Stanford won't be released, judge rules

Fallen financier R. Allen Stanford won’t be released from jail before his fraud trial in 2011, a U.S. judge ruled after reviewing a doctor’s report that the accused is close to “a complete nervous breakdown.”

Attorneys for Stanford, who faces 21 criminal counts for allegedly swindling investors out of more than $7 billion, asked U.S. District Judge David Hittner in Houston yesterday to reconsider his earlier ruling denying bail out of concern the defendant might flee. They submitted reports from two psychiatrists who’d examined Stanford, 59, and found him suffering from severe depression triggered by his incarceration under conditions that render him unable to help in his defense.

“Having considered the motion along with the exhibits attached thereto, and the applicable law, the court determines the motion should be denied,” Hittner wrote in an order today.

Stanford has been jailed since his arrest June 19 and is in a federal detention center in downtown Houston. Stanford’s lawyers said in a Dec. 21 filing that one of the psychiatrists determined that the financier’s mental and physical health had deteriorated sharply.

“If the present set of circumstances persist, Mr. Stanford’s spiraling downhill course will continue to the point where he will suffer serious physical disorders and, more likely than not, a complete nervous breakdown,” the doctor’s report said, according to the filing.

Stanford and three former top executives at Stanford Financial Group are charged with running a Ponzi scheme that paid above-market rates to early investors by taking money from later investors in certificates of deposit sold by Antigua-based Stanford International Bank. Stanford is accused of skimming about $1.6 billion from depositors to fund a lavish lifestyle that included a fleet of jets, yachts, multiple homes and a private island in the Caribbean.

Stanford faces spending the rest of his life in prison if he’s convicted at a trial set to begin in January 2011. The financier denies all wrongdoing in connection with both the criminal case and the parallel civil fraud lawsuit brought against him and the same associates by the U.S. Securities and Exchange Commission.

Stanford’s lawyer complained that without Internet access and frequent communication with his defense team, the jailed financier cannot adequately review more than 7 million documents in the government database or answer questions from attorneys and accountants hired to defend him.

“The issues we raised were real, as well as legally and factually compelling,” attorney Kent Schaffer said in an e-mail today. “I am surprised that we were shot down so abruptly and without a response from the government or a hearing. I am not sure how Allen will be able to participate in assisting in his own defense and, the truth is, he probably won’t be.”