March 12 (Bloomberg) -- Texas financier R. Allen Stanford, accused by regulators of an $8 billion investor fraud, invoked his right against self-incrimination under the U.S. Constitution and said he won’t testify in the case against him.

Stanford’s declaration was among papers filed yesterday in federal court in Dallas by lawyers for the U.S. Securities and Exchange Commission, which sued Stanford, two associates and three affiliated companies on suspicion of running a massive fraud involving the sale of high-yield certificates of deposit, or CDs, through Antigua-based Stanford International Bank.

“I hereby assert my privilege against self-incrimination under the Fifth Amendment to the U.S. Constitution and decline to testify or provide an accounting, and will continue to decline to testify, provide an accounting or produce any documents” related to the accusations, Stanford said in an affidavit signed March 9.

Stanford said he wouldn’t provide any information about his personal background or assets, conduct related to the Stanford Financial Group of companies, his communications with co- defendants, or regarding any funds he received or transferred related to the CDs at the heart of the government’s allegations.

The SEC also filed a copy of a Feb. 24 deposition of James Stanford, Allen’s father, who also repeatedly invoked his Fifth Amendment right against self-incrimination. The elder Stanford, a member of Stanford International Bank’s board, refused to answer questions about the bank’s operations, its structure or the source of his son’s money.

‘Massive Ponzi Scheme’

Neither Allen Stanford, the chairman and sole shareholder of the Stanford Financial Group of companies, nor Chief Financial Officer James M. Davis has been accused of a crime. Davis filed court papers Feb. 27 asserting his right against self-incrimination and hasn’t answered the SEC’s claim that he and Stanford ran a “massive Ponzi scheme,” in which old investors were paid using money from new participants.

Chief Investment Officer Laura Pendergest-Holt, who also was sued Feb. 17 by the SEC in the fraud allegation, was charged with criminal obstruction and released on $300,000 bond. Her lawyer, Dan Cogdell, said she is innocent and had been cooperating with investigators when she was arrested Feb. 25.

U.S. District Judge David Godbey froze all of Stanford’s personal and corporate assets and named Dallas lawyer Ralph Janvey as receiver. Stanford said in his affidavit that he was served with papers notifying him of the SEC complaint, requesting his deposition and freezing his assets.

Charles Meadows, a Dallas attorney who said he is representing Stanford on the asset-freeze issue, didn’t immediately return calls seeking comment. Meadows previously denied the SEC allegations that Stanford ran a Ponzi scheme.

Frozen Accounts

Stanford investors began retrieving roughly 12,000 frozen accounts containing as much as $250,000 each on March 9, after Godbey partially lifted the asset freeze at Janvey’s request.

Janvey said yesterday in a statement on a Web site for investors that he will ask Godbey later this week to release more of the estimated 20,000 accounts still frozen. The second wave will exclude accounts linked to the offshore CDs or to certain Stanford executives or employees, Janvey said.

Along with Stanford’s statement, the SEC yesterday filed copies of internal e-mails between Stanford, Davis and top Stanford officials from Feb. 4 through Feb. 16. The SEC said the messages support its allegations.

In an e-mail dated Feb. 13, Lena Stinson, Stanford’s director of global compliance, told Allen Stanford that she would resign and take her concerns to the SEC unless he immediately disclosed certain transactions with Stanford International Bank and inaccuracies in the company’s financial statements.

Return Deposits

Stinson was following up on a phone conversation with Allen Stanford from the previous evening, according to the e-mail. Stinson, who served on the membership committee of the Financial Industry Regulatory Authority until she resigned at the group’s request last month, also told Stanford that his Antigua-based bank should immediately stop accepting customer deposits and return about $5 million in deposits received in early February.

The SEC claims that Stanford may have appropriated as much as $1.6 billion in investor funds through personal loans disclosed only to a few top executives. Stinson said in her e-mail that she learned of irregularities in the company’s accounts at a meeting of Stanford Financial Group officials held in Miami in early February.

Janvey yesterday asked Godbey for sole authority to place Stanford companies into bankruptcy, if he determines that’s needed. The receiver said he isn’t ready to put the companies under creditor protection at this time.

“Bankruptcy may turn out to be the best option for one or more of the defendants, but it is too early in the receivership process for anyone to accurately assess the potential benefits a bankruptcy might provide for the defendants,” Janvey said in court papers. “That will take time.”

The case is SEC v. Stanford International Bank, 3:09-cv-00298-N, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

Last Updated: March 12, 2009 00:01 EDT