Witness Says
February 01, 2012,
By Laurel Brubaker Calkins
Feb. 1 (Bloomberg) -- A former Stanford Financial Group Co. accountant testified that he grew concerned about $2 billion R. Allen Stanford secretly borrowed from his Antiguan bank after hearing the company’s finance chief say repeatedly in 2007 and 2008, “The emperor has no more clothes.”
“I interpreted that to mean Mr. Stanford didn’t have any money to cover this debt, nor did the companies have the money to pay it back, and the bank didn’t have the money to pay it back,” Henry Amadio, the accountant, told jurors today at Stanford’s criminal fraud trial in federal court in Houston.
Stanford, 61, is accused of skimming more than $1 billion in investor funds from his Antigua-based Stanford International Bank Ltd. to fund a billionaire’s lifestyle and private businesses ranging from Caribbean airlines to cricket tournaments. Stanford, who faces as long as 20 years in prison if convicted of the most serious charges, denies all wrongdoing.
Amadio, testifying for the government, told jurors he prepared monthly reports tracking the financier’s personal loans from the Antiguan bank, which prosecutors claim was at the heart of an alleged $7 billion Ponzi scheme. The loans weren’t disclosed to investors, he said.
Bank funds borrowed by Stanford flowed through several intermediary companies before they were used to cover operating losses and startup expenses at the financier’s affiliated companies, Amadio testified. He said Stanford Financial Group Chief Financial Officer James Davis instructed him to record these loans as capital infusions into the companies rather than as loans from Allen Stanford.
‘No Other Option’
“There is not going to be repayment; there is no other option,” Amadio said, reading to jurors from an e-mail he received from Davis in 2007. In the e-mail, Davis said the accounting treatment was directed by Stanford, the bank’s sole shareholder.
Amadio said he worried that investors’ savings were being secretly diverted to cover losses at Stanford’s other companies.
“The combined profits of the bank were not enough” to provide Stanford sufficient legitimate profits to lend more than $2 billion to his other businesses, Amadio testified. “The only other conclusion was the money was coming from depositors’ accounts.”
Amadio told jurors he was ordered to strip all bank records, including his reports tracking Stanford’s loans, from computers at Stanford’s Houston headquarters and move them to a portable hard drive in 2006, after U.S. securities regulators began investigating the bank.
Regulatory Probe
He said he wasn’t told at the time about the regulatory probe, only that the bank’s records must be kept in Antigua. He said he carried the external hard drive containing the records around the Houston offices in his computer bag, leading co- workers to nickname the device “the football,” after the portable controller containing nuclear launch codes that’s carried at all times by aides to the U.S. president.
Amadio testified that he took the external hard drive home with him when a court-appointed receiver seized the offices on Feb. 17, 2009, and ordered employees to leave all computers in the building. After recovering family photos and personal files from the drive, he brought it back the next day and eventually gave it to federal agents, who were looking for “the football.”
Amadio said that after intense questioning by federal agents that day in the Stanford offices, he became so nervous that he fainted for several minutes. He said he’s still nervous as he’s testifying under an agreement with the government, in which prosecutors can still criminally charge him if he doesn’t testify truthfully or changes his story on the witness stand.
‘Charge You?’
“The government can still to this day charge you?” Assistant U.S. Attorney Gregg Costa asked. Amadio replied, “There is no promise; there is a risk.”
Robert Scardino, one of Stanford’s attorneys, asked the accountant if he’d committed any crimes while working for the financier.
“My intention was never to commit any crimes,” Amadio said. “I’m not proud of myself for not making the right decision and leaving the company. I regret looking the other way.”
Stanford Financial’s global controller Mark Kuhrt, Amadio’s former supervisor, was in court today during several hours of Amadio’s testimony. Kuhrt was indicted with Stanford and is scheduled to be tried on charges related to his role in the alleged scheme after Stanford’s trial concludes.
The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).
Showing posts with label Amadio. Show all posts
Showing posts with label Amadio. Show all posts
Thursday, 2 February 2012
Stanford used CD funds for cricket, jets
Anna Driver
Reuters
4:45 p.m. CST, February 1, 2012
Allen Stanford funnelled $2 billion of investor money from his offshore bank to pay operating expenses at his other companies, including money-losing airlines and his cricket concerns, a former Stanford Financial Group accountant said on Wednesday.
Stanford, 61, is on trial in federal court in Houston for leading a $7 billion Ponzi scheme from his offshore bank in Antigua in what prosecutors call one of the largest white-collar crimes since Bernard Madoff. The Texas financier has pleaded not guilty to all charges.
Henry Amadio, a former accountant for Stanford in Houston, told jurors he created a top-secret report for Stanford tracking the flow of $2 billion from Stanford International Bank in Antigua to other entities he controlled. The funds were spent by Stanford over a number of years leading up to 2009, when the government seized the businesses.
"There's no doubt that those amounts came from Stanford International Bank," Amadio told the jury of five women and 10 men. He compiled the reports using wire transfer records provided by Stanford's treasurers, he said.
The funds, marked as loans at the offshore bank, were never repaid by Stanford, the accountant said.
Prosecutors accuse Stanford of misleading investors who bought certificates of deposit (CDs) from his bank in Antigua. The investors were told their deposits were invested in safe, liquid investments.
Instead, the government alleges, the funds were used to pay for Stanford's yachts and private jets or were put into illiquid entities like private companies.
More than $300 million in deposits were used to pay salary and expenses for Stanford's now defunct money-losing Caribbean Star and Caribbean Sun airlines, Amadio said.
Millions of dollars of deposits were also spent on Stanford's passion to promote the sport of cricket in the Caribbean, he said.
Amadio, who worked for Stanford from 2002 until 2009 and has not been charged in the case, said keeping the reports under wraps was a top priority. He was told he would lose his job if he shared the data with anyone.
In the materials he prepared, he was asked by former Chief Financial Officer James Davis to refer to the Antigua bank as "the company down south."
"Everything was to be on a need-to-know basis," Amadio testified.
His reports were also stored on an external hard drive that the accounting department nicknamed, "the football." In 2006, "the football" was moved to Antigua from Houston, Amadio told the jury.
The U.S. Securities and Exchange Commission started an investigation of Stanford CDs in 2006, Gregg Costa, the U.S. attorney leading the case, said.
Mark Kuhrt, who is also charged in the alleged Ponzi scheme and was Amadio's boss at Stanford Financial Group, attended the trial for the first time since it began last week.
Kuhrt shifted in his seat as Amadio told the jury he told his former boss he was concerned about the growing amount of investor money that was being used to pay for Stanford's other businesses.
"He was concerned too," Amadio said.
Reuters
4:45 p.m. CST, February 1, 2012
Allen Stanford funnelled $2 billion of investor money from his offshore bank to pay operating expenses at his other companies, including money-losing airlines and his cricket concerns, a former Stanford Financial Group accountant said on Wednesday.
Stanford, 61, is on trial in federal court in Houston for leading a $7 billion Ponzi scheme from his offshore bank in Antigua in what prosecutors call one of the largest white-collar crimes since Bernard Madoff. The Texas financier has pleaded not guilty to all charges.
Henry Amadio, a former accountant for Stanford in Houston, told jurors he created a top-secret report for Stanford tracking the flow of $2 billion from Stanford International Bank in Antigua to other entities he controlled. The funds were spent by Stanford over a number of years leading up to 2009, when the government seized the businesses.
"There's no doubt that those amounts came from Stanford International Bank," Amadio told the jury of five women and 10 men. He compiled the reports using wire transfer records provided by Stanford's treasurers, he said.
The funds, marked as loans at the offshore bank, were never repaid by Stanford, the accountant said.
Prosecutors accuse Stanford of misleading investors who bought certificates of deposit (CDs) from his bank in Antigua. The investors were told their deposits were invested in safe, liquid investments.
Instead, the government alleges, the funds were used to pay for Stanford's yachts and private jets or were put into illiquid entities like private companies.
More than $300 million in deposits were used to pay salary and expenses for Stanford's now defunct money-losing Caribbean Star and Caribbean Sun airlines, Amadio said.
Millions of dollars of deposits were also spent on Stanford's passion to promote the sport of cricket in the Caribbean, he said.
Amadio, who worked for Stanford from 2002 until 2009 and has not been charged in the case, said keeping the reports under wraps was a top priority. He was told he would lose his job if he shared the data with anyone.
In the materials he prepared, he was asked by former Chief Financial Officer James Davis to refer to the Antigua bank as "the company down south."
"Everything was to be on a need-to-know basis," Amadio testified.
His reports were also stored on an external hard drive that the accounting department nicknamed, "the football." In 2006, "the football" was moved to Antigua from Houston, Amadio told the jury.
The U.S. Securities and Exchange Commission started an investigation of Stanford CDs in 2006, Gregg Costa, the U.S. attorney leading the case, said.
Mark Kuhrt, who is also charged in the alleged Ponzi scheme and was Amadio's boss at Stanford Financial Group, attended the trial for the first time since it began last week.
Kuhrt shifted in his seat as Amadio told the jury he told his former boss he was concerned about the growing amount of investor money that was being used to pay for Stanford's other businesses.
"He was concerned too," Amadio said.