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.
Showing posts with label incompetent. Show all posts
Showing posts with label incompetent. Show all posts
Tuesday, 22 November 2011
Wednesday, 9 November 2011
Allen Stanford Completes Drug Treatment?
Source: Scott Cohn (CNBC)
Accused Ponzi schemer Allen Stanford has been moved from the Bureau of Prisons medical center in North Carolina where he has been undergoing drug rehabilitation treatment since early this year, CNBC has learned.
That could be a signal that Stanford has completed his treatment, and may be ready to stand trial. Stanford, 61, faces 14 criminal counts in an alleged $7 billion Ponzi scheme. He has been held without bail since his indictment in 2009, but his trial was delayed after he became addicted to prescription drugs while in custody, and was ruled incompetent to stand trial.
His trial is currently scheduled for January, but it is unclear whether he would be ready for a trial by then. Stanford’s court-appointed attorney, Ali Fazel, was not immediately available for comment. Earlier this week, Fazel declined to discuss the timing of a trial, citing a court-imposed gag order in the case.
Accused Ponzi schemer Allen Stanford has been moved from the Bureau of Prisons medical center in North Carolina where he has been undergoing drug rehabilitation treatment since early this year, CNBC has learned.
That could be a signal that Stanford has completed his treatment, and may be ready to stand trial. Stanford, 61, faces 14 criminal counts in an alleged $7 billion Ponzi scheme. He has been held without bail since his indictment in 2009, but his trial was delayed after he became addicted to prescription drugs while in custody, and was ruled incompetent to stand trial.
His trial is currently scheduled for January, but it is unclear whether he would be ready for a trial by then. Stanford’s court-appointed attorney, Ali Fazel, was not immediately available for comment. Earlier this week, Fazel declined to discuss the timing of a trial, citing a court-imposed gag order in the case.
Wednesday, 26 October 2011
Looks like all the class actions are going to be thrown out thanks to SLUSA!!
Proskauer, Chadbourne off the hook in Ponzi scheme class action
Davis Polk & Wardwell and Paul, Weiss, Rifkind, Wharton & Garrison had to make a key strategic decision when they moved to dismiss a securities class action accusing Proskauer and Chadbourne & Parke of abetting R. Allen Stanford's Ponzi scheme. The firms had a veritable arsenal of defenses to deploy: qualified immunity because the law firm defendants were acting as counsel to Stanford; no evidence of fraudulent intent by the law firms; no duty to Stanford's investors. But the first defense both Davis Polk and Paul Weiss chose to assert in motions to dismiss on behalf of Proskauer and Chadbourne was more technical. The Dallas federal court class action, they asserted, had to be dismissed because the Securities Litigation Uniform Standards Act of 1998 pre-empts its claims, which were all grounded in Texas state law.
"Putting aside the absence of any viable federal claims," wrote Proskauer's counsel from Davis Polk, "because plaintiffs have chosen to bring their claims not only on their behalf, but also on behalf of a putative class, their claims are barred by SLUSA, and they cannot 'be maintained' as a class action in this or any other court."
The strategy turned out to be a good one. On Friday U.S. District Judge David Godbey of Dallas federal court dismissed the class action without granting leave to appeal. The case, he said, was precluded by SLUSA. You have to give class counsel from Castillo Snyder and Strasburger & Price credit for trying to get around the U.S. Supreme Court's 2008 ruling in Stoneridge v. Scientific-Atlanta, which pretty much cuts off federal securities law claims against the law firms, auditors, and investment advisers to accused fraudsters. The allegations against Chadbourne and Proskauer all involved the advice that Stanford counsel Thomas Sjoblom (who lateraled from Chadbourne to Proskauer after he began representing the Ponzi schemer) gave to his client. The class didn't offer evidence that either of the law firms communicated directly with Stanford's investors -- the standard they would have had to meet to bring federal securities claims.
So instead, the amended class action complaint against Sjoblom, Chadbourne, Proskauer, and a former Stanford general counsel was based on Texas's state securities laws. The complaint claimed that former Securities and Exchange Commission enforcement lawyer Sjoblom -- and, by extension, the firms at which he practiced -- should have known Stanford was running a Ponzi scheme, but helped keep him afloat nonetheless.
If Stanford had been trading stock, it would have been a no-brainer for Davis Polk and Paul Weiss to cry SLUSA. He wasn't. Stanford sold investors instruments he called CDs from the Antiguan bank he controlled. These CDs functioned as mutual or hedge fund shares. But it wasn't entirely clear that they fell under SLUSA's definition of securities, which is limited to instruments traded on a national exchange. Davis Polk argued that because Stanford investors liquidated stock and bond holdings in order to purchase Stanford CDs -- and because Stanford claimed that the CDs were backed by stocks and bonds -- the Stanford instruments fell under SLUSA's definition of a covered security.
Because Godbey agreed, he never even reached the other defenses Proskauer and Chadbourne -- and, for that matter, other Stanford defendants whose motions to dismiss he granted on SLUSA grounds -- might have argued. Proskauer counsel James Rouhandeh of Davis Polk declined comment, as did Chadbourne counsel Daniel Beller. I left a message with class counsel Edward Snyder but didn't hear back.
Sunday, 17 April 2011
SEC Chief Won't Offer Any False Hopes
Mary Schapiro had this to say after running the Securities and Exchange for more than two years: "I'd like to move beyond the question of whether regulation is necessary."
This is the woman who President Obama hired to clean up rampant financial fraud.
This is the regulator who was to inspire confidence following the worst economic crisis since the Great Depression.
This is the pit bull who was to build shattered trust after the SEC blatantly ignored warnings about Ponzi schemer Bernie Madoff and missed so many other white-collar schemes.
But Schapiro went to Dallas last week to tell a bunch of business editors and writers that she wishes she wouldn't have to argue about whether regulation is even necessary.
"The idea that regulation is per se counterproductive, the idea that it is always a net negative, stands reality on its head," she said at an annual conference of the Society of American Business Editors and Writers, or Sabew.
"We have seen over the years what happens when financial markets are poorly regulated--they are prone to crashes, runs, manipulation and fraud. Investors are left unprotected, market structures become unstable and businesses are poorly served."
"This happens over and over again. And yet, despite these lessons, even basic, common-sense regulations are too often bitterly contested affairs."
This reminded me of the time Officer Friendly came to my kindergarten class to explain why we need traffic lights and crossing guards.
Imagine an Attorney General having to defend the existence of drug laws. Or an Army General having to justify guns?
Schapiro is supposed to be the nation's top cop on white-collar crimes, and this is how far she has come?
"Too often, in our discussion about financial reform, advocates have taken extreme positions--that all regulation is intrinsically bad, or inherently good."
Yes, just turn on the TV. Free market, good. Regulation, bad. But when regulators chime into this very simplistic discussion, they allow their opponents to frame all the arguments.
This is especially disappointing following Shapiro's remarks before Sabew in April 2009 in Denver, Colo., where she took questions targeting her agency's absentee-landlord approach to regulation.
"In the short time I've been chairman, I have begun efforts to revitalize the agency," she said then. "I have let it be known far and wide that things must change."
But what has changed? Executives still pay the SEC millions for the privilege of stealing billions, typically without admitting guilt.
And now Schapiro is crying poverty. The SEC could be self-funded through the fees it raises, yet it must go to Congress each year to plead for an annual appropriation.
Last year, it collected nearly $1.5 billion in fees, but received a $1.1 billion appropriation. Schapiro wants to up that to $1.4 billion to hire 780 more people to boost the agency's enforcement efforts and carry out new Dodd-Frank financial reforms. Without the increase, it'll be the same sad story.
"We can get the rules written," Schapiro said. "What we are not going to be able to do is operationalize them."
Republicans in Congress have had an easy time smacking down Schapiro for the SEC's missteps leading up to the financial crisis. Gut the agency. Then complain about its incompetence. It's the American way.
But Schapiro has given her opponents plenty of new ammunition. One example, she's had to explain David Becker, her agency's former top legal counsel. Becker worked on compensation issues for Madoff victims, even though he inherited a Madoff account from his late mother.
Schapiro also leased a million square feet of office space last July for the expanded agency she envisioned. But she did this without first securing the funds from Congress. Now, she's subleasing the space as fast as she can, and much of her new digs remain vacant.
This gives Republicans another chance to bring up one of their favorite topics: government waste.
The worst of it, though, is that instead of being a hard-bitten regulator, Schapiro has apparently become an apologist for regulations.
"Admittedly, individual regulations can be ill- or well-conceived, effective or ineffective," she said. "They impact market participants in different ways; costs and benefits can be hard to measure; and balancing competing interests is a delicate task. And, naturally, those who fear their profits will suffer may decide to fight even the most meaningful reform."
What does Schapiro hope to achieve in parroting the most cliche" sound bytes of her critics, besides her next inside-the-beltway job?
"Where we see the greatest risk to the investing public, that's where we will put our resources," Schapiro said. "We also need to be transparent about what we are not doing so there's not a false sense of comfort that the SEC isn't everywhere, when clearly we won't be."
This is the woman who President Obama hired to clean up rampant financial fraud.
This is the regulator who was to inspire confidence following the worst economic crisis since the Great Depression.
This is the pit bull who was to build shattered trust after the SEC blatantly ignored warnings about Ponzi schemer Bernie Madoff and missed so many other white-collar schemes.
But Schapiro went to Dallas last week to tell a bunch of business editors and writers that she wishes she wouldn't have to argue about whether regulation is even necessary.
"The idea that regulation is per se counterproductive, the idea that it is always a net negative, stands reality on its head," she said at an annual conference of the Society of American Business Editors and Writers, or Sabew.
"We have seen over the years what happens when financial markets are poorly regulated--they are prone to crashes, runs, manipulation and fraud. Investors are left unprotected, market structures become unstable and businesses are poorly served."
"This happens over and over again. And yet, despite these lessons, even basic, common-sense regulations are too often bitterly contested affairs."
This reminded me of the time Officer Friendly came to my kindergarten class to explain why we need traffic lights and crossing guards.
Imagine an Attorney General having to defend the existence of drug laws. Or an Army General having to justify guns?
Schapiro is supposed to be the nation's top cop on white-collar crimes, and this is how far she has come?
"Too often, in our discussion about financial reform, advocates have taken extreme positions--that all regulation is intrinsically bad, or inherently good."
Yes, just turn on the TV. Free market, good. Regulation, bad. But when regulators chime into this very simplistic discussion, they allow their opponents to frame all the arguments.
This is especially disappointing following Shapiro's remarks before Sabew in April 2009 in Denver, Colo., where she took questions targeting her agency's absentee-landlord approach to regulation.
"In the short time I've been chairman, I have begun efforts to revitalize the agency," she said then. "I have let it be known far and wide that things must change."
But what has changed? Executives still pay the SEC millions for the privilege of stealing billions, typically without admitting guilt.
And now Schapiro is crying poverty. The SEC could be self-funded through the fees it raises, yet it must go to Congress each year to plead for an annual appropriation.
Last year, it collected nearly $1.5 billion in fees, but received a $1.1 billion appropriation. Schapiro wants to up that to $1.4 billion to hire 780 more people to boost the agency's enforcement efforts and carry out new Dodd-Frank financial reforms. Without the increase, it'll be the same sad story.
"We can get the rules written," Schapiro said. "What we are not going to be able to do is operationalize them."
Republicans in Congress have had an easy time smacking down Schapiro for the SEC's missteps leading up to the financial crisis. Gut the agency. Then complain about its incompetence. It's the American way.
But Schapiro has given her opponents plenty of new ammunition. One example, she's had to explain David Becker, her agency's former top legal counsel. Becker worked on compensation issues for Madoff victims, even though he inherited a Madoff account from his late mother.
Schapiro also leased a million square feet of office space last July for the expanded agency she envisioned. But she did this without first securing the funds from Congress. Now, she's subleasing the space as fast as she can, and much of her new digs remain vacant.
This gives Republicans another chance to bring up one of their favorite topics: government waste.
The worst of it, though, is that instead of being a hard-bitten regulator, Schapiro has apparently become an apologist for regulations.
"Admittedly, individual regulations can be ill- or well-conceived, effective or ineffective," she said. "They impact market participants in different ways; costs and benefits can be hard to measure; and balancing competing interests is a delicate task. And, naturally, those who fear their profits will suffer may decide to fight even the most meaningful reform."
What does Schapiro hope to achieve in parroting the most cliche" sound bytes of her critics, besides her next inside-the-beltway job?
"Where we see the greatest risk to the investing public, that's where we will put our resources," Schapiro said. "We also need to be transparent about what we are not doing so there's not a false sense of comfort that the SEC isn't everywhere, when clearly we won't be."
Friday, 18 February 2011
Allen Stanford — Incompetent to Stand Trial, Competent to Sue US Government
Source: Walter Pavlo (forbes)
Allen Stanford was recently transferred (en route) to Butner federal prison after a judge ruled that he was not competent to stand trail. This ruling was made after evidence was put forward that Stanford was deeply depressed, was addicted to anti-depressants and had suffered trauma from a beating by another inmate in prison. Clearly, life is not good for Allen Stanford these days.
Now comes news that Stanford is suing the U.S. government for $7.2 billion accusing federal prosecutors and regulators of depriving him of his constitutional rights. That’s an aggressive action for a guy who was ruled not competent to stand trial. The earlier ruling by the judge indicated that Stanford was not able to help in mounting a defense since but it seems that he is able to mount an OFFENSE. Stanford’s defense is being paid for with taxpayer dollars since being declared indigent by the same judge that deemed him incompetent to stand trial. So Stanford is now suing the same entity (the U.S. government) that is footing the bill for his defense. Confused? I am.
I guess Stanford is not going anywhere quickly but while this delay goes on there are many victims, or investors if Stanford is found innocent, waiting. All of Stanford’s assets have been frozen but the trial would provide a way to distribute those funds. With Madoff’s scheme, an early guilty verdict provided a way for the government to move in, recover and begin distributing stolen assets. With Stanford, we’re still awaiting a plea or a trial to figure out what went on.
There is no clear time frame for when Stanford will be competent to stand trial….but my guess is that this is going to take a while.
Allen Stanford was recently transferred (en route) to Butner federal prison after a judge ruled that he was not competent to stand trail. This ruling was made after evidence was put forward that Stanford was deeply depressed, was addicted to anti-depressants and had suffered trauma from a beating by another inmate in prison. Clearly, life is not good for Allen Stanford these days.
Now comes news that Stanford is suing the U.S. government for $7.2 billion accusing federal prosecutors and regulators of depriving him of his constitutional rights. That’s an aggressive action for a guy who was ruled not competent to stand trial. The earlier ruling by the judge indicated that Stanford was not able to help in mounting a defense since but it seems that he is able to mount an OFFENSE. Stanford’s defense is being paid for with taxpayer dollars since being declared indigent by the same judge that deemed him incompetent to stand trial. So Stanford is now suing the same entity (the U.S. government) that is footing the bill for his defense. Confused? I am.
I guess Stanford is not going anywhere quickly but while this delay goes on there are many victims, or investors if Stanford is found innocent, waiting. All of Stanford’s assets have been frozen but the trial would provide a way to distribute those funds. With Madoff’s scheme, an early guilty verdict provided a way for the government to move in, recover and begin distributing stolen assets. With Stanford, we’re still awaiting a plea or a trial to figure out what went on.
There is no clear time frame for when Stanford will be competent to stand trial….but my guess is that this is going to take a while.
Wednesday, 16 February 2011
Stanford moved from Houston prison
Accused fraud mastermind R. Allen Stanford, ruled incompetent to stand trial because of addiction to drugs he’s received while in federal custody, is being moved from Houston to a different detention facility.
Traci Billingsley, spokeswoman for the Federal Bureau of Prisons in Washington, confirmed that Stanford has left the federal detention center in downtown Houston. She said the bureau does not disclose where inmates are going, and would not say whether Stanford is going to a drug treatment facility.
U.S. District Judge David Hittner ruled after a hearing in January that Stanford is incompetent to stand trial and must undergo detoxification from addictions to medications prescribed for anxiety and depression. A brain injury Stanford suffered in a 2009 altercation with another inmate also may have diminished his capacity to assist in his defense, the judge wrote, citing expert testimony in the hearing.
Stanford and other officers of his Houston-based Stanford Financial Group are accused of defrauding investors of $7 billion in a scheme based largely on certificates of deposit issued by a Stanford-owned bank on the Caribbean island of Antigua.
Stanford has been in federal custody as a potential flight risk since his arrest in June 2009. The other defendants are free on bail.
Traci Billingsley, spokeswoman for the Federal Bureau of Prisons in Washington, confirmed that Stanford has left the federal detention center in downtown Houston. She said the bureau does not disclose where inmates are going, and would not say whether Stanford is going to a drug treatment facility.
U.S. District Judge David Hittner ruled after a hearing in January that Stanford is incompetent to stand trial and must undergo detoxification from addictions to medications prescribed for anxiety and depression. A brain injury Stanford suffered in a 2009 altercation with another inmate also may have diminished his capacity to assist in his defense, the judge wrote, citing expert testimony in the hearing.
Stanford and other officers of his Houston-based Stanford Financial Group are accused of defrauding investors of $7 billion in a scheme based largely on certificates of deposit issued by a Stanford-owned bank on the Caribbean island of Antigua.
Stanford has been in federal custody as a potential flight risk since his arrest in June 2009. The other defendants are free on bail.
Thursday, 27 January 2011
Stanford Ruled Incompetent to Stand Trial
Source: Dealbook nytimes
A federal judge ruled Wednesday that the jailed Texas financier R. Allen Stanford was incompetent to stand trial at this time on charges that he ran a $7 billion Ponzi scheme.
Judge David Hittner in Federal District Court in Houston ordered Mr. Stanford to be treated for drug addiction at a federal prison hospital. The judge denied a defense request to place Mr. Stanford in a private hospital for treatment, saying he is considered a flight risk.
“The court finds Stanford is incompetent to stand trial at this time based on his apparent impaired ability to rationally assist his attorneys in preparing his defense,” Judge Hittner ruled.
But in ruling against the motion to place Mr. Stanford in a private hospital, the judge noted that the Texas financier had previously been denied requests to be released on bail ahead of his trial.
“It is not lost on the court that Stanford’s motion to be released to a local mental facility for treatment may be yet another attempt by Stanford to be released on bond,” Judge Hittner wrote. “The court’s finding that Stanford is incompetent, however, does not alter the court’s finding that Stanford is a flight risk and that no combination of conditions of pretrial release can reasonably assure his appearance at trial.”
Mr. Stanford was arrested in 2009 on charges including securities fraud and money-laundering. He is accused of selling billions of dollars in fraudulent certificates of deposit through the Antigua operations of the Stanford Financial Group.
That same year, while in jail, Mr. Stanford suffered a head injury after being attacked by another inmate. Since then, Mr. Stanford has been taking anti-anxiety drugs and antidepressants. Defense lawyers have argued that Mr. Stanford is mentally unfit to stand trial, although doctors disagree whether his mental state is a result of possible brain damage from the head injury or over-medication from the drugs.
Judge Hittner also ordered that Mr. Stanford’s head injury be evaluated for possible further treatment.
In an interesting twist, the judge suggested that one prison hospital that might be suitable for Mr. Stanford was the Federal Medical Center in Butner, N.C. Among the inmates at the Butner federal prison is the convicted swindler Bernard L. Madoff, who ran a far-larger Ponzi scheme than the one Mr. Stanford is accused of operating.
Ruling on Stanford's Competency
A federal judge ruled Wednesday that the jailed Texas financier R. Allen Stanford was incompetent to stand trial at this time on charges that he ran a $7 billion Ponzi scheme.
Judge David Hittner in Federal District Court in Houston ordered Mr. Stanford to be treated for drug addiction at a federal prison hospital. The judge denied a defense request to place Mr. Stanford in a private hospital for treatment, saying he is considered a flight risk.
“The court finds Stanford is incompetent to stand trial at this time based on his apparent impaired ability to rationally assist his attorneys in preparing his defense,” Judge Hittner ruled.
But in ruling against the motion to place Mr. Stanford in a private hospital, the judge noted that the Texas financier had previously been denied requests to be released on bail ahead of his trial.
“It is not lost on the court that Stanford’s motion to be released to a local mental facility for treatment may be yet another attempt by Stanford to be released on bond,” Judge Hittner wrote. “The court’s finding that Stanford is incompetent, however, does not alter the court’s finding that Stanford is a flight risk and that no combination of conditions of pretrial release can reasonably assure his appearance at trial.”
Mr. Stanford was arrested in 2009 on charges including securities fraud and money-laundering. He is accused of selling billions of dollars in fraudulent certificates of deposit through the Antigua operations of the Stanford Financial Group.
That same year, while in jail, Mr. Stanford suffered a head injury after being attacked by another inmate. Since then, Mr. Stanford has been taking anti-anxiety drugs and antidepressants. Defense lawyers have argued that Mr. Stanford is mentally unfit to stand trial, although doctors disagree whether his mental state is a result of possible brain damage from the head injury or over-medication from the drugs.
Judge Hittner also ordered that Mr. Stanford’s head injury be evaluated for possible further treatment.
In an interesting twist, the judge suggested that one prison hospital that might be suitable for Mr. Stanford was the Federal Medical Center in Butner, N.C. Among the inmates at the Butner federal prison is the convicted swindler Bernard L. Madoff, who ran a far-larger Ponzi scheme than the one Mr. Stanford is accused of operating.
Ruling on Stanford's Competency