Texas billionaire Allen Stanford and four associates were indicted on fraud, conspiracy and obstruction charges in a $7 billion pyramid scheme to bilk investors, the US Justice Department said yesterday.
Mr Stanford, a flamboyant 59-year-old financier, has to answer charges by a Texas grand jury that he orchestrated the fraud through his Antigua bank with the aid of company executives and an Antigua regulator.
He could face up to 250 years in prison if convicted on all charges, assistant Attorney General Lanny Breuer said in announcing the charges against Mr Stanford, three company executives and the chief regulator in Antigua.
Mr Breuer, speaking at a Washington news conference, said some 5,000 to 6,000 investors were hurt in the fraud.
Mr Stanford faced a hearing before federal magistrate Hannah Lauck after surrendering to FBI agents outside his girlfriend's house in Virginia late on Thursday.
A colourful figure with a penchant for cricket, golf and publicity, Mr Stanford holds dual US and Antigua and Barbuda citizenship. He denies any wrongdoing and has said he would put up "the fight of my life" if indicted. His case is the first major financial crimes prosecution brought under the administration of President Barack Obama, who has vowed to crack down on economic malfeasance.
Mr Breuer said economic troubles made such regulation even more important and vowed the government "will remain vigilant in rooting out all such fraud."
With many Americans already angered by the financial sector crisis, investigators have been under heavy pressure to crack down on financial and corporate fraud cases after the government failed to respond to warnings over the years that money manager Bernard Madoff was running a massive swindle.
Mr Madoff was arrested last year and admitted in March to orchestrating the biggest financial scam in Wall Street history.
Mr Breuer said so far less than $2 billion in recoverable assets had been identified in the Stanford case.
Mr Stanford already faces civil charges by the US Securities and Exchange Commission that he fraudulently sold $8 billion in certificates of deposit with improbably high interest rates from his Stanford International Bank Ltd, headquartered in the Caribbean island of Antigua.
The SEC, saying Mr Stanford had used Antigua as a "personal playground," filed new civil charges yesterday against company officials and an Antigua regulator, saying they aided Mr Stanford in the $8 billion Ponzi scheme, or pyramid investment plan.