Billionaire Stanford pleads not guilty to fraud

HOUSTON -- Texas billionaire R. Allen Stanford pleaded not guilty to charges he swindled investors out of $7 billion as part of a massive investment scam.

Stanford entered his plea during his arraignment Thursday in federal court in Houston. The financier was indicted last week by a grand jury on charges that his international banking empire was really just a colossal Ponzi scheme.

Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt, three Stanford Financial Group executives who were indicted along with their former boss, also entered not guilty pleas during the court hearing.

Stanford arrived at a the courthouse in handcuffs and leg chains wearing an orange prison jumpsuit and dark slip-on shoes. He was the last inmate off the corrections shuttle bus.

U.S. Magistrate Judge Frances Stacy's decision on whether to grant a bond for Stanford was expected later in the day. Stanford was arrested in Virginia on June 18.

He was returned to Texas on Tuesday and was being held in the Montgomery County Jail in Conroe, just north of Houston, according to his attorney Dick DeGuerin.

Each of the most serious counts Stanford faces carry prison terms of up to 20 years.

The billionaire and the executives are accused of orchestrating a massive fraud by misusing most of the $7 billion they advised clients to invest in certificates of deposit from the Stanford International Bank, based on the Caribbean island of Antigua.

Also Thursday, Antigua and Barbuda's authorities arrested the country's former chief financial regulator over U.S. charges that he collaborated with Stanford.

"(Leroy King) was taken into police custody early this morning ... pending a formal extradition request" from the United States, Antigua and Barbuda's Director of Public Prosecutions Anthony Armstrong told Reuters by phone.

King was sacked last week by the government as head of the Caribbean nation's Financial Services Regulatory Commission (FSRC) after the U.S. Securities and Exchange Commission brought charges against him alleging he received "thousands of dollars in bribes" from Stanford to cover up the fraud.