Feb. 21 (Bloomberg) -- Baldwyn, Mississippi, was perhaps best known for its proximity to Elvis Presley’s home town of Tupelo until this week. Now, it’s becoming famous for a native son and daughter who were top executives in R. Allen Stanford’s company.
James Davis, Stanford Financial Group Co.’s finance chief, and Laura Pendergest-Holt, the Houston-based firm’s chief investment officer, both hail from the town of 3,300 people 123 miles southeast of Memphis. At least four other employees of Stanford companies grew up in Baldwyn, giving it an unlikely role in an international probe by the Securities and Exchange Commission and Federal Bureau of Investigation that stretches from Houston to Antigua.
“Everyone in town is floored,” said Lynda Conlee, Baldwyn’s city clerk, who referred to Davis as “Mr. Jim.” “This has put Baldwyn on the map, that’s for sure.”
The SEC has accused Stanford, 58, Davis, 60, and Pendergest-Holt, 35, of running a “massive, ongoing fraud” that misled investors in about $8 billion in certificates of deposit issued by Antigua-based Stanford International Bank, which the regulator said promised “improbable, if not impossible” returns. The FBI served Stanford Feb. 19 in Virginia with court papers related to the SEC’s civil lawsuit. No criminal charges have been filed against the Texas-born billionaire or his colleagues.
Main Street Money
In Baldwyn, where the water tower is the tallest structure, the talk of the town is the Stanford scandal. Davis, Stanford’s college roommate, owns or helped refurbish several businesses on Main Street, including the Status Thimble, which sells needlepoint supplies, and Kaffa at the Old Post Office, a coffee shop. Stanford’s offshore bank is a shareholder in a golf-supply company that opened a distribution center in Baldwyn last year.
“As a city, we’re taking it one day at a time,” Mayor Danny Horton said in an interview. “I don’t know what’s going on, only what I read and what I hear in the news.”
A profile in the September-October issue of Mississippi Magazine lauded Davis for revitalizing Baldwyn, where the per capita income at the 2000 U.S. Census was $15,430, compared to $21,587 nationwide.
“The community investment aspect of our lives is critical,” Davis was quoted as saying in the article. “It protects our values -- values like commitment to others and to family.”
PGA Tournament
Davis and Pendergest-Holt both had offices up Highway 78 in Memphis, the U.S. headquarters for Stanford Group Co., the wealth-management arm of Stanford’s network of companies. In 2007, Stanford became lead sponsor of a PGA Tour Golf Tournament, the Stanford St. Jude Championship, which benefits the St. Jude Children’s Research Hospital in Memphis.
A program Stanford sponsored that paid $1,000 for each eagle, or shot two under par, on the women’s and men’s professional tour raised $4 million in the last two years for the hospital, said Phil Cannon, the tournament director. Davis played in pro-am events with professional golfers, he said.
“Mr. Davis seemed to be a very fine gentleman that had St. Jude’s best interests at heart,” Cannon said.
Davis Holdings LLC, an investment company Davis owns, occupies a 1920s-era building next door to his home-decorating store Patina Décor. Two men and a woman were inside on Feb. 19, packing bankers’ boxes with files. They locked the door when a Bloomberg reporter arrived, and declined to answer questions.
Baldwyn Employees
Zack Davis, Jim Davis’s son, worked at Stanford’s Memphis office. Stanford employees Angie Skelton, David Bishop and Elizabeth Randall are natives of Baldwyn, according to a 2008 story in the Memphis Business Journal. None of these employees were named in the SEC complaint. Bishop and Randall couldn’t be reached for comment.
“I can’t talk to you, all of the analysts are restricted,” Skelton said when reached at her home in Guntown, four miles south of Baldwyn.
Stanford required every employee to wear a lapel pin of an eagle with a shield. The Eagle Shield demonstrated “financial strength, integrity and commitment to our clients,” according to its Web site.
“Well-managed companies tend to be led by people who actually look for dissenting voices,” said Rick Wartzman, who studies management issues as director of the Drucker Institute at Claremont Graduate University in Claremont, California. “It’s a reminder not to surround yourself with friends.”
Loribel
Davis’s gated house is in a neighborhood scattered with prefabricated homes, trailers and ranch houses. Called Loribel, according to a sign on a pillar near the gate, it features a widow’s walk overlooking a pond. No cars were visible from the road when a reporter visited Feb. 19.
“He did not have an air about him as being important,” Horton, the mayor, said.
Stanford’s offices in Memphis and Tupelo were closed yesterday. Davis didn’t return voicemails left at both offices and at his Baldwyn home seeking comment.
Pendergest-Holt, wearing jeans and a cranberry-red turtleneck, greeted a reporter Feb. 19 at the Victorian home on Clayton Road where she grew up. Her husband, Jim Holt, was putting up a cable so a neighbor’s dog could roam safely around the yard. Holt said his wife was preparing to travel to Houston to work with the company’s receiver.
She wouldn’t comment on the case, referring questions to her lawyer, Brent Baker of Parsons Behle & Latimer in Salt Lake City.
‘Intend to Abide’
“We intend to abide by our legal responsibilities,” Baker, a former Securities & Exchange Commission lawyer, said. “We are willing to fulfill anything that is required.”
Pendergest-Holt and Davis met at the First Baptist Church in Baldwyn when she was in her early 20s, Jim Holt said in an interview. Davis was a Sunday school teacher at the church, Holt said. Holt, who said he is a hedge-fund manager, said his wife only oversaw the “investable assets” of the company, and that Pendergest-Holt didn’t manage the company’s “black box” assets.
Pendergest-Holt was a graduate of Baldwyn High School.
Roberta McKay, who was a librarian at the school for more than three decades, said in a March 2006 interview that Pendergest-Holt was a “very good student” and at the top of her class.
Pendergest-Holt’s sister Amy is married to Kenneth Weeden, Stanford Financial Group’s Tupelo-based managing director of investments and research. Weeden, reached by phone at his home in Corinth, Mississippi, said he’s cooperating with the court- appointed receiver which had “occupied” the Tupelo office.
ForeFront Holdings
Stanford International Bank, seized by Antiguan regulators, is a shareholder in ForeFront Holdings Inc., a golf-supply company that opened a 200,000 square foot distribution center in Baldwyn last year.
Antigua-based Stanford International Bank held about 80 percent of its common stock, ForeFront said in a statement last year. Forefront also said the bank agreed to invest $12 million into the company. ForeFront lost $3.3 million in the first quarter of 2008, the last quarterly report it filed before asking the SEC in August to cease filing regular financial reports.
ForeFront Chief Executive Officer Stan Harris said the company “is in all essence private right now,” and wouldn’t comment on Stanford’s ownership stake or the decision to open the Baldwyn distribution center. Charlie Sample, who manages the Baldwyn distribution center, declined to comment.
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