Leroy King Appeal Hearing Begins

By Martina Johnson – Friday, December 16th, 2011.

ST JOHN’S, Antigua – After waiting nearly a year for a court to hear his appeal against his extradition committal, lawyers for former Chief Executive Officer (CEO) of the Financial Services Regulatory Commission (FSRC) Leroy King yesterday began oral arguments in the High Court.

King is wanted in the United States for his alleged role in the masterminding of the R Allen Stanford US $7 billion Ponzi Scheme.

Appearing before Justice Mario Michel, King’s lawyers Dane Hamilton QC and Dane R Hamilton argued two main points in support of the application for a writ of habeas corpus in a bid to get the court to quash the earlier decision of former Chief Magistrate Ivan Walters.

King, who was also the FSRC administrator, is accused of 10 counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to commit money laundering and conspiracy to obstruct the Securities Exchange Commission (SEC) as an accomplice to Stanford’s alleged crimes.

The complaint accuses King of conducting sham audits and examinations of Stanford International Bank (SIBL), an offshore bank located in Antigua, in exchange for large sums of money and other bribes while he allegedly made sure that the SEC did not peruse the offshore bank’s investment records.

Hamilton QC contended that some of the crime(s) King is accused of are not crimes under the laws of Antigua & Barbuda and as such he has not committed any offence for which he can be extradited.

He also said if the offences existed under the laws of Antigua & Barbuda it must be stated, expressly, that they are extra-territorial as well.

The appellant’s counsel then questioned how it is that King is before the court for conspiracy to commit various types of fraud when no counterpart has been named.

The senior lawyer dismissed information in witness statements of other persons allegedly or admittedly implicated in the fraud and said they were nothing but unsubstantiated hearsay evidence.

Hamilton spent the entire day addressing the court on the aforementioned issues in addition to others and is expected to resume next Wednesday. After that the Director of Public Prosecution (DPP) Anthony Armstrong would respond.

While the matter is ongoing, King would remain on $600,000 bail with strict orders not to leave his home without being accompanied by one of his sureties.

He must also continue to report to the police station nearest his home every day among other conditions.

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Magistrate Orders King’s Extradition

Former administrator of the Financial Services Regulatory Commission (FSRC) Leroy King leaves the court, Monday, after Chief Magistrate Ivan Walters ordered his committal for extradition on allegations of fraud related to R Allen Stanford’s alleged US$8 billion ponzi scheme. King, who was on bail since his arrest in June last year, underwent surgery on his right eye. To King’s left is a senior police officer. (Photo by Julian Rogers)

Almost 10 months after he was arrested on several fraud-related charges in connection with an alleged US $8 billion ponzi scheme perpetrated by R Allen Stanford, and after several adjournments, Chief Magistrate Ivan Walters ordered the committal for extradition of Leroy King, former chief executive officer of the Financial Services Regulatory Commission (FSRC).

Minister of External Affairs Baldwin Spencer has to approve the decision that will allow the one-time FSRC boss to be returned to the United States to answer the charges in a court of law.

Meanwhile, the court informed the accused that he has 15 days to exercise his right to file a writ of habeas corpus seeking to set aside the magistrate’s ruling. Reliable reports are that the writ has already been drafted. Should the application be filed, the matter could be tied up in the courts for months to come.

The highly anticipated court decision on the extradition request made by the US last year was delivered yesterday in the St John’s Magistrates’ Court in the presence of King’s relatives and friends.

Following his decision, Magistrate Walters ordered King remanded to Her Majesty’s Prison to await the decision. However, the magistrate later granted King bail under section 11(9) and (7) of the Extradition Act upon application by King’s lawyer, Queen’s Counsel Dane Hamilton, with no objections coming from the Director of Public Prosecutions (DPP) Anthony Armstrong who had conduct of the extradition request.

Hamilton made the bail application on medical grounds.

The lawyer told the adjudicator that King, who appeared in court yesterday with a bandage over his right eye, underwent surgery on Saturday April 24 to reattach the retina in his right eye and the ophthalmologist, Dr Ian Walwyn, who performed the surgery recommended that he return for regular treatment and remain in a safe, clean, healthy and secure environment, among other stipulations.

The attorney submitted medical reports in support of information that King’s surgery to the eye, without proper follow-up care, would result in blindness.

He further gave the court additional documents, from different doctors, in support of other medical conditions, which place restriction on physical activities.

In light of the application, Magistrate Walters said bail would be extended to the accused but instead of the $500,000 with a $100,000 cash requirement which King was granted on his first appearance in court last June, the magistrate increased the amount.

Now, King’s bail is $600,000, making it necessary for an additional $10,000 cash deposit to be paid to the court before he was released.

The court also asked for a copy of the title deed to the property that King’s surety said was valued at $200,000 and further asked that a caution be placed on said property.

The other bail conditions previously ordered remain the same.

The accused must continue to report to the St John’s Police Station twice daily and must not leave his home unless accompanied by one of his two sureties except in the case of a medical emergency. His travel documents will remain in police custody.

Before he made his decision on the bail application known, Magistrate Walters noted that King’s co-accused, some of whom also have medical conditions, are all in jail in the US awaiting trial.

He however stated that he is cognisant of the conditions of the local prison where the cells are overcrowded and conditions not conducive to the type of medical care King would require.

King, who was also the FSRC administrator, is accused of 10 counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to commit money laundering and conspiracy to obstruct the SEC as an accomplice to Allen Stanford’s alleged crimes.

The complaint accuses King of conducting sham audits and examinations of Stanford International Bank (SIBL), an offshore bank located in Antigua, in exchange for large sums of money and other bribes while he allegedly made sure that the SEC did not peruse the offshore bank’s investment records.

The DPP had submitted that King had sought advice from Stanford’s lawyers on what to say in response to inquiries being made by the Eastern Caribbean Central Bank (ECCB) as the investigation into the alleged scheme got under way.

Armstrong said that King prepared letters in his handwriting, addressed to one Nigel Streete, bearing the fax number for Maurice Alvarado the general legal counsel for Stanford Financial Company (SFC), seeking advice on matters raised by the ECCB concerning the supervision of SIBL, Stanford Trust Company Limited (STCL) and other affiliate companies.

Armstrong said the nature of the correspondence shows that there was more than a “good friend” relationship between the SFC counsel and King.

In the letter King allegedly wrote, “To America’s best and greatest attorney, Mr MA, I am sending you two versions. One short, one with a little more knock-out punch. I prefer the shorter version; a little more subtle and diplomatic.”

Armstrong told the court that King had written to the SEC stating that the FSRC had concluded that “any further investigation of ‘possible’ fraudulent activity of SIBL is unwarranted. The FSRC is very concerned as to why the SEC would impute such serious allegations against SIBL. It is the opinion of the FSRC the SIBL has conducted its banking business to date in a manner the FSRC considers to be fully compliant.”

The DPP submitted that the correspondence shows that the accused knew of and facilitated the ponzi scheme.

In a second letter, said to be in King’s handwriting, he wrote, “I would like to include but it does not seem to flow well with the above. Don’t want to over-kill or seem too arrogant. Any other ideas? Must conclude tomorrow. Will send package to include a copy of the annual reports for SIBL and STCL. I am sending a message to these guys that institutions concerned are not run of the mill, they are great quality institutions and the numbers speak for themselves. Thanks a million. Lee.”

The DPP said that the letter, statements from James Davis, the former chief financial officer of SFC, as well as substantive independent data are corroborative that King supported the scheme.

Davis is also an accused in the matter and he has pleaded guilty.

The court had heard that between February 2, 2005 and February 2, 2009 there had been quite a number of cash deposits made to one of King’s two accounts at JP Morgan Chase whilst similar deposits were made into the other account between January 9, 2003 and February 4, 2009.

The prosecutor had also said that evidence obtained from an independent auditor into SIBL’s financial statements showed that the investments the company alleged to have made, did not exist or were grossly inaccurate having been overstated.

However, Armstrong said that King reported to SEC officials that the offshore bank was solvent and a good quality institution which was fully compliant with the requisite offshore banking regulations.”

In response, Hamilton QC had argued that while King is accused of making false assurances that there was no cause for concern about SIBL and collaborating with Stanford to withhold significant information requested by the SEC, that could not be so because King was never the supervisor of banking and therefore could not influence the proper or improper examination of SIBL’s books.

Further, the Queen’s Counsel stated that King’s alleged refusal to divulge information was not a crime, his actions were in fact “within the four corners of the law.”

Hamilton also said that the statements given by the accused Davis are incapable of establishing that King was involved or that he took part in “the ludicrous blood oath ceremony” for the stated purpose, or that he received bribe money from Stanford to obstruct the SEC investigation. The Queen’s Counsel had made several other submissions, as did the DPP.

Under the Extradition Act, persons can only be extradited following a bilateral agreement for crimes which carry a penalty exceeding 12 months in prison.

King is the second person whose extradition to the United States has been ordered this year. Last week Newfield resident Gordon Weston was taken to the United States on allegations he attempted to murder Earl Matthias, among other related offences committed some five years ago

Antiguan Charged in Stanford Case Ordered to U.S.

Antigua’s former top banking regulator, Leroy King, was ordered extradited to the U.S. to face charges he helped financier R. Allen Stanford conceal a $7 billion fraud scheme, Antigua’s top prosecutor said.

Director of Public Prosecutions Anthony Armstrong said that Chief Magistrate Ivan Walters ordered King removed to the U.S. in a decision issued today. Armstrong, who argued for the removal, said King has 15 days to appeal the decision to the nation’s High Court.

King was formerly chief executive officer of Antigua and Barbuda’s Financial Services Regulatory Commission. He has been under house arrest in Antigua since June, when he was indicted by a federal grand jury in Houston for allegedly accepting bribes from Stanford to mislead U.S. securities regulators.

His lawyer, Dane Hamilton Sr. of St. John’s, Antigua, did not immediately return a call seeking comment on the court’s ruling. Andy Laine, a spokesman for the U.S. State Department, said he could not immediately comment.

U.S. prosecutors allege Stanford and his co-conspirators took money from new investors to repay earlier investors who bought allegedly bogus certificates of deposit from the Antigua- based Stanford International Bank Ltd.

Blood Oath

King and Stanford took a blood oath in 2003 to support the alleged fraud scheme, which netted King hundreds of thousands of dollars in bribes, according to a document signed by former Stanford chief financial officer James M. Davis when he pleaded guilty to criminal charges in the probe last year.

Stanford, who is being held without bail pending a January 2011 trial, has denied all allegations of wrongdoing. He also faces parallel charges in a civil enforcement action filed by the U.S. Securities and Exchange Commission.

The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09cv298, U.S. District Court, Northern District of Texas (Dallas).

Magistrate Dithers on Leroy King Extradition Decision

Leroy King, the former head of the Financial Services Regulatory Commission (FSRC), will have to wait a bit longer to find out whether he will be committed for extradition to the United States (US).

King appeared in the St. John’s Magistrates’ Court yesterday before Chief Magistrate Ivan Walters, who informed him that he (Walters) was not ready with his decision.

Chief Magistrate Walters adjourned the matter until 26 April and told King that his bail will continue in the same terms as before.

The former FSRC head has been charged by the United States Securities and Exchange Commission (SEC) with taking hundreds of thousands of dollars in bribes to ignore wrongs in relation to the alleged Sir Allen Stanford $8 billion Ponzi scheme. He is facing 10 counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to obstruct the SEC, and conspiracy to launder illegal proceeds.

The SEC’s complaint alleges that King facilitated the Ponzi scheme by ensuring that the FSRC conducted sham audits and examinations of Stanford International Bank Limited’s (SIBL’s) books and records. They also allege that in exchange for bribes paid to him over several years, King made sure the FSRC did not examine SIBL’s investment portfolio.

In January, King’s lawyer, Dane Hamilton QC, made submissions before the court as to why his client should not be sent to the US to stand trial for his alleged involvement in a Ponzi scheme with Sir Allen Stanford and others.

Hamilton said it has not been

shown in anyway whatsoever that King benefitted from sums of monies lodged with Stanford Bank in the USA by investors Jonathon Davis and William Julian.

He said SIBL was an offshore banking corporation that was registered in Antigua and Barbuda and fell under the regulatory purview of the FSRC. Hamilton explained that the regulatory body (the FSRC) is headed by a board of directors and King was the administrative head of the commission at the material time.

Hamilton stated that King had no control of the processes of the FSRC and added that there was no evidence to show that in any way, he (King) influenced the examination of the supervisor of banking over SIBL.

Director of Public Prosecutions (DPP), Anthony Armstrong, in his submissions said the government’s case was based on three areas- direct, circumstantial and documentary evidence.

The DPP told the court that King wrote to Elizabeth Jacobs, the deputy director of SEC on 10 Feb., 2006, assuring her that the FSRC had examined SIBL’s conduct some five months before and that the bank was complying with all the applicable laws and regulations. King also assured that all the other relevant things were examined and were in place.

According to Armstrong, King’s role in the conspiracy was indeed critical because of what he said in his letter-that on site examination proved that the bank was complying with depositors’ safety and insolvency.

Armstrong said in 2005, King was put on notice by the SEC that all was not well at SIBL. The DPP said the SEC had disclosed that evidence was gathered by its staff about legitimacy of the CDs, which King had assured were safe and solvent.

King, Armstrong said was put on guard in no uncertain manner.

It is alleged that King sought advice from Sir Allen Stanford’s legal counsel pertaining to questions being raised by the Eastern Caribbean Central Bank (ECCB.)

Armstrong said in one of the hand-written letters King writes, “My good friend (referring to the attorney.) In another letter written to the attorney, he (King) again writes, “To America’s best and greatest attorney. Maurice (Alvarado), I am sending you two versions- one short and one long with a little more knock out punch. I prefer the shorter version, a little more subtle and diplomatic.”

It was further quoted in that letter by King to Alvarez, “Any other idea? Must conclude tomorrow. Will send you a package to include the annual report for SIBL and STCL. I am sending a message to these guys that the institutions concerned are not run of the mill, they are great quality institutions and the numbers speak for themselves. Please do not bill me (laugh) Thanks a million, Lee (short for Leroy.)”

The DPP questioned why King would be sending these letters from the ECCB concerning SIBL and STCL to his “good friend Maurice Alvarado” when he is refusing to disclose any information to the US regulatory body (the SEC.)

King to know extradition fate on March 25

By Observer News – Tuesday, January 26th, 2010

The former head of the Financial Services Regulatory Commission (FSRC) will know in two months if a magistrate will order his extradition.

If extradited, Leroy King will travel to the United States to face charges for his alleged involvement in a US $7 billion Ponzi scheme believed to have been orchestrated by investor Sir Allen Stanford.

King is accused of 10 counts of conspiracy to commit mail fraud, seven counts of conspiracy to commit wire fraud, conspiracy to launder illegal proceeds and conspiracy to obstruct the Securities and Exchange Commission (SEC).

Yesterday, Chief Magistrate Ivan Walters heard submissions from Director of Pubic Prosecution Anthony Armstrong and King’s lawyer, Dane Hamilton, QC, before saying he would announce his decision on March 25.

Hamilton spent over an hour outlining his position to the court. He said his client should not be held accountable for the alleged fraud, as the Stanford International Bank Ltd (SIBL) “operated in an environment in which the laws were lax on how an offshore bank should operate.”

The attorney said King, as the FSRC administrator, did not have a direct hand in scrutinising the reports and balance sheets of the various offshore banks.

“He had never been the Supervisor of Banking,” Hamilton said. “He was never responsible for any examination of any account.”

The senior attorney also added that King was not involved in any cover-up with Stanford, as the charges suggest.

“It cannot be said and should not be said that Leroy King did not cooperate with the SEC (Securities and Exchange Commission),” Hamilton said, as he explained that his client offered to host a meeting between SIBL officials and American regulators after receiving correspondence from the SEC.

“Leroy King had gone beyond the remit of his office to cooperate with the SEC,” he added.

However Director of Public Prosecutions (DPP) Anthony Armstrong disagreed. He contended that King was, in fact, responsible for regulating the offshore banks.

He pushed his case, arguing that the timing in which King proceeded to withdraw funds from his US accounts was cause for concern. According to Armstrong, the withdrawal of money had to be viewed in the context of what was happening at the time.

He upheld a similar view when he noted a series of deposits that were made to Chase Morgan accounts and questioned the timing in which those sizeable deposits stopped in February of last year.

During the course of his submissions, the prosecutor contended that King and Stanford were very good friends and that he, from time to time, produced reports that indicated SIBL was solvent and in good standing.

Should the magistrate order King’s extradition, the former FSRC boss would have the opportunity to file an appeal in the High court.

King remains on house arrest and will continue to report to the St John’s Police Station twice daily, accompanied by one of his two sureties.