SEC Testimony in Stanford Case Leads to Fireworks
SEC testimony can sometimes be tedious and uneventful, but that certainly does not appear to have been the case with respect to the February 10, 2009, SEC testimony of Stanford Financial Group chief investment officer Laura Pendergest-Holt. First, almost immediately following her testimony, Stanford Financial Group’s lawyer, Thomas Sjoblom of the law firm Proskauer Rose, decided to withdraw from the case altogether and to “disaffirm” his prior statements to authorities.
According to a Memphis Daily News article, on February 11, Sjoblom reportedly gave notice to the SEC that his firm was no longer Stanford’s counsel. Sjoblom
followed that up with a Feb. 12 fax to Kevin Edmundson, the assistant regional director in the SEC’s Forth Worth office, and left a voice mail message for him the next evening.
Finally, Sjoblom typed a note on his BlackBerry to Edmundson a little after 4 p.m. Saturday, Feb. 14. It read: “Kevin, this will advise the SEC, and confirm my voice message last evening, that I disaffirm all prior oral and written representations made by me and my associates … to the SEC staff regarding Stanford Financial Group and its affiliates.”
Three days later, on February 17, the SEC filed its case against SFG and the executives.
That was hardly the end of the “post-testimony” fall-out in this case, however. Yesterday, the FBI made Pendergest-Holt the first arrest in its $8 billion Stanford Financial Group fraud investigation. The DOJ alleges that in her SEC testimony, Pendergest-Holt “concealed her role in and familiarity with the Antigua bank’s investments.” Specifically, Reuters reports that the allegations of the complaint include the following:
- Pendergest-Holt did not tell the SEC that she had served on the Antigua bank’s investment committee and that the investment portfolio holding more than 80 percent of its assets included a $1.6 billion loan to Stanford himself.
- Pendergest-Holt wrongly denied she had prepared with company officials before her SEC interview on February 10. In fact, the complaint alleges, there were stormy preparation sessions for Pendergest-Holt in January and February “during which the bank’s shaky asset base became apparent. to a wider circle of officials and to the lawyer — ‘Attorney A’ — who later quit.” These intense sessions allegedly included “Executive A” — Stanford –”pounding the table” and insisting “the assets are there.” The next day one of the participants broke down in tears and threatened to go to the authorities, and the attorney declared “the party is over.”
According to Bloomberg, the DOJ stated that its criminal complaint against is based on a finding of probable cause by a magistrate judge, and Pendergest-Holt has not been indicted by a grand jury. Pendergest-Holt’s lawyer, Dan Cogdell, stated that “[s]he is extremely disappointed in the path the SEC and law enforcement are taking. She has been cooperating for weeks, and now she is falsely charged for a crime she didn’t commit.”
I am not clear on one thing.
Most accounts of this situation, including this one, stress the apparent suddenness of Sjoblom’s departure from representing Stanford, within hours of Pendergest-Holt’s testimony.
Unless I’m missing something, that would suggest Sjoblom heard something shocking that turned into a conscientious whistle-blower.
But here’s what I don’t get. That same newspaper story describes Sjoblom taking charge of the SEC deposition, arguing strongly on behalf of Stanford that, first, the SEC didn’t have political jurisdiction over a business based in Antigua, and secondly that the certificates of deposit in question didn’t meet the legal definition of “securities.”
Now to my naive, non-lawyer reading, this sounds like aggressive pursuit of legal technicalities on behalf of a client. Nothing illegal about it, but also far closer to the behavior of a mob lawyer than to someone who is hours away from turning in his client.
It would seem to me that either he was last guy off a sinking ship when the testimony was finally given, or he was incredibly naive to have bought off on a pack of lies.
What am I missing? How is the interpretation of Sjoblom-as-whistle blower consistent with the actions of Sjoblom the aggressive partisan lawyer mere hours before?
I am genuinely asking–is there an interpretation here that is escaping me?
Comment by Charles H. Green — February 27, 2009 @ 10:54 am
It didn’t strike me that way at all.
It seemed to me that Sjoblom, a prior SEC investigator himself, after listening to Pendergast-Holt perjure herself repeatedly, especially with regards to knowledge of the Tier 3 investments, in sworn testimony before the SEC wanted nothing further to do in defense of the Stanford group as he could possibly face a charge of conspiracy in part of the cover-up since he personally had informed her about the existence of Tier 3 and she had just days prior given a presentation on the details of Tier3 to a number of top executives.
Comment by arias — May 12, 2009 @ 11:40 pm