Laura Pendergest-Holt, a 35-year-old wonder woman who dispensed financial advice on Memphis radio stations and earned a million dollars last year, earned the dubious distinction of being the first person charged criminally in the ballooning investigation of Stanford Financial Group.
Friday night, the Securities Exchange Commission upgraded its assessment of Stanford to "a massive Ponzi scheme," invoking the P-Word well after numerous media outlets and fleeced investors had already done so.
Pendergest-Holt was arraigned in court in Houston Friday. But her home is in Baldwyn and her office was in the Crescent Center in East Memphis, where she witnessed the SEC's fateful raid on February 17th.
People from Baldwyn who knew her were, needless to say, surprised when I visited with them last week.
"She was one of the smartest women to come out of this town," said Tammy Bullock, general manager of the Baldwyn News. Pendergest-Holt was a 1991 graduate of Baldwyn High School and a 1995 graduate of Mississippi University for Women, winning several honors at both schools, according to Bullock. "She is very success oriented, and has a pleasing personality."
Baldwyn Mayor Danny Horton called Pendergest-Holt "a fine young lady from a fine family." Horton also knows her mentor, Stanford's chief financial officer James M. Davis.
"Our sons went to high school together," Horton said. "I had no idea. I read it in the paper and heard it on the news. Surprised is a good word. Jim Davis had a deep love and passion for small municipalities and realized that their heart is the downtown area."
Davis invested in several buildings and small businesses on Baldwyn's two-block Main Street, giving the otherwise forlorn downtown a touch of Oxfords trendy square. Davis' wife operates a store called Patina Decor. A man who answered the door Thursday said no one in the family would have any comment.
Everybody in town is kind of shocked," Horton said. "Any news travels fast but most people, like me, didn't know about it. They probably would know more about the Friday night high school football games than about the dealings of Stanford."
Perhaps, although managers of the Farmers and Merchants Bank and Regions Bank in Baldwyn declined to be interviewed about whether they suspected anything about Davis, Pendergest-Holt, or Stanford's certificates of deposit that paid twice as much interest as their own products.
The FBI and the SEC say Pendergest-Holt is a liar whose gall verges on the "incredible," according to documents made public Friday. She lied, they allege, as recently as last week when asked about Stanford's financial structure. She is charged with obstructing an investigation and is likely to be treated harshly as her case advances. Memphians may remember former state senator Roscoe Dixon, who lied to the FBI in a "last-chance" interview, went to trial, lied again on the witness stand, and got a conviction and a five-year sentence in the Tennessee Waltz investigation.
The small-town-makes-good (for a while, anyway) story has overtones of a novel by Theodore Dreiser or Sinclair Lewis. Pendergest-Holt was a protegee of Davis, who is 60 years old, married, and the father of four sons. They met at First Baptist Church in Baldwyn several years ago. Davis, raised in the community of Dry Creek, subsequently left First Baptist and helped start a new church in another nearby hamlet called Guntown. The administrator at LifeWay Community Church in Guntown confirmed that Davis was "one of the founders" but would not be interviewed. Davis' wife Laurie still attends First Baptist, according to pastor Stanley Huddleston.
"We have resigned ourselves at the church not to make quick judgments and to wait until all the facts come out," Huddleston said -- a day before the feds version of the facts became to come out in Houston.
Bullock said several young people from Baldwyn went to work for Stanford but none rose as high in management as Pendergest-Holt. The FBI and SEC allege that Pendergest-Holt was unprepared for the job of overseeing a complicated financial firm and that the company lacked professional oversight that would have exposed the fraud.
Baldwyn is the home of Hancock Fabrics, a publicly-traded company that was a Memphis investment favorite a decade or so ago. It is about 15 miles north of Tupelo, where Stanford had an office in the recently developed property that used to be the fairgrounds. A Tupelo businessman said Stanford gained entry into the financial business in Tupelo by buying out a company called Executive Financial Planning.
For Tupelo, Stanford's fall is the second shock in less than a year. Last year Toyota announced that it is indefinitely delaying construction of its new assembly plant northwest of town.
Pendergest-Holt, a native of Baldwyn, Mississippi, was working in Stanford's Memphis office in the Crescent Center last week when it was raided by U.S. marshals and the Securities Exchange Commission. Stanford's headquarters is in Houston.
Pendergest-Holt, 35, is a protege of one of Stanford's top executives, James M. Davis, who is also from Baldwyn, a small town 15 miles north of Tupelo. She started working for Stanford in 1997 and quickly rose to the position of chief investment officer, supervising a group of research analysts and producing monthly and quarterly reports.
In interviews yesterday, Baldwyn residents described her as a young woman clearly determined to go places in the world of business.
"She was incredibly smart," said Tammy Bullock, general manager of the Baldwyn News. Mayor Danny Horton called Pendergest-Holt "a fine young lady from a fine family." An FBI criminal complaint says Pendergest-Holt lied several times to obstruct an investigation that began in June of 2008. She met several times with people who were secretly cooperating with the investigation, according to the complaint.
Davis has made several investments in businesses on downtown Baldwyn's Main Street in an effort to revive it. He is expected to be a key figure in the criminal investigation.
Stanford sold certificates of deposit (CDs) with unusually high rates of return. Financial advisers got a 1 percent commission and additional commissions throughout the term of the CD.
"SFG promoted the CD products as secure investments that were very liquid and had very low risk," the complaint says.
Accounts at the Stanford office in Memphis have been frozen since last week.
The complaint describes a series of increasingly desperate meetings between Stanford officials and attorneys, some of whom are now cooperating with the government. At the conclusion of a meeting on February 6th, an unidentified cooperating witness "broke down crying," and an unidentified attorney said, "The party is over." And it appears to be.
Shelby Farms recently added 28 more buffalo to their herd, so the park is hosting a Welcome Buffalo Party on Sunday in the kite-flying field near the Farm Road and Walnut Grove intersection. Buffalo Wild Wings will be dishing out free wings (made with chicken, not buffalo!). Thomas, the Park's buffalo mascot, will greet kids, and park rangers will be on hand to answer questions. The party runs from 2 to 4 p.m.
In the fall of 1969, some Memphis City Schools students and teachers began skipping class every Monday to protest a lack of African American school board representation. Over half of the school's student population was black, but the board was solely white. On Saturday at 2 p.m., former NAACP secretary Maxine Smith and Vasco Smith will lead a panel discussion about the history and impact of Black Monday in Memphis at the Benjamin L. Hooks Central Library.
Mardi Gras may be over, but Memphians will find any excuse to keep the party going. Beale Street becomes Bourbon Street this Saturday at the annual Zydeco Festival, during which Cajun bands play various Beale Street bars and clubs all night long.
For 20 years, the Memphis Gay and Lesbian Community Center has offered local GLBT folks a safe haven for meetings, support groups, art shows, and more. Celebrate the center's birthday with an open house celebration on Sunday from 2 to 5 p.m.
For more weekend fun, check out the Flyer's searchable online listings.
For more on this weirdness, check out Vance Lauderdale's blog.
Today, he was back at the mall -- in his store's old space -- to hear what the mall's new owners, the World Overcomers Outreach Ministries Church, are planning.
"People keep saying to us, you're a church, what are you going to do with a mall?" says Al Cousins of the World Overcomers. "We want to talk to those retailers who are returning, those who are on the fence, and those who weren't here in the first place and tell them, here's our plan."
In addition to 40 retail and food court stores, the mall will include social services, church ventures -- such as a day care and a book store -- and family entertainment. Part of Macy's is slated to become a banquet and conference center. There are also plans for a youth recreational center and a movie theater.
"We don't believe the community has been abandoned by the residents. We believe the community has been abandoned by the national retailers," Cousins says. "Are we going to have a Macy's and Dillard's? We don't need them for a community mall."
The church hopes that by creating a mix of retail, social services, and educational facilities it can revitalize both the mall and the surrounding community. It has been in negotiations with entities as disparate as Incredible Pizza and Southwest Tennessee Community College to lease space in the mall.
To read more, visit Mary Cashiola's In The Bluff blog.
"Today the Rocky Mountain News, long the leading voice in Denver, becomes a victim of changing times in our industry and huge economic challenges," Scripps CEO Rich Boehne said.
Scripps said the paper lost $16 million last year. Scripps owns the Memphis Commercial Appeal. Read more at RMN website.
(Our condolences go out to the 200 families impacted the RMN's shutdown.)
The University of Memphis' TERRA House will open with a ribbon-cutting Friday, February 27th, at 9:30 a.m.
Last week, while workers were putting on the finishing touches, Eric Criswell with DPC Construction was nice enough to give us a tour to point out the house's green features.
Below, a video of that tour.
We're in pretty good company: Chicago heads the list, followed by Atlanta and New York. For the deets, check out MovieMaker's website.
The head of Performa Entertainment Real Estate informed members of the Birmingham-Jefferson Convention Complex board at a meeting that he has made "major revisions" to his plans for The Forge, a proposed district of nightclubs, restaurants and retail shops.
"No one will lend $20 (million) to $24 million in an economic climate like this," Elkington said in an interview.
Read the story at the Birmingham News website.
Who else but Vance Lauderdale would find a drowning in Court Square?
A 2007 study for the Memphis Park Commission on making the stadium comply with the Americans With Disabilities Act (ADA) said it would cost $4,799,708 to provide 219 wheelchair seats and 219 companion seats. There are currently 133 wheelchair seats in the 61,641-seat stadium.
Memphis Park Commission director Cindy Buchanan cited the study to the Flyer for a December 2007 story on the stadium. Wheelchair users who have attended games for several years told the Flyer the current number of seats is more than adequate for demand, although they said improvements are needed in access to companion seats, restrooms, and concessions.
The Liberty Bowl is used roughly nine times a year for college football. The average turnstile attendance (as opposed to tickets sold) at University of Memphis home football games last year was well below 20,000. The AutoZone Liberty Bowl game and Southern Heritage Classic each drew slightly less than 40,000 fans last year, although the number of tickets sold exceeded 50,000.
University of Memphis sports information director Bob Winn said average attendance for the 2008 season was 25,003. That counts season tickets sold, student admissions, and walk-ups. A total of 58 tickets were sold for handicapped seating in 2006 (50 of those for the game against the University of Tennessee). In 2007, 52 handicapped tickets were sold, with 9 being the most at one game. In 2008, 48 handicapped tickets were sold, with 8 being the most in one game.
Memphis City Attorney Elbert Jefferson told City Council members Tuesday the cost of ADA compliance could be $40 million. In the 2007 study, there is no figure close to that in the 12 options presented.
The University of Michigan settled a landmark ADA lawsuit with the U.S. Department of Justice on March 10, 2008. Michigan Stadium seats more than 107,000 fans and has been sold out for every game for 35 years. The stadium has 81 pairs of seats for wheelchair users and companions. When a renovation and expansion are completed in 2010, there will be 592 seats, including companion seats, dispersed throughout the stadium.
The key issue -- and the source of much confusion -- is the federal ADA guideline of making one percent of seats wheelchair accessible and dispersed throughout the stadium. Counting companion seats, the standard is more like two percent.
In Michigan's case, the settlement figure is approximately half of one percent, including companion seats. At the Liberty Bowl, one percent would mean 616 wheelchair seats and 616 companion seats. The proposed 219 pairs of seats is the basis for the $4,799,708 estimate, which works out to $21,916 per wheelchair seat.
In its negotiations with the Office of Civil Rights in the DOJ, the University of Michigan stated that the proposed remedy was put forth "with no evidence that patrons with mobility impairments will purchase even a small fraction of what might be constructed." The university estimated that one pair of wheelchair and companion seats equals 12.5 other seats.
The "feds" but not the FBI were involved in an operation Tuesday morning to secure documents and interview employees at Stanford's office in the Crescent Center in East Memphis. Whether it was a "raid" or something less dramatic is a matter of opinion.
FBI spokesman C. M. Sturgis said the operation was conducted by a federal team including United States marshals and employees of the Securities Exchange Commission. News organizations, including the Flyer, originally said the FBI was involved.
The problem was partly due to inability to reach FBI personnel in Memphis Tuesday, when numerous messages seeking comment and clarification from Sturgis, his supervisor, and special agent in charge My Harrison went unanswered until Tuesday evening or Wednesday morning. A statement from the U.S. Marshal's office Tuesday afternoon did not say whether or not the FBI was involved. The statement referred to the operation as involving "the execution of court orders."
The Memphis "execution" apparently occurred at about the same time the feds visited Stanford offices in Houston. The Wall Street Journal described it Wednesday as follows: "The Houston office was the scene of a raid Tuesday morning by U.S. marshals and agents led by the SEC. The federal team arrived in a fleet of Chevy Suburbans and GMC pickups with tinted windows. Agents secured all entrances and exits to two Stanford buildings, and some agents were posted to nearby rooftops."
A person who works in the Crescent Center and saw the feds said some Stanford employees left the building while others remained behind and were interviewed in their offices. Employees were said to be shocked.
By the end, however, he said, "Based on what I'm hearing publicly, we are no where ... near to doing this project."
Herenton said he was weary of "the innuendos."
"I keep hearing there are councilmembers ... concerned about development fees," said Herenton. "At the end of the day we're going to do this project or we're not.
"What are your issues?"
Under the proposal, the developer, Henry Turley (full disclosure: Turley is one of Contemporary Media's stockholders) is set to get $9.5 million in development fees.
Funding for the project would be generated by $50 million in retail sales.
Council members Barbara Swearengen Ware and Kemp Conrad both called that plan into question:
"I hate to use the terminology, but it sounds a little pie in the sky," said Ware.
"It's predicated on $100 million in retail sales, but the economy is not good right now. People are not spending money," Conrad said, calling the proposal "half-baked."
Herenton then said that based on what he was hearing from the council, the project was not ready to be moved forward and that he would instead focus on the stadium upgrades required by the department of justice.
The council plans to schedule a three-hour meeting to discuss the fairgrounds proposal in detail.
For more, visit Mary Cashiola's In the Bluff blog.