Stanford Financial Group investment official released on bond

HOUSTON -- The chief investment officer of troubled Stanford Financial Group was forced to borrow money from her attorney Friday to cover her $300,000 bond and avoid spending the weekend in jail.

"Embarrassingly, I posted the money out of my own account," said Dan Cogdell, who represents Laura Pendergest-Holt. "I didn't want to see her spend the weekend in detention. I'm confident her husband's family is going to reimburse me on Monday."

During a court hearing Friday, Pendergest-Holt was painted alternately as the scapegoat for what regulators now call a massive Ponzi scheme and as one of the few people who knows where millions stolen from investors are hidden. She was unable to post the $30,000 in cash.

She must wear an ankle monitor as she heads to Dallas for more hearings in her case.

Pendergest-Holt, who looked pale and solemn in a black pantsuit, appeared in federal court as new details emerged showing that the head of the firm borrowed $1.6 billion from the troubled company's assets.

She faces charges that she obstructed the Securities and Exchange Commission's (SEC) investigation of the Stanford scandal by lying about her knowledge of the firm's activities and by omitting key details.

The SEC on Friday accused Pendergest-Holt's boss, Texas billionaire and company CEO R. Allen Stanford, and his finance chief James Davis of conducting a "massive Ponzi scheme" through companies they controlled, including Antigua-based Stanford International Bank. Stanford and Davis misappropriated billions of dollars of investors' money and falsified the bank's financial statements to conceal the fraud, the agency said in an amended civil complaint filed in federal court in Dallas.

The SEC on Feb. 17 brought civil charges against Stanford, Davis and Pendergest-Holt. In an $8 billion investment fraud, investors were lied to about the safety of investments sold by the bank as certificates of deposit and promised unrealistically high rates of return, the SEC alleged. The SEC froze the assets of three of Stanford's companies. FBI agents served Stanford with legal papers last week, and he was ordered to surrender his passport, but has not been charged with a crime.

Adding a new dynamic to the scandal, the regulators now say the fraud was a Ponzi scheme, in which early investors are paid returns from money put in by later investors.

And they allege that Stanford and Davis diverted at least $1.6 billion of investors' money through personal loans to Stanford. Stanford and Davis also invested an undetermined amount of customer funds in speculative, unprofitable private businesses, some of which they controlled, the SEC said in the new complaint.

Pendergest-Holt "facilitated" the alleged scheme by misrepresenting to investors that she managed the bank's multibillion-dollar investment portfolio and employed a large team of analysts to monitor it, the SEC said in the new filing.

Cogdell, her attorney, said Friday that his client was "set up" by men she trusted: Stanford and Davis.

Cogdell said his client had been cooperating with the investigation when she was arrested.

"She is going to fight this accusation with every resource, with every ounce of energy she has," Cogdell said, "She is not guilty. She will plead not guilty. She is going to be found not guilty."

Pendergest-Holt was arrested Thursday in Houston, where Stanford Financial Group is based.