Ground Rules for Stanford Testimony

Lawyers in the R. Allen Stanford fraud trial on Friday began discussing
ground rules for his testimony, which likely will start early next week if
he chooses to take the stand.

Defense lawyers said they have one more expert witness to call on Monday,
after which Stanford might testify. They gave no hint in open court about
their decision, and a gag rule forbids them from any other public comments
about the case.

After the jury was dismissed for the weekend, prosecutors, defense lawyers
and U.S. District Judge David Hittner talked about what will be admissible
if Stanford elects to tell jurors his side of the story. Defense lawyers
told jurors early in the trial that their client would testify, but he
doesn't have to.

The prosecution has the burden of proving his guilt beyond a reasonable
doubt.

Friday morning, a prosecutor's question to a defense witness prompted a
heated court argument after Stanford's lawyers sought a mistrial.

Hittner denied the mistrial motion but instructed jurors that they should
base conclusions on testimony from the witness stand and not on lawyers'
questions.

'Skunk in the jury box'

Defense attorney Ali Fazel moved for the mistrial, arguing that prosecutor
Andrew Warren put a "skunk in the jury box" when he asked a defense expert
witness if he knew computer hard drives containing Stanford financial
information had been erased.

Warren was cross-examining forensic accountant Morris Hollander, who was
beginning his third day on the witness stand and had testified that the
auditing and financial statements of Stanford's companies complied with
international accounting standards.

He had acknowledged previously that he based his information on the
financial reports themselves, and didn't have access to working papers that
Stanford's auditor, CAS Hewlett, used to generate the annual reports.

"Are you aware that the firm erased the hard drives?" Warren asked.

Jury escorted out

Fazel immediately asked for the mistrial, and the jury was escorted out so
lawyers could argue the motion.

"They're making it sound like the reason the wiping occurred is because
there's something in those records or lack of in those records that make the
wiping necessary," Fazel said.

The government said Hewlett's daughter told investigators she wiped his
firm's hard drives clean after he died in 2009, but that nothing in Warren's
question implied wrongdoing.

The defense argued that the condition of the hard drives constituted hearsay
and not evidence.

The indictment against Stanford alleges that Hewlett received bribes in
exchange for producing favourable financial reports.

Testimony before the jury resumed after about 45 minutes, and Hollander
repeated his earlier testimony that financial statements show loans to
Stanford from his bank in the Caribbean nation of Antigua were for
investment in his companies.

Reorganization backed

He also said that the investments and other entries in the financial reports
suggest Stanford was reorganizing his financial network - consistent with a
defense argument that the Stanford businesses would have remained solvent
had the U.S. government not seized their assets in February 2009.

The government alleges that Stanford and others ran a $7 billion fraud using
money investors put into certificates of deposit at Stanford International
Bank - which like all Stanford's ventures was a subsidiary of Houston-based
Stanford Financial Group.

Stanford has denied wrongdoing. He is being held without bail because
Hittner ruled that his former wealth and international contacts make him a
flight risk.