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.
Showing posts with label defense. Show all posts
Showing posts with label defense. Show all posts
Monday, 20 February 2012
Friday, 17 February 2012
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.
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.
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.
Monday, 16 January 2012
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.
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.
Friday, 13 January 2012
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.
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.
Thursday, 27 January 2011
Allen Stanford incompetent for trial -US judge
Source: Dan Levine (Reuters)
* Stanford currently unable to assist in his defense-judge
* Indicted for alleged $7 billion fraud
* Stanford suffered 2009 head injury while in custody
* Doctors say anti-anxiety meds should stop-ruling (Adds defense comment)
SAN FRANCISCO, Jan 26 (Reuters) - Financier Allen Stanford is incompetent to stand trial at this time over accusations that he led a $7 billion fraud, a U.S. judge in Texas ruled on Wednesday.
Stanford, who had been accustomed to jetting around the globe in private aircraft, was indicted in 2009 on 21 counts including securities fraud and money laundering. U.S. prosecutors accuse him of creating false accounting records, lying to investors and bribing a regulatory official in Antigua.
Stanford has pleaded not guilty and was previously scheduled to begin trial this week. But that was postponed amid uncertainty about his condition.
In a written ruling, U.S. District Judge David Hittner found that Stanford did not have the present mental capacity to assist his lawyers in his defense.
While incarcerated, Stanford sustained a head injury during a 2009 confrontation with another inmate and underwent surgery for repair of facial fractures.
Psychiatrists for both the government and the defense who examined Stanford also recommended that his anti-anxiety medication be withdrawn. One doctor testified that it was unclear whether Stanford is incompetent for trial because of the injury, or due to over-medication.
The government contends that Stanford is legally competent, but nevertheless asked the court to move him to a suitable facility for psychiatric evaluation.
A representative for the U.S. Attorney's office in Houston was not immediately available to comment on Wednesday.
Hittner rejected defense arguments that the judge could commit Stanford to a private medical facility. Instead, Hittner recommended that Stanford be sent to a medical facility within the U.S. Bureau of Prisons for treatment.
Ali Fazel, an attorney for Stanford, said once Stanford is weaned off his medication, additional tests will determine how much damage was caused by the prison injury, and the drugs.
"We just have to take it a step at a time," Fazel said.
The judge did not specify a new trial date, though he admonished attorneys on both sides to diligently prepare despite Stanford's absence.
The case in U.S. District Court, Southern District of Texas is United States v. Robert Allen Stanford, 09-cr-342. (Reporting by Dan Levine; Editing by Gary Hill, Tim Dobbyn and Bernard Orr)
* Stanford currently unable to assist in his defense-judge
* Indicted for alleged $7 billion fraud
* Stanford suffered 2009 head injury while in custody
* Doctors say anti-anxiety meds should stop-ruling (Adds defense comment)
SAN FRANCISCO, Jan 26 (Reuters) - Financier Allen Stanford is incompetent to stand trial at this time over accusations that he led a $7 billion fraud, a U.S. judge in Texas ruled on Wednesday.
Stanford, who had been accustomed to jetting around the globe in private aircraft, was indicted in 2009 on 21 counts including securities fraud and money laundering. U.S. prosecutors accuse him of creating false accounting records, lying to investors and bribing a regulatory official in Antigua.
Stanford has pleaded not guilty and was previously scheduled to begin trial this week. But that was postponed amid uncertainty about his condition.
In a written ruling, U.S. District Judge David Hittner found that Stanford did not have the present mental capacity to assist his lawyers in his defense.
While incarcerated, Stanford sustained a head injury during a 2009 confrontation with another inmate and underwent surgery for repair of facial fractures.
Psychiatrists for both the government and the defense who examined Stanford also recommended that his anti-anxiety medication be withdrawn. One doctor testified that it was unclear whether Stanford is incompetent for trial because of the injury, or due to over-medication.
The government contends that Stanford is legally competent, but nevertheless asked the court to move him to a suitable facility for psychiatric evaluation.
A representative for the U.S. Attorney's office in Houston was not immediately available to comment on Wednesday.
Hittner rejected defense arguments that the judge could commit Stanford to a private medical facility. Instead, Hittner recommended that Stanford be sent to a medical facility within the U.S. Bureau of Prisons for treatment.
Ali Fazel, an attorney for Stanford, said once Stanford is weaned off his medication, additional tests will determine how much damage was caused by the prison injury, and the drugs.
"We just have to take it a step at a time," Fazel said.
The judge did not specify a new trial date, though he admonished attorneys on both sides to diligently prepare despite Stanford's absence.
The case in U.S. District Court, Southern District of Texas is United States v. Robert Allen Stanford, 09-cr-342. (Reporting by Dan Levine; Editing by Gary Hill, Tim Dobbyn and Bernard Orr)
Saturday, 20 March 2010
Insurance Companies Must Fund Former Stanford Executives' Defense Until Court Rules
A three-judge panel of the 5th U.S. Circuit Court of Appeals held March 15 that a court -- not insurance companies -- will determine whether two insurance companies have to pay defense costs for R. Allen Stanford and three other former Stanford Financial Group (SFG) executives who face criminal charges and civil litigation.
The civil litigation filed by the U.S. Securities and Exchange Commission and the federal criminal charges stem from allegations that the former SFG executives conspired to defraud investors who bought about $7 million in certificates of deposit sold through Stanford International Bank Ltd. The criminal case, United States v. Robert Allen Stanford, et al. is pending in U.S. District Judge David Hittner's court in the Southern District of Texas in Houston. The civil case, Securities and Exchange Commission v. Stanford International Bank Ltd., et al., is pending before U.S. District Judge David Godbey of the Northern District of Texas in Dallas. Stanford and the other three executives, Laura Pendergest-Holt, Gilberto Lopez Jr. and Mark Kuhrt, have pleaded not guilty to the criminal charges against them and deny the allegations in the civil suit.
The insurance companies had appealed a Jan. 25 preliminary injunction Hittner issued in Laura Pendergest-Holt, et al. v. Certain Underwriters at Lloyds of London, et al. Hittner ordered Certain Underwriters at Lloyds of London and Arch Specialty Insurance Co. to advance defense costs to the four former SFG executives. The two insurance companies contended that they should not have to pay under the SFG directors-and-officers policy because they determined in November 2009 that the former executives engaged in "money laundering."
According to the 5th Circuit's opinion, written by Senior Judge Patrick Higginbotham, the liability policy limit is $100 million. But, as noted in the opinion, a money-laundering exclusion in the policy bars coverage for loss from any claim "arising directly or indirectly as a result of or in connection with any act or acts (or alleged act or acts) of Money Laundering."
The policy also provides that the insurance companies must pay the costs in the event that money laundering is alleged "until such time that it is determined that the alleged act or acts did in fact occur." As the 5th Circuit reads the policy, "the determination is a judicial act" and that act must occur in a separate coverage proceeding.
The 5th Circuit modified Hittner's injunction, affirming the order "only insofar as it provides for coverage until a court determines otherwise." But to avoid any "awkwardness" for Hittner, who presides over the criminal case against the SFG executives, the 5th Circuit remanded the case to the Southern District so that the chief judge might assign it to another judge. Higginbotham wrote that the 5th Circuit cannot "ignore the awkwardness -- readily recognized by Judge Hittner -- in putting the civil 'cart' before the criminal 'horse,' especially when the judge who decides the question of coverage, with its demand for assessing the strength of the government's criminal case, is set to later preside over the criminal trial."
Lee Shidlofsky, attorney for the executives and a partner in Austin's Visser Shidlofsky, writes in an e-mail, "We are pleased that the 5th Circuit concluded that Underwriters does not have the unilateral right to act as the judge and jury. Under the court's holding, Underwriters are obligated to pay defense costs until a court determines that money laundering has in fact occurred."
Neel Lane and Rex Heinke, attorneys representing the insurance companies and partners in Akin Gump Strauss Hauer & Feld in San Antonio and Los Angeles, respectively, each did not return a telephone call seeking comment before press time on Thursday.
The civil litigation filed by the U.S. Securities and Exchange Commission and the federal criminal charges stem from allegations that the former SFG executives conspired to defraud investors who bought about $7 million in certificates of deposit sold through Stanford International Bank Ltd. The criminal case, United States v. Robert Allen Stanford, et al. is pending in U.S. District Judge David Hittner's court in the Southern District of Texas in Houston. The civil case, Securities and Exchange Commission v. Stanford International Bank Ltd., et al., is pending before U.S. District Judge David Godbey of the Northern District of Texas in Dallas. Stanford and the other three executives, Laura Pendergest-Holt, Gilberto Lopez Jr. and Mark Kuhrt, have pleaded not guilty to the criminal charges against them and deny the allegations in the civil suit.
The insurance companies had appealed a Jan. 25 preliminary injunction Hittner issued in Laura Pendergest-Holt, et al. v. Certain Underwriters at Lloyds of London, et al. Hittner ordered Certain Underwriters at Lloyds of London and Arch Specialty Insurance Co. to advance defense costs to the four former SFG executives. The two insurance companies contended that they should not have to pay under the SFG directors-and-officers policy because they determined in November 2009 that the former executives engaged in "money laundering."
According to the 5th Circuit's opinion, written by Senior Judge Patrick Higginbotham, the liability policy limit is $100 million. But, as noted in the opinion, a money-laundering exclusion in the policy bars coverage for loss from any claim "arising directly or indirectly as a result of or in connection with any act or acts (or alleged act or acts) of Money Laundering."
The policy also provides that the insurance companies must pay the costs in the event that money laundering is alleged "until such time that it is determined that the alleged act or acts did in fact occur." As the 5th Circuit reads the policy, "the determination is a judicial act" and that act must occur in a separate coverage proceeding.
The 5th Circuit modified Hittner's injunction, affirming the order "only insofar as it provides for coverage until a court determines otherwise." But to avoid any "awkwardness" for Hittner, who presides over the criminal case against the SFG executives, the 5th Circuit remanded the case to the Southern District so that the chief judge might assign it to another judge. Higginbotham wrote that the 5th Circuit cannot "ignore the awkwardness -- readily recognized by Judge Hittner -- in putting the civil 'cart' before the criminal 'horse,' especially when the judge who decides the question of coverage, with its demand for assessing the strength of the government's criminal case, is set to later preside over the criminal trial."
Lee Shidlofsky, attorney for the executives and a partner in Austin's Visser Shidlofsky, writes in an e-mail, "We are pleased that the 5th Circuit concluded that Underwriters does not have the unilateral right to act as the judge and jury. Under the court's holding, Underwriters are obligated to pay defense costs until a court determines that money laundering has in fact occurred."
Neel Lane and Rex Heinke, attorneys representing the insurance companies and partners in Akin Gump Strauss Hauer & Feld in San Antonio and Los Angeles, respectively, each did not return a telephone call seeking comment before press time on Thursday.
Saturday, 30 January 2010
Judge Puts 2 Insurers on the Hook for Defense Costs for Stanford, 3 Execs
Senior U.S. District Judge David Hittner of Houston on Tuesday issued a preliminary injunction that orders two insurance companies to advance defense costs to Stanford Financial Group executives facing criminal charges and civil litigation. In a 42-page order, Hittner ruled that Certain Underwriters at Lloyd's of London and Arch Specialty Insurance Cos. are prohibited from withholding "all 'costs, charges and expenses'" already incurred by the defendants and that will be incurred in the future in United States v. Robert Allen Stanford, et al., a criminal case pending in Hittner's court, and in Securities and Exchange Commission v. Stanford International Bank Ltd., et al., a civil case which is pending before U.S. District Judge David Godbey of the Northern District of Texas. Hittner gave the insurance companies 10 days to pay all invoices already submitted by defense attorneys for the criminal case in his court and the SEC civil suit in Godbey's court.
Allen Stanford and three other Stanford Financial Group defendants -- Laura Pendergest-Holt, Gilberto Lopez Jr. and Mark Kuhrt -- filed the coverage suit after the underwriters in November 2009 issued denial letters that retroactively denied them coverage under directors and officers' policies.
In the order, Hittner found the Stanford plaintiffs "met their burden of persuasion with respect to all four prerequisites of a preliminary injunction."
Lee Shidlofsky, a partner in Visser Shidlofsky who represents the Stanford plaintiffs in the coverage suit, Laura Pendergest-Holt, et al, v. Certain Underwriters at Lloyd's of London, et al., says "this is what we wanted." He notes, however, that defense attorneys for the insurers told him they will appeal the order to the 5th U.S. Circuit Court of Appeals.
Neal Lane, a partner in Akin Gump Strauss Hauer & Feld in San Antonio who represents the insurance company defendants, did not immediately return a telephone message seeking comment.
Stanford, who is in custody, and the other three defendants, who are out on bond, have each pleaded not guilty to the criminal charges against them and have denied the allegations in the civil suit. The executives were indicted in June on fraud and obstruction charges in connection with an alleged conspiracy to defraud investors who bought about $7 billion in certificates of deposit sold through the Stanford International Bank Ltd. They pleaded not guilty to the charges in June, and Hittner set the trial for January 2011.
Allen Stanford and three other Stanford Financial Group defendants -- Laura Pendergest-Holt, Gilberto Lopez Jr. and Mark Kuhrt -- filed the coverage suit after the underwriters in November 2009 issued denial letters that retroactively denied them coverage under directors and officers' policies.
In the order, Hittner found the Stanford plaintiffs "met their burden of persuasion with respect to all four prerequisites of a preliminary injunction."
Lee Shidlofsky, a partner in Visser Shidlofsky who represents the Stanford plaintiffs in the coverage suit, Laura Pendergest-Holt, et al, v. Certain Underwriters at Lloyd's of London, et al., says "this is what we wanted." He notes, however, that defense attorneys for the insurers told him they will appeal the order to the 5th U.S. Circuit Court of Appeals.
Neal Lane, a partner in Akin Gump Strauss Hauer & Feld in San Antonio who represents the insurance company defendants, did not immediately return a telephone message seeking comment.
Stanford, who is in custody, and the other three defendants, who are out on bond, have each pleaded not guilty to the criminal charges against them and have denied the allegations in the civil suit. The executives were indicted in June on fraud and obstruction charges in connection with an alleged conspiracy to defraud investors who bought about $7 billion in certificates of deposit sold through the Stanford International Bank Ltd. They pleaded not guilty to the charges in June, and Hittner set the trial for January 2011.