By Teresa Ambord
It wasn't our fraud! That was a big part of the overall defense presented by two men accused of helping Texas financier R. Allen Stanford cover his tracks when he bilked trusting investors out of $7 billion. The jury took sixteen hours of deliberation over a three-day period to find the men guilty of conspiracy to hide a massive wire fraud scheme.
Stanford's chief accounting officer, seventy-year-old Gilbert Lopez, and global controller, forty-year-old Mark Kuhrt, were each convicted of nine out of ten wire fraud counts and one count of conspiracy to commit fraud.
The Ponzi scheme
Stanford's fraud involved the selling of bogus certificates of deposit at Stanford International Bank, Ltd. based in Antigua. According to prosecutors, Stanford advised investors that their funds were being put into conservative liquid assets and overseen by international money managers. In reality, evidence showed that Stanford and his finance chief, James M. Davis, controlled about 80 percent of the money. Stanford used the money to pay for yachts, private jets, and waterfront mansions. He also used some to finance his own risky business ventures, like cricket tournaments, a Caribbean airline, and resort developments.
Stanford himself was convicted last March and is now serving 110 years in a Florida federal prison. His attorneys are appealing his sentence. Davis is awaiting sentencing, after he pled guilty and testified against Stanford.
Where do Lopez and Kuhrt fit into the scheme?
Defense attorneys for Lopez and Kuhrt told jurors that their clients never intended to falsify records or break any laws. They relied on investment returns given them by Davis and Stanford. Those figures were used to create what turned out to be false financial statements, which unsuspecting investors relied on. In fact, the attorneys said, Lopez and Kuhrt tried to get Davis to publicly disclose that Stanford himself borrowed most of the funds that were supposed to be in investments, but they were overruled by Davis.
"There's no doubt whatsoever there was a massive fraud going on, but it was a Stanford and Davis fraud, not a Lopez and Kuhrt fraud," said Kuhrt's attorney, Richard Kuniansky.
However, prosecutor Jason Varnado told jurors, "They knew the bank was doing one thing and promising investors another, and they helped hide it. The only explanation for that is a criminal explanation."
Other employees were also involved in tracking the stolen funds, but Lopez and Kuhrt are the last to face criminal trial. Following their convictions, the government recommended allowing the men to remain free on bail until they appear before District Judge David Hittner (who presided over the trial) for sentencing on February 14. However, Hittner ordered both men taken into custody.
"Based on the facts in this case, and this being an international scheme, I believe there are enough potential contacts out there that I decline to allow them to remain free," Hittner said.
Attorneys for both men will appeal.
Showing posts with label Hittner. Show all posts
Showing posts with label Hittner. Show all posts
Tuesday, 4 December 2012
Thursday, 29 November 2012
Sentence date set for ex-Stanford CFO
by Patsy R. Brumfield/NEMS Daily Journal
James M. Davis, former chief financial officer for the failed Stanford Financial Group Co., will be sentenced Jan. 22 in Houston, Texas, for his admissions in the $7.2 billion scandal.
Davis once lived in Union County and worked out of Stanford offices in Tupelo and Memphis.
In September 2009, he admitted to his part in helping his boss, R. Allen Stanford, carry out a years-long Ponzi scheme on some 20,000 investors worldwide.
Scores of Mississippians were among the victims and have yet to receive any compensation for their losses of life savings and retirement funds invested in certificates of deposit through his Antigua-based Stanford International Bank Ltd.
Many of the investors say they were assured by local financial advisers that their investments were federally insured. They were not, and debates continue in court and on Capitol Hill about who should assist victims.
Before Davis’ sentencing, victims may send written statements or ask to speak to the court.
A court-appointed receiver seized all Stanford and other defendants’ assets to liquidate for a victims fund.
Davis faces up to 30 years in prison but said he hopes for leniency as the government’s key witness against Stanford.
Last March, a jury found Stanford guilty of masterminding the scheme in Houston, where he built his financial empire more than two decades ago.
U.S. District Judge David Hittner sentenced him to 110 years in prison. Hittner also will sentence Davis in Houston.
Laura Pendergest-Holt, a Baldwyn native, was Stanford’s chief investment officer. She admitted to obstructing a federal investigation of her employer and is serving a three-year term in prison.
Last week, another jury found guilty two other former Stanford executives. They have not been sentenced. Davis was a key witness at their trial.
James M. Davis, former chief financial officer for the failed Stanford Financial Group Co., will be sentenced Jan. 22 in Houston, Texas, for his admissions in the $7.2 billion scandal.
Davis once lived in Union County and worked out of Stanford offices in Tupelo and Memphis.
In September 2009, he admitted to his part in helping his boss, R. Allen Stanford, carry out a years-long Ponzi scheme on some 20,000 investors worldwide.
Scores of Mississippians were among the victims and have yet to receive any compensation for their losses of life savings and retirement funds invested in certificates of deposit through his Antigua-based Stanford International Bank Ltd.
Many of the investors say they were assured by local financial advisers that their investments were federally insured. They were not, and debates continue in court and on Capitol Hill about who should assist victims.
Before Davis’ sentencing, victims may send written statements or ask to speak to the court.
A court-appointed receiver seized all Stanford and other defendants’ assets to liquidate for a victims fund.
Davis faces up to 30 years in prison but said he hopes for leniency as the government’s key witness against Stanford.
Last March, a jury found Stanford guilty of masterminding the scheme in Houston, where he built his financial empire more than two decades ago.
U.S. District Judge David Hittner sentenced him to 110 years in prison. Hittner also will sentence Davis in Houston.
Laura Pendergest-Holt, a Baldwyn native, was Stanford’s chief investment officer. She admitted to obstructing a federal investigation of her employer and is serving a three-year term in prison.
Last week, another jury found guilty two other former Stanford executives. They have not been sentenced. Davis was a key witness at their trial.
Thursday, 13 September 2012
Ex-Stanford exec gets 3 years for $7B swindle
A top executive in the now-defunct empire of disgraced Texas financier R. Allen Stanford was sentenced to three years in prison Thursday for her role in helping the once jet-setting businessman bilk investors out of more than $7 billion in one of the biggest Ponzi schemes in U.S. history.
Associated Press
Former Stanford chief investment officer Laura Pendergest-Holt's sentence was part of a plea agreement reached with federal prosecutors. She had pleaded guilty in June to one count of obstruction of a U.S. Securities and Exchange Commission proceeding in exchange for the sentence.
After U.S. District Judge David Hittner handed down the sentence he revoked Pendergest-Holt's bond, and she was taken into custody. She waved to her husband Jim Holt before she was put in handcuffs and taken from the courtroom by federal marshals.
A tearful Pendergest-Holt told Hittner prior to sentencing that she was sorry for putting her trust in Stanford and others in his financial empire, including the former chief financial officer, James M. Davis, who also has pleaded guilty and faces up to 30 years in prison.
"I'm sorry I was so trusting in people who didn't deserve my trust, and my trusting them caused harm in others. I apologize greatly," she said.
Prosecutors said Stanford, 62, used the money from investors who bought certificates of deposit from his bank on the Caribbean island nation of Antigua to fund a string of failed businesses, bribe regulators and pay for a lavish lifestyle that included yachts, a fleet of private jets and sponsorship of cricket tournaments. Authorities said Stanford and others in his companies lied to investors from more than 100 countries, telling them their funds were being safely invested in stocks, bonds and other securities.
Pendergest-Holt, 38, a native of Baldwyn, Miss., was the first person indicted in the case. Prosecutors said she and other executives conspired to hide the bank's true financial health and provide misleading testimony to the SEC in 2009 when it was investigating Stanford's bank.
One of her attorneys, Chris Flood, told Hittner that Pendergest-Holt was also a victim of Stanford's Ponzi scheme and lost her life savings. Flood had asked that she not be imprisoned for three years but be allowed to serve that time in home confinement, a halfway house or a combination of the two.
She "is an extremely upstanding citizen and not a danger to anyone," Flood said. "Don't punish her for the crimes of Allen Stanford or Jim Davis."
But prosecutor Jason Varnado told Hittner that from Pendergest-Holt's statement in court on Thursday and from letters her family and friends had submitted calling her a victim, the former Stanford executive wasn't taking full responsibility for what she had done. Varnado asked that she be sent to prison.
"She led (investors) to believe (their money) was invested in a particular manner ... Ms. Holt is not a victim. She is a federal felon," Varnado said.
As part of the plea deal, prosecutors will drop 20 other counts she faced, including conspiracy, wire and mail fraud.
Stanford, the one-time billionaire, was convicted in March on 13 of 14 fraud-related counts. In June, Hittner sentenced Stanford to 110 years in prison. He is serving his sentence in a prison in Central Florida.
Two other indicted ex-executives - Gilbert Lopez, the ex-chief accounting officer, and Mark Kuhrt, the ex-global controller - are set for trial later this month. A former Antiguan financial regulator was also indicted and awaits extradition to the U.S.
Pendergest-Holt sentence due Thursday for Stanford crime
by PATSY R. BRUMFIELD/Daily Journal
HOUSTON, Texas – Baldwyn native Laura Pendergest-Holt is set for sentencing Thursday for her attempts to obstruct the investigation of a Ponzi scheme at Stanford International Bank Ltd. Holt was chief investment officer at Stanford Financial Group based out of Memphis, with offices in Tupelo, when the entire Stanford financial empire came crashing down in 2009 under the weight of a federal investigation. Her boss, R. Allen Stanford, was convicted last March of masterminding the scheme, which cost worldwide investors $7.2 billion. He is serving a 110-year prison sentence. In a deal with the government, Holt pleaded guilty June 21 to one count and faces up to five years in prison. Her deal recommends three years. She’ll appear before District Judge David Hittner for a 9:45 a.m. hearing in Houston, where Stanford built his empire. Co-defendants Mark Kuhrt and Gilbert Lopez, former Stanford executives, are set for trial there starting Sept. 28. Read more: djournal.com - Update Pendergest Holt sentence due Thursday for Stanford crime
Friday, 22 June 2012
Ex-Stanford executive pleads guilty to obstruction
Associated Press
HOUSTON – Disgraced Texas financier R. Allen Stanford's former chief investment officer for his now defunct financial empire pleaded guilty Thursday for her role in helping the once jet-setting businessman bilk investors out of more than $7 billion.
A tearful Laura Pendergest-Holt changed her original not guilty plea a week after Stanford was sentenced to 110 years in prison following his conviction on fraud-related charges for orchestrating one of the biggest Ponzi schemes in U.S. history.
As part of an agreement with federal prosecutors, Pendergest-Holt, 38, pleaded guilty to one count of obstruction of a U.S. Securities and Exchange Commission proceeding in exchange for a three-year prison sentence. The obstruction count carries a maximum prison term of five years. As part of the plea deal, prosecutors will drop 20 other counts, including conspiracy, wire and mail fraud.
U.S. District Judge David Hittner said he will consider the deal, including the sentencing recommendation, when he sentences her on Sept. 13.
Pendergest-Holt, a native of Baldwyn, Miss., her attorney, Chris Flood, and prosecutors all declined to comment after the hearing.
Prosecutors said Stanford, 62, used the money from investors who bought certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua to fund a string of failed businesses, bribe regulators and pay for a lavish lifestyle that included yachts, a fleet of private jets and sponsorship of cricket tournaments. The one-time billionaire was convicted in March on 13 of 14 fraud-related counts
Prosecutors said Stanford lied to investors from more than 100 countries, telling them their funds were being safely invested in stocks, bonds and other securities.
During Thursday's court hearing, Pendergest-Holt admitted she gave the impression to investors and employees that she knew what assets made up the bank's investment portfolio, which was divided into three tiers. According to authorities, Pendergest-Holt didn't know most of the bank's assets were tied up in Tier 3, which was made up of real estate purchases whose value had been overinflated by billions and by up to $2 billion in personal loans to Stanford.
"Her management of (the bank's) investments was confined to Tier 2, which made up only about 12 percent of the bank's assets," said prosecutor Jason Varnado.
When the SEC began investigating, officials say Stanford, Pendergest-Holt and other company executives conspired to hide the bank's true financial health and provide misleading testimony to the federal agency in 2009.
During the court hearing, Hittner prodded Pendergest-Holt to offer details of her actions, asking her to "tell me what you did."
Pendergest-Holt, who was the first person indicted in the case, told Hittner she was not completely truthful with the SEC when she testified before the agency in Fort Worth, Texas, in February 2009, a week before authorities shut down Stanford's companies.
"I knew I was delaying" the SEC's investigation, she said.
Varnado told Hittner that at least $350,000 that had been held by Pendergest-Holt was frozen by a U.S. receiver who took over Stanford's companies and those funds will be given to victims.
During Stanford's trial, the financier's defense attorneys had tried to use an affair Pendergest-Holt had with James M. Davis, the former chief financial officer for Stanford's companies and the prosecution's star witness, to discredit Davis, who has pleaded guilty and faces up to 30 years in prison.
Thursday, 14 June 2012
Allen Stanford Sentenced to 110 Years in Prison
By Walter Pavlo,
Dressed in green prison fatigues, R. Allen Stanford entered a federal courthouse in Houston today to hear U.S. District Judge David Hitner pronounce his prison sentence. The decision: 110 years.
Prosecutors had asked that the one-time billionaire financier get 230 years in prison. (note: Bernard Madoff is serving 150 years). The prosecutor told Judge Hitner, “230 years will not get anyone their money back but on sleepless nights they will know that he got the maximum.” I think 110 years will give them just as much comfort.
During the proceeding, Stanford’s attorney, Ali Fazel, objected to the use of the term “Ponzi scheme,” but Hittner said the evidence at trial justified the use of the term. It’s not like Stanford could be any more insulted. The prosecutors also compared him to Bernie Madoff. That too caused Fazel to speak up on behalf of Stanford by saying of Madoff, “he didn’t invest time in anything.” Not sure what he was going for with that comment but I took it that Stanford worked harder at his fraud than did Madoff.
Speaking on his own behalf, Stanford recounted his last three years, including his beating in September 2009. The best that he could say as a compliment for those who prosecuted him was, “I wouldn’t wish this on them.” While he acknowledge that he felt sorry for depositors, employees and his own family for the failure of Stanford Financial, he managed to slip in, “I’m not a thief,” and, “I never defrauded anyone.” Victims in the courtroom, all dressed in black, begged to differ.
The prison sentence represents a long fall from the once knighted Antiguan, who has been in prison since his arrest in June 2009. Declared indigent by the court, all of Stanford’s assets were frozen and he was represented by a public defender. In March, Stanford was found guilty of running a $7 billion Ponzi scheme. However, his road to the courthouse was not without controversy. First, there was that strange interview on CNBC in which Stanford proclaimed his innocence. Then Stanford sued Lloyd’s of London, the underwriter of Stanford Financial Group’s Directors and Officers insurance, to pay for his legal fees. In the end, Lloyd’s won and Stanford got the legal help of public defenders Ali Fazel and Robert Scardino.
Stanford learned that prison can be a difficult place to live. Long before being tried in court, Stanford was severely beaten by another inmate. He was hospitalized and later transferred to a federal prison medical facility in Butner, NC, as result of an addiction to anti-depressants, which he developed after the beating. The trauma, his lawyers claimed, left their client unable to remember anything. After a year’s delay in heading to trial, government psychologists determined he was faking it and set a court date.
In January, just 12 days before Stanford’s trial was to begin, Fazel and Scardino wanted out of the case on the grounds that budget restrictions were hurting their ability to defend him. Prior to that, a number of supporting groups and expert witnesses for the defense said that they too wanted to quit because they were not being paid by the government. Eventually, some money was released and Stanford was off to trial.
With all of this drama, there still has been no distribution of the funds that have been seized by the government to victims who had invested their savings with Stanford in the hopes of incredible returns on safe (certificates of deposit) investments. The trial and the prison sentence will bring some closure, but the restitution to investors will come up a little short. With regard to the losses for U.S. taxpayers? We will be paying for Stanford’s prison stay and his future legal fees. Stanford is planning to appeal and the court will be giving him a new public defender.
Stanford’s most memorable statement was, “If I live the rest of my life in prison …. I will always be at peace with the way I conducted myself in business.” He can think about that one for a while.
My thanks to Twitterers Ronnie Crocker and CNBC’s Scott Cohn, who gave us all updates during the sentencing.
Dressed in green prison fatigues, R. Allen Stanford entered a federal courthouse in Houston today to hear U.S. District Judge David Hitner pronounce his prison sentence. The decision: 110 years.
Prosecutors had asked that the one-time billionaire financier get 230 years in prison. (note: Bernard Madoff is serving 150 years). The prosecutor told Judge Hitner, “230 years will not get anyone their money back but on sleepless nights they will know that he got the maximum.” I think 110 years will give them just as much comfort.
During the proceeding, Stanford’s attorney, Ali Fazel, objected to the use of the term “Ponzi scheme,” but Hittner said the evidence at trial justified the use of the term. It’s not like Stanford could be any more insulted. The prosecutors also compared him to Bernie Madoff. That too caused Fazel to speak up on behalf of Stanford by saying of Madoff, “he didn’t invest time in anything.” Not sure what he was going for with that comment but I took it that Stanford worked harder at his fraud than did Madoff.
Speaking on his own behalf, Stanford recounted his last three years, including his beating in September 2009. The best that he could say as a compliment for those who prosecuted him was, “I wouldn’t wish this on them.” While he acknowledge that he felt sorry for depositors, employees and his own family for the failure of Stanford Financial, he managed to slip in, “I’m not a thief,” and, “I never defrauded anyone.” Victims in the courtroom, all dressed in black, begged to differ.
The prison sentence represents a long fall from the once knighted Antiguan, who has been in prison since his arrest in June 2009. Declared indigent by the court, all of Stanford’s assets were frozen and he was represented by a public defender. In March, Stanford was found guilty of running a $7 billion Ponzi scheme. However, his road to the courthouse was not without controversy. First, there was that strange interview on CNBC in which Stanford proclaimed his innocence. Then Stanford sued Lloyd’s of London, the underwriter of Stanford Financial Group’s Directors and Officers insurance, to pay for his legal fees. In the end, Lloyd’s won and Stanford got the legal help of public defenders Ali Fazel and Robert Scardino.
Stanford learned that prison can be a difficult place to live. Long before being tried in court, Stanford was severely beaten by another inmate. He was hospitalized and later transferred to a federal prison medical facility in Butner, NC, as result of an addiction to anti-depressants, which he developed after the beating. The trauma, his lawyers claimed, left their client unable to remember anything. After a year’s delay in heading to trial, government psychologists determined he was faking it and set a court date.
In January, just 12 days before Stanford’s trial was to begin, Fazel and Scardino wanted out of the case on the grounds that budget restrictions were hurting their ability to defend him. Prior to that, a number of supporting groups and expert witnesses for the defense said that they too wanted to quit because they were not being paid by the government. Eventually, some money was released and Stanford was off to trial.
With all of this drama, there still has been no distribution of the funds that have been seized by the government to victims who had invested their savings with Stanford in the hopes of incredible returns on safe (certificates of deposit) investments. The trial and the prison sentence will bring some closure, but the restitution to investors will come up a little short. With regard to the losses for U.S. taxpayers? We will be paying for Stanford’s prison stay and his future legal fees. Stanford is planning to appeal and the court will be giving him a new public defender.
Stanford’s most memorable statement was, “If I live the rest of my life in prison …. I will always be at peace with the way I conducted myself in business.” He can think about that one for a while.
My thanks to Twitterers Ronnie Crocker and CNBC’s Scott Cohn, who gave us all updates during the sentencing.
Thursday, 7 June 2012
Source: Caribarena News
Antigua St john's - Prosecutors in the US are pushing for a 230-year sentence for former Antiguan Knight R. Allen Stanford who was convicted on March 6 by a US federal jury for running a US $7 billion Ponzi scheme.
Labelling Stanford as a "ruthless predator" on Wednesday, the prosecutors presented their case to the judge that reflects the maximum recommended under federal sentencing guidelines.
If the judge agrees, Stanford would stand to serve some 80 years more than Bernard Madoff who was convicted in 2009 for his Ponzi scheme.
Defense lawyers are pushing for some 200 years less than their prosecuting counterparts, which could result in Stanford’s immediate release since he has been in custody for three years already, according to US laws.
"We feel like our recommendations are every bit as appropriate as I'm sure they think theirs are," said Robert Scardino, a lawyer for Stanford, in a Reuters interview.
The former businessman was convicted on 13 criminal counts of fraud, conspiracy and obstruction. U.S. District Judge David Hittner, who presided over Stanford's six-week trial, is scheduled to sentence Stanford on June 14.
Stanford also faces civil charges by the U.S. Securities and Exchange Commission.
Prosecutors say Stanford places "among the greediest, most selfish, and utterly remorseless criminals, and note that he ran a two-decade scheme centered on the sale of bogus certificates of deposit from his Antigua-based Stanford International Bank Ltd.
"Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history… The sheer magnitude of the money stolen, the duration of the crime, and the extent to which Stanford lived a life steeped in deceit are almost unrivaled," prosecutors said on Wednesday in a filing in U.S. District Court in Houston.
Prosecutors also contended in their summation that the nature and circumstances of Stanford’s crimes, coupled with his role and personal history and the need for forceful deterrence, undoubtedly calls for the most severe punishment by law.
Further to his conviction, it was also found that federal authorities should try to seize some $330 million of frozen funds that Stanford stashed in 29 foreign bank accounts.
Antigua St john's - Prosecutors in the US are pushing for a 230-year sentence for former Antiguan Knight R. Allen Stanford who was convicted on March 6 by a US federal jury for running a US $7 billion Ponzi scheme.
Labelling Stanford as a "ruthless predator" on Wednesday, the prosecutors presented their case to the judge that reflects the maximum recommended under federal sentencing guidelines.
If the judge agrees, Stanford would stand to serve some 80 years more than Bernard Madoff who was convicted in 2009 for his Ponzi scheme.
Defense lawyers are pushing for some 200 years less than their prosecuting counterparts, which could result in Stanford’s immediate release since he has been in custody for three years already, according to US laws.
"We feel like our recommendations are every bit as appropriate as I'm sure they think theirs are," said Robert Scardino, a lawyer for Stanford, in a Reuters interview.
The former businessman was convicted on 13 criminal counts of fraud, conspiracy and obstruction. U.S. District Judge David Hittner, who presided over Stanford's six-week trial, is scheduled to sentence Stanford on June 14.
Stanford also faces civil charges by the U.S. Securities and Exchange Commission.
Prosecutors say Stanford places "among the greediest, most selfish, and utterly remorseless criminals, and note that he ran a two-decade scheme centered on the sale of bogus certificates of deposit from his Antigua-based Stanford International Bank Ltd.
"Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history… The sheer magnitude of the money stolen, the duration of the crime, and the extent to which Stanford lived a life steeped in deceit are almost unrivaled," prosecutors said on Wednesday in a filing in U.S. District Court in Houston.
Prosecutors also contended in their summation that the nature and circumstances of Stanford’s crimes, coupled with his role and personal history and the need for forceful deterrence, undoubtedly calls for the most severe punishment by law.
Further to his conviction, it was also found that federal authorities should try to seize some $330 million of frozen funds that Stanford stashed in 29 foreign bank accounts.
Friday, 9 March 2012
Judge Hitner has invited Victim Impact Statements
Judge Hitner has invited Victim Impact Statements from any victims. If you are a victims and feel that Stanford should get the maximum jail time then please write to Judge Hitner.
Victims should send a Stanford trial impact statement to Judge David Hittner, US Courthouse,
515 Rusk Ave, Room 8509,
Houston, TX 77002
Let's get as many letters out as possible and let's make this sure he never gets out of prison.
Kate
Victims should send a Stanford trial impact statement to Judge David Hittner, US Courthouse,
515 Rusk Ave, Room 8509,
Houston, TX 77002
Let's get as many letters out as possible and let's make this sure he never gets out of prison.
Kate
Thursday, 1 March 2012
Fate of financier Stanford in jury's hands
JUAN A. LOZANO
The Associated Press
Wednesday, Feb. 29, 2012
HOUSTON - The fate of Texas tycoon R. Allen Stanford - accused of orchestrating a massive Ponzi scheme that took billions from investors - rests in the hands of the Houston jury, as prosecutors and defense attorneys presented their closing arguments in the financier's fraud trial Wednesday.
During closing arguments, prosecutors said Stanford flushed away billions of investor funds on a "lavish lifestyle and his loser companies" as part of a fraud that spanned two decades. Defense attorneys countered, saying no evidence was presented that showed the financier cheated anyone. They contended Stanford made money for his investors and created more than 5,000 jobs through a legitimate, worldwide business empire.
Jurors deliberated for about two hours Wednesday. They were set to resume on Thursday.
Stanford, who has been jailed without bond since being indicted in 2009, is on trial for 14 counts, including mail and wire fraud. If convicted, he could be sentenced to more than 20 years in prison. The financier's trial began Jan. 23.
Prosecutor William Stellmach told the jury on Wednesday that Stanford, 61, lined his pockets "with billions of dollars of other people's money." He said that Stanford for years lied to investors who bought certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua, telling them it was a safe investment.
Prosecutor Gregg Costa called Stanford a thief and compared him to Bernie Madoff, who orchestrated the largest Ponzi scheme in history.
"Don't let him pull one last con job," Costa said.
Stanford's attorneys, Ali Fazel and Robert Scardino, told jurors Wednesday "there's no doubt" he made money for people who bought his bank's CDs. They also said that until the financier's businesses were seized by authorities, he paid investors "every penny of their money."
Scardino accused prosecutors of targeting Stanford because he was rich and told jurors that investors were warned they could lose all their money.
"The government wants you to believe it was all a fraud. That's just not what happened," he said.
During closing arguments, Stellmach said depositors were never told their investments paid for a string of failed businesses that lost millions. Nor were investors told their money funded his extravagant lifestyle, which included yachts and private jets, he said.
"The bank was his own personal ATM," Stellmach said.
Stellmach said that by 2008, the bank owed depositors over $7 billion that it did not have and Stanford was responsible for the massive debt.
The prosecutor said Stanford covered up the massive fraud by falsely telling depositors their money was protected by an insurance policy and that the bank had been given a clean bill of financial health through reviews from an outside auditor and Antiguan regulators. Stellmach told jurors that both the auditor and regulators were bribed with millions from a secret Swiss bank account.
"A real audit would have discovered this fraud in about five minutes," he said.
Over a three-week period, federal prosecutors methodically presented their case - including testimony from ex-workers of Stanford's companies as well as emails, financial statements and other documents they allege showed the financier bilked investors out of more than $7 billion.
The prosecution's star witness, James M. Davis, the ex-chief financial officer of Stanford's companies, told jurors he and Stanford faked the bank's profits and used CD deposits to bribe the auditor and regulators.
Defense attorneys argued that Stanford was a savvy businessman whose business empire, headquartered in Houston, was legitimate. They blamed Davis for the alleged fraud, and said he lied to get a reduced sentence. Davis has pleaded guilty as part of a deal with prosecutors.
Stanford's attorneys, who spent about nine days presenting their case, did not put the businessman on the witness stand. Stanford had apparently wanted to testify but was convinced not to do so.
Stanford was once considered among the wealthiest people in the U.S. with an estimated net worth of more than $2 billion. But at his trial, he had court-appointed attorneys because his assets have been seized by authorities.
If jurors come back with a verdict after 2 p.m. Thursday or anytime Friday, the decision won't be announced until Monday because U.S. District Judge David Hittner has a prior engagement. Jurors can still deliberate on those days, and a magistrate judge will be available to answer questions.
The federal judge also said that if the jury returns a guilty verdict on any count, a shorter, civil trial related to 31 U.S. properties that authorities want to seize from Stanford would immediately follow with the same jury.
The Associated Press
Wednesday, Feb. 29, 2012
HOUSTON - The fate of Texas tycoon R. Allen Stanford - accused of orchestrating a massive Ponzi scheme that took billions from investors - rests in the hands of the Houston jury, as prosecutors and defense attorneys presented their closing arguments in the financier's fraud trial Wednesday.
During closing arguments, prosecutors said Stanford flushed away billions of investor funds on a "lavish lifestyle and his loser companies" as part of a fraud that spanned two decades. Defense attorneys countered, saying no evidence was presented that showed the financier cheated anyone. They contended Stanford made money for his investors and created more than 5,000 jobs through a legitimate, worldwide business empire.
Jurors deliberated for about two hours Wednesday. They were set to resume on Thursday.
Stanford, who has been jailed without bond since being indicted in 2009, is on trial for 14 counts, including mail and wire fraud. If convicted, he could be sentenced to more than 20 years in prison. The financier's trial began Jan. 23.
Prosecutor William Stellmach told the jury on Wednesday that Stanford, 61, lined his pockets "with billions of dollars of other people's money." He said that Stanford for years lied to investors who bought certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua, telling them it was a safe investment.
Prosecutor Gregg Costa called Stanford a thief and compared him to Bernie Madoff, who orchestrated the largest Ponzi scheme in history.
"Don't let him pull one last con job," Costa said.
Stanford's attorneys, Ali Fazel and Robert Scardino, told jurors Wednesday "there's no doubt" he made money for people who bought his bank's CDs. They also said that until the financier's businesses were seized by authorities, he paid investors "every penny of their money."
Scardino accused prosecutors of targeting Stanford because he was rich and told jurors that investors were warned they could lose all their money.
"The government wants you to believe it was all a fraud. That's just not what happened," he said.
During closing arguments, Stellmach said depositors were never told their investments paid for a string of failed businesses that lost millions. Nor were investors told their money funded his extravagant lifestyle, which included yachts and private jets, he said.
"The bank was his own personal ATM," Stellmach said.
Stellmach said that by 2008, the bank owed depositors over $7 billion that it did not have and Stanford was responsible for the massive debt.
The prosecutor said Stanford covered up the massive fraud by falsely telling depositors their money was protected by an insurance policy and that the bank had been given a clean bill of financial health through reviews from an outside auditor and Antiguan regulators. Stellmach told jurors that both the auditor and regulators were bribed with millions from a secret Swiss bank account.
"A real audit would have discovered this fraud in about five minutes," he said.
Over a three-week period, federal prosecutors methodically presented their case - including testimony from ex-workers of Stanford's companies as well as emails, financial statements and other documents they allege showed the financier bilked investors out of more than $7 billion.
The prosecution's star witness, James M. Davis, the ex-chief financial officer of Stanford's companies, told jurors he and Stanford faked the bank's profits and used CD deposits to bribe the auditor and regulators.
Defense attorneys argued that Stanford was a savvy businessman whose business empire, headquartered in Houston, was legitimate. They blamed Davis for the alleged fraud, and said he lied to get a reduced sentence. Davis has pleaded guilty as part of a deal with prosecutors.
Stanford's attorneys, who spent about nine days presenting their case, did not put the businessman on the witness stand. Stanford had apparently wanted to testify but was convinced not to do so.
Stanford was once considered among the wealthiest people in the U.S. with an estimated net worth of more than $2 billion. But at his trial, he had court-appointed attorneys because his assets have been seized by authorities.
If jurors come back with a verdict after 2 p.m. Thursday or anytime Friday, the decision won't be announced until Monday because U.S. District Judge David Hittner has a prior engagement. Jurors can still deliberate on those days, and a magistrate judge will be available to answer questions.
The federal judge also said that if the jury returns a guilty verdict on any count, a shorter, civil trial related to 31 U.S. properties that authorities want to seize from Stanford would immediately follow with the same jury.
Friday, 24 February 2012
Only drama left besides verdict is whether Stanford will talk
The R. Allen Stanford fraud trial appears to be winding down, and the big
question is whether the Texas tycoon will take the stand today, Monday or at
all.
The defense team will continue this morning with their paid expert
accountant witness, Morris Hollander. Once his testimony is over, another
paid witness is expected to come on, and then possibly Stanford himself.
Stanford doesn't have to take the stand. And the defense team does not have
to tell U.S. District Judge David Hittner or the prosecution team that he is
testifying until the last possible moment.
The 61-year-old financial services king is accused of running a $7 billion
Ponzi scheme through sales of certificates of deposit from his Antigua bank
and if convicted on the 14 counts against him, could spend 20 years in
prison.
The government claims CD customers were told their money was going toward
safe and conservative investments and presented evidence that two-thirds of
it was used to fund his other companies and Stanford's high-end tastes.
But the defense says the bank was solvent, in the midst of a reorganization
and would be here today if the government had not shut it down in 2009.
question is whether the Texas tycoon will take the stand today, Monday or at
all.
The defense team will continue this morning with their paid expert
accountant witness, Morris Hollander. Once his testimony is over, another
paid witness is expected to come on, and then possibly Stanford himself.
Stanford doesn't have to take the stand. And the defense team does not have
to tell U.S. District Judge David Hittner or the prosecution team that he is
testifying until the last possible moment.
The 61-year-old financial services king is accused of running a $7 billion
Ponzi scheme through sales of certificates of deposit from his Antigua bank
and if convicted on the 14 counts against him, could spend 20 years in
prison.
The government claims CD customers were told their money was going toward
safe and conservative investments and presented evidence that two-thirds of
it was used to fund his other companies and Stanford's high-end tastes.
But the defense says the bank was solvent, in the midst of a reorganization
and would be here today if the government had not shut it down in 2009.
Monday, 20 February 2012
Defense is desperate Lawyers hold back nothing in the financial Ponzi scheme case
By Lindsay Gary Published on: Monday, February 20, 2012
Stanford was charged committing a "bait and switch" international Ponzi scheme in which he allegedly conned investors out of $7 billion.
The trial, is a battleground between the government and Stanford's defense team, who seem to be trying everything possible to win this difficult case.
The defense team's tactics include trying to prove that former Chief Financial Officer of Stanford Financial Group and college roommate of Stanford, James Davis, is responsible for the alleged scheme. They also allege that had government groups, such as the U.S. Securities and Exchange Commission (SEC), not intervened, Stanford would have completed the task of paying investors back. However both are difficult to prove for various reasons.
First, although it is the CFO's responsibility to advise a company financially, Stanford was still the final decision-maker. On Friday, Feb. 3, 2012, the government presented several emails as evidence to the courtroom, including emails with subject line "Transfer of Funds TIOC" (Two Islands One Club). These were a series of emails regarding a risky business venture - building a resort in the Caribbean. Patricia Maldonado asked for the approval of $1,275,000 to go into this resort. This money came from a Societe Generale account in Switzerland that was funded by the Certificates of Deposits from investments.
Davis' alleged reply was for Maldonado to contact Stanford for approval; Stanford supposedly in turn approved this amount, and possibly many other illegal transactions such as this. Investors thought they were making secure investments but based on the evidence presented by the government, they actually weren't. In fact, the money went to millions of dollars worth of employee bonuses, bills and, not to mention, the TIOC, which was never completed.
There is no strong evidence that proves Stanford was actually in the process of paying investors back, especially when emails similar to the TIOC series were sent just weeks before Stanford was caught.
It is obvious the defense team is uneasy. Davis was Stanford's right-hand man and he has not only plead guilty but has testified against him with believable evidence.
Stanford and his defense team only revealed their poker faces. But their desperate actions, such as trying to put the blame on Davis, show their insecurity.
Not only are they trying to persuade the courtroom that a man who already plead guilty is at fault, but they even tried to call for a mistrial during recess on the grounds that Davis violated Stanford's Fifth Amendment rights.
Judge Hittner overruled that accusation against Davis and the trial continued.
After exhausting many of their options, they are still having a difficult time proving Stanford's innocence.
First the defense claimed Stanford was incompetent. Now they're blaming Stanford's employee for all the crime committed in Stanford's company. What will the defense resort to next?
With all of the evidence and witnesses the government has brought in, it will almost be impossible for the prosecution to lose this case.
Stanford was charged committing a "bait and switch" international Ponzi scheme in which he allegedly conned investors out of $7 billion.
The trial, is a battleground between the government and Stanford's defense team, who seem to be trying everything possible to win this difficult case.
The defense team's tactics include trying to prove that former Chief Financial Officer of Stanford Financial Group and college roommate of Stanford, James Davis, is responsible for the alleged scheme. They also allege that had government groups, such as the U.S. Securities and Exchange Commission (SEC), not intervened, Stanford would have completed the task of paying investors back. However both are difficult to prove for various reasons.
First, although it is the CFO's responsibility to advise a company financially, Stanford was still the final decision-maker. On Friday, Feb. 3, 2012, the government presented several emails as evidence to the courtroom, including emails with subject line "Transfer of Funds TIOC" (Two Islands One Club). These were a series of emails regarding a risky business venture - building a resort in the Caribbean. Patricia Maldonado asked for the approval of $1,275,000 to go into this resort. This money came from a Societe Generale account in Switzerland that was funded by the Certificates of Deposits from investments.
Davis' alleged reply was for Maldonado to contact Stanford for approval; Stanford supposedly in turn approved this amount, and possibly many other illegal transactions such as this. Investors thought they were making secure investments but based on the evidence presented by the government, they actually weren't. In fact, the money went to millions of dollars worth of employee bonuses, bills and, not to mention, the TIOC, which was never completed.
There is no strong evidence that proves Stanford was actually in the process of paying investors back, especially when emails similar to the TIOC series were sent just weeks before Stanford was caught.
It is obvious the defense team is uneasy. Davis was Stanford's right-hand man and he has not only plead guilty but has testified against him with believable evidence.
Stanford and his defense team only revealed their poker faces. But their desperate actions, such as trying to put the blame on Davis, show their insecurity.
Not only are they trying to persuade the courtroom that a man who already plead guilty is at fault, but they even tried to call for a mistrial during recess on the grounds that Davis violated Stanford's Fifth Amendment rights.
Judge Hittner overruled that accusation against Davis and the trial continued.
After exhausting many of their options, they are still having a difficult time proving Stanford's innocence.
First the defense claimed Stanford was incompetent. Now they're blaming Stanford's employee for all the crime committed in Stanford's company. What will the defense resort to next?
With all of the evidence and witnesses the government has brought in, it will almost be impossible for the prosecution to lose this case.
Friday, 17 February 2012
Jury will decide, but Stanford investors have no doubt
R. Allen Stanford's fraud trial neared the end of its fourth week Friday morning as defense lawyers built a case for his innocence in a courtroom filled with investors who believe he swindled them collectively out of millions of dollars.
About 40 investors in financial products offered by Houston-based Stanford Financial Group attended the trial to commemorate the third anniversary of the federal lawsuit that shut down Stanford's global financial operations and seized assets that may have included funds intrusted to the companies by clients.
In Friday's trial proceedings before U.S. District Judge David Hittner, Linda Wingfield, a former vice president in Stanford's operations, testified via a video link from Orlando, Fla., because she is ill and could not travel to Houston.
Wingfield testified that she went to work for Stanford in 1998 and eventually became a project manager and one of his top assistants and troubleshooters, sometimes representing him at meetings.
"He was a detail person," Wingfield testified, but over time he handed off increasing day-to-day responsibility to his chief financial officer, James Davis.
The testimony supports the defense narrative that in the years before the Stanford operations collapsed, Davis was in charge of financial transactions that prosecutors allege defrauded investors of $7 billion.
Davis pleaded guilty to three felony counts and was the star prosecution witness against Stanford, testifying that the two manipulated financial reports to conceal the funneling of investors' money to their personal use and to Stanford's pet business ventures.
Wingfield suggested in her testimony, however, that Stanford was trying to make an array of businesses profitable, and often delegated the specific tasks.
She described the shock among employees when the receiver took control of the operations three years ago Friday, and expressed bitterness at the way it was done.
"I saw multiple inefficiencies," she said, including receiver staff's confiscation of unlabeled boxes without ascertaining their contents.
"We were devastated that this company was taken apart."
Meanwhile, investors described their own devastation in interviews during courtroom breaks and as they assembled outside the courthouse.
They came from across Texas and from Louisiana, and while it will be up to a jury to determine Stanford's guilt or innocence, the investors expressed little doubt.
"I came to see the guy who stole my money," said Jim Eccles, 76, of Austin, who invested in two 5-year certificates of deposit at Stanford's offshore bank in 2007 - one for $1 million and one for $50,000. They mature next September.
"That means I'll be able to get it all back," Eccles said, laughing gamely at the reality that investors will recover little if any of their money.
"It's painful enough to lose your resources," Eccles said. "Add to that the embarrassment of the fool who is soon parted from his money."
Paul Gallagher, 64, said he and his mother-in-law lost more than half a million dollars in Stanford investments, and has received no help from the Securities Investor Protection Corp., an insurance fund operated by the industry to protect investors from losses in failed brokerage firms. It does not protect against investment losses.
The SIPC is in a dispute with the U.S. Securities and Exchange Commission over whether it must cover some losses for Stanford investors.
Gallagher said he came to court Friday to see Stanford and the dynamics of the trial first hand, and to show solidarity with others who lost money.
He said that because of his Stanford losses, he probably won't ever be able to retire.
Paul Wolfe said he has been frustrated by the long wait for some kind of restitution - either from assets controlled by the receiver or from the SIPC.
"We aren't all big wealthy investors," Wolfe said. "We're just regular people."
About 40 investors in financial products offered by Houston-based Stanford Financial Group attended the trial to commemorate the third anniversary of the federal lawsuit that shut down Stanford's global financial operations and seized assets that may have included funds intrusted to the companies by clients.
In Friday's trial proceedings before U.S. District Judge David Hittner, Linda Wingfield, a former vice president in Stanford's operations, testified via a video link from Orlando, Fla., because she is ill and could not travel to Houston.
Wingfield testified that she went to work for Stanford in 1998 and eventually became a project manager and one of his top assistants and troubleshooters, sometimes representing him at meetings.
"He was a detail person," Wingfield testified, but over time he handed off increasing day-to-day responsibility to his chief financial officer, James Davis.
The testimony supports the defense narrative that in the years before the Stanford operations collapsed, Davis was in charge of financial transactions that prosecutors allege defrauded investors of $7 billion.
Davis pleaded guilty to three felony counts and was the star prosecution witness against Stanford, testifying that the two manipulated financial reports to conceal the funneling of investors' money to their personal use and to Stanford's pet business ventures.
Wingfield suggested in her testimony, however, that Stanford was trying to make an array of businesses profitable, and often delegated the specific tasks.
She described the shock among employees when the receiver took control of the operations three years ago Friday, and expressed bitterness at the way it was done.
"I saw multiple inefficiencies," she said, including receiver staff's confiscation of unlabeled boxes without ascertaining their contents.
"We were devastated that this company was taken apart."
Meanwhile, investors described their own devastation in interviews during courtroom breaks and as they assembled outside the courthouse.
They came from across Texas and from Louisiana, and while it will be up to a jury to determine Stanford's guilt or innocence, the investors expressed little doubt.
"I came to see the guy who stole my money," said Jim Eccles, 76, of Austin, who invested in two 5-year certificates of deposit at Stanford's offshore bank in 2007 - one for $1 million and one for $50,000. They mature next September.
"That means I'll be able to get it all back," Eccles said, laughing gamely at the reality that investors will recover little if any of their money.
"It's painful enough to lose your resources," Eccles said. "Add to that the embarrassment of the fool who is soon parted from his money."
Paul Gallagher, 64, said he and his mother-in-law lost more than half a million dollars in Stanford investments, and has received no help from the Securities Investor Protection Corp., an insurance fund operated by the industry to protect investors from losses in failed brokerage firms. It does not protect against investment losses.
The SIPC is in a dispute with the U.S. Securities and Exchange Commission over whether it must cover some losses for Stanford investors.
Gallagher said he came to court Friday to see Stanford and the dynamics of the trial first hand, and to show solidarity with others who lost money.
He said that because of his Stanford losses, he probably won't ever be able to retire.
Paul Wolfe said he has been frustrated by the long wait for some kind of restitution - either from assets controlled by the receiver or from the SIPC.
"We aren't all big wealthy investors," Wolfe said. "We're just regular people."
Texas financier Stanford to begin defense in fraud trial after 3-week long prosecution case
by: JUAN A. LOZANO , Associated Press Updated: February 15, 2012
HOUSTON - Attorneys for jailed Texas tycoon R. Allen Stanford on Wednesday began their defense in his fraud trial after prosecutors rested their case following three weeks of testimony in support of their claims the financier was behind a massive Ponzi scheme that took billions from investors.
The start of Stanford's defense was briefly delayed as his attorneys asked U.S. District Judge David Hittner for time to discuss how they would proceed.
"We've been in discussions with our client on what is wise, what the next step would be," said Robert Scardino, one of Stanford's attorneys. Scardino had initially asked for the rest of Wednesday to discuss trial strategy with Stanford but Hittner only gave them an hour.
The request by Stanford's attorneys came after Hittner denied their motion to dismiss all charges against the financier because prosecutors had failed to prove their case. Such motions are typically argued after prosecutors finish presenting a case and are usually denied.
After consulting with Stanford, Scardino gave Hittner a list of 26 potential defense witnesses. Scardino said he was not sure if all of them would testify. Although Scardino had previously said Stanford would, his name was not on the list. However, Stanford's attorneys could decide later to put their client on the witness stand. A gag order prevents defense attorneys and prosecutors from discussing the case.
Before resting, federal prosecutors methodically presented evidence, including testimony from ex-workers of Stanford's companies as well as emails, financial statements and other documents, that they allege show the flamboyant businessman orchestrated a 20-year scheme that bilked more than
$7 billion from investors through the sale of certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua. They allege Stanford lied to depositors by telling them their funds were being safely invested.
Defense attorneys have tried to show the financier was a savvy businessman whose financial empire, headquartered in Houston, was legitimate. They said he was trying to reorganize his businesses to pay back investors when authorities seized his companies.
The first two witnesses for Stanford were a retired FBI agent and a retired U.S. Customs investigator who told jurors about the work they did on a committee in the late 1990s to strengthen banking and money laundering laws in Antigua.
Patrick O'Brien, the former U.S. Customs investigator and a retired attorney who had done legal work for Stanford, told jurors the financier was the "driving force" behind this effort to improve Antigua's banking laws.
When questioned by a prosecutor, Lloyd Harrell, the retired FBI agent who had done investigative work for Stanford's bank, testified he and others on the committee were paid by the Antiguan government through a loan it had received from another bank on Antigua also owned by Stanford.
The prosecution's star witness - James M. Davis, the former chief financial officer for Stanford's various companies - told jurors his ex-boss used CD deposits to bribe Antiguan bank regulators. Davis also said Stanford funnelled money to pay for various businesses, most of which failed, and to pay for a lavish lifestyle that included yachts and private jets.
Stanford' attorneys accused Davis of leading the fraud and questioned his character, including highlighting extra marital affairs he's had. They also accused him of lying so he could get a reduced sentence. Davis pleaded guilty to three fraud and conspiracy charges in 2009 as part of a deal he made with prosecutors for a possible reduced sentence.
Testimony was to resume on Thursday.
HOUSTON - Attorneys for jailed Texas tycoon R. Allen Stanford on Wednesday began their defense in his fraud trial after prosecutors rested their case following three weeks of testimony in support of their claims the financier was behind a massive Ponzi scheme that took billions from investors.
The start of Stanford's defense was briefly delayed as his attorneys asked U.S. District Judge David Hittner for time to discuss how they would proceed.
"We've been in discussions with our client on what is wise, what the next step would be," said Robert Scardino, one of Stanford's attorneys. Scardino had initially asked for the rest of Wednesday to discuss trial strategy with Stanford but Hittner only gave them an hour.
The request by Stanford's attorneys came after Hittner denied their motion to dismiss all charges against the financier because prosecutors had failed to prove their case. Such motions are typically argued after prosecutors finish presenting a case and are usually denied.
After consulting with Stanford, Scardino gave Hittner a list of 26 potential defense witnesses. Scardino said he was not sure if all of them would testify. Although Scardino had previously said Stanford would, his name was not on the list. However, Stanford's attorneys could decide later to put their client on the witness stand. A gag order prevents defense attorneys and prosecutors from discussing the case.
Before resting, federal prosecutors methodically presented evidence, including testimony from ex-workers of Stanford's companies as well as emails, financial statements and other documents, that they allege show the flamboyant businessman orchestrated a 20-year scheme that bilked more than
$7 billion from investors through the sale of certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua. They allege Stanford lied to depositors by telling them their funds were being safely invested.
Defense attorneys have tried to show the financier was a savvy businessman whose financial empire, headquartered in Houston, was legitimate. They said he was trying to reorganize his businesses to pay back investors when authorities seized his companies.
The first two witnesses for Stanford were a retired FBI agent and a retired U.S. Customs investigator who told jurors about the work they did on a committee in the late 1990s to strengthen banking and money laundering laws in Antigua.
Patrick O'Brien, the former U.S. Customs investigator and a retired attorney who had done legal work for Stanford, told jurors the financier was the "driving force" behind this effort to improve Antigua's banking laws.
When questioned by a prosecutor, Lloyd Harrell, the retired FBI agent who had done investigative work for Stanford's bank, testified he and others on the committee were paid by the Antiguan government through a loan it had received from another bank on Antigua also owned by Stanford.
The prosecution's star witness - James M. Davis, the former chief financial officer for Stanford's various companies - told jurors his ex-boss used CD deposits to bribe Antiguan bank regulators. Davis also said Stanford funnelled money to pay for various businesses, most of which failed, and to pay for a lavish lifestyle that included yachts and private jets.
Stanford' attorneys accused Davis of leading the fraud and questioned his character, including highlighting extra marital affairs he's had. They also accused him of lying so he could get a reduced sentence. Davis pleaded guilty to three fraud and conspiracy charges in 2009 as part of a deal he made with prosecutors for a possible reduced sentence.
Testimony was to resume on Thursday.
Friday, 3 February 2012
Allen Stanford Conspired in Investment Fraud, Former CFO Davis Testifies
By Laurel Brubaker Calkins and Andrew Harris - Feb 2, 2012
James Davis, the former Stanford Financial Group Co. finance chief, testified as a government witness that R. Allen Stanford, the company founder, conspired with him in an investment fraud.
Davis, 63, pleaded guilty to three felony charges in August 2009 and agreed to cooperate with prosecutors. He testified today against his former boss and Baylor University roommate at Stanford's criminal trial in federal court in Houston.
Assistant U.S. Attorney William Stellmach asked Davis if he committed any crimes at Houston-based Stanford Financial Group.
"Yes, sir, I did," he replied.
Stanford, 61, is accused of leading a $7 billion investment fraud scheme. He maintains he's not guilty of the 14 criminal counts he's charged with. They include mail fraud, wire fraud and obstructing a U.S. Securities and Exchange Commission investigation.
Jury selection before District Judge David Hittner began on Jan. 23. Lawyers for both sides delivered opening statements to the jury the next day.
Stanford's lawyers have argued that while their client was the public face of the organization, he was misled about its financial health by Davis and other executives.
Davis pleaded guilty to conspiring to commit mail and wire fraud, mail fraud and conspiring to obstruct the SEC probe. He told the jury today he faces as long as 30 years imprisonment.
"My obligation is to tell the truth," Davis said of his plea deal with prosecutors.
30-Year Relationship
Dressed in a dark suit and a silver tie, Davis testified in a quaking voice about his association of more than 30 years with Stanford. The financier leaned forward at the defense table and stared at his former colleague.
Davis testified that he lied about financial statements of Stanford International Bank Ltd., the Antigua-based financial institution prosecutors say sold fraudulent certificates of deposit to investors.
"I lied about overstating the value of these investments, and I lied about the nature of these investments," he said.
"Who conspired with you to commit those crimes?" Stellmach asked.
"Mr. Allen Stanford and others," Davis said.
Stellmach asked why Davis agreed to lie about overseeing the bank's professional money managers, who weren't under his supervision.
'I Was Greedy'
"I wanted to please Mr. Stanford," he said, his voice choked. "I was proud, embarrassed. I was a coward."
Also, he said, "I was greedy."
He described Stanford's management style as that of a "charismatic dictator."
"In his charismatic way, he controlled by money, flattery, intimidation and fear," Davis said. "He used to say it is much better to be feared as a leader than loved -- get better results."
Davis said he was well paid while working for Stanford. He also said the financier at one point refused to speak with him for three months.
Stanford once invited him for a ride in his new Mercedes Benz, he said.
"We went 170 miles per hour down the freeway," Davis said. "Scared me to death. He paid well, flattered you, instilled intimidation and fear."
'Short Hop'
Davis told the court he realized the enterprise was engaged in fraud as early as 1991 when Stanford asked him to fly to London for the sole purpose of faxing proof of insurance to a wealthy investor.
The coverage had been issued by British Insurance Fund Ltd., which Davis said he then learned was a company created by Stanford to furnish insurance to the Antiguan bank.
Its U.K. office consisted of a 10-foot-square cubicle in an London administrative services suite, furnished with a desk, chair and fax machine, Davis said, recalling his journey to fax the document from the otherwise empty office and then return to Houston.
Stanford "told me he hated to ask me to go for such a short hop but it was necessary," Davis said. "After that, I knew it was a fraud."
In early 1992, Davis said he began having frequent conversations with Stanford about where the bank's assets were, because there was a gap between what was owed depositors and the amount in the investment portfolio.
'Close That Hole'
"Mr. Stanford told me that there was value there and the bank was going to grow and dwarf this small amount that was so- called missing," Davis testified. Stanford said his plan was to rapidly increase CD sales and "grow out of the hole."
"Brother, it's going to work, we're going to grow this bank, and close that hole," Davis said Stanford reassured him.
Davis said that during these conversations he took to shuffling across the floor with his wrists clasped in front of him, mimicking someone in handcuffs and shackles. "I wanted him to know that what we're doing is going to have consequences, and those aren't good consequences," Davis said.
Stanford would sometimes laugh off his finance chief's concerns, telling him, "I'll tell them you were on the books and I was out building my companies,'" Davis told jurors. "I'll just blame it all on you.'"
Stellmach asked why he didn't leave when his "years of suspicions" that the bank was engaged in fraud were confirmed.
'I Believed'
"I believed in Mr. Stanford - wrongfully so, regrettably so, God forgive me so," Davis replied. "But I continued to stay there and lie with him."
Davis said he never even told his wife that he knew the bank was engaged in fraud.
By the time U.S. securities regulators seized the bank in February 2009, Davis said he was earning more than $900,000 in yearly base salary, with an additional $850,000 in personal loans Stanford had approved from the bank.
Davis also said Stanford, after moving his bank from Montserrat to neighboring Antigua, took a "blood oath" with that island's top banking regulator, Leroy King, to "codify" an agreement to shield the bank from scrutiny.
"Mr. Stanford said they actually cut themselves and had a blood oath," Davis testified.
After the remark, Stanford raised his eyebrows, looked down at his notes and shook his head.
Davis also said Stanford made large contributions to both political parties in Antigua and loaned the island's government $40 million. Antigua hasn't yet repaid the debt, he said.
The case is U.S. v. Stanford, 4:09-cr-00342, U.S. District Court, Southern District of Texas (Houston).
James Davis, the former Stanford Financial Group Co. finance chief, testified as a government witness that R. Allen Stanford, the company founder, conspired with him in an investment fraud.
Davis, 63, pleaded guilty to three felony charges in August 2009 and agreed to cooperate with prosecutors. He testified today against his former boss and Baylor University roommate at Stanford's criminal trial in federal court in Houston.
Assistant U.S. Attorney William Stellmach asked Davis if he committed any crimes at Houston-based Stanford Financial Group.
"Yes, sir, I did," he replied.
Stanford, 61, is accused of leading a $7 billion investment fraud scheme. He maintains he's not guilty of the 14 criminal counts he's charged with. They include mail fraud, wire fraud and obstructing a U.S. Securities and Exchange Commission investigation.
Jury selection before District Judge David Hittner began on Jan. 23. Lawyers for both sides delivered opening statements to the jury the next day.
Stanford's lawyers have argued that while their client was the public face of the organization, he was misled about its financial health by Davis and other executives.
Davis pleaded guilty to conspiring to commit mail and wire fraud, mail fraud and conspiring to obstruct the SEC probe. He told the jury today he faces as long as 30 years imprisonment.
"My obligation is to tell the truth," Davis said of his plea deal with prosecutors.
30-Year Relationship
Dressed in a dark suit and a silver tie, Davis testified in a quaking voice about his association of more than 30 years with Stanford. The financier leaned forward at the defense table and stared at his former colleague.
Davis testified that he lied about financial statements of Stanford International Bank Ltd., the Antigua-based financial institution prosecutors say sold fraudulent certificates of deposit to investors.
"I lied about overstating the value of these investments, and I lied about the nature of these investments," he said.
"Who conspired with you to commit those crimes?" Stellmach asked.
"Mr. Allen Stanford and others," Davis said.
Stellmach asked why Davis agreed to lie about overseeing the bank's professional money managers, who weren't under his supervision.
'I Was Greedy'
"I wanted to please Mr. Stanford," he said, his voice choked. "I was proud, embarrassed. I was a coward."
Also, he said, "I was greedy."
He described Stanford's management style as that of a "charismatic dictator."
"In his charismatic way, he controlled by money, flattery, intimidation and fear," Davis said. "He used to say it is much better to be feared as a leader than loved -- get better results."
Davis said he was well paid while working for Stanford. He also said the financier at one point refused to speak with him for three months.
Stanford once invited him for a ride in his new Mercedes Benz, he said.
"We went 170 miles per hour down the freeway," Davis said. "Scared me to death. He paid well, flattered you, instilled intimidation and fear."
'Short Hop'
Davis told the court he realized the enterprise was engaged in fraud as early as 1991 when Stanford asked him to fly to London for the sole purpose of faxing proof of insurance to a wealthy investor.
The coverage had been issued by British Insurance Fund Ltd., which Davis said he then learned was a company created by Stanford to furnish insurance to the Antiguan bank.
Its U.K. office consisted of a 10-foot-square cubicle in an London administrative services suite, furnished with a desk, chair and fax machine, Davis said, recalling his journey to fax the document from the otherwise empty office and then return to Houston.
Stanford "told me he hated to ask me to go for such a short hop but it was necessary," Davis said. "After that, I knew it was a fraud."
In early 1992, Davis said he began having frequent conversations with Stanford about where the bank's assets were, because there was a gap between what was owed depositors and the amount in the investment portfolio.
'Close That Hole'
"Mr. Stanford told me that there was value there and the bank was going to grow and dwarf this small amount that was so- called missing," Davis testified. Stanford said his plan was to rapidly increase CD sales and "grow out of the hole."
"Brother, it's going to work, we're going to grow this bank, and close that hole," Davis said Stanford reassured him.
Davis said that during these conversations he took to shuffling across the floor with his wrists clasped in front of him, mimicking someone in handcuffs and shackles. "I wanted him to know that what we're doing is going to have consequences, and those aren't good consequences," Davis said.
Stanford would sometimes laugh off his finance chief's concerns, telling him, "I'll tell them you were on the books and I was out building my companies,'" Davis told jurors. "I'll just blame it all on you.'"
Stellmach asked why he didn't leave when his "years of suspicions" that the bank was engaged in fraud were confirmed.
'I Believed'
"I believed in Mr. Stanford - wrongfully so, regrettably so, God forgive me so," Davis replied. "But I continued to stay there and lie with him."
Davis said he never even told his wife that he knew the bank was engaged in fraud.
By the time U.S. securities regulators seized the bank in February 2009, Davis said he was earning more than $900,000 in yearly base salary, with an additional $850,000 in personal loans Stanford had approved from the bank.
Davis also said Stanford, after moving his bank from Montserrat to neighboring Antigua, took a "blood oath" with that island's top banking regulator, Leroy King, to "codify" an agreement to shield the bank from scrutiny.
"Mr. Stanford said they actually cut themselves and had a blood oath," Davis testified.
After the remark, Stanford raised his eyebrows, looked down at his notes and shook his head.
Davis also said Stanford made large contributions to both political parties in Antigua and loaned the island's government $40 million. Antigua hasn't yet repaid the debt, he said.
The case is U.S. v. Stanford, 4:09-cr-00342, U.S. District Court, Southern District of Texas (Houston).
Monday, 30 January 2012
Inside Stanford’s Ponzi puzzle palace
By STEVE MCVICKER
After an opening week of testimony marked by talk of peanut butter sandwiches and mac and cheese, the Ponzi scheme trial of disgraced financier R. Allen Stanford shifts into high gear this week.
Uncle Sam’s key witness, James Davis, the former chief financial officer at Stanford’s firm — and a former college roommate of the alleged fraudster — is scheduled to take the stand and tell jurors just how the massive fraud was carried out.
Stanford’s alleged $7 billion Ponzi scheme, the largest such scam after Bernie Madoff’s $65 billion fraud, robbed more than 30,000 people from 113 countries, according to prosecutors.
The 14-count indictment, which carries a prison term of up to 20 years, claims the financier, through his Antigua-based Stanford International Bank, lured investors in with high interest rates on CDs.
Prosecutors claim Stanford didn’t buy the CDs but instead used investors’ cash to fuel a lavish lifestyle. Stanford has denied the charges.
Last week, jurors heard one fleeced investor, 69-year-old retiree Joseph Flynn, testify that he lost his entire life’s savings, some $1.6 million, which he had invested in Stanford bank CDs.
Flynn also told the jury he gets by these days by selling his possessions on eBay and by eating lots of mac and cheese.
Flynn wasn’t the only person in the courtroom to discuss a hard-times menu. Stanford’s legal team complained to Judge David Hittner about the peanut butter sandwiches served up by the federal courthouse kitchen.
The lunches were not providing Stanford with enough energy to allow him to participate in his defense, they claimed.
After they raised the issue a couple of times, it was dropped and the courthouse menu is now apparently more to Stanford’s liking.
After an opening week of testimony marked by talk of peanut butter sandwiches and mac and cheese, the Ponzi scheme trial of disgraced financier R. Allen Stanford shifts into high gear this week.
Uncle Sam’s key witness, James Davis, the former chief financial officer at Stanford’s firm — and a former college roommate of the alleged fraudster — is scheduled to take the stand and tell jurors just how the massive fraud was carried out.
Stanford’s alleged $7 billion Ponzi scheme, the largest such scam after Bernie Madoff’s $65 billion fraud, robbed more than 30,000 people from 113 countries, according to prosecutors.
The 14-count indictment, which carries a prison term of up to 20 years, claims the financier, through his Antigua-based Stanford International Bank, lured investors in with high interest rates on CDs.
Prosecutors claim Stanford didn’t buy the CDs but instead used investors’ cash to fuel a lavish lifestyle. Stanford has denied the charges.
Last week, jurors heard one fleeced investor, 69-year-old retiree Joseph Flynn, testify that he lost his entire life’s savings, some $1.6 million, which he had invested in Stanford bank CDs.
Flynn also told the jury he gets by these days by selling his possessions on eBay and by eating lots of mac and cheese.
Flynn wasn’t the only person in the courtroom to discuss a hard-times menu. Stanford’s legal team complained to Judge David Hittner about the peanut butter sandwiches served up by the federal courthouse kitchen.
The lunches were not providing Stanford with enough energy to allow him to participate in his defense, they claimed.
After they raised the issue a couple of times, it was dropped and the courthouse menu is now apparently more to Stanford’s liking.
Friday, 27 January 2012
Stanford Decried Greed in Speech Shown at Trial
By Laurel Brubaker Calkins and Andrew Harris - Jan 26, 2012
R. Allen Stanford, standing trial on allegations he led a $7 billion investment fraud, appeared in an October 2008 video shown to his jury decrying “damn greed” on Wall Street as the financial crisis deepened.
“People are stupid, they’re greedy, they’re lazy, they don’t stick to their core values,” he told a gathering of Stanford Financial Group Co. executives in Miami. “We’re different.”
In the video, shown today in Houston federal court, the financier told his audience that the company was “$5.5 billion more liquid than it should have been.” Four months later, U.S. regulators sued Stanford claiming his businesses were missing billions of dollars in investor money. He was indicted in June 2009.
Charged with mail fraud, wire fraud and obstructing a U.S. Securities and Exchange Commission probe, Stanford, 61, told jurors earlier this week that he isn’t guilty. He faces as long as 20 years in prison if convicted on the most serious charges.
U.S. District Judge David Hittner, who is overseeing Stanford’s case, said the trial, which began Jan. 23, could last six weeks.
Earlier today, the former president of Stanford Group Co.’s private client group testified about a monthly newsletter Stanford drafted for his investors and sent to him for his input in December 2008, the month that New York money manager Bernard Madoff confessed to the biggest Ponzi scheme in U.S. history.
‘Exposure’ to Madoff
“We want our depositors to know that SIBL had no direct or indirect exposure to any of Madoff’s investments” or to subprime debt,’’ said Jason Green, read from the newsletter.
Green also read to the jury the text of an e-mail message he sent to Stanford and to Stanford’s chief financial officer, Jim Davis, less than a week before the SEC filed suit and put him out of business. Davis is the Stanford finance chief who has pleaded guilty to the scheme and is expected to testify against Stanford.
In the e-mail, Green urged the men to hire a major accounting firm as the Stanford business auditor, replacing a sole practitioner in Antigua, to publish a validation of its asset values by their custodians, and to hold a conference call or town meeting with Stanford investors to provide transparency in the “trust-but-verify” post-Madoff era.
‘Antiguan Madoff’
Green in that e-mail referenced news articles accusing “Sir Allen of being the Antiguan Madoff,” adding that he and other managers believed that absent taking the steps he’d outlined, “We would not have a business to defend.”
Asked by prosecutor William Stellmach whether Stanford responded, Green said, “The silence was deafening. No.”
Earlier today, Green testified that Stanford structured commissions at his securities brokerage to reward members of his sales force who sold the most certificates of deposit issued by his Antigua bank.
Those CDs are at the heart of U.S. government charges that Stanford orchestrated an investment fraud scheme.
Brokers who had quarterly sales of at least $1 million in CDs in excess of any funds clients withdrew during the period earned bonuses and commissions twice as big as those paid to employees who didn’t, Green said. Those who fell short of that target were dropped to the lowest compensation rate.
‘Reward Growth’
“You’d only get 50 percent of what you’d make,” Green testified today. He said he understood Stanford designed the compensation system “to reward growth” in CD sales, an objective the financier often emphasized in capital letters in company memos.
Dressed in a charcoal-gray suit and blue shirt, Stanford watched and took notes as Green, a former top aide, answered the prosecutor’s questions and read from documents shared with the jury.
Green told jurors that while he hasn’t been criminally charged for his role in the alleged scheme, he has been sued by former brokerage clients on claims of negligence for recommending the CDs.
Green said the receiver appointed in a lawsuit filed against Stanford by the U.S. Securities and Exchange Commission also sued him, seeking to recover those bonuses and commissions he earned selling the CDs.
‘Taking Some Risk’
“I’m taking some risk in testifying, but I feel that it’s the right thing to do,” Green said under questioning by Stellmach. “That’s why I’m here.”
Stanford first began selling his Caribbean bank CDs to U.S. citizens around the time Green joined the company in 1996. Previously, the CDs were only sold to non-American citizens to limit the Antiguan bank’s exposure to U.S. regulations and oversight, Green said.
Stanford’s CDs paid as much as 4.5 percentage points higher interest than comparable CDs issued by American banks, Green said, based on what employees were told were consistent double- digit earnings by the bank’s “globally diversified portfolio.”
“The bank was earning on average a 6 percent spread on what it was paying clients and earning, so they could afford to pay the clients a higher rate,” the one-time branch manager testified. Advisers were told the bank’s portfolio consisted largely of marketable securities that could be converted to cash “very quickly; that was one of the big selling points of the bank in terms of mitigating risk” to investors’ money, he said.
13 Years
Green said that during his 13 years at Stanford’s company, about 3 percent of the bank’s investment portfolio was managed by analysts in Stanford’s office in Memphis, Tennessee, while the rest was handled by a team of European money managers.
Prosecutors accuse Stanford of skimming more than $1 billion in investor deposits to fund a lavish lifestyle and support a wide array of real estate developments and unrelated companies ranging from regional airlines to newspapers.
The financier is also accused of deceiving employees and investors about the extent to which he personally managed the bank’s investment portfolio. The government claims Stanford and the company’s finance chief managed about 90 percent of the bank’s funds, which prosecutors told jurors Stanford treated “like a personal piggybank.”
Green testified that he would have been concerned to learn that Laura Pendergest Holt, the firm’s chief investment officer, wasn’t overseeing all of Stanford’s investment portfolio as he’s been told by “Mr. Stanford, Mr. Davis, everyone that was affiliated with the bank that was in a position to know.”
“You wanted to know that somebody was managing the managers,” Green said. Pendergest Holt told him “maybe two or three days before the FBI and the receiver shut us down” that she managed just a fraction of the bank’s portfolio.
Regional Teams
Stanford organized brokers into regional teams that competed to sell the most CDs every quarter. Team names ranged from the Miami Money Machine for Stanford’s top producers in South Florida to the Aztec Eagles for his Mexican operation. Prosecutors showed jurors a scorecard that Green said showed sales by these “superstars” were as much as $323 million in 2006, which was 110 percent of their goal.
Green said Stanford clearly ran the company, in his opinion. He recalled an instance where Stanford heatedly objected to a decision made by Davis.
“‘I don’t know who Jim Davis thinks he is,’” Green said he remembered Stanford shouting. “‘This is my company.’ I know that he talked to Mr. Davis about it, and I’m sure he gave him an earful. Mr. Davis wasn’t very nice to me for some time” after the incident.
The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case against Stanford is Securities and Exchange Commission v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).
R. Allen Stanford, standing trial on allegations he led a $7 billion investment fraud, appeared in an October 2008 video shown to his jury decrying “damn greed” on Wall Street as the financial crisis deepened.
“People are stupid, they’re greedy, they’re lazy, they don’t stick to their core values,” he told a gathering of Stanford Financial Group Co. executives in Miami. “We’re different.”
In the video, shown today in Houston federal court, the financier told his audience that the company was “$5.5 billion more liquid than it should have been.” Four months later, U.S. regulators sued Stanford claiming his businesses were missing billions of dollars in investor money. He was indicted in June 2009.
Charged with mail fraud, wire fraud and obstructing a U.S. Securities and Exchange Commission probe, Stanford, 61, told jurors earlier this week that he isn’t guilty. He faces as long as 20 years in prison if convicted on the most serious charges.
U.S. District Judge David Hittner, who is overseeing Stanford’s case, said the trial, which began Jan. 23, could last six weeks.
Earlier today, the former president of Stanford Group Co.’s private client group testified about a monthly newsletter Stanford drafted for his investors and sent to him for his input in December 2008, the month that New York money manager Bernard Madoff confessed to the biggest Ponzi scheme in U.S. history.
‘Exposure’ to Madoff
“We want our depositors to know that SIBL had no direct or indirect exposure to any of Madoff’s investments” or to subprime debt,’’ said Jason Green, read from the newsletter.
Green also read to the jury the text of an e-mail message he sent to Stanford and to Stanford’s chief financial officer, Jim Davis, less than a week before the SEC filed suit and put him out of business. Davis is the Stanford finance chief who has pleaded guilty to the scheme and is expected to testify against Stanford.
In the e-mail, Green urged the men to hire a major accounting firm as the Stanford business auditor, replacing a sole practitioner in Antigua, to publish a validation of its asset values by their custodians, and to hold a conference call or town meeting with Stanford investors to provide transparency in the “trust-but-verify” post-Madoff era.
‘Antiguan Madoff’
Green in that e-mail referenced news articles accusing “Sir Allen of being the Antiguan Madoff,” adding that he and other managers believed that absent taking the steps he’d outlined, “We would not have a business to defend.”
Asked by prosecutor William Stellmach whether Stanford responded, Green said, “The silence was deafening. No.”
Earlier today, Green testified that Stanford structured commissions at his securities brokerage to reward members of his sales force who sold the most certificates of deposit issued by his Antigua bank.
Those CDs are at the heart of U.S. government charges that Stanford orchestrated an investment fraud scheme.
Brokers who had quarterly sales of at least $1 million in CDs in excess of any funds clients withdrew during the period earned bonuses and commissions twice as big as those paid to employees who didn’t, Green said. Those who fell short of that target were dropped to the lowest compensation rate.
‘Reward Growth’
“You’d only get 50 percent of what you’d make,” Green testified today. He said he understood Stanford designed the compensation system “to reward growth” in CD sales, an objective the financier often emphasized in capital letters in company memos.
Dressed in a charcoal-gray suit and blue shirt, Stanford watched and took notes as Green, a former top aide, answered the prosecutor’s questions and read from documents shared with the jury.
Green told jurors that while he hasn’t been criminally charged for his role in the alleged scheme, he has been sued by former brokerage clients on claims of negligence for recommending the CDs.
Green said the receiver appointed in a lawsuit filed against Stanford by the U.S. Securities and Exchange Commission also sued him, seeking to recover those bonuses and commissions he earned selling the CDs.
‘Taking Some Risk’
“I’m taking some risk in testifying, but I feel that it’s the right thing to do,” Green said under questioning by Stellmach. “That’s why I’m here.”
Stanford first began selling his Caribbean bank CDs to U.S. citizens around the time Green joined the company in 1996. Previously, the CDs were only sold to non-American citizens to limit the Antiguan bank’s exposure to U.S. regulations and oversight, Green said.
Stanford’s CDs paid as much as 4.5 percentage points higher interest than comparable CDs issued by American banks, Green said, based on what employees were told were consistent double- digit earnings by the bank’s “globally diversified portfolio.”
“The bank was earning on average a 6 percent spread on what it was paying clients and earning, so they could afford to pay the clients a higher rate,” the one-time branch manager testified. Advisers were told the bank’s portfolio consisted largely of marketable securities that could be converted to cash “very quickly; that was one of the big selling points of the bank in terms of mitigating risk” to investors’ money, he said.
13 Years
Green said that during his 13 years at Stanford’s company, about 3 percent of the bank’s investment portfolio was managed by analysts in Stanford’s office in Memphis, Tennessee, while the rest was handled by a team of European money managers.
Prosecutors accuse Stanford of skimming more than $1 billion in investor deposits to fund a lavish lifestyle and support a wide array of real estate developments and unrelated companies ranging from regional airlines to newspapers.
The financier is also accused of deceiving employees and investors about the extent to which he personally managed the bank’s investment portfolio. The government claims Stanford and the company’s finance chief managed about 90 percent of the bank’s funds, which prosecutors told jurors Stanford treated “like a personal piggybank.”
Green testified that he would have been concerned to learn that Laura Pendergest Holt, the firm’s chief investment officer, wasn’t overseeing all of Stanford’s investment portfolio as he’s been told by “Mr. Stanford, Mr. Davis, everyone that was affiliated with the bank that was in a position to know.”
“You wanted to know that somebody was managing the managers,” Green said. Pendergest Holt told him “maybe two or three days before the FBI and the receiver shut us down” that she managed just a fraction of the bank’s portfolio.
Regional Teams
Stanford organized brokers into regional teams that competed to sell the most CDs every quarter. Team names ranged from the Miami Money Machine for Stanford’s top producers in South Florida to the Aztec Eagles for his Mexican operation. Prosecutors showed jurors a scorecard that Green said showed sales by these “superstars” were as much as $323 million in 2006, which was 110 percent of their goal.
Green said Stanford clearly ran the company, in his opinion. He recalled an instance where Stanford heatedly objected to a decision made by Davis.
“‘I don’t know who Jim Davis thinks he is,’” Green said he remembered Stanford shouting. “‘This is my company.’ I know that he talked to Mr. Davis about it, and I’m sure he gave him an earful. Mr. Davis wasn’t very nice to me for some time” after the incident.
The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case against Stanford is Securities and Exchange Commission v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).
Thursday, 26 January 2012
Stanford Invented Insurance Company for Bank Depositors, Prosecutor Says
By Andrew Harris and Laurel Brubaker Calkins - Jan 25, 2012 10:43 PM GMT-0400
R. Allen Stanford failed to tell a financial adviser he hired for his first offshore bank that the insurer he selected for the institution was a company he created, a federal prosecutor said at the financier’s investment fraud trial.
Assistant U.S. Attorney William Stellmach made that claim today while questioning the adviser, Michelle Chambliess, on the first day of testimony at the federal courthouse in Houston.
Chambliess said she was one of Stanford’s first hires in 1987, at Guardian International Investment Services, a U.S.- based sibling of Stanford’s Montserrat-based Guardian International Bank Ltd. Guardian was the precursor to Stanford International Bank Ltd., the Antiguan entity at the heart of Stanford’s alleged $7 billion fraud.
Stanford told her he’d obtained insurance for the bank from a carrier called British Insurance Fund Ltd., which appeared to be an independent U.K.-based company.
“Did he ever tell you it was a shell company he had set up?” Stellmach asked.
“No,” Chambliess replied.
‘Any Difference’
“Would that have made any difference to you?” he asked.
“Absolutely,” she said. “Then there wouldn’t be insurance.”
The Guardian bank later moved to Antigua, where it was renamed. Stanford is charged with wire fraud and mail fraud, crimes that carry maximum sentences of 20 years in prison, as well as obstruction of an SEC investigation. U.S. District Judge David Hittner has said the trial may last about six weeks.
Stanford, 61, told the jury yesterday he isn’t guilty. Today, wearing a double-breasted navy suit and a light blue shirt, he occasionally pursed his lips and shook his head as he watched his ex-employees testify against him.
The bank’s offshore location made it a tax haven for depositors and removed it from U.S. regulatory oversight and the backing of the Federal Deposit Insurance Corp., Chambliess testified. Its money-market accounts and certificates of deposit offered higher rates of return than those of banks required to comply with U.S. reserve regulations and tax laws, she said.
Fired in 2002
The financial adviser said she was fired in 2002, after working for Stanford for almost 15 years, when she lost her three largest clients and her CD sales dropped. By that time, she said, she had already started circulating her resume because Stanford had told her to “do whatever you need to do” to land a client.
That advice left her “flabbergasted,” she testified.
Chambliess told the court she learned that Stanford and some of his businesses borrowed money from the bank from a disclosure in Stanford’s 1996 annual report. She said she was surprised by the loans, as Stanford had promised investors and employees that the bank didn’t make commercial loans and invested solely in high-grade liquid assets.
The document said the financier personally borrowed $13.5 million while two affiliated companies borrowed an additional $11 million. When she asked about the loans, Chambliess said Stanford replied that he’d guaranteed the loans with his own liquid assets “and there was no risk” it wouldn’t be repaid.
Annual Report
The ex-employee said a disclosure in the company’s 1998 annual report indicated Stanford repaid the personal loan in full, along with $480,000 interest.
She said there were no subsequent disclosures of lending to Stanford or any of his companies and that financial advisers weren’t told Stanford continued to invest depositor funds in outside ventures ranging from regional airlines to newspapers.
Employees believed “the bank’s money stayed at the bank” in the conservative, highly liquid portfolio advertised to investors, Chambliess testified.
Under questioning by defense lawyer Ali Fazel, Chambliess said the Caribbean bank was subject to different international accounting standards than what U.S. companies are required to follow.
Under the international rules, Fazel said, the bank didn’t need to disclose its loans to Stanford and his companies.
Key Theme
Fazel revisited a key defense theme with Chambliess, that none of Stanford’s investors lost money until U.S. regulators seized his operations and destroyed their value.
“Was there anybody who did not get paid their money when the CDs were due?” Fazel asked Chambliess.
“Not while I was there,” she replied.
Leonel Mejia, who Stanford hired to head a captive advertising and marketing business called Idea Advertising in 1988, testified he was asked by James Davis, chief financial officer of the securities brokerage Stanford Group Co., to alter the coverage dates of an expired copy of a British Insurance Fund document.
Mejia said he declined to do so because he believed he was tampering with a legal document. Davis asked Mejia if he’d make the changes with permission from the owner of the British insurer. When he agreed, Davis and Stanford showed him papers indicating Stanford owned the insurance company, Mejia said.
CD Rates
Mejia, an El Salvador native, also testified that Stanford purposely set his bank CD rates two to four percentage points higher than U.S. rates to attract investors willing to forgo FDIC insurance on their deposits to get a better return.
“He said that people were willing to risk their money for 2 percent, they’re greedy,” Mejia said. “It was not very respectful to his clients, in my opinion.”
Mejia also testified that Stanford and Davis changed numbers in the bank’s 1988 annual report using a handheld calculator. The bank’s auditor in Antigua signed off on the revised numbers by fax 15 minutes later.
“It took me more time to do my checkbook,” Mejia said of the auditor’s rapid approval. “I thought that was quick.”
Questioned by Fazel, Mejia said he didn’t know if Stanford and Davis were consulting with the auditor and accountants in another room when they changed the annual report numbers.
“You’re speculating and guessing about everything, aren’t you,” Fazel asked Mejia. While disagreeing with that assertion, Mejia conceded that his knowledge of Stanford’s financial empire was limited.
The case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).
Assistant U.S. Attorney William Stellmach made that claim today while questioning the adviser, Michelle Chambliess, on the first day of testimony at the federal courthouse in Houston.
Chambliess said she was one of Stanford’s first hires in 1987, at Guardian International Investment Services, a U.S.- based sibling of Stanford’s Montserrat-based Guardian International Bank Ltd. Guardian was the precursor to Stanford International Bank Ltd., the Antiguan entity at the heart of Stanford’s alleged $7 billion fraud.
Stanford told her he’d obtained insurance for the bank from a carrier called British Insurance Fund Ltd., which appeared to be an independent U.K.-based company.
“Did he ever tell you it was a shell company he had set up?” Stellmach asked.
“No,” Chambliess replied.
‘Any Difference’
“Would that have made any difference to you?” he asked.
“Absolutely,” she said. “Then there wouldn’t be insurance.”
The Guardian bank later moved to Antigua, where it was renamed. Stanford is charged with wire fraud and mail fraud, crimes that carry maximum sentences of 20 years in prison, as well as obstruction of an SEC investigation. U.S. District Judge David Hittner has said the trial may last about six weeks.
Stanford, 61, told the jury yesterday he isn’t guilty. Today, wearing a double-breasted navy suit and a light blue shirt, he occasionally pursed his lips and shook his head as he watched his ex-employees testify against him.
The bank’s offshore location made it a tax haven for depositors and removed it from U.S. regulatory oversight and the backing of the Federal Deposit Insurance Corp., Chambliess testified. Its money-market accounts and certificates of deposit offered higher rates of return than those of banks required to comply with U.S. reserve regulations and tax laws, she said.
Fired in 2002
The financial adviser said she was fired in 2002, after working for Stanford for almost 15 years, when she lost her three largest clients and her CD sales dropped. By that time, she said, she had already started circulating her resume because Stanford had told her to “do whatever you need to do” to land a client.
That advice left her “flabbergasted,” she testified.
Chambliess told the court she learned that Stanford and some of his businesses borrowed money from the bank from a disclosure in Stanford’s 1996 annual report. She said she was surprised by the loans, as Stanford had promised investors and employees that the bank didn’t make commercial loans and invested solely in high-grade liquid assets.
The document said the financier personally borrowed $13.5 million while two affiliated companies borrowed an additional $11 million. When she asked about the loans, Chambliess said Stanford replied that he’d guaranteed the loans with his own liquid assets “and there was no risk” it wouldn’t be repaid.
Annual Report
The ex-employee said a disclosure in the company’s 1998 annual report indicated Stanford repaid the personal loan in full, along with $480,000 interest.
She said there were no subsequent disclosures of lending to Stanford or any of his companies and that financial advisers weren’t told Stanford continued to invest depositor funds in outside ventures ranging from regional airlines to newspapers.
Employees believed “the bank’s money stayed at the bank” in the conservative, highly liquid portfolio advertised to investors, Chambliess testified.
Under questioning by defense lawyer Ali Fazel, Chambliess said the Caribbean bank was subject to different international accounting standards than what U.S. companies are required to follow.
Under the international rules, Fazel said, the bank didn’t need to disclose its loans to Stanford and his companies.
Key Theme
Fazel revisited a key defense theme with Chambliess, that none of Stanford’s investors lost money until U.S. regulators seized his operations and destroyed their value.
“Was there anybody who did not get paid their money when the CDs were due?” Fazel asked Chambliess.
“Not while I was there,” she replied.
Leonel Mejia, who Stanford hired to head a captive advertising and marketing business called Idea Advertising in 1988, testified he was asked by James Davis, chief financial officer of the securities brokerage Stanford Group Co., to alter the coverage dates of an expired copy of a British Insurance Fund document.
Mejia said he declined to do so because he believed he was tampering with a legal document. Davis asked Mejia if he’d make the changes with permission from the owner of the British insurer. When he agreed, Davis and Stanford showed him papers indicating Stanford owned the insurance company, Mejia said.
CD Rates
Mejia, an El Salvador native, also testified that Stanford purposely set his bank CD rates two to four percentage points higher than U.S. rates to attract investors willing to forgo FDIC insurance on their deposits to get a better return.
“He said that people were willing to risk their money for 2 percent, they’re greedy,” Mejia said. “It was not very respectful to his clients, in my opinion.”
Mejia also testified that Stanford and Davis changed numbers in the bank’s 1988 annual report using a handheld calculator. The bank’s auditor in Antigua signed off on the revised numbers by fax 15 minutes later.
“It took me more time to do my checkbook,” Mejia said of the auditor’s rapid approval. “I thought that was quick.”
Questioned by Fazel, Mejia said he didn’t know if Stanford and Davis were consulting with the auditor and accountants in another room when they changed the annual report numbers.
“You’re speculating and guessing about everything, aren’t you,” Fazel asked Mejia. While disagreeing with that assertion, Mejia conceded that his knowledge of Stanford’s financial empire was limited.
The case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston).
Saturday, 21 January 2012
In the Madoff mould?
The fraud trial begins on Monday of Allen Stanford, the billionaire who bankrolled English cricket.
By Stephen Foley (The Independent)
When the Texan financier Allen Stanford swept into English cricket in 2008, landing his helicopter at Lord's and wheeling a chest containing $20m in new banknotes in front of the cameras, traditionalists decried the debasement of the sport by the lure of filthy lucre. What they didn't know then, and what we are about to find out now, is whether Mr Stanford's lucre was indeed filthy.
This weekend, Mr Stanford's lawyers are furiously and reluctantly preparing for the trial that will decide if that $20m, and hundreds of millions or billions more, was the proceeds of a spectacular fraud.
In 14 criminal charges, he is accused of using his business on the Caribbean island of Antigua to perpetrate a $7bn pyramid scheme, an alleged fraud second in size only to that of Bernard Madoff. He was aided, prosecutors say, by a gang of associates who conjured fake investment returns from their imaginations, falsified documents and funnelled cash from Swiss bank accounts to fund his sports sponsorships and his extravagant lifestyle. In the trial's most eye-popping allegation, he is said to have sealed the co-operation of Antigua's chief bank regulator through a bizarre "blood brothers" ritual.
For 20 years, his indictment alleges, Mr Stanford and his co-conspirators solicited deposits from more than 20,000 people across the US and Central and South America and, "contrary to their representations to investors, they misappropriated a significant percentage of the proceeds ... to finance his personal, failing business ventures and for his own use and enjoyment, including personal living expenses, several yachts and private jet airplanes and numerous residences around the world".
"Yes," Mr Stanford had answered, smirking, in one television interview before his arrest, "it is fun being a billionaire – but it's hard work". Just how hard is dealt with in by court documents filed in Houston, which set out the lengths to which Mr Stanford is said to have gone to conceal his alleged fraud – as told to prosecutors by his right-hand man and one-time university roommate, Jim Davis.
"When the chief financial officer flips and agrees to testify for the prosecution, this is extremely bad" for a defendant, says Andrew Stoltmann, a securities attorney who has represented investors in cases against a string of banks and insurers. "Similar situations happened in the Enron trial and the Worldcom trial. Jurors tend to find their testimony to be very persuasive." Whether this will be the case here remains to be seen.
Mr Stanford built a network of testosterone-fuelled salesmen who touted his investment products, Mr Davis claims, in testimony that he will repeat in court during the six-week trial. This sales force hawked fabricated investment data that purported to show a miracle-grow investment strategy at work, while the company's founder creamed off several billion dollars as bogus loans. The $7.2bn Stanford International Bank (SIB) claimed to have built on behalf of its clients was in reality as little as $500m. The alleged co-conspirators at the top of the firm will be tried in the summer, separately, and it remains an open question whether Leroy King will be among them. Mr King is the main reason US regulators' investigations into SIB ran into the sand. He was chief executive of the Antiguan Regulatory Commission, a man the prosecution claims was bought and paid for by Mr Stanford. But Mr King has been fighting extradition from Antigua, saying local banking secrecy laws meant he could not assist US investigations. As part of his plea bargain, Mr Davis claims that Messrs Stanford and King took a "blood oath", sealed by cutting themselves and mingling their blood.
Mr Stanford entered a not guilty plea last week, and has argued before that if there was any illegal activity at his firm, it must have been the work of Mr Davis or his other underlings. His lawyers are also preparing to argue that the firm was solvent, properly investing its monies, and returning cash to anyone who asked – until the federal authorities swooped and destroyed the business.
The charges against Mr Stanford in 2009 caused a sensation. Panicked investors thronged his operations in Antigua, Caracas and Panama City, among other business centres, demanding their cash back. Those who had been lured by the too-good-to-be-true returns of his Antiguan certificates of deposit are still fighting to get back pennies on the dollar.
Mr Stanford's personal decline has been perhaps even more striking than his business losses. Barely three years ago, he was the brash Texan, famed for fathering six children with several women, pictured bouncing the wives and girlfriends of the England cricket team on his knee, and caring not a damn about the outrage he was causing. His $100m Twenty20 sponsorship had made him a giant in the sport.
But as civil and then criminal charges mounted, he appears to have lost his bearings. He was interviewed drunk and weeping on television, protesting his innocence. His fiancée, Andrea Stoelker, told The Independent the couple were "living on the charity of my family". In custody in Texas, he was beaten by fellow inmates so brutally that he sustained brain damage and, claim his lawyers, became addicted to painkillers.
The trial was delayed by a year, but Houston Judge David Hittner ruled this month that Mr Stanford was finally fit to face a jury. His lawyers were still begging to differ last week but they now say their client may even take the stand in his own defence next month.
What will be revealed if he does? Thousands of out-of-pocket investors want to know if they were duped and, if so, whether it was by a Walter Mitty character or a cold and calculating fraudster in the Madoff mould. The trial begins on Monday.
Dramatis personae: Key figures in the trial
The accused, Allen Stanford
The 61-year-old Texan turned his sleepy family finance firm into an offshore powerhouse that dominated Antigua and provided him with the life of a playboy. The England and Wales Cricket Board fawned as he promised to lavish $100m on Twenty20 cricket.
The betrayer, Jim Davis
Mr Stanford's university roommate and his right-hand man as he built his empire. Faced with the prospect of years in prison, Mr Davis, has turned evidence for the prosecution, alleging that the pair plotted to fabricate profits and lure investors.
The judge, David Hittner
Hittner has already declared he will brook no nonsense. He has banned lawyers from talking about the case outside the court, and had no truck last week with the idea Mr Stanford was unfit to face a jury.
The 'conspirator' Laura Pendergest-Holt
The first person to receive a criminal indictment in the case, she was in the front line with the federal authorities came to investigate the alleged pyramid scheme in 2009. She is charged with obstructing their inquiries, as well as helping Mr Stanford dupe his sales staff into believing they were marketing world-beating investment products.
The bank regulator, Leroy King
The prosecution alleges Mr Stanford showered the Antiguan official with bribes, including impossible-to-get tickets to the US Super Bowl and tens of thousands of dollars in cash from Swiss bank accounts, and even swore a blood oath to win his assistance in shielding Stanford International Bank from prying eyes. He says local laws mean he cannot assist the SEC.
By Stephen Foley (The Independent)
When the Texan financier Allen Stanford swept into English cricket in 2008, landing his helicopter at Lord's and wheeling a chest containing $20m in new banknotes in front of the cameras, traditionalists decried the debasement of the sport by the lure of filthy lucre. What they didn't know then, and what we are about to find out now, is whether Mr Stanford's lucre was indeed filthy.
This weekend, Mr Stanford's lawyers are furiously and reluctantly preparing for the trial that will decide if that $20m, and hundreds of millions or billions more, was the proceeds of a spectacular fraud.
In 14 criminal charges, he is accused of using his business on the Caribbean island of Antigua to perpetrate a $7bn pyramid scheme, an alleged fraud second in size only to that of Bernard Madoff. He was aided, prosecutors say, by a gang of associates who conjured fake investment returns from their imaginations, falsified documents and funnelled cash from Swiss bank accounts to fund his sports sponsorships and his extravagant lifestyle. In the trial's most eye-popping allegation, he is said to have sealed the co-operation of Antigua's chief bank regulator through a bizarre "blood brothers" ritual.
For 20 years, his indictment alleges, Mr Stanford and his co-conspirators solicited deposits from more than 20,000 people across the US and Central and South America and, "contrary to their representations to investors, they misappropriated a significant percentage of the proceeds ... to finance his personal, failing business ventures and for his own use and enjoyment, including personal living expenses, several yachts and private jet airplanes and numerous residences around the world".
"Yes," Mr Stanford had answered, smirking, in one television interview before his arrest, "it is fun being a billionaire – but it's hard work". Just how hard is dealt with in by court documents filed in Houston, which set out the lengths to which Mr Stanford is said to have gone to conceal his alleged fraud – as told to prosecutors by his right-hand man and one-time university roommate, Jim Davis.
"When the chief financial officer flips and agrees to testify for the prosecution, this is extremely bad" for a defendant, says Andrew Stoltmann, a securities attorney who has represented investors in cases against a string of banks and insurers. "Similar situations happened in the Enron trial and the Worldcom trial. Jurors tend to find their testimony to be very persuasive." Whether this will be the case here remains to be seen.
Mr Stanford built a network of testosterone-fuelled salesmen who touted his investment products, Mr Davis claims, in testimony that he will repeat in court during the six-week trial. This sales force hawked fabricated investment data that purported to show a miracle-grow investment strategy at work, while the company's founder creamed off several billion dollars as bogus loans. The $7.2bn Stanford International Bank (SIB) claimed to have built on behalf of its clients was in reality as little as $500m. The alleged co-conspirators at the top of the firm will be tried in the summer, separately, and it remains an open question whether Leroy King will be among them. Mr King is the main reason US regulators' investigations into SIB ran into the sand. He was chief executive of the Antiguan Regulatory Commission, a man the prosecution claims was bought and paid for by Mr Stanford. But Mr King has been fighting extradition from Antigua, saying local banking secrecy laws meant he could not assist US investigations. As part of his plea bargain, Mr Davis claims that Messrs Stanford and King took a "blood oath", sealed by cutting themselves and mingling their blood.
Mr Stanford entered a not guilty plea last week, and has argued before that if there was any illegal activity at his firm, it must have been the work of Mr Davis or his other underlings. His lawyers are also preparing to argue that the firm was solvent, properly investing its monies, and returning cash to anyone who asked – until the federal authorities swooped and destroyed the business.
The charges against Mr Stanford in 2009 caused a sensation. Panicked investors thronged his operations in Antigua, Caracas and Panama City, among other business centres, demanding their cash back. Those who had been lured by the too-good-to-be-true returns of his Antiguan certificates of deposit are still fighting to get back pennies on the dollar.
Mr Stanford's personal decline has been perhaps even more striking than his business losses. Barely three years ago, he was the brash Texan, famed for fathering six children with several women, pictured bouncing the wives and girlfriends of the England cricket team on his knee, and caring not a damn about the outrage he was causing. His $100m Twenty20 sponsorship had made him a giant in the sport.
But as civil and then criminal charges mounted, he appears to have lost his bearings. He was interviewed drunk and weeping on television, protesting his innocence. His fiancée, Andrea Stoelker, told The Independent the couple were "living on the charity of my family". In custody in Texas, he was beaten by fellow inmates so brutally that he sustained brain damage and, claim his lawyers, became addicted to painkillers.
The trial was delayed by a year, but Houston Judge David Hittner ruled this month that Mr Stanford was finally fit to face a jury. His lawyers were still begging to differ last week but they now say their client may even take the stand in his own defence next month.
What will be revealed if he does? Thousands of out-of-pocket investors want to know if they were duped and, if so, whether it was by a Walter Mitty character or a cold and calculating fraudster in the Madoff mould. The trial begins on Monday.
Dramatis personae: Key figures in the trial
The accused, Allen Stanford
The 61-year-old Texan turned his sleepy family finance firm into an offshore powerhouse that dominated Antigua and provided him with the life of a playboy. The England and Wales Cricket Board fawned as he promised to lavish $100m on Twenty20 cricket.
The betrayer, Jim Davis
Mr Stanford's university roommate and his right-hand man as he built his empire. Faced with the prospect of years in prison, Mr Davis, has turned evidence for the prosecution, alleging that the pair plotted to fabricate profits and lure investors.
The judge, David Hittner
Hittner has already declared he will brook no nonsense. He has banned lawyers from talking about the case outside the court, and had no truck last week with the idea Mr Stanford was unfit to face a jury.
The 'conspirator' Laura Pendergest-Holt
The first person to receive a criminal indictment in the case, she was in the front line with the federal authorities came to investigate the alleged pyramid scheme in 2009. She is charged with obstructing their inquiries, as well as helping Mr Stanford dupe his sales staff into believing they were marketing world-beating investment products.
The bank regulator, Leroy King
The prosecution alleges Mr Stanford showered the Antiguan official with bribes, including impossible-to-get tickets to the US Super Bowl and tens of thousands of dollars in cash from Swiss bank accounts, and even swore a blood oath to win his assistance in shielding Stanford International Bank from prying eyes. He says local laws mean he cannot assist the SEC.
Thursday, 19 January 2012
Trial Set for Financier Accused in Decades-Long Ponzi Scheme
Aaron M. Sprecher/Bloomberg News
HOUSTON — A federal judge ruled on Wednesday that R. Allen Stanford, the Texas financier accused of defrauding thousands of investors in a $7 billion Ponzi scheme, will go on trial next week, nearly three years after his arrest.
Three years after his arrest, R. Allen Stanford will face a jury.
At the hearing, Mr. Stanford’s lawyers said he would testify at the trial, giving him an opportunity to describe how he was beaten so seriously by a fellow inmate while in custody in Texas that his memory and ability to prepare for trial was impaired.
United States District Judge David Hittner in recent weeks ruled against motions by Mr. Stanford’s lawyers that their client was not mentally competent to stand trial and that the trial should be postponed because they had not had enough time to prepare a defense.
“My finding still remains that he is competent and ready to go,” Judge Hittner said Wednesday.
Defense lawyers for Mr. Stanford argued again this week that they needed a delay in the trial. They said that they needed more time to study possible testimony from expert witnesses on accounting procedures and that one of their contract workers involved in document preparation needed cancer surgery and would be unavailable to work for at least several weeks.
Mr. Stanford, 61, pleaded not guilty to a revised 14-count indictment charging him with defrauding nearly 30,000 investors from 113 countries in a Ponzi scheme involving bogus high-interest certificates of deposit at the Stanford International Bank, which is based on the Caribbean island of Antigua. At the hearing Mr. Stanford, who wore a green prison suit, appeared relaxed while talking with his lawyers. He closed his eyes at times while listening to the lawyers review the procedures for the trial, to start Monday.
Mr. Stanford and three other senior executives of the Stanford Financial Group are accused of lying about the growth of bank assets in investor reports, diverting more than $1.6 billion into personal loans to Mr. Stanford and engaging in wire and mail fraud and conspiracy to obstruct a Securities and Exchange Commission investigation.
According to prosecutors, Mr. Stanford skimmed money from investor funds to live lavishly, with mansions and yachts, essentially converting Antigua into a private playground.
What began as a financial scandal second only to the Bernard L. Madoff pyramid scheme that unfolded as financial markets collapsed in 2008 has devolved into a messy, slow-moving soap opera. Mr. Stanford has been represented since his arrest in 2009 by about a dozen lawyers, many of whom have either quit or were fired for various reasons. Even his current legal team has tried to resign.
Once estimated to have had a personal fortune of more than $2 billion, Mr. Stanford is now considered an indigent defendant deserving of a taxpayer-financed defense since all his assets are frozen by court order.
Mr. Stanford’s latest team of four court-appointed lawyers filed a motion last week to leave the case, explaining that they did not have sufficient resources or time to organize a proper defense. They also said their efforts had been held back when contractors preparing documents for the defense quit at the end of last year because they had not been paid for several months.
The lawyers had argued that they should be given three more months to prepare. Judge Hittner repeatedly rejected the bid, arguing that the defense team had had more than a year to prepare. Meanwhile, the contractors have returned to work after an appellate court ordered them to do so and granted them some back pay.
During a break at the hearing, Ali R. Fazel, a defense lawyer, said he was disappointed with the judge’s decision that the trial would begin on Monday.
At the hearing, defense lawyers gave some clues about their strategy. They said investors had received payments from their Stanford bank certificates of deposit on schedule until the S.E.C. sued the Stanford Financial Group. Mr. Stanford has long argued that the federal government was responsible for a run on his firm’s assets. Robert A. Scardino Jr., another defense lawyer, said, “We fully intend for Mr. Stanford to take the stand.”
Mr. Stanford was declared incompetent to stand trial last January because he had become addicted to anti-anxiety medication prescribed to him while in detention in a federal facility outside of Houston. Psychiatrists said the drug, prescribed after he had a fight with a fellow inmate over use of a telephone, probably contributed to fits of delirium.
Psychiatrists who testified for the prosecution and defense last year suggested that Mr. Stanford had become mentally incapacitated because of depression, possible brain injury suffered in the fight and addiction to medication prescribed after the beating.
Over the last year, Mr. Stanford has undergone evaluation and drug rehabilitation. He was declared competent in December to stand trial, though his lawyers say he has not had enough time to review thousands of documents to participate in his defense.
Mr. Stanford says he cannot recall events that happened before the fight. But prosecutors and doctors at the North Carolina facility say Mr. Stanford has been faking memory loss. Gregg Costa, the lead federal prosecutor, has said that Mr. Stanford is trying to “game the system.”
As the trial proceeds, the leading witness for the prosecution will be James M. Davis, the former chief financial officer of the Stanford Financial Group, who has pleaded guilty to fraud and conspiracy charges. In a plea agreement, Mr. Davis said Mr. Stanford ordered him to report false revenue and false investment portfolio balances to banking regulators as far back as 1988.
Mr. Davis and the two other former Stanford executives who have been charged in orchestrating the Ponzi scheme face separate proceedings. The prosecution and other lawyers involved in the case said the trial should last at least three weeks.
His lawyers continued to contend on Wednesday that he is not competent to stand trial.
“You’re still pushing that?” Judge Hittner responded incredulously when he heard from the defense lawyers that Mr. Stanford was unable to participate fully in his defense.
HOUSTON — A federal judge ruled on Wednesday that R. Allen Stanford, the Texas financier accused of defrauding thousands of investors in a $7 billion Ponzi scheme, will go on trial next week, nearly three years after his arrest.
Three years after his arrest, R. Allen Stanford will face a jury.
At the hearing, Mr. Stanford’s lawyers said he would testify at the trial, giving him an opportunity to describe how he was beaten so seriously by a fellow inmate while in custody in Texas that his memory and ability to prepare for trial was impaired.
United States District Judge David Hittner in recent weeks ruled against motions by Mr. Stanford’s lawyers that their client was not mentally competent to stand trial and that the trial should be postponed because they had not had enough time to prepare a defense.
“My finding still remains that he is competent and ready to go,” Judge Hittner said Wednesday.
Defense lawyers for Mr. Stanford argued again this week that they needed a delay in the trial. They said that they needed more time to study possible testimony from expert witnesses on accounting procedures and that one of their contract workers involved in document preparation needed cancer surgery and would be unavailable to work for at least several weeks.
Mr. Stanford, 61, pleaded not guilty to a revised 14-count indictment charging him with defrauding nearly 30,000 investors from 113 countries in a Ponzi scheme involving bogus high-interest certificates of deposit at the Stanford International Bank, which is based on the Caribbean island of Antigua. At the hearing Mr. Stanford, who wore a green prison suit, appeared relaxed while talking with his lawyers. He closed his eyes at times while listening to the lawyers review the procedures for the trial, to start Monday.
Mr. Stanford and three other senior executives of the Stanford Financial Group are accused of lying about the growth of bank assets in investor reports, diverting more than $1.6 billion into personal loans to Mr. Stanford and engaging in wire and mail fraud and conspiracy to obstruct a Securities and Exchange Commission investigation.
According to prosecutors, Mr. Stanford skimmed money from investor funds to live lavishly, with mansions and yachts, essentially converting Antigua into a private playground.
What began as a financial scandal second only to the Bernard L. Madoff pyramid scheme that unfolded as financial markets collapsed in 2008 has devolved into a messy, slow-moving soap opera. Mr. Stanford has been represented since his arrest in 2009 by about a dozen lawyers, many of whom have either quit or were fired for various reasons. Even his current legal team has tried to resign.
Once estimated to have had a personal fortune of more than $2 billion, Mr. Stanford is now considered an indigent defendant deserving of a taxpayer-financed defense since all his assets are frozen by court order.
Mr. Stanford’s latest team of four court-appointed lawyers filed a motion last week to leave the case, explaining that they did not have sufficient resources or time to organize a proper defense. They also said their efforts had been held back when contractors preparing documents for the defense quit at the end of last year because they had not been paid for several months.
The lawyers had argued that they should be given three more months to prepare. Judge Hittner repeatedly rejected the bid, arguing that the defense team had had more than a year to prepare. Meanwhile, the contractors have returned to work after an appellate court ordered them to do so and granted them some back pay.
During a break at the hearing, Ali R. Fazel, a defense lawyer, said he was disappointed with the judge’s decision that the trial would begin on Monday.
At the hearing, defense lawyers gave some clues about their strategy. They said investors had received payments from their Stanford bank certificates of deposit on schedule until the S.E.C. sued the Stanford Financial Group. Mr. Stanford has long argued that the federal government was responsible for a run on his firm’s assets. Robert A. Scardino Jr., another defense lawyer, said, “We fully intend for Mr. Stanford to take the stand.”
Mr. Stanford was declared incompetent to stand trial last January because he had become addicted to anti-anxiety medication prescribed to him while in detention in a federal facility outside of Houston. Psychiatrists said the drug, prescribed after he had a fight with a fellow inmate over use of a telephone, probably contributed to fits of delirium.
Psychiatrists who testified for the prosecution and defense last year suggested that Mr. Stanford had become mentally incapacitated because of depression, possible brain injury suffered in the fight and addiction to medication prescribed after the beating.
Over the last year, Mr. Stanford has undergone evaluation and drug rehabilitation. He was declared competent in December to stand trial, though his lawyers say he has not had enough time to review thousands of documents to participate in his defense.
Mr. Stanford says he cannot recall events that happened before the fight. But prosecutors and doctors at the North Carolina facility say Mr. Stanford has been faking memory loss. Gregg Costa, the lead federal prosecutor, has said that Mr. Stanford is trying to “game the system.”
As the trial proceeds, the leading witness for the prosecution will be James M. Davis, the former chief financial officer of the Stanford Financial Group, who has pleaded guilty to fraud and conspiracy charges. In a plea agreement, Mr. Davis said Mr. Stanford ordered him to report false revenue and false investment portfolio balances to banking regulators as far back as 1988.
Mr. Davis and the two other former Stanford executives who have been charged in orchestrating the Ponzi scheme face separate proceedings. The prosecution and other lawyers involved in the case said the trial should last at least three weeks.
His lawyers continued to contend on Wednesday that he is not competent to stand trial.
“You’re still pushing that?” Judge Hittner responded incredulously when he heard from the defense lawyers that Mr. Stanford was unable to participate fully in his defense.
Monday, 16 January 2012
Stanford attorneys file another motion to delay trial
Stanford's attorneys are still pushing for delay, the judge should impose some sort of fine on them for wasting his and the courts time. The excuse this time is that a "non-attorney member of the defense team will not be available on that date"!! Can you believe it? They have had this date from Hitner for over 1 year and they have the nerve to say they will not be available!! How stupid and incompetent are these guys???
HOUSTON, United States, Monday January 16, 2012
The court-appointed attorneys for accused Ponzi schemer Allen Stanford have filed a new motion to delay the January 23 start of trial after being ordered to remain on the job.
They have asked for a continuance on the basis that a non-attorney member of the defense team will not be available on that date.
U.S. District Judge David Hittner said that request could be argued this week at a pre-trial hearing.
The judge previously denied a request by Stanford’s attorneys for the trial date to be delayed by three months.
Last Friday, the judge ordered Stanford’s four attorneys, among them Ali Fazel and Robert Scardino, to continue preparing for the trial after they submitted a withdrawal request two weeks ahead of jury selection. The attorneys said budget restrictions were hampering their effectiveness.
The judge, in a two-page order said, “The defense team’s primary reason for seeking such relief is based upon its self-proclamation that Stanford’s right to effective assistance of counsel will be impaired.
“The court notes that the defense team maintains this position despite the fact that two of its lawyers - Scardino and Fazel - have been appointed to this case since November 2010, and the other two lawyers - Parras and McGuire - have been appointed to this case since March 2011,” Judge Hittner added.
He also denied motions by the defense to throw out the case on constitutional grounds.
The 61-year-old Stanford was indicted in June 2009 on charges of defrauding investors through his Antigua-based Stanford International Bank Ltd. The former Texas financier has denied all wrongdoing.
HOUSTON, United States, Monday January 16, 2012
The court-appointed attorneys for accused Ponzi schemer Allen Stanford have filed a new motion to delay the January 23 start of trial after being ordered to remain on the job.
They have asked for a continuance on the basis that a non-attorney member of the defense team will not be available on that date.
U.S. District Judge David Hittner said that request could be argued this week at a pre-trial hearing.
The judge previously denied a request by Stanford’s attorneys for the trial date to be delayed by three months.
Last Friday, the judge ordered Stanford’s four attorneys, among them Ali Fazel and Robert Scardino, to continue preparing for the trial after they submitted a withdrawal request two weeks ahead of jury selection. The attorneys said budget restrictions were hampering their effectiveness.
The judge, in a two-page order said, “The defense team’s primary reason for seeking such relief is based upon its self-proclamation that Stanford’s right to effective assistance of counsel will be impaired.
“The court notes that the defense team maintains this position despite the fact that two of its lawyers - Scardino and Fazel - have been appointed to this case since November 2010, and the other two lawyers - Parras and McGuire - have been appointed to this case since March 2011,” Judge Hittner added.
He also denied motions by the defense to throw out the case on constitutional grounds.
The 61-year-old Stanford was indicted in June 2009 on charges of defrauding investors through his Antigua-based Stanford International Bank Ltd. The former Texas financier has denied all wrongdoing.