UPDATE 1-Stanford executive Pendergest-Holt sues lawyer

Tue Mar 31, 2009 8:37pm BST

(Adds details from court documents, byline)

By Anna Driver

HOUSTON, March 31 (Reuters) - Stanford Financial Group's chief investment officer, who is charged with an $8 billion fraud by U.S. regulators, filed a $20 million lawsuit accusing the firm's former attorney of malpractice that led to her arrest.

Laura Pendergest-Holt, who faces one criminal count of obstruction, said the actions of Thomas Sjoblom, a partner in the Washington law firm Proskauer Rose LLP are the reason she "has been wrongfully accused of a crime" and is incurring "hundreds of thousands of dollars in attorney's fees," according to a complaint filed in U.S. District Court in Dallas on Monday.

Sjoblom could not immediately be reached for comment.

Pendergest-Holt, Stanford Chairman Texan Allen Stanford and the company's chief financial officer James Davis are accused by the U.S. Securities and Exchange Commission of a massive scheme involving high-yield certificates of deposit issued by Stanford's offshore bank in Antigua.

Pendergest-Holt, who is the only Stanford executive facing a criminal charge, was arrested on Feb. 26. The U.S. Justice Department said the executive concealed her role in and familiarity with the Antigua bank's investments when she was questioned earlier that month.

Pendergest-Holt accuses Sjoblom, who advised her before her recorded SEC testimony, of representing the company's interests rather than her individual interests.

In fact, the night before Sjoblom met Pendergest-Holt to prepare her for her SEC testimony, the lawyer solicited a multimillion dollar retainer from Allen Stanford to represent him personally, the lawsuit said.

Shortly after Pendergest-Holt's testimony, Sjoblom notified the SEC that his firm no longer represented Stanford, court documents show.

Pendergest-Holt, Davis and billionaire Allen Stanford have had their assets frozen by a court-appointed attorney.

Pendergest-Holt had trouble raising $30,000 bail and Stanford has so far been unable to hire an attorney to represent him. He is in talks with noted Texas criminal attorney Dick DeGuerin, however.

In court papers filed on Monday, Stanford denied all of the government's charges and said he was forced to represent himself because his funds were frozen and he had no money to hire a lawyer.

Stanford also challenged the venue of the SEC lawsuit, saying it should have been filed in federal court in Houston, where his home office and one of his houses is located. (Reporting by Anna Driver in Houston; Editing by Andre Grenon and Gerald E. McCormick)