what Davis and Stanford were doing with 81% of the $8B black hole– she had no idea. She may have actually not been in the securities fraud actively (more passively or with blinders). But this guy put her up to lie, and that sat and watched her do it. Not pretty.
Just think– if they’d told her to get independent counsel, she might have been counseled to join the cooperating witness club.
“Makes you wonder if she’d received assurances from elsewhom that she’d be protected.”
Ya think?
I see someone who is cooperating. I see someone who was arrested while cooperating. I see someone who is young, attractive, smart (in some some ways), and not afraid to be out trying to save herself. I see someone the press likes to feed on because of the hype. I see someone the SEC likes to prey on because of what they can get out of it. I seen someone the Feds can do with what they will because they can and because they need a bad guy (and if it’s a gal, well then all the better).
I see two other somebodies who employ her – one who cowardly tried to flee the country – and the other who appears to be cowardly hiding in his house. Neither of the two big bosses have been arrested. Neither of the two big bosses have come to her aid. Neither will talk. Neither will talk to their employees for @#$ sake. Heck, Davis put out a statment he’s not talkin’ to nobody no time.
Neither of the two big bosses have her courage or character – and if I’m wrong, I’d love to see them prove I’m wrong.
“You do the math” as her lawyer challenges. It doesn’t take long to add one plus one – and s’far it ain’t adding up to her.
Was she set up? Damn straight she was.
Hey Shelby- a bit of a conspiracy theorist aren’t you. Laura often described herself as brilliant in fact she thought she was smarter then anyone she knew. She and James Davis had a long affair- he was leaving his wife for her at one stage… She wasn’t set up. She knew exactly what was going on- she tried to save her own ass and it backfired because she lied- not advisable while under oath. As for Davis and Stanford I too don’t understand why they’re not talking- but there are quite a few conflicting reports as to Stanford’s attempts to leave the country. I think if he had attempted to flee it would be him perp walking for the cameras.
Ruby–
She may have known to some degree what was going on, but there’s little question in my mind from reading the deposition and the complaint against her that Davis, Stanford, and Sjoblom set her up. They all knew that she didn’t have the information about Tier III to answer the questions the SEC was demanding answered. They all knew that if Davis or Stanford were put up, there options were to commit perjury or confess to criminal fraud, so they fed her to the wolves.
She went along, which suggests she’s not as bright as some of the news reporting states. And she committed perjury if the complaint is to be believed (looks pretty convincing to me), so I don’t have a lot of sympathy. Three of her colleagues, when they saw the shape of things, turned states evidence. They are obviously smarter than her.
But here’s another thing: I cannot believe they put her up there with Sjoblom and no lawyer at all for her. None. Sjoblom has a lot to answer for as a lawyer I think.
As for Stanford and Davis, the SEC right now is pursuing Holt on the lying charge in order to pressure her to cooperate and help build their future criminal case against Stanford and Davis. They are most likely the big fish, not Holt. But, that does not mean that Holt is “innocent”. I agree with NMC’s assessment above @47. And this lawyer Sjoblom does indeed have a lot to answer for —- by his actions that we know of, he looks to me to be a potential criminal target as well.
IF Holt does not cooperate with the SEC and feds, then one can presume that she has been promised something in return in the future and believes that the promise will be kept. There would be few, if any, other rational explanations as she clearly knew about some of the shenanigans and her self-interest would appear to be served best by cooperation in exchange for a lighter sentence than otherwise. But, then again, such continued refusal to cooperate might indicate much deeper involvement on her part in the fraudulent operations, including the Tier 3 “investments” —it might have been her brainchild and she is unwilling to admit that there was anything criminal about it, defending it to the end.
Hi Friend @48 I think the latter assertation is probably a little closer to the mark. I mean come on- she would have to be a complete idiot not to have known where the rest of the money (more then 80%) was parked. She claimed responsibilty for investing the entire portfolio. Surely she and Davis had a little pillow talk, and if she wasn’t the mastermind… she was complicit. Probably a team effort between her and Davis- Stanford is pretty much a moron. I don’t think he is capable of some convoluted investment strategy.
I agree on Sjoblom- with a laywer like that better off with none at all.
NMC – where’s the deposition of hers? You can provide a link to it?
Questions not answered are – who is CW1? From the affidavit – at the mtg 2/4/09: CW2 and CW3 had not been aware that Tier 3 funds had been loaned to a shareholder.
Ok, so what the authorities leave out in that accusation is that CW1 obviously was aware. Why leave him out of that sentence? Since CW1 was not mentioned as having not been aware – he(she) was aware? That is certainly what is suggested.
What is CW1’s motive for his or her testimony to the authorities?
The Proskauer attorney, Sjoblom (in the timeline of the affidavit), conacted CW1 in an email on 1/24/09 setting forth the understanding of an agreement w/SEC earlier that day.
The affidavit doesn’t say Sjoblom emailed Holt that day. Doesn’t say Sjoblom emailed the affiliate Pres, doesn’t say he emailed Stanford, Davis, CW2, CW3.. just CW1.
Sjoblom’s 1/24/09 email to CW1 (and not all the major players) says that he “persuaded” the SEC in essence to go after Holt and affiliate pres.
On 2/4/09 we have another email between CW1 and attorney Sjoblom – this time from CW1 to Sjoblom.
Now at this point – since this is in the affidavit, and there’s clearly a point made showing a tighter written communication type relationship between CW1 and the attorney, (than is with the other CWs)…
- I can assume that
1) either the attorney is providing this info to the authorities or
2) CW1 is providing this info to the authorities or
3) Both CW1 and also Attorney Sjoblom are providing info the authorities or
4) Somebody else in the “room” provided info (Davis?)
5) Some combination of the above or
6) the authorities have wired somebody, tapped into computers or phones, or something to that effect or
7) Still, some combination of the above.
Since CW1 (and thing two and thing three and … you get the picture) is anonymous except that he/she clearly is “in on specific and targeted information” that the authorities seem to be using and not using against CW1 – CW1 seems pivotal in this investigation.
What is CW1’s motive again I ask.
CW1 appears to have worked closely with Sjoblom. The same Sjoblom who worked very hard to keep Stanford and Davis from having to go to the SEC. The same Sjoblom who went running from the case disavowing anything he might’ve done – of course he bailed after he got what he wanted out of Holt – her depo plated up hot for the SEC.
Sjoblom ran from the case and the people he persuaded to be questioned while not having persuaded Holt to hire her own representation along with whatever he was doing to “help” her.
Of course, it took Dan Cogdell, Holt’s criminal lawyer, about 2 seconds to size that situation up. Now there’s a lawyer doing his job.
Ruby @ 46 – Where can I find more about the affair between Pendergest-Holt and Davis and other similar details?
The deposition is available through PACER. Unfortunately, it was posted as about 11 or 12 documents, not one, and so would be somewhat of a migraine to put on the blog. I’ll try to get around to it if it’s of general interest.
I wondered if CW1 was the CEO of the Antigua Stanford bank. While he/she may not know what exactly was in Tier 3, he/she would probably have come closer than anyone but Davis and Stanford to knowing it was an empty bucket. It’s clear the CEO of the bank was involved in the prep (CEO may be the wrong exact title, but it’s that position) and should either be directly mentioned or be one of the three CWs. I think 1 is the best bet.
Cutting a deal when the 3 CWs cut a deal is the optimal time– gives the SEC and the prosecutors critical leverage against Holt. It’s possible that CW1 would have been in a position to know but not to be responsible for it– running an offshore sub might fit that, pointing again to my guess. I’ll have to re-read the complaint with that hypothesis in mind.
But that hypothesis fits your observations.
Thanks NMC. More later.
DLM @51: I have heard from a source who worked at Stanford/Mphs in 2002-2003 that it was fairly common “knowledge” there was something going on with Pendergest (she was not married at the time)and Davis. I was also told that at Stanford, as in dysfunctional families, you did not air the dirty laundry. What happened at Stanford, stayed at Stanford.
Thanks, GG. One of my acquaintance’s was working there when the Feds came to visit (he’s been in the news), but hadn’t talked to him since 2004 or so. And this is not a good time to be catching up.
GG– Pendergest-Holt married relatively recently. Is this a 2nd marriage?
NMC: I get the impression that her marriage to Holt was her first marriage, but I can’t confirm that.
Hi there GG and DLM- Laura was married once before but recently married Jim Holt. Jim Davis has been married twice- was married while conducting the affair with Laura and of course all the others (Heather Sheppard- look her up)- I don’t know what I can provide to specifically prove the affair but personally witnessed a lot of drama between Jim and Laura, Jim and Heather, Laura and Michael etc… I am absolutely certain as would be anyone from their inner circle these relationships were/ are real… James often spoke of leaving his wife, Lori and living on a sailboat with Laura in Miami.
Ruby @ 58 – It sounds so very Peyton Place. Thank you for the info.