Stanford faces £4.2bn fraud charge

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The 59-year-old was indicted on fraud and obstruction charges alongside other executives of his firm, Stanford Financial Group, the US Justice Department announced.

The tycoon handed himself in to the FBI on the eve of Friday's court hearing.

Stanford already faces civil charges brought by US regulators over an allegedly fraudulent eight billion dollar (£4.8 billion) certificate of deposit scheme and a separate 1.2 billion dollar (£700 million) investment vehicle.

Stanford's arrest in Virginia was followed by that of Gilberto Lopez and Mark Kuhrt, Stanford Financial Group's (SFG) chief accounting officer and global controller.

The company's chief investment officer, Laura Pendergest-Holt, has also been charged over the alleged fraud.

According to the charge sheet, Stanford and his co-defendants masterminded a scam in which investors were sold around 7 billion dollars (£4.2 billion) worth of so-called certificates of deposit (CDs) after being lured by above-the-odds returns.

CDs are fixed-term investment products which are supposed to the virtually risk-free.

Regulators in the US have claimed that Stanford and his firms "misrepresented" to investors that their money was safe, falsely claiming the bank re-invested client funds primarily in "liquid" financial instruments and was monitored by a team of 20-plus analysts. Instead, Stanford and his co-accused misused and misappropriated the funds, it is alleged.

The US Department of Justice claims that 1.6 billion dollars (£1 billion) was diverted to Stanford himself through undisclosed personal loans. The defendants are also charged with conspiracy to commit mail, wire and securities fraud.