Stanford defense begins with no hint of whether he'll testify

By Terri Langford
Wednesday, February 15, 2012

HOUSTON - The government rested its case Wednesday afternoon in the trial of accused swindler R. Allen Stanford, and his lawyers began calling witnesses without indicating whether Stanford will testify in his own defense.

The first defense witness, lawyer and former U.S. Customs Agent Patrick O'Brien, said he served with Stanford during the late 1990s on a committee charged with reforming banking laws in the Caribbean nation of Antigua, where Stanford owned the largest bank.

Stanford pushed the effort and wanted to make Antigua the "crown jewel"
among Caribbean nations for providing financial services, O'Brien said.

The effort yielded new laws and a new regulatory body in Antigua, and Stanford was named to its board even though he owned an institution it was charged with overseeing.

Prosecution witness Althea Crick, who was executive director of the new agency, said earlier in Stanford's trial that his position on the board allowed him to impede efforts to regulate his bank.

In her testimony, she compared Stanford to a "rat being put in charge of the cheese."

But O'Brien painted a different picture, saying Crick obstructed reform efforts and resisted sharing agency documents with U.S. authorities.

Wednesday's other defense witness was Lloyd Harrell, a retired FBI agent and private investigator, who said he participated with Stanford in "Operation Clean Slate," the 1998-2000 U.S. effort pushing for offshore banking reforms, and also found Crick obstructive.

Early in the trial, defense lawyers said Stanford would testify, but he doesn't have to, and U.S. District Judge David Hittner reminded jurors that they might learn his intentions only when and if he takes the stand.

Trial experts have said it's risky for defendants to testify because it subjects them to intense cross-examination. In Stanford's case, the decision is even more complicated because his lawyers attempted to delay the trial on grounds he was mentally incompetent to assist in his defense.

His Antiguan bank, Stanford International, is at the centre of what prosecutors allege was a $7 billion investor fraud led by Stanford and others.

Defense lawyer Ali Fazel showed spread sheets labelled as "consolidated"
financial reports during cross-examination of FBI agent Robert Martin, who spent Tuesday describing the flow of money through Stanford-related accounts based on financial reports he said came from Stanford's employees.

"Did you use this document to formulate these numbers?" Fazel asked as he showed Martin a series of statements that Fazel suggested projected the companies' financial standing if they were consolidated.

"I have not looked at this document," Martin replied repeatedly, explaining that he examined reports only of transactions that actually occurred, not projections.

Recalling Martin's testimony that money from the bank went to Stanford-affiliated companies, Fazel asked Martin why he assumed the money wasn't used for business purposes.

Martin said the companies were 100 per cent owned by Stanford and therefore were his "possessions."

On further prosecution questioning, Assistant U.S. Attorney Andrew Warren asked about the defense suggestions that Stanford was consolidating his companies.

"Does consolidation allow you to create billions of dollars in thin air?"
Warren asked.

"No it does not," Martin replied.

Government rests in Stanford trial

The government rested its case Wednesday afternoon in the trial of accused
swindler R. Allen Stanford, and a federal judge was to consider motions from both sides before the 18th day of the trial continues later in the
afternoon.

Prosecutors presented evidence that they contend shows Stanford and others
conducted a $7 billion investor scam through certificates of deposit in an
offshore bank .

Defense lawyers have indicated by their questioning of government witnesses
that they'll attempt to show that Stanford's businesses were legitimate, and collapsed because the government seized their assets in 2009.

Wednesday morning, Stanford's lawyers presented documents to boost their
expected defense that he was consolidating his operations and that they
could have remained solvent.

Defense lawyer Ali Fazel showed spread sheets labelled as "consolidated"
financial reports during cross-examination of FBI agent Robert Martin, who
spent the day Tuesday describing the flow of money through Stanford-related
accounts based on financial reports he said came from Stanford's employees.

"Did you use this document to formulate these numbers?" Fazel asked as he
showed Martin a series of statements.

"I have not looked at this document," Martin replied repeatedly.

Fazel also pressed Martin about how the government developed charts and
graphics presented during Martin's testimony Tuesday, when he described
Stanford's finances to jurors in U.S. District Judge David Hittner's court.

Martin - a bank loan examiner before he began his FBI career - said
investigators used documents provided by staff of Houston-based Stanford
Financial Group and its dozens of subsidiaries, including Stanford
International Bank in the Caribbean nation of Antigua.

A 14-count indictment alleges that Stanford defrauded clients who invested
in certificates of deposit issued by the bank, marketing them as
conservative investments when the funds really went to Stanford's luxurious
lifestyle and speculative business ventures.

Martin testified Tuesday that the bank loaned $2 billion to Stanford, often
through transfers to a Swiss bank account and then to Stanford for personal
use.

Recalling Martin's testimony that money also went from the account to
Stanford-affiliated companies, Fazel asked Martin if it was misleading to
assume the money wasn't used for business purposes.

Martin said the companies were 100 percent owned by Stanford and therefore
were his "possessions."

Fazel concluded his cross-examination of Martin at midday, and Assistant
U.S. Attorney Andrew Warren resumed prosecution questioning by asking about
the defense suggestions that Stanford was consolidating his companies.

Martin - the final witness in the prosecution's presentation of its case -
had testified Tuesday that Stanford International Bank reported reserves of
less than $1 billion at the end of 2008.

"Does consolidation allow you to create billions of dollars in thin air?"
Warren asked.

"No it does not," Martin replied.

Stanford Blew Millions on Bellagio, Women and Yachts, Agent Says

By Laurel Brubaker Calkins

Feb. 15 (Bloomberg) -- R. Allen Stanford blew $1.1 million at the Bellagio hotel and casino in Las Vegas and gave another million in cash to family members, including his wife and girlfriend, an FBI agent told jurors at the financier's criminal fraud trial.

The Texas financier also spent $20 million on yachts, $37 million promoting cricket tournaments, $333 million on a pair of start-up Caribbean airlines, and another $379 million to underwrite his Stanford Group Co. broker-dealer, FBI Special Agent Robert Martin testified yesterday about his review of the company's financial records.

"Did that represent all his spending?" Assistant U.S. Attorney Andrew Warren asked Martin.

"No, not at all," Martin replied.

Prosecutors showed jurors evidence illustrating how they believe Stanford spent more than $2 billion he's accused of skimming from certificates of deposit at Stanford International Bank Ltd. in Antigua. While customers were promised their money was invested in safe, liquid assets, prosecutors claim Stanford borrowed heavily from the CDs to finance an extravagant lifestyle and dozens of risky ventures.

Flight Risk

Stanford, 61, has been jailed as a flight risk since his indictment in June 2009. The former billionaire, who denies wrongdoing, faces as long as 20 years in prison if convicted of the most serious charges against him.

Among Stanford's personal wire transfers to the Bellagio in Las Vegas, Martin testified he found one for $200,000 in January 2009, four weeks before regulators seized Stanford's operation on suspicion it was a $7 billion Ponzi scheme.

Martin said he also reviewed business records indicating the financier loaned $418 million to Stanford Development Co., his real estate development firm, and $350 million to his venture capital unit. An array of other speculative ventures, some of which simply disappeared, Martin said, burned through an additional $486 million Stanford borrowed from CD depositors.

Stanford's defense lawyers have told jurors their client was in the process of consolidating roughly 130 private companies onto his Antiguan bank's balance sheet when U.S. regulators shut him down. If regulators hadn't blocked that consolidation, his lawyers claim, the move would have recapitalized the bank and repaid all of Stanford's investors.

'Practically None'

"Practically none of Mr. Stanford's companies were profitable," Martin testified. While some of Stanford's side ventures made money from "time to time," the agent said, only Bank of Antigua, a tiny commercial bank Stanford ran for islanders, consistently earned a yearly profit.

The side ventures Stanford loaned more than $2 billion to collectively lost at least $711 million by the end of 2008, Martin told jurors. The financier's borrowings contributed to a $7.05 billion "hole" Martin said existed between the $8.59 billion in reported assets and $1.54 billion in actual assets on Stanford International Bank's books at year-end 2008.

Under questioning by Ali Fazel, one of Stanford's attorneys, Martin said he has calculated "practically zero" value for most of the financier's side enterprises because the entities weren't owned by the bank and most were unprofitable.

"Are you saying these companies are worthless because they have no profits?"
Fazel asked. "These companies have no value in and of themselves?"

'Can Have Value'

"They can have value, but that doesn't mean they do have value," Martin replied.

Fazel suggested the government hasn't found all of Stanford's assets, and that's why the bank's balance sheet appears short.

"Wouldn't it be important to know the totality of assets SIBL has before you tell the jury that 92 percent of the assets are missing or don't exist?"
Fazel asked. "Are there assets out there you don't know about?"

"I don't think there are," Martin replied. "I think we've got an accounting of what the bank's assets were at the end of 2008."

Lanny Breuer, head of the Justice Department's criminal division, monitored testimony yesterday at Stanford's trial, which is in its fourth week.
Sitting alone in the rear of the courtroom, Breuer said he has been "following the case" through regular reports. He declined to comment on the trial, citing a gag order by the judge barring lawyers from publicly discussing it.

Defense has tough decision: Should Stanford testify?

Purva Pate, Houston Chronicle Copyright 2012 Houston Chronicle. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
By Purva Patel
Monday, February 6, 2012

As the fraud trial of R. Allen Stanford progresses in Houston federal court, defense attorneys will have to make a critical decision: whether to put their client on the stand.

His lawyers told the jury as the trial began that he plans to testify, but that's not a commitment.

"It's always a calculated risk," said Philip Hilder, a Houston defense lawyer and former federal prosecutor who is not involved in the Stanford case.

Lawyers in the case are prohibited by a gag order from commenting beyond what they say in open court.

On the one hand, Hilder and other trial experts said, defendants who take the stand to declare their innocence usually carry more weight with jury members. On the other hand, jurors who don't find a defendant credible may lean more toward a guilty verdict.

Under the Constitution's Fifth Amendment protection against self-incrimination, criminal defendants don't have to testify - or for that matter present any defense - since the prosecution has the burden of proof beyond a reasonable doubt.

So defense attorneys may wait to see how effectively the government meets that burden before deciding whether to put a defendant on the stand, Hilder said.

Lawyers and other trial participants are forbidden from suggesting during trial that a defendant should testify.

In fact, during testimony in the Stanford case Friday, his lawyers asked for a mistrial after a witness said, in response to a prosecutor's question, that Stanford would have to clear it up.

U.S. District Judge David Hittner denied the mistrial motion, but instructed the jury to disregard the remark.

In Stanford's case, the decision on whether he should testify has an extra
complication: The defense attempted to have his trial delayed on grounds that head injuries he suffered in a jailhouse fight rendered him incompetent to help in his defense.

Putting him on the stand would suggest he is competent, making it more difficult for the defense to appeal a verdict on the argument that Hittner denied trial delays.

Andrew Stoltman, a Chicago-based securities lawyer, speculated that the defense may be bluffing about possibly calling Stanford to the stand to create a sense of confidence about their case.

"It would be legal suicide to call him," Stoltman said.

Having Stanford testify could allow the prosecution a field day during cross-examinations, taking Stanford through incriminating documents and asking for explanations that may be hard to spin, Stoltman said.

And jurors may be skeptical if Stanford says he can't remember details, said Julie Blackman, a social psychologist and jury consultant in New York.

"If he takes the stand and the judge tells the jury he's competent to stand trial, and he's rambling or incoherent, it's unlikely that's going to be good for him," Blackman said, because the jury may suspect he's faking.

"It's a very difficult decision."

“If bad things were happening, he never brought them to my attention,” Mr. Stanford said. “He did his job and I stayed out of his hair.”

Robert A. Scardino, a lawyer for Mr. Stanford, said in his introductory argument last week that Mr. Davis “is going to testify and admit that he is a liar and a crook, and yet these prosecutors are going to ask you to believe him.”

The defense followed that line of attack in the trial’s first week, reminding jurors during cross-examinations that Mr. Davis had often worked alone, that he had been the one in charge of finances and that he had made major executive hires.

Under questioning from the defense attorney Ali Fazel, Michelle Chambliess, a former Stanford marketing executive and government witness, acknowledged that Mr. Davis had been a powerful presence in day-to-day operations. The prosecution countered by putting on the stand Jason Green, a former Stanford Financial Group Louisiana branch manager, and asking if he ever had seen Mr. Stanford overrule Mr. Davis. “Very much so,” he said, smiling.

Mr. Green recalled how Mr. Davis had commissioned an expert to do an efficiency study when others thought she was not right for the job. Mr. Stanford berated Mr. Davis, Mr. Green said, mimicking Mr. Stanford’s jaunty Texas drawl: “He’s my best friend, but I still run the company.”

Gregg Costa, the assistant United States attorney leading the prosecution, said in his opening argument of Mr. Davis that Mr. Stanford had found someone he knew he could control: “Mr. Davis has accepted responsibility. He will give you the ultimate insider’s view.”

The prosecution concedes that Mr. Davis is facing up to 30 years of jail and hoping for leniency, but says that he will take the jury through documents and accounting records that will prove that Mr. Stanford was skimming investor money. That money, he will say, was secretly invested in real estate and other high-risk, illiquid assets, as well as personal loans and a secret Swiss bank account.

It is likely Mr. Davis will portray himself as an emotionally needy man who was easily bullied by Mr. Stanford.

Much of what Mr. Davis is expected to say has been laid out in a 2009 plea agreement in which Mr. Davis admitted to various counts of fraud and conspiracy to obstruct a Security and Exchange Commission investigation.

The fraud began as early as 1988, when Mr. Stanford owned the Guardian International Bank on the Caribbean island of Montserrat, and Mr. Davis served as his controller. Mr. Davis told prosecutors that Mr. Stanford had ordered him to make false entries into the bank’s general ledger to report false revenue and investment portfolio balances. The practice continued after the bank was transferred to Antigua and renamed the Stanford International Bank.

Over the years, as the bank sold high-interest certificates of deposit, Mr. Stanford, Mr. Davis and other executives promoted the investments as safe and secure, as they amassed assets of over $7 billion.

But by 2008, 80 percent of the money went to various risky Stanford investments. Mr. Davis said that for years, at Mr. Stanford’s request, he and others had “created false books and records.” At least $2 billion of personal loans to Mr. Stanford were concealed and disguised, Mr. Davis told prosecutors.

Mr. Stanford has pleaded not guilty to all charges.

Mr. Davis’s plea agreement was nothing if not graphic and detailed. Sometime in 2003, he said, Mr. Stanford and the two top Antiguan bank regulators had taken a “blood oath,” with Mr. Stanford pledging to provide bribes, and the officials promising not to “kill the business.” When Mr. Stanford needed money to pay the bribes, he would instruct Mr. Davis to withdraw funds from a secret numbered Swiss bank account.

When the Antiguan bank was finally running out of money in mid-2008, Mr. Davis said he, Mr. Stanford and other executives artificially inflated the bank’s assets by devising a real estate transaction in which they falsely inflated the value of a $65 million real estate transaction into a $3.2 billion asset.

Mr. Gershowitz, the University of Houston law professor, said Mr. Davis was a compelling witness.

“When you got a guy who says ‘I was in the room and I can tell you exactly what happened,’ it’s a lot easier for a jury to understand and believe than to figure it out from a mountain of paper,” he said. “It’s hard to swallow that Stanford was smart enough to make billions of dollars, but not smart enough to know what the guy down the hall was doing.”

One Stanford Client Lost $20 Million, Ex-Executive Tells Jurors at Trial

By Andrew Harris - Jan 27, 2012
Bloomberg

A former Stanford Group Co. executive told a jury that one client of R. Allen Stanford’s securities brokerage lost at least $20 million before the business was closed by U.S. regulators.

Jason Green, who led Stanford Group’s private-client group, offered the figure while being cross-examined by the defense on the fifth day of Stanford’s investor fraud trial in federal court in Houston.

Stanford’s lawyers have said that customers who bought the certificates of deposit issued by Antigua-based Stanford International Bank Ltd. and sold by the brokerage were able to withdraw every penny of their money until the Securities and Exchange Commission sued in February 2009.

Asked by defense attorney Ali Fazel if anybody had not gotten their money back before then, Green replied, “Yes, one person I know of specifically” was denied $20 million. Green later identified the client as Michael Moreno, who had residences in Lafayette, Louisiana, and in Houston.

Stanford, 61, who was indicted in June 2009, is accused of leading a $7 billion investment fraud cantered on CD sales. He is charged with 14 counts including mail fraud, wire fraud and obstruction of an SEC probe. He denies the charges.

Stanford, who suffered a jailhouse beating after his arrest, began rubbing his head during today’s proceeding. The judge offered to let him lie down and follow the trial from another room.

Joined in 1996
Green told the court yesterday that he joined the Stanford Group brokerage in 1996 and stayed until its end.

Moreno, he said, entrusted Stanford’s business with almost $50 million before withdrawing some of those funds to address a tax obligation. The $20 million withdrawal request was made shortly before Stanford stopped allowing clients to redeem CDs before their maturity date to stanch the outflow of capital as the global financial crisis deepened.

He also spoke of his efforts to persuade Stanford and the company’s chief financial officer, James M. Davis, to reassure customers after New York money manager Bernard Madoff’s December 2008 arrest for running the largest investment fraud in U.S. history.

‘Antiguan Madoff’
Green read an e-mail he sent to Stanford and Davis days before the SEC sued, in which he cited news articles that accused “Sir Allen of being the Antiguan Madoff” and said that he and other managers believed that if immediate steps weren’t taken to provide transparency, “we would not have a business to defend.”

On cross-examination today, Fazel asked Green about risk disclosures provided to prospective clients, offering them the opportunity to ask questions and receive answers about the firm’s “financial condition and affairs.”

Fazel asked if there was anything illegal about that.

“Only if people lie about their financial condition and affairs,” Green replied.

“Did you lie?” the lawyer asked.

“No, but I feel like I was lied to,” Green said. “I have a lot of clients, friends, relatives who haven’t gotten a penny back because there was no money.”

Later, Fazel questioned Green about Stanford Group’s ability to conduct financial research. The former executive told the court about a unit in Washington staffed with people he described as “political insiders,” including a retired brigadier general and a surgeon formerly with the U.S. Food and Drug Administration.

‘Politics Into Profit’
Their mission was to analyse legislation and “turn politics into profit,” Green said.

Asked by Fazel what became of that group after the Stanford firm closed, he replied, “I think they went to MF Global (MFGLQ).”

MF Global Holdings Ltd., parent company of the MF Global Inc. commodities brokerage, filed for bankruptcy protection in October. More than $1.2 billion may be missing from its customers’ accounts, trustee James Giddens has said.

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).

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).

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.

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.

State of Stanford's defense may leave questions

I can see Stanford trying to use this as a reason for a mistrial or an appeal if/when he is found guilty. Let's hope Hitner covers any exit doors during the trial.

By Loren Steffy, HOUSTON CHRONICLE

After three years, fallen billionaire R. Allen Stanford is set to go to trial in 10 days on charges he ran a $7 billion Ponzi scheme. Yet with the trial looming, his legal defense is in a shambles.

On Wednesday, his lawyers asked to withdraw from the case. A week before that, his expert witnesses quit because they hadn't been paid in three months.

Stanford's assets were frozen after his 2009 arrest, leaving him to rely on his company's insurance policy to pay for his defense. Stanford, who was denied bail and has remained in prison for almost three years, squandered most of the money on a revolving door of legal talent, going through 10 lawyers before the insurance company refused to pay for more.

Now, that money - like that of his investors - is gone. U.S. District Judge David Hittner has declared Stanford, who once reveled in a lavish lifestyle of private jets and Caribbean mansions, indigent. His current pair of lawyers is being paid with public funds.

The court has a limited budget from which to pay for indigent defense, and Stanford's share isn't nearly enough to address a case that as convoluted and globe-spanning as his. After balking at bills for the expert witnesses, the appeals court that controls his defense budget granted partial payment and ordered the experts to continue preparing for trial.

Then, according to Wednesday's filing by Stanford's lawyers, Hittner cut off pay for a jury consultant who had been helping the defense team prepare for the trial.

"As a result of the funding issues in this case and in light of the current trial deadlines, the defense will be compelled to try the case without having had the resources necessary to render constitutionally adequate representation, while the government has been entirely unfettered by any financial resource constraints," one of Stanford's attorneys, Ali Fazel, wrote in the filing.

The back-and-forth court decisions and the budget constraints have placed the defense in such an "untenable position" that they "cannot represent the accused competently," Fazel wrote.

Phillip Hilder, a Houston defense attorney who isn't involved in the case, said, "The defense is put in a no-win situation."

Hittner already told Stanford he can't have any more lawyers, so the judge is probably going to order the current legal team to see the case through.

Not like Enron
Stanford has become the anti-Skilling. Accused of complex financial crimes, his shoestring defense has little in common with the Enron executive's gold-plated and relentless legal campaign. Jeff Skilling still fights the charges against him, five years and tens of millions of dollars after his conviction.

"In Enron, you had a cohesive defense, you had clients who were not incarcerated, you had clients who were of a sound mind, and you had financial resources," said Hilder, who represented Enron whistle-blower Sherron Watkins, a government witness in Skilling's trial. "All of that is lacking in the Stanford case. It's just a comedy of missteps."

In filings last week, defense lawyers accused the government of violating Stanford's constitutional rights during his long pretrial incarceration because of injuries sustained in a beating he received from another inmate and an addiction to painkillers that resulted from those injuries that they say has left him mentally unable to aid in his defense.

What's more, Stanford's incarceration - which for much of 2011 was in North Carolina and which included stays in solitary confinement - has made it difficult for him to review defense materials, Fazel argued.

Wanting answers

It's hard to feel sorry for Stanford, whose firm wiped out the savings of many of his 22,000 investors. Justice may be served despite his hobbled defense, but in a case rife with questions about Stanford's political influence and why the government took so long to take action against him, the trial isn't likely to provide many answers.

Allen Stanford’s Lawyers Can’t Quit His Case, Judge Says

By Laurel Brubaker Calkins and Andrew Harris

Jan. 13 (Bloomberg) -- R. Allen Stanford’s attorneys must defend him at a $7 billion investment fraud trial that will begin Jan. 23 in Houston federal court, said a U.S. judge who rejected the lawyers’ bid to quit.

Stanford’s court-appointed attorneys, Ali Fazel, Robert Scardino, John Parras and Ken McGuire, asked to exit his case in a motion filed on Jan. 11, less than two weeks before the start of jury selection. They claimed they hadn’t been given enough time or resources to prepare an adequate defense against what they describe as a complicated financial fraud case.

“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,” Hittner said in a two-page order that also rejected the lawyer’s bid for a three-month delay in starting the trial.

“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,” Hittner said.

Stanford, 61, has been imprisoned as a flight risk since he was indicted in June 2009 on charges of defrauding investors through allegedly bogus certificates of deposit at his Antigua- based Stanford International Bank Ltd. Stanford denies all wrongdoing.

Pretrial Hearing

Hittner said in a separate order late today that Stanford’s lawyers could argue yet another delay request, which they filed under seal this afternoon, at a pretrial hearing next week.

The lawyers seek “a continuance on the basis that a non- attorney member of the defense team will be unavailable to assist at the commencement of trial,” Hittner said in the ruling. He ordered the government and Stanford’s lawyers to continue “full trial preparation” in the meantime.

The former financier was declared indigent and given a taxpayer-financed defense because all of his assets were frozen by court order after the U.S. Securities and Exchange Commission sued him in February 2009.

Fazel and Scardino have complained about time and funding restrictions imposed on the defense team by Hittner and the U.S. Court of Appeals in New Orleans, which approves trial budgets for court-appointed attorneys.

Prison Attack

They said Stanford has had too little time since he was declared mentally competent on Dec. 22 to adequately review the thousands of documents necessary to assist in his defense. Stanford spent almost nine months in a prison rehabilitation program recovering from a head injury suffered during a 2009 prison attack and an addiction to anxiety drugs prescribed following the assault.

Fazel said in court filings that the defense team was also hampered by the yearend resignation of all its document- management and trial-preparation contractors over unpaid bills dating back to September. The contractors returned to work in early January after an appellate court granted them partial back pay and ordered them to continue working.

Lead prosecutor Gregg Costa opposed delaying the trial by more than a few weeks, citing efforts by Stanford’s defense team to get Stanford bail and to fight his competency declaration. Stanford’s attorneys have also filed multiple constitutional challenges in his case, none of which have succeeded.

Certain Issues

“The defense obviously has devoted extraordinary resources to certain issues,” Costa said in a filing earlier today. “It is time for the defense to devote those resources to the trial.”

Laura Sweeney, a Justice Department spokeswoman, declined to comment on the judge’s rulings today.

“We’re preparing for trial,” Fazel said in a telephone interview after Hittner denied him permission to quit. He declined to comment further, citing a gag order banning lawyers from publicly discussing the case.

The criminal case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09cv298, U.S. District Court, Northern District of Texas (Dallas).

--Editors: Mary Romano, Peter Blumberg

Hitner sets June 11 Trial date for LPH and others

R. Allen Stanford’s Houston criminal-defense attorneys want to withdraw from the case

R. Allen Stanford’s Houston criminal-defense attorneys filed a motion last night asking Senior U.S. District Judge David Hittner to allow them to withdraw from the case, which is set for trial on Jan. 23. Stanford’s court-appointed attorneys -- Scardino & Fazel partners Ali Fazel and Robert Scardino, solo John Parras and Ken McGuire of the McGuire Law Firm – no longer want to defend Stanford, the former chairman of Houston’s Stanford Financial Group (SFG).

The lawyers allege in their Jan. 11 motion in United States v. Robert Allen Stanford that their investigation is incomplete -- a situation caused in part by “funding constraints” for experts and litigation support. Also, they allege, because Hittner turned down their request for a 90-day continuance, Stanford “will not receive effective assistance of counsel” because they will not be ready for trial on Jan. 23. “Proceeding to trial under these circumstances would result in representation that falls well below the constitutional standard for effective assistance of counsel,” the lawyers allege in the motion. They ask Hittner to allow them to withdraw or to grant them an additional 90 days to prepare for trial and to grant “prior budgetary requests.”

Lead prosecutor Gregg Costa, an assistant U.S. attorney in the Southern District of Texas, did not immediately return a telephone call seeking comment.

Also on Jan. 11, before Stanford’s defense team filed the motion to withdraw, Hittner issued a scheduling order that sets a June 11 trial date for defendants Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt, who worked with Stanford at SFG. ”Counsel are advised that the foregoing trial date is a preferential setting and should adjust their trial and personal schedules accordingly,” Hittner wrote in that order.

In June 2010, Hittner granted a motion filed by Pendergest-Holt, and joined by Lopez and Kuhrt, to sever their trials from Stanford’s. Stanford and his co-defendants, indicted in June 2009, have pleaded not guilty to the criminal charges against them related to an alleged conspiracy to defraud investors who bought about $7 billion in certificates of deposit sold through Stanford International Bank Ltd.

A June 2011 superseding indictment in Stanford brings a total of 14 counts against him: one count of conspiracy to commit wire fraud and mail fraud; five counts of wire fraud; five counts of mail fraud; one count of conspiracy to obstruct an SEC investigation; one count of obstruction of an SEC investigation; and one count of conspiracy to commit money laundering.

Allen Stanford lawyers want out just before trial

By Jonathan Stempel | Reuters

Just 12 days before jury selection is to begin in a much-delayed case, lawyers for Allen Stanford, accused of running a $7.2 billion Ponzi scheme, have asked to withdraw from the case.

The request by Ali Fazel and Robert Scardino is the latest twist in a case in which Stanford, once believed to be a billionaire but who later claimed to be indigent, has employed roughly 14 different lawyers, and spent several months under medical care after being ruled incompetent to stand trial.

Fazel and Scardino, who were appointed by the court and are being paid with public funds, had previously sought to delay jury selection beyond the scheduled January 23 date.

In a joint filing on Wednesday with the U.S. District Court in Houston, they said rulings by the presiding judge David Hittner, budget matters and non-public issues make it "untenable" for them to stay on the case.

"The time and budgetary constraints imposed on defense counsel have operated to deprive the accused of counsel who are adequately prepared to render the constitutional threshold of effective assistance," they said. "Counsel cannot represent the accused competently."

A spokeswoman for the U.S. Department of Justice declined to comment.

It is unclear whether Hittner will grant the withdrawal request.

On December 28, he called the public interest in a speedy trial "particularly acute," citing charges that Stanford caused billions of dollars of losses and noting that the defendant has been in detention for 2-1/2 years since his June 2009 arrest.

"This case needs to be tried," he wrote.

Prosecutors accused Stanford of deceiving thousands of investors into buying bogus certificates of deposit from his Antiguan bank, Stanford International Bank Ltd.

The defendant faces a 14-count indictment in one of the largest white-collar fraud cases since Bernard Madoff was arrested in December 2008 for his Ponzi scheme, in which older investors are paid with money from newer investors.

Stanford also faces civil fraud charges by the U.S. Securities and Exchange Commission in a separate case.

Former SEC lawyer Spencer Barasch is expected, without admitting wrongdoing, to settle Justice Department civil charges over an apparent conflict of interest when he did some work for Stanford after leaving the Commission, people familiar with the matter have said.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No. 09-00342.

Stanford Says His Constitutional Rights Were Violated

By: Scott Cohn
Senior Correspondent, CNBC

Accused Ponzi mastermind Allen Stanford, who is scheduled to go on trial in two weeks on charges he ran a $7 billion scam, says the case should be dismissed because his constitutional rights were violated.

Stanford's court-appointed attorneys unleashed a barrage of legal filings late Friday night and early Saturday morning in hopes of derailing the trial, which is set to begin January 23.

In one of the filings, lead defense attorney Ali Fazel cites "repeated outrageous government conduct" during the two-and-a-half years Stanford has been held without bail. Stanford has been detained as a flight risk since his indictment in June, 2009.

While in government custody, Stanford was savagely beaten by another inmate, underwent major surgery, and became addicted to prescription drugs. The defense claims Stanford has suffered permanent physical and mental damage.

"The Government's negligence has resulted in the Accused suffering from diminished mental capacity and thereby has interfered with the Accused's ability to effectively exercise his rights," the filing says, including assisting his attorneys, cross-examination of witnesses and testifying on his own behalf.

The filing also says Stanford's "punitive" treatment while in custody violates his right to due process, since Stanford is still presumed innocent.

Another filing claims the government violated Stanford's constitutional protections against unreasonable search and seizure when a court-appointed receiver accessed the records of Stanford's bank in Antigua and turned them over to U.S. prosecutors.

The receiver, Dallas attorney Ralph Janvey, is supposed to be rounding up assets to return to Stanford's investors, but the defense claims that Janvey became an "agent of the government" by working with prosecutors and the SEC. The filing says all the evidence Janvey turned over to the government should be suppressed because it was obtained without a warrant.

It is not clear whether any of Stanford's latest maneuvers has much chance for success. The judge in the case, U.S. District Judge David Hittner, has already denied requests by Stanford's attorneys that the judge declare him incompetent, as well as to delay the case for three months to give them more time to prepare.

For its part, the government has not yet responded to the latest filings by the defense. But Assistant U.S. Attorney Gregg Costa did ask in a motion on Friday that Hittner bar Stanford's attorneys from introducing evidence at the trial about Stanford's jailhouse treatment, which the motion says is "not relevant."

Stanford Defense Experts Paid, Told to Keep Preparing for Trial

By Laurel Brubaker Calkins (Bloomberg)

R. Allen Stanford’s defense experts were ordered to keep preparing for the former financier’s trial over an alleged $7 billion investment fraud by a U.S. appellate court that also agreed to pay their back wages.

All of Stanford’s non-attorney experts quit last week after appellate judges controlling the former billionaire’s taxpayer- funded defense budget said they would limit and withhold the experts’ compensation until after conclusion of his trial, set to begin Jan. 23 in Houston federal court.

“It would be neither feasible nor economical to obtain a replacement to perform the services Marcum was expected by counsel to provide,” Circuit Judge Edith Jones, the chief of the U.S. Court of Appeals in New Orleans, said in a letter yesterday to Marcum LLP, one of the expert contractors that resigned last week from Stanford’s defense team.

The service providers were also “ordered to continue work on the case as previously planned, including the provision of testifying experts, through the end of trial, and, if required by counsel, through the conclusion of the case in the district court,” Jones said in the letter, which was posted to the court’s electronic docket.

Jones issued similar orders and agreements to pay overdue invoices to two other expert-services contractors to keep them working on Stanford’s defense. Accumyn Consulting and the Worley Group had also resigned last week over non-payment of bills dating back to September, according to court filings.

Preparation Time

Ali Fazel, Stanford’s lead criminal-defense attorney, asked U.S. District Judge David Hittner last week to delay Stanford’s trial for three months to allow more preparation time. Fazel argued that Stanford has had too little time since being declared mentally competent to adequately review documents critical to his defense.

Fazel said the defense was hampered by the resignation of all expert-services contractors on Dec. 30, after the appellate court balked at paying their bills. Jones, in her letters yesterday, said billings by Marcum and Accumyn feature “hourly rates significantly in excess of the rates payable under the Criminal Justice Act to even the most experienced attorneys.”

Jones said the court would “consider” future payments for work by Accumyn and Marcum according to a sliding schedule pegged to the beginning and end of Stanford’s criminal trial, as well as any post-trial work the firms provide. Jones didn’t require withholding for work she ordered the Worley Group to provide.

Flight Risk

Stanford, 61, has been in custody as a flight risk since he was indicted in June 2009 on charges of defrauding investors through allegedly bogus certificates of deposit at his Antigua- based Stanford International Bank. He denies any wrongdoing.

Stanford was declared mentally fit for trial on Dec. 22, after completing eight months of rehabilitation at the federal prison hospital in Butner, North Carolina. Hittner found the former financier had sufficiently recovered to understand the proceedings and assist with his defense after suffering head injuries in a September 2009 jailhouse assault and becoming addicted to anxiety drugs prescribed by prison doctors following the attack .

Hittner appointed taxpayer-funded defense attorneys for Stanford in 2010 after he found the former billionaire to be indigent. Stanford, who was ranked the 205th richest person in the U.S. in 2008 by Forbes magazine, is accused by the government of skimming more than $1 billion in investor funds to finance a lavish lifestyle of private jets, yachts and a Caribbean island.

The U.S. Securities and Exchange Commission seized all of Stanford’s personal and corporate assets in February 2009, when it sued him on claims he ran a “massive Ponzi scheme” built on the Antiguan bank CDs. Stanford also lost access to his corporate directors and officers liability insurance last year, after underwriters won the right to refuse coverage on the basis of a guilty plea by Stanford’s former finance chief.

“Stanford, as an indigent defendant, is entitled to a solid, capable, and competent defense, not the deluxe or ‘perfect’ defense that he might have otherwise desired were he still in control of the millions (or even billions) of dollars indicative of his past lifestyle,” Hittner said in a Dec. 28 order.

Allen Stanford Mental Fitness Hearing Scheduled for Dec. 20

By Andrew Harris and Laurel Brubaker Calkins

Nov. 29 (Bloomberg) -- R. Allen Stanford, the Texas financier accused of leading a $7 billion investment fraud, faces a Dec. 20 hearing to determine whether he is mentally fit to stand trial next year.

Stanford, 61, returned to Houston earlier this month after a nearly nine-month stay at a U.S. Bureau of Prisons hospital at Butner, North Carolina. He was treated there for a dependency on anti-anxiety drugs given to him in prison and evaluated for the after-effects of a head injury sustained in a jailhouse assault.

Houston U.S. District Judge David Hittner today scheduled the competency hearing to determine if Stanford can assist in his defense. In a separate order, the judge said Stanford’s criminal trial would start with jury selection on Jan. 23.

The former chairman and chief executive officer of Houston- based Stanford Group Co. is accused of misleading investors about the nature and oversight of certificates of deposit issued by his Antigua-based Stanford International Bank Ltd.

Stanford, who maintains his innocence, has been in custody since June 2009, when he was indicted by a federal grand jury in Houston. The court has twice postponed previously scheduled trial dates.

Aiding Defense

Ali Fazel, one of his defense attorneys, today declined to comment on the hearing and trial dates, citing an earlier order from Hittner barring attorneys from discussing the case publicly.

Justice Department spokeswoman Laura Sweeney didn’t immediately respond to a request for comment on the trial date. She has previously declined to comment because of the gag order.

If he’s found unable to help his attorneys prepare his defense, Stanford could return to Butner for further treatment, said Eric Sussman, a former federal prosecutor now in private practice in Chicago, in an interview earlier this month.

If Hittner finds Stanford can’t sufficiently recover his faculties, the judge would be required to decide whether the financier must be committed to a long-term care facility, said Sussman, now a partner in the Chicago office of New York-based Kaye Scholer LLP.

For Stanford to be permanently institutionalized, “he’d have to be deemed a danger to himself or others,” said Sussman, who isn’t involved in the case. “To the extent the judge finds he can’t be restored to competency, they may have to drop the charges,” he said.

Doctors

Houston attorney Wendell Odom, who convinced a jury that Andrea Yates was insane when she drowned her children, said if the government’s doctors have found Stanford fit for trial, it will be difficult for the defense to prove otherwise. Stanford will have an even tougher time proving he’s so permanently incapacitated that he can never be tried, Odom said.

“Mental competency is an incredibly low standard, not the same as insanity,” said Odom, a former federal prosecutor. “It basically means you are cognizant of what’s going on and you can talk to your attorney.”

The case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston).

Stanford Still Not Competent for Ponzi Trial - Lawyer

Source: Scott Cohn (CNBC)

Despite nine months of court-ordered drug treatment, accused Ponzi schemer Allen Stanford is not yet competent to face charges he ran a $7 billion Ponzi scheme, his attorney told CNBC.

As a result, thousands of Stanford investors remain in limbo, nearly three years after the alleged scheme was exposed.

Stanford, who was released from a prison medical center earlier this month but remains in federal custody, was scheduled to be arraigned today on revised charges filed in May. But defense attorney Ali Fazel said in an e-mail that Stanford cannot be arraigned "until his competency status changes."

As a result, today's arraignment has been postponed.

In January, U.S. District Judge David Hittner ruled Stanford incompetent to stand trial after the 61-year-old financier became addicted to prescription drugs while in federal custody. Doctors testified that Stanford may also have suffered brain damage after being severely beaten by another inmate in 2009. Hittner ordered Stanford to undergo drug treatment at the Bureau of Prisons medical center in Butner, NC. With the treatment apparently completed earlier this month, Stanford was moved back to a federal detention in Houston. Because Hittner ruled he is a flight risk, Stanford is being held without bail pending his trial.

When that trial will take place remains uncertain. It is currently scheduled to begin January 20 according to a source close to the case, but questions about Stanford's competency would appear to make that date increasingly unlikely.

Specifics of Stanford's condition are difficult to come by in a case that is shrouded in an unusual amount of secrecy.

Earlier this month, a civil attorney for Stanford, Stephen Cochell, said in a court filing that his client "continues to suffer from short-term and long-term memory loss." That filing — despite being in a different court and a separate case — drew an angry rebuke from Hittner, who barred Cochell from further contact with his client in the civil case until after the criminal case is complete.

Attorneys in the criminal case are barred from discussing Stanford's condition under a broad gag order imposed by Hittner, who has also sealed much of the court docket since Stanford's medical problems came to light.

As a result, more than 28,000 investors remain in the dark. A court-appointed receiver attempting to recover assets has said much of that effort depends on the outcome of Stanford's criminal trial, since the vast majority of the funds are in foreign accounts that are inaccessible without a resolution in the case.

So far, investors have recovered just pennies on the dollar.

Stanford arraignment set for Nov 28th

Source: Tex Parte Blog
Judge David Hittner: Stephen Cochell, who represents R. Allen Stanford in civil suit, can’t have in-person access to his client until criminal case is completed.

Posted on November 18, 2011

Houston financier R. Allen Stanford is back in Texas and back at the Federal Detention Center in Houston, according to Federal Bureau of Prisons records. But proximity doesn’t do much good for Stephen Cochell, an attorney in Houston who represents Stanford in a civil suit, Securities and Exchange Commission v. Stanford International Bank Ltd, et al., which is pending in the U.S. District Court for the Northern District of Texas.

On Nov. 17, Senior U.S. District Judge David Hittner of the Southern District of Texas, who is presiding over Stanford’s criminal case, signed an order precluding Cochell from “in-person access” to Stanford at the FDC in Houston until Stanford’s criminal case is “completed.” Hittner wrote that it has come to his attention that Cochell issued a public statement concerning Stanford’s “current mental status” that could “directly impact the on-going criminal prosecution and impending jury trial” against Stanford in his court.

Hittner wrote that Cochell, in the statement, said Stanford “continues to suffer from short-term and long-term memory loss” and should remain at the federal medical facility in Butner, N.C., through the end of January 2012. Stanford recently returned to Houston after undergoing treatment in Butner for a dependency on prescription drugs. Cochell, of the Cochell Law Firm, declines comment. Stanford’s criminal-defense attorneys, Robert Scardino and Ali Fazel, partners in Scardino & Fazel in Houston, did not immediately return a telephone message left at their office.

Stanford’s criminal trial was set for January, but Hittner delayed it after finding Stanford was mentally incompetent to stand trial. On May 4, the government filed a superseding indictment against Stanford, and his arraignment is set for Nov. 28 before U.S. Magistrate Judge Mary Milloy of the Southern District of Texas.

Stanford pleaded not guilty to the charges in his original indictment of June 2009. He faces a total of 14 counts: one count of conspiracy to commit wire fraud and mail fraud; five counts of wire fraud; five counts of mail fraud; one count of conspiracy to obstruct an SEC investigation; one count of obstruction of an SEC investigation; and one count of conspiracy to commit money laundering.

Stanford Ponzi Scheme Trial Set for September 12

The long awaited trial of accused Ponzi schemer Allen Stanford has been set for September 12, according to a new scheduling order issued Tuesday by U.S. District Judge David Hittner in Houston.

Stanford's trial had been set for January, but was postponed indefinitely after he became addicted to prescription drugs while in prison, and Hittner ruled he was incompetent to stand trial.

Since February, Stanford has been undergoing drug treatment at a prison hospital in Butner, North Carolina. His court-appointed attorney, Ali Fazel, would not comment on Stanford's condition, citing a gag order in the case.

The setting of a new trial date is the latest in a fast-moving series of events in the case.

Last week, a federal grand jury in Houston returned a new indictment against Stanford, reducing the number of counts he faces to 14 from 21, and removing four co-defendants from the case. They are to be tried separately.

Following the new indictment, Fazel informed the court that his client could not be arraigned on the revised charges since Stanford had been ruled incompetent.

But Hittner set the new schedule anyway, noting that the new indictment has "no basic changes in the relevant counts."

Stanford investors have been critical of delays in the case. With the criminal charges unresolved, most of his assets are in foreign accounts, off limits to U.S. authorities.

New Allen Stanford Indictment Unlikely to End Delays

A federal grand jury in Houston has returned a new, 14-count indictment against alleged fraudster Allen Stanford, who was already accused in 2009 of running a $7 billion Ponzi scheme. But the new charges are unlikely to move the case closer to a trial.

Stanford was initially charged along with three former executives and the former top banking regulator in Antigua, the home of Stanford's offshore bank. But the co-defendants' cases were separated from Stanford's last year. The new indictment charges Stanford alone.

As in the earlier case, he is accused of conspiracy, wire fraud, mail fraud, obstruction of an SEC investigation and conspiracy to commit money laundering.

The new indictment removes two counts of wire fraud and five counts of mail fraud, and Stanford is no longer accused of conspiracy to commit securities fraud. Still, Stanford faces up to 250 years in prison.

A Justice Department spokeswoman declined to comment, citing a court-imposed gag order in the case.

While the new indictment sharpens the focus on Stanford as a lone defendant, it is unclear whether it will do much to advance a case that has been hopelessly stalled for months.



Stanford's original trial, scheduled for January, was postponed indefinitely after he became addicted to prescription drugs while in federal custody and a judge ruled him incompetent. Because of that, he is also unable to answer the new charges against him and will not attend an arraignment scheduled for May 19. Stanford's court-appointed defense attorney, Ali Fazel, says that as a matter of law, Stanford cannot enter a plea.

"He has been found incompetent," Fazel said. "We are on standby."

The fate of Stanford's initial co-defendants—former chief investment officer Laura Pendergest-Holt, former accounting executives Mark Kuhrt and Gilbert Lopez, and former Antiguan banking regulator Leroy King—also remains unclear. Pendergest-Holt, Kuhrt and Lopez have all pleaded not guilty. King, who holds dual citizenship in the U.S. and Antigua, has been fighting extradition to the U.S.

Fazel notes that as a matter of law, the judge in the case could put the co-defendants on trial at any time, but instead has chosen to delay their cases until after Stanford's trial, which has been postponed indefinitely.

"The other defendants are free on bond and have had months to study the charges," Fazel said. Citing the judge's gag order, however, Fazel to speculate on why the co-defendants are being allowed to wait for trial.

"Make of that what you will," he said.

The new indictment comes at a time when investors and others touched by the Stanford scandal have been turning up the heat on the authorities in hopes of moving the case along. The delays have confounded efforts by a court-appointed receiver to recover assets for Stanford's alleged victims, because most of the missing funds are believed to be in overseas accounts. Without a guilty verdict and a forfeiture order, the funds are off limits to U.S. authorities, meaning investors are likely to see just pennies on the dollar.



The receiver, Dallas attorney Ralph Janvey, has instead been focusing his efforts in the U.S. Janvey has filed dozens of so-called "clawback" claims, including against dozens of former Stanford employees and investment advisors. One such claim targets two advisors widely credited with helping authorities make their case against Stanford: Charles Rawl and Mark Tidwell of Houston.

The two sued Stanford in 2007, saying they left the company due to rampant fraud, which the company denied. Rawl and Tidwell say they brought their evidence to the SEC, which sued Stanford in 2009. (Read about other whistleblower cases and how the SEC rewards tipsters here.)

Rawl, who has not spoken publicly about the case in two years, told CNBC exclusively this week that he and Tidwell contacted the SEC seeking help with the suit by the receiver, but were told they are on their own.

"The SEC attorneys informed us that, you know, 'We've got your back guys, you're good with us,'" Rawl said. But apparently that goodwill only went so far. Rawl said they were told, "We like you, you're our guys, but we don't control the receiver. There's nothing we can do to help you.'"

An SEC spokesman did not respond to CNBC's request for a comment.

• Secrets of the Knight: The Allen Stanford Story

Rawl believes the government is intentionally dragging its feet because authorities took so long to move in on Stanford. A 2010 SEC Inspector General's report found the agency was aware of issues at Stanford as far back as 1997. Rawl alleges the delays in Stanford's criminal case are part of what he calls a cover-up.

"The further that people dig, the more embarrassment on the government's part," Rawl said. "I think certain people hope it just fades away."