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Antigua Police Arrest Bank Regulator Tied to Stanford

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Published on:
Jun/25/2009

By Evan Perez, www.wsj.com

Police in Antigua and Barbuda arrested a top banking regulator on U.S. charges related to the alleged $7 billion Ponzi scheme run by Texas financier R. Allen Stanford.

Leroy King, administrator of the Financial Services Regulatory Commission, was taken into custody following a judge's approval of a U.S. request Wednesday, a government spokesman said. U.S. authorities made the request based on a U.S. indictment announced Friday and pending extradition proceedings, according to the Antiguan official.

Mr. King, who has dual U.S. and Antiguan citizenship, couldn't be reached for comment and an attorney who has represented him in the past said he hadn't been made aware of the arrest Wednesday night.

The twin-island nation has agreements with the U.S. allowing for extradition, though the court process could take months and more than a year.

The Antiguan cabinet dismissed Mr. King from the FSRC position on Tuesday. Antiguan Attorney General Justin Simon said in an interview that Mr. King "hid his actions from the [FSRC] board, did not consult with or advise them. There is correspondence missing from office files."

The FSRC regulates Antigua's financial sector, including several offshore banks. Mr. Stanford's Stanford Financial Group operated an offshore bank and several other businesses in Antigua, where he was a major employer.

Last week, the Justice Department unveiled criminal charges against Mr. Stanford, four other officials at Stanford Financial Group and Mr. King.

Mr. Stanford's financial empire collapsed in February after the SEC filed a civil complaint accusing Mr. Stanford, top executives and multiple Stanford corporate entities of orchestrating "a massive Ponzi scheme." Last week, Mr. Stanford's attorney said his client will fight the allegations and was confident of being found not guilty.

The regulator's role, according to U.S. investigators, was to keep U.S. scrutiny at bay. The federal indictment and related Securities and Exchange Commission civil complaint released Friday describe how Mr. King allegedly helped Mr. Stanford conceal his activities from U.S. regulators for $100,000 in bribes.

The SEC alleges Mr. King shared documents with Mr. Stanford sent by U.S. investigators and allowed Mr. Stanford to craft the regulator's assurance that all was well. Robert Khuzami, SEC enforcement director, described Mr. King as "the enemy of investors" at a press conference Friday.

In 2005, according to the SEC complaint, Mr. King allowed Stanford officials to craft a response to the SEC that read: "We wish to assure the SEC that the FSRC's most recent onsite examination conducted just five months ago confirmed [Stanford Investment Bank's] compliance with all areas of depositor safety and solvency, as well as all other applicable laws and regulations."

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