Stanford: Criminal Charges Almost Certain

The SEC case against Allen Stanford comprises little more, right now, than a civil complaint; more private cases are now being filed. What does this mean for Stanford himself? Is he subject to arrest anywhere in the world? I asked Michael Gurland, a former federal prosecutor who’s now at Neal Gerber Eisenberg, about what happens now.

Gurland told me that criminial charges are probably on their way: "The allegations on their face support criminal mail and wire fraud charges. I would assume there’s an ongoing FBI investigation. The likelihood that he’s going to be indicted are extraordinarily high." But that indictment doesn’t need to be made public unless and until he’s found and the US authorities start trying to extradite him from wherever he’s turned up.

Given that there’s still no indication of Stanford’s whereabouts, the presumption is now that he’s a fugitive, and that he’s trying to place himself in a country which doesn’t have good extradition relations with the US. Meanwhile, all of Stanford’s creditors and investors, and certainly anybody who bought a CD from Stanford International Bank in Antigua, are going to have to look to the court in Texas if they want to get any of their money bank. Going to a branch in Antigua or Venezuela or Mexico — or any branch at all, really — isn’t going to do them any good.

Gurland also explained to me that SIB’s location in Antigua would have hugely complicated the SEC investigation: a large part of Stanford’s operations were simply outside the SEC’s jurisdiction. Maybe that explains why the investigation went on so long.

Meanwhile, Bloomberg’s Alison Fitzgerald is reporting that the SEC investigation really went into full overdrive only last week, when Stanford’s lawyer, Thomas Sjoblom of Proskauer Rose, suddenly "stepped down" from his role. Details are sparse, but Sjoblom’s decision to stop representing Stanford would seem to have coincided with the release of press reports that SIB looked like a Ponzi scheme; presumably, up until that point, Sjoblom had been cooperating with the SEC and other authorities.

In any case, Stanford doesn’t need a civil lawyer right now, he needs a criminal defense lawyer. Or, more to the point, he just needs someone who can help set up a new life for him as far removed as possible from any extradition threats. I suspect he’s found such a person already.