HOUSTON, June 19 (Xinhua) -- U.S. billionaire Allen Stanford, chairman of the Stanford Financial Group, has been indicted for alleged massive investment fraud and expected to appear in a federal court in Virginia later Friday.

Texan billionaire Allen Stanford is shown during an interview with Reuters in Miami in May 1, 2008.(Xinhua/Ruters file photo) Photo Gallery>>>

    The case will be the first major U.S. economic crimes prosecuted under the new Obama administration.

    A federal grand jury in Houston, Texas, has handed up fraud indictment against Stanford, local newspaper Houston Chronicle said.

    Stanford was indicted along with Stanford Chief Investment Officer Laura Pendergest-Holt, Houston-based accountant Gilberto Lopez, Houston-based global controller Mark Kuhrt, and Leroy King, a joint American-Antiguan citizen charged with monitoring the Antigua bank.

    The indictment charges Stanford and other executives at his firm "would cause the movement of millions of dollars of fraudulently obtained investors' funds from and among bank accounts." The firm would give money to some investors "to perpetuate the false appearance that (Stanford's business) was financially sound," according to the indictment.

    Stanford and his co-defendants were charged with engaging in a scheme to defraud investors who bought roughly 7 billion U.S. dollars in certificates of deposit administered by Stanford International Bank Ltd, the bank in Antigua controlled by Stanford.

    Federal prosecutors also said Stanford and the others misused most of those investor assets, including diverting more than 1.6 billion dollars into undisclosed personal loans to Stanford.

    Pendergest-Holt was already indicted earlier this year on charges of blocking a Securities and Exchange Commission (SEC) fraud investigation.

    Criminal charges were filed against James Davis, chief financial officer for Stanford Financial Group.

    Stanford was taken into custody in Virginia on Thursday night in Richmond, Virginia, after a warrant for his arrest was issued. The 59-year-old Texan will appear in federal court in Richmond later Friday. He has denied any wrongdoing.

    Justice Department officials planned to announce the charges against Stanford and other defendants at a news conference Friday.