Ex-Stanford executive pleads guilty to obstruction

Disgraced Texas financier R. Allen Stanford's former chief investment officer for his now defunct financial empire pleaded guilty Thursday for her role in helping the once jet-setting businessman bilk investors out of more than $7 billion.

A tearful Laura Pendergest-Holt changed her original not guilty plea a week after Stanford was sentenced to 110 years in prison following his conviction on fraud-related charges for orchestrating one of the biggest Ponzi schemes in U.S. history.

As part of an agreement with federal prosecutors, Pendergest-Holt, 38, pleaded guilty to one count of obstruction of a U.S. Securities and Exchange Commission proceeding in exchange for a three-year prison sentence. The obstruction count carries a maximum prison term of five years. As part of the plea deal, prosecutors will drop 20 other counts, including conspiracy, wire and mail fraud.

U.S. District Judge David Hittner said he will consider the deal, including the sentencing recommendation, when he sentences her on Sept. 13.

Pendergest-Holt, a native of Baldwyn, Miss., her attorney, Chris Flood, and prosecutors all declined to comment after the hearing.

Prosecutors said Stanford, 62, used the money from investors who bought certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua to fund a string of failed businesses, bribe regulators and pay for a lavish lifestyle that included yachts, a fleet of private jets and sponsorship of cricket tournaments. The one-time billionaire was convicted in March on 13 of 14 fraud-related counts

Prosecutors said Stanford lied to investors from more than 100 countries, telling them their funds were being safely invested in stocks, bonds and other securities.

During Thursday's court hearing, Pendergest-Holt admitted she gave the impression to investors and employees that she knew what assets made up the bank's investment portfolio, which was divided into three tiers. According to authorities, Pendergest-Holt didn't know most of the bank's assets were tied up in Tier 3, which was made up of real estate purchases whose value had been overinflated by billions and by up to $2 billion in personal loans to Stanford.

"Her management of (the bank's) investments was confined to Tier 2, which made up only about 12 percent of the bank's assets," said prosecutor Jason Varnado.

When the SEC began investigating, officials say Stanford, Pendergest-Holt and other company executives conspired to hide the bank's true financial health and provide misleading testimony to the federal agency in 2009.

During the court hearing, Hittner prodded Pendergest-Holt to offer details of her actions, asking her to "tell me what you did."

Pendergest-Holt, who was the first person indicted in the case, told Hittner she was not completely truthful with the SEC when she testified before the agency in Fort Worth, Texas, in February 2009, a week before authorities shut down Stanford's companies.

"I knew I was delaying" the SEC's investigation, she said.

Varnado told Hittner that at least $350,000 that had been held by Pendergest-Holt was frozen by a U.S. receiver who took over Stanford's companies and those funds will be given to victims.

During Stanford's trial, the financier's defense attorneys had tried to use an affair Pendergest-Holt had with James M. Davis, the former chief financial officer for Stanford's companies and the prosecution's star witness, to discredit Davis, who has pleaded guilty and faces up to 30 years in prison.

Pendergest-Holt had been set to go to trial in September with two other indicted ex-executives — Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller. Lopez and Kuhrt are still set for trial. A former Antiguan financial regulator was also indicted and awaits extradition to the U.S.