Lawsuit by Allen Stanford's victims targets his key helpers

Loren Steffy
Published: Tuesday, November 27, 2012 at 1:00 a.m.

Allen Stanford couldn't have acted alone.

That's the idea behind a lawsuit filed last week by a group of investors he ripped off and the receiver appointed to recover assets for them.

Stanford, of course, was convicted of fraud and is serving 110 years in prison. Two top lieutenants have pleaded guilty, and two others were convicted by a Houston jury last week.

But none possessed the legal, banking and international business expertise to enable Stanford -- a former bankrupt gym owner from Mexia, Texas -- to create a fraud that spanned more than 100 countries and swindled $7.2 billion from about 30,000 investors.

"How could it be that five people alone could do this?" asked Angela Shaw, head of the Stanford Victims Coalition, which represents investors and is a party to the 172-page lawsuit.
Her answer: They had help. They had lawyers.

Stanford's Ponzi scheme, the lawsuit contends, wouldn't have grown so large and enveloped so many without the legal expertise of two law firms, Greenberg Traurig and Hunton & Williams, which collected millions in fees from their Stanford work.

Stanford's longtime outside counsel, Carlos Loumiet, worked for both firms and consistently provided the legal advice Stanford needed to perpetuate his fraud, the lawsuit alleges.

With his lawyers' help, the lawsuit alleges, Stanford hijacked the Caribbean nation of Antigua and used it as a shield for his fraudulent banking and investment businesses, which were run from Houston.

Those people who set that up in Antigua, they were with Stanford from the very beginning," Shaw said. "They precipitated in the whole thing. They set this up, saw it through, and then they all walked away."

Stanford himself acknowledged Loumiet's role, telling the lawyer in a 2006 email that "I wouldn't be where I am today without you," according to the lawsuit.

Loumiet wasn't named as a defendant in the lawsuit, but many of its allegations focus on his actions. When the lawsuit was filed last week, he issued a statement saying, "I have never represented anyone that I knew was engaged in wrongdoing. And, after years of investigations by the federal government and months of trials involving Allen Stanford and his co-defendants, I have not been implicated in any wrongdoing."

The suit seeks $1.8 billion in damages from the firms, which denied the allegations, saying investors are simply trying to "pry open a deep pocket" to repay their losses.

Yet the lawsuit lays out excruciating detail how Loumiet knew Stanford's business was a sham. For example, it notes that Loumiet did the legal work on a deal in which Stanford lent the Antiguan government $30 million in 1994 for a hospital. Another Greenberg partner warned Loumiet of mounting financial problems inside Stanford's bank and expressed concern that Stanford couldn't cover the amount of the loan, according to an email included in the lawsuit.

Unfortunately, this pattern is familiar. Law firms are happy to collect big fees, look the other way while companies commit fraud, then feign ignorance.

For example, Vinson & Elkins and Andrews Kurth wound up paying hefty fines -- $30 million and $18.5 million respectively -- to settle civil claims that they provided the legal grease for Enron Corp.'s fraudulent machinations.

In Southwest Florida, high-profile law firm Holland & Knight agreed in August to pay $25 million to settle a suit accusing it of not reporting illegal activities at Scoop Management hedge funds that Arthur Nadel operated in downtown Sarasota.

For more than 20 years, Stanford dodged almost two dozen investigations in the U.S. and elsewhere. His strategy ran the gamut from finesse to bullying.

Stanford had the charisma that all con men need, but that alone couldn't have created the global veneer of legitimacy that allowed him to fleece thousands of investors and balloon his fraud to historic proportions.

For that, he had help.

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

Lawyers to Attend Judge Godbey's Court on 13th OCT for what is described as "Status Conference"

I don't know what this is about, but Judge Godbey has sent out electronic notifications to hundreds of movants and lawyers to attend his court on 13th OCT. For what is described as "Status Conference". Here is a copy of the court docs. and which cases have been notified:



U.S. District Court
Northern District of Texas
Notice of Electronic Filing


The following transaction was entered on 9/28/2011 at 11:15 AM CDT and filed on 9/27/2011

Case Name: In RE: Stanford Entities Securities Litigation
Case Number: 3:09-md-02099-N

Filer:
Document Number: 21

Docket Text:
ORDER: The Court will hold a status conference for all parties to the Stanford MDL proceeding on 10/13/2011 10:30 AM in US Courthouse, Courtroom 1505, 1100 Commerce St., Dallas, TX 75242-1310 before Judge David C Godbey. (Ordered by Judge David C Godbey on 9/27/2011) (jkm)



Case Name: Securities and Exchange Commission v. Stanford International Bank Ltd et al
Case Number: 3:09-cv-00298-N

Filer:
Document Number: 1449



Case Name: Adams et al v. Stanford Group Company et al
Case Number: 3:09-cv-00334-N

Filer:
Document Number: 28



Case Name: Pre-War Art, Inc. et al v. Stanford Coins & Bullion, Inc. et al
Case Number: 3:09-cv-00559-N

Filer:
Document Number: 87





Case Name: Trustmark National Bank v. HP Financial Services Venezuela, C.C.A. et al
Case Number: 3:09-cv-00633-N

Filer:
Document Number: 18



Case Name: In re Stanford International Bank Ltd. Debtor in a Foreign Proceeding
Case Number: 3:09-cv-00721-N

Filer:
Document Number: 84



Case Name: Janvey v. Alguire et al
Case Number: 3:09-cv-00724-N

Filer:
Document Number: 769



Case Name: Troice et al v. Willis of Colorado, Inc. et al
Case Number: 3:09-cv-01274-N

Filer:
Document Number: 149



Case Name: Troice et al v. PROSKAUER ROSE LLP et al
Case Number: 3:09-cv-01600-N

Filer:
Document Number: 92



Case Name: Gonzalez et al v. Ralph S. Janvey et al
Case Number: 3:09-cv-01603-N

Filer:
Document Number: 45



Case Name: Certain Underwriters at Lloyd's London v. Ralph S Janvey
Case Number: 3:09-cv-01736-N

Filer:
Document Number: 25



Case Name: Allen v. Stanford Group Company et al
Case Number: 3:09-cv-02041-N

Filer:
Document Number: 12



Ranni v. Willis of Colorado Inc et al
Case Number: 3:09-cv-02042-N

Filer:
Document Number: 24



Case Name: Janvey v. Reeves
Case Number: 3:09-cv-02151-N

Filer:
Document Number: 37



Frank et al v. The Commonwealth of Antigua and Barbuda
Case Number: 3:09-cv-02165-N

Filer:
Document Number: 44



Case Name: Kyle v. Stanford International Bank Ltd. et al
Case Number: 3:09-cv-02166-N

Filer:
Document Number: 15



Case Name: Turk et al v. Pershing LLC
Case Number: 3:09-cv-02199-N

Filer:
Document Number: 68



Case Name: Certain Underwriters at Lloyd's London et al v. Stanford et al
Case Number: 3:09-cv-02206-N

Filer:
Document Number: 21



Case Name: In the Matter of the Tax Liabilities of John Does
Case Number: 3:09-cv-02290-N

Filer:
Document Number: 14



Case Name: Rotstain et al v. Trustmark National Bank et al
Case Number: 3:09-cv-02384-N

Filer:
Document Number: 86



Case Name: Queyrouze et al v. Bank of Antigua et al
Case Number: 3:10-cv-00304-N

Filer:
Document Number: 23



Case Name: MacArthur, et al v. Certain Underwriters/Names at Lloyd's of London, et al
Case Number: 3:10-cv-00313-N

Filer:
Document Number: 33



Case Name: Jackson et al v. Cox et al
Case Number: 3:10-cv-00328-N

Filer:
Document Number: 37



Case Name: Janvey v. Venger et al
Case Number: 3:10-cv-00366-N

Filer:
Document Number: 233



Case Name: Janvey v. Rodriguez Posada, et al
Case Number: 3:10-cv-00415-N

Filer:
Document Number: 67



Case Name: Janvey v. Wealth Management Services, Ltd.
Case Number: 3:10-cv-00477-N

Filer:
Document Number: 18



Case Name: Janvey v. Gilbe Corp.
Case Number: 3:10-cv-00478-N

Filer:
Document Number: 69



Case Name: Janvey v. Barnes et al
Case Number: 3:10-cv-00527-N

Filer:
Document Number: 23



Case Name: Janvey v. Buck's Bits Service, Inc.
Case Number: 3:10-cv-00528-N

Filer:
Document Number: 56



Case Name: Janvey v. Johnson
Case Number: 3:10-cv-00617-N

Filer:
Document Number: 46



Case Name: Janvey v. Barr
Case Number: 3:10-cv-00725-N

Filer:
Document Number: 41



Case Name: Rupert et al v. Winter
Case Number: 3:10-cv-00799-N

Filer:
Document Number: 76



Case Name: Janvey v. Interim Executive Management, Inc.
Case Number: 3:10-cv-00829-N

Filer:
Document Number: 15



Case Name: Janvey v. Indigo Trust
Case Number: 3:10-cv-00844-N

Filer:
Document Number: 46



Case Name: Janvey v. Dokken et al
Case Number: 3:10-cv-00931-N

Filer:
Document Number: 76



Case Name: Janvey v. Fernandez et al
Case Number: 3:10-cv-01002-N

Filer:
Document Number: 128



Case Name: Janvey v. Stoelker
Case Number: 3:10-cv-01272-N

Filer:
Document Number: 25



Case Name: Carter et al v. Mills et al
Case Number: 3:10-cv-01328-N

Filer:
Document Number: 13



Case Name: Janvey v. Wieselberg et al
Case Number: 3:10-cv-01394-N

Filer:
Document Number: 34



Case Name: Janvey v. Merge Healthcare, Inc.
Case Number: 3:10-cv-01465-N

Filer:
Document Number: 20



Case Name: Casanova et al v. Willis of Colorado Inc et al
Case Number: 3:10-cv-01862-N

Filer:
Document Number: 12



Case Name: Kneese et al v. Pershing, LLC
Case Number: 3:10-cv-01908-N

Filer:
Document Number: 17



Case Name: Janvey v. Tonarelli
Case Number: 3:10-cv-01955-N

Filer:
Document Number: 11



Case Name: Janvey v. Dillon Gage Inc. of Dallas et al
Case Number: 3:10-cv-01973-N

Filer:
Document Number: 25



Case Name: Janvey vs. Rodriguez-Tolentino et al
Case Number: 3:10-cv-02290-N

Filer:
Document Number: 8



Case Name: Janvey v. Stanford
Case Number: 3:10-cv-02322-N

Filer:
Document Number: 12



Case Name: Janvey v. Bogar et al
Case Number: 3:10-cv-02583-N

Filer:
Document Number: 16



Case Name: Janvey v. Alvarado
Case Number: 3:10-cv-02584-N

Filer:
Document Number: 7



Case Name: Janvey v. Stinson
Case Number: 3:10-cv-02586-N

Filer:
Document Number: 21



Case Name: Janvey et al v. Toms et al
Case Number: 3:11-cv-00018-N

Filer:
Document Number: 15



Godbey. (Ordered by Judge David C Godbey on 9/27/2011) (jkm)
Case Name: Janvey et al v. The University of Miami

Case Number: 3:11-cv-00041-N

Filer:
Document Number: 16



Case Name: Janvey et al v. The Inter-American Economic Council
Case Number: 3:11-cv-00044-N

Filer:
Document Number: 7



Case Name: Janvey et al v. IMG Worldwide, Inc.
Case Number: 3:11-cv-00117-N

Filer:
Document Number: 29



Case Name: Janvey et al v. Miami Heat Limited Partnership et al
Case Number: 3:11-cv-00158-N

Filer:
Document Number: 23



Case Name: Ralph S Janvey, et al. v. PGA Tour Inc
Case Number: 3:11-cv-00226-N

Filer:
Document Number: 17



Case Name: Janvey et al v. Allen
Case Number: 3:11-cv-00289-N

Filer:
Document Number: 6



Case Name: Janvey et al v. Arizaga
Case Number: 3:11-cv-00290-N

Filer:
Document Number: 6



Case Name: Janvey et al v. Vingerhoedt et al
Case Number: 3:11-cv-00291-N

Filer:
Document Number: 6



Case Name: Janvey et al v. Giusti et al
Case Number: 3:11-cv-00292-N

Filer:
Document Number: 10



Case Name: Janvey et al v. The Golf Channel, Inc.
Case Number: 3:11-cv-00294-N

Filer:
Document Number: 13



Case Name: Janvey et al v. ATP Tour Inc
Case Number: 3:11-cv-00295-N

Filer:
Document Number: 13



Case Name: Janvey et al v. Salgar
Case Number: 3:11-cv-00296-N

Filer:
Document Number: 7



Case Name: Janvey et al v. Romero
Case Number: 3:11-cv-00297-N

Filer:
Document Number: 22



Case Name: The Official Stanford Investors Committee v. Cort & Cort et al
Case Number: 3:11-cv-00298-N

Filer:
Document Number: 15



Case Name: Janvey et al v. Castaneda
Case Number: 3:11-cv-00299-N

Filer:
Document Number: 6



Case Name: Janvey et al v. Brown
Case Number: 3:11-cv-00301-N

Filer:
Document Number: 12



Case Name: Janvey et al v. Blackman
Case Number: 3:11-cv-00302-N

Filer:
Document Number: 8



Case Name: The Official Stanford Investors Committee v. American Lebanese Syrian Associated Charities, Inc. et al
Case Number: 3:11-cv-00303-N

Filer:
Document Number: 28



Case Name: Mendez et al v. Pershing, LLC et al
Case Number: 3:11-cv-00314-N

Filer:
Document Number: 11



Case Name: The Official Stanford Investors Committee et al v. Breazeale Sachse & Wilson LLP et al
Case Number: 3:11-cv-00329-N

Filer:
Document Number: 38



Case Name: Certain Underwriters at Lloyd's of London et al v. Tolentino et al
Case Number: 3:11-cv-00360-N

Filer:
Document Number: 11



Case Name: Robert Juan Dartez, LLC et al v. The United States of America
Case Number: 3:11-cv-00602-N

Filer:
Document Number: 23



Case Name: Janvey et al v. Chung Design, LLC.
Case Number: 3:11-cv-00738-N

Filer:
Document Number: 7



Case Name: Janvey v. Insideout Sports & Entertainment
Case Number: 3:11-cv-00760-N

Filer:
Document Number: 7



Case Name: Janvey et al v. Rocketball, Ltd. et al
Case Number: 3:11-cv-00770-N

Filer:
Document Number: 10



Case Name: Trustmark National Bank v. Carribean Sun Airlines, Inc. et al
Case Number: 3:11-cv-00924-N

Filer:
Document Number: 16



Case Name: Official Stanford Investors Committee v. Chamberlain, Hrdlicka, White, Williams & Martin, LLP.
Case Number: 3:11-cv-01025-N

Filer:
Document Number: 9



Case Name: Wilkinson et al v. BDO USA, LLP et al
Case Number: 3:11-cv-01115-N

Filer:
Document Number: 37



Case Name: Janvey v. Libyan Investment Authority et al
Case Number: 3:11-cv-01177-N

Filer:
Document Number: 22



Case Name: Janvey v. Stanford
Case Number: 3:11-cv-01199-N

Filer:
Document Number: 10



Case Name: Janvey v. Rincon
Case Number: 3:11-cv-01659-N

Filer:
Document Number: 5



Case Name: Janvey et al v. Texas A&M University
Case Number: 3:11-cv-01895-N

Filer:
Document Number: 5



Case Name: Rishmague et al v. Winter et al
Case Number: 3:11-cv-02024-N

Filer:
Document Number: 15



Docket Text:

ORDER: The Court will hold a status conference for all parties to the Stanford MDL proceeding on 10/13/2011 10:30 AM in US Courthouse, Courtroom 1505, 1100 Commerce St., Dallas, TX 75242-1310 before Judge David C Godbey. (Ordered by Judge David C Godbey on 9/27/2011) (jkm)

Allen Stanford Receiver to Argue for SocGen Subpoena Feb. 28

Lawyers for R. Allen Stanford’s U.S. court-appointed receiver are scheduled to appear with those for a Societe Generale unit before a federal judge to resolve a dispute over subpoenaed records.

U.S. District Judge David Godbey in Dallas set a hearing for Feb. 28 to address the disagreement between the Lausanne, Switzerland-based unit of the Paris-based bank and the receivership overseeing the indicted financier’s businesses.

Citing Swiss banking secrecy laws, Societe Generale Private Banking (Suisse) SA has objected to receiver Ralph Janvey’s Dec. 13 subpoena demanding that the bank turn over all of its records after Jan. 1, 2000, for accounts held by Stanford personally or by his businesses.

“Production of the requested documents would force SG Suisse and its officers and employees to violate Swiss substantive law,” including laws prohibiting the release of the type of records Janvey seeks, the bank said in a Feb. 7 court filing.

Stanford, 60, is civilly and criminally accused by the U.S. of leading a $7 billion investment-fraud scheme through the sale of certificates of deposit by his Antigua-based Stanford International Bank Ltd. He has denied any wrongdoing.

The U.S. Securities and Exchange Commission filed its enforcement proceeding against the Texas financier two years ago Feb. 18. The receivership is recovering money to repay Stanford’s investors and creditors.

The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09-cv-00298, U.S. District Court, Northern District of Texas (Dallas). The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston).

COVISAL and SVC Amend Specimen Registration Forms

This is an URGENT message for any victims who followed the advice given by COVISAL and SVC to file their own SF-95 claims using the specimen registration forms they provided.

It has come to our attention that COVISAL and SVC have just released amended specimen claim forms correcting errors in their previous release.
This raises serious concerns regarding the wisdom of taking legal advice from people who have no legal background.

Please be aware that if you have tried to complete your own registration and following the guidance provided by COVISAL & SVC, You need to look closely at the amended versions to check for more mistakes.

After waiting for months for these documents (which you were all assured by Covisal and SVC were easy to complete) and now finding out that both originals require amendments - you have to ask yourself if you are willing to take the risk that the amended versions are correct.

For those that are questioning the advice you were originally given and the fact the (long awaited) specimen registration forms are your last chance of registering your interest, perhaps now is the time to ask yourself if it is worth taking the chance of having your form rejected by the SEC?

Remember this is your one and only chance to register your claim against the SEC and you only have 7 days left, for some it is already to late! We would once again advise all victims to make contact with Gaytri Kachroo and make sure the job is done correctly by downloading the contract of engagement and sending it to info@kachroolegal.com.

These mistakes made by people who are not lawyers could cost you all dearly and leave both people who supplied you with incorrect information open to being sued. You need to think carefully about the advice you have received, but more importantly you have to question if the revised information is correct.

---------------------------------------------------------------------------

Este es un mensaje urgente para que ninguna de las víctimas que siguieron el consejo dado por Covisal y SVC para presentar su propia SF-95 reclamaciones en los formularios de registro que muestra siempre.

Ha llegado a nuestra atención que Covisal y SVC acaban de publicar modificado los formularios de reclamación muestra la corrección de errores en su versión anterior.
Esto plantea serias preocupaciones acerca de la conveniencia de pedir la opinión jurídica de las personas que no tienen formación jurídica.

Tenga en cuenta que si usted ha tratado de completar su propio registro y siguiendo las orientaciones dadas por Covisal y SVC, Usted tiene que mirar de cerca las versiones modificadas para comprobar si hay más errores.

Después de esperar durante meses para estos documentos (que se asegura a todos por Covisal y SVC fueron fáciles para completar) y ahora saber que tanto los originales supone la modificación - que tiene que preguntarse si están dispuestos a asumir el riesgo de que las versiones modificadas son correcta.

Para aquellos que están cuestionando el consejo que le dieron origen y el hecho de las formas (esperado) muestra el registro son su última oportunidad de registrar su interés, tal vez ahora es el momento de preguntarse si vale la pena tomar el riesgo de que su forma rechazada por la SEC?

Recuerde que esta es su primera y única oportunidad de registrar su reclamo en contra de la SEC y que sólo han 7 días a la izquierda , para algunos ya es tarde! Queremos una vez más asesorar a todas las víctimas para hacer contacto con Gaytri Kachroo y asegúrese de que el trabajo se hace correctamente, descargue el contrato de compromiso y de enviarlo a info@kachroolegal.com.

Estos errores cometidos por personas que no son abogados podría costar muy caro a todos y dejar las dos personas que le suministró la información incorrecta abierto a ser demandado. Usted necesita pensar cuidadosamente acerca de los consejos que hemos recibido, pero lo más importante que tenemos que preguntarnos si la información revisada es correcta.

Author: Stanford's Nemesis

Law Firms that have Represented Stanford Since Last Year

Stanford asks for new team to defend him

Jailed businessman R. Allen Stanford is changing lawyers again and wants to be tried someplace else.

Criminal defense lawyer Michael Essmyer said Monday that Stanford, 60, founder and chairman of Stanford Financial Group who faces 21 federal criminal charges, has asked for new representation.

Since the Securities and Exchange Commission first froze assets of Stanford and the company in February 2009, Stanford's criminal counselors, at various times, have been lawyers with a Washington firm, a Houston civil lawyer, Houston criminal defense lawyer Dick DeGuerin, a court-appointed public defender and most recently Houston criminal defense lawyers Kent Schaffer and George “Mac” Secrest.

Stanford has pleaded not guilty to charges of conspiracy, fraud and obstruction of justice. Prosecutors allege he ran a $7 billion Ponzi scheme.

Essmyer said Stanford, who is being detained without bail as a flight risk, has asked to be represented by Essmyer and Robert S. Bennett, a Houston-based consumer lawyer who does some criminal work. Essmyer said that if Senior U.S. District Judge David Hittner accepts the change of attorneys, he plans to ask that the trial be moved because the Houston jury pool may be tainted by publicity about the case.

He cited the case of ex-Enron CEO Jeff Skilling, whose appeal before the U.S. Supreme Court includes an argument that he should not have been tried in Houston because Enron's collapse so deeply shook the Houston community.

In the Skilling case arguments before the high court earlier this month, the justices focused largely on the amount of time the Houston trial judge spent on jury selection and why he didn't strike some potentially prejudiced people from the pool of jury prospects.

The court is not likely to decide the Skilling case for several months and could rule solely on the other issue in that case — whether the government properly prosecuted Skilling under a federal law that makes it a crime to deprive a business or government of “honest services.”

Hittner is the only Houston judge who granted a change of venue motion in an Enron case. That was in the case against Lea Fastow, an Enron employee and the wife of the chief financial officer. Hittner moved it to Brownsville for trial but Fastow entered into a plea bargain instead.

Schaffer said he and Secrest are happy to step aside for the lawyers Stanford now requests.

Essmyer said if the court approves the new counsel, they may add to the team in the future.

This possible changing of the legal guard for Stanford coincides with an expected attorney payday from Lloyd's of London. The insurance company has fought paying criminal defense legal fees for Stanford and his codefendants since the day a former Stanford company official pleaded guilty to wrongdoing at the company.

The insurer said that plea triggered an agreement in its contract with the Stanford firms and directors and officers, and that they no longer are covered in criminal cases.

An appellate court recently ruled that Lloyd's must pay now but can still take the question of its obligations to trial in Houston.

Richard Kuniansky, lawyer for Stanford codefendant Mark Kuhrt, said Monday that he will submit a $94,000 bill to Lloyd's, and asked the court that he no longer be considered court-appointed and paid by taxpayers.

The trial for Stanford, Kuhrt and codefendants Laura Holt and Gilbert Lopez is scheduled for January 2011.

Some lawyers said Stanford, the only jailed defendant, may now ask that his case be tried sooner or that he be released. But Essmyer said he has no current plans to ask for an immediate trial. Since Hittner is known to run a fast docket, such a motion likely would mean Stanford's case would be severed from those of his codefendants and he'd be tried quickly.

Allen Stanford appeals bail decision again

Allen Stanford's lawyers on Tuesday asked an appeals court for the second time to review a judge's decision denying the accused swindler bail.

Last month, U.S. District Judge David Hittner in Houston issued an order denying pleas from Stanford's lawyers and family that he be released from jail due to his deteriorating mental and physical health.
Stanford, 59, was first deemed a flight risk and denied bail by Hittner in June last year. The judge's initial decision was appealed and upheld by the United States Court of Appeals for the Fifth Circuit in New Orleans.
Stanford is in a federal detention center in Houston awaiting his January 2011 trial.
The Texas financier surrendered to authorities on June 18 after prosecutors charged him with leading a $7 billion Ponzi scheme centered on certificates of deposit issued by his offshore bank in Antigua.
Stanford's lawyers, Kent Schaffer and George Secrest, filed the latest appeal with the appellate court in New Orleans, court documents showed.

Stanford lawyers and Lloyd's of London butt heads in court

R. Allen Stanford sat in court glumly for three hours Tuesday while a dozen lawyers debated whether insurance should pay for his criminal attorneys and whether those lawyers will have to report to a civil receiver when they find something new in the case.

Lloyd's of London lawyers announced in court that under a Stanford company policy, they've paid out $4.2 million to some criminal defense lawyers for work done before the August guilty plea of the Stanford company's chief financial officer, James Davis.

The Lloyd's lawyers said they won't pay further for the criminal defense of Stanford or those accused with him because Davis said they conspired with him. They said that the insurance contract said Lloyd's could stop payment if it determined money laundering was committed. Though Davis didn't plead guilty to money laundering, Lloyd's contends the terms of the policy were violated.

Dan Cogdell, lawyer for the former Stanford chief investment officer, Laura Holt, disputed that position.

“It's a bad faith denial of coverage,” he said.

Stanford, Holt and others are accused of cheating investors who bought certificates of deposit issued by Stanford International Bank, on the Caribbean island of Antigua, and sold through companies affiliated with Houston-based Stanford Financial Group.

Stanford, a native Texan who founded Stanford Financial Group and is the only one of the defendants in the case who is behind bars while awaiting trial, faces 21 counts of conspiracy, fraud, bribery and obstruction of justice.

Lawyers for Stanford and other defendants asked U.S. District Judge David Hittner to order Lloyd's to pay on its policy, possibly unprecedented in a criminal case.

“We're in uncharted water,” Hittner said, asking lawyers on both sides to submit briefs on the issue.

Hittner observed that the insurance lawyers' position would mean taxpayers have to pay for legal representation of Stanford and his codefendants.

Frozen assets
The payment of the criminal defense lawyers has been an ongoing issue. When the Securities and Exchange Commission filed a civil fraud suit last February in Dallas, it froze all the company assets and the personal assets of Allen Stanford and Holt.

Holt filed a separate lawsuit against Lloyd's in Houston federal court Tuesday, saying it was denying her coverage in bad faith. It's unclear whether Hittner will hear that case.

Also discussed Tuesday, but left undecided, is whether a receiver appointed by the Dallas court in the SEC case should be allowed to force criminal defense lawyers to hand over information they obtain while conducting their defense investigations.

Constitutional rights
Kent Schaffer, Stanford's lawyer, argued that the receiver's demands could violate defendants' constitutional rights and interfere with attorney-client privilege.

On that and the insurance issue, prosecutor Gregg Costa asked the judge to consider moving the case along as quickly as possible, especially since Stanford is imprisoned.

Stanford, who has had two surgeries since he went to jail in late June and has dropped more than 35 pounds, was unshaven and gaunt.

Concern on health
He leaned his head down so much at the beginning of the hearing that Hittner asked his lawyers to check on him and admonished that if Stanford is not well enough to attend court, he should stay in the detention center downtown.

Stanford perked up during a break, engaging in animated conversation with two U.S. marshals.

Janvey Stops Stanford ‘End Run’ to Tap Lloyd’s Coverage in U.K.

R. Allen Stanford’s court-appointed receiver persuaded a U.S. judge to block the accused Ponzi scheme mastermind’s bid to access insurance funds to pay his lawyers at a hearing today in London Chancery court.

Ralph Janvey, who was placed in charge of Stanford’s financial empire, told a Dallas judge the Texas financier is trying “a blatant attempt to end run this court” by asking the U.K. court to order the insurer to pay over Janvey’s objections. U.S. District Judge David Godbey yesterday ordered Stanford to withdraw his petition from the London court.

“It appears that Stanford is purporting to seek relief before another tribunal relating to the policies,” Godbey wrote in an order posted on his court’s Web site. “Such actions by Stanford both violate the terms of this court’s prior orders, as well as threaten to interfere with this court’s jurisdiction over the policies.”

Janvey has been fighting Stanford’s efforts to unlock frozen assets or access his Lloyd’s of London liability insurance to hire lawyers to defend against civil and criminal allegations he swindled investors of more than $7 billion through bogus certificates of deposit at Antigua-based Stanford International Bank Ltd.

‘Very Unfortunate’

“The court’s order is entirely appropriate,” Janvey said yesterday in a statement issued by his spokeswoman, Kristie Blumenschein. “It is very unfortunate that Mr. Stanford and his attorneys continue to engage in conduct which needlessly increases the costs of litigation to the receivership.”

Stanford, 59, who denies any wrongdoing, is in jail in Texas awaiting trial on 21 felony charges that mirror civil fraud claims filed by the U.S. Securities and Exchange Commission. He is recovering from a Sept. 24 fight with another inmate that left him with a concussion, two black eyes and a broken nose, said Kent Schaffer, Stanford’s criminal-defense lawyer.

“He was beaten up,” Schaffer said. “I don’t know what the circumstances are that led to the fight or why they kept him in the hospital until Sunday morning.”

Yesterday, U.S. District Judge David Hittner, who is presiding over Stanford’s criminal case in Houston, granted the defendant’s request for a transfer from a private Texas jail to a federal facility closer to his lawyers in downtown Houston.

Sworn Statements

Janvey filed copies of sworn statements that Stanford’s lawyers submitted last week to the British court, seeking an emergency hearing in London to force the receiver to stop interfering with payment by Lloyd’s of some fees to Stanford’s lawyers under the liability policy. Janvey claims the bulk of the policy coverage should be reserved for his use to defend Stanford’s companies against claims.

British lawyer Simon Peter Kamstra, in a statement dated Sept. 23, told the British court that the SEC and the U.K.’s Serious Fraud Office have no objection to Stanford obtaining legal defense funds through the Lloyd’s policy. The SEC, which has opposed letting Stanford access frozen funds to hire attorneys, hasn’t taken a position on Stanford’s access to insurance proceeds in papers filed with the Dallas judge.

Stanford faces “at least 49 separate United States proceedings,” as well as lawsuits in Switzerland, Israel, Panama, Venezuela, Mexico, Canada, Malaysia and Singapore, Kamstra said in his statement to the British court. Because Stanford hasn’t been represented by lawyers at most of these proceedings, judgments are being entered against him in several cases, Kamstra said.

Stanford was assigned to the federal public defender’s office in Houston two weeks ago by the judge overseeing his criminal case when the financier couldn’t say he had access to any funds for his defense. Kamstra mentioned that to the U.K. court, too.

Frozen Funds

Godbey has rejected Stanford’s requests for at least $10 million in frozen funds unless he can prove the money isn’t tainted by fraud. Godbey hasn’t ruled on requests over who can access Lloyds’ coverage that could be worth $90 million. More than 60 former employees of Stanford Financial Group, including its founder, have asked to draw on the policy.

Stanford’s British lawyers asked the U.K. court to order Janvey to drop his objections to Lloyd’s paying Stanford’s attorneys and to stop interfering with the payments.

Some Lloyd’s of London underwriters joined Janvey’s request to block Stanford’s attempt to obtain insurance coverage through the U.K. court proceeding today, according to documents filed yesterday in federal court in Dallas.

‘Threatening’ Letter

The underwriters said Stanford’s civil lawyers had sent them a Sept. 22 letter “threatening” legal action if they didn’t begin to pay Stanford’s legal bills immediately. Their lawyer, Daniel Lane of Akin, Gump, Strauss, Hauer & Feld LLP asked Godbey to rule on the issue “so the underwriters will not risk entry of competing and inconsistent orders” from the British court.

Hittner signed an unrelated order yesterday regarding Stanford’s legal team. He blocked Schaffer and the federal public defender’s Houston office from representing the financier on any appellate issue that arose before they were appointed as Stanford’s taxpayer-funded defense counsel on Sept. 16.

Schaffer said in a phone interview that the order will keep him from asking a full panel of judges at the U.S. Court of Appeals in New Orleans to review Hittner’s June 30 order denying Stanford bail on the grounds he might flee. A three-judge appellate panel already denied Stanford’s request to have the bail denial overturned, and his request for en-banc review must be filed at the New Orleans court by Oct. 8, Schaffer said.

Robert Luskin and Christina Sarchio, attorneys with Washington-based Patton Boggs LLP who filed an earlier appeal for Stanford on the bail issue, didn’t immediately return calls or e-mails seeking comment on whether they will continue working for the jailed financier.

No guarantee of insurance for Stanford execs

Lloyd's of London said a federal judge should not allocate the proceeds of a directors and officers insurance policy for accused swindler Allen Stanford and other executives because they have no guarantee of coverage, according to a court filing on Friday.

A number of Stanford executives, including Stanford and former Chief Investment Officer Laura Pendergest-Holt, have filed claims against the policy issued by Lloyd's.

Stanford and Pendergest-Holt had their assets frozen in February when the U.S. Securities and Exchange Commission filed civil fraud charges, alleging a "massive" Ponzi scheme.

The asset freeze has left the executives unable to pay their defense lawyers, they have said in numerous court filings.

Lloyd's initially agreed to reimburse some "reasonable and necessary legal expenses," for Pendergest-Holt, but Ralph Janvey, the receiver in the case, argued proceeds are assets of the Stanford estate.

He threatened to hold Lloyd's in contempt of court if they made payments to the Stanford executives, court papers show.

In response, lawyers for Pendergest-Holt filed a motion asking U.S. District Judge David Godbey in Dallas, who is overseeing the civil fraud case, to clarify whether the insurance proceeds should go to the receiver.

If the court determines the policy proceeds were assets of the estate, then the funds should be allocated to pay defense costs in accordance with the insurance policy, Pendergest- Holt's motion, said.

But Janvey has also asked the judge to allocate the majority of the insurance proceeds to the receivership.

"While there is an urgent need for this court to address the issue of whether the policies' proceeds are assets of the receivership estate, the court cannot and should not allocate proceeds or rule on who is entitled to coverage under the policies because underwriters do not concede that claims submitted by Holt or the receiver are covered," lawyers said in a filing.

Claims resulting from "money laundering, and from dishonest, fraudulent, or criminal acts, are excluded from coverage, Lloyd's said in court papers.

Stanford and Pendergest-Holt are charged with fraud, conspiracy and obstruction in a 21-count criminal indictment. Prosecutors say they and others duped investors through the sale of $7 billion in fraudulent certificates of deposit.

Both have denied wrongdoing.

Jeffrey Tillotson, a lawyer for Pendergest-Holt said it was clear his client is covered by the Lloyd's policy and he welcomes the involvement of insurance carrier in the matter.

At a court hearing in Dallas on Thursday, Judge Godbey said consideration of the matter was near the top of his list
The civil fraud cases is filed in federal court in Dallas under 3:09-cv-00298-N Securities and Exchange Commission v. Stanford International Bank Ltd et al.

Appellate court: Stanford criminal case stays put

An appellate court today refused to move R. Allen Stanford's criminal case to a new federal judge as the fallen billionaire requested.

A three-member panel of the 5th U.S. Circuit Court of Appeals denied the request in a one-sentence order.

Houston civil attorney Michael Sydow and Washington criminal defense lawyer Robert Luskin had asked that Senior U.S. District Judge David Hittner be removed from the case and it be moved to U.S. District Judge Vanessa Gilmore, who drew the first case against one of Stanford's codefendants. Stanford and others are accused of bilking investors in a $7 billion fraud.

“We're disappointed in the result but hopeful that Mr. Stanford will ultimately be permitted to be represented by counsel of his choice,” Luskin said Tuesday.

Luskin and Sydow argued Hittner exhibited “unexplained hostility” in refusing Sydow's request to make an appearance and in ordering that Sydow have no further involvement in the criminal case.

Sydow asked the court to consider him Stanford's lawyer for the limited purpose of receiving notices on a motion filed by Luskin's firm, Patton Boggs, which wants assurance it will be paid before it agrees to represent Stanford.

Houston criminal defense lawyer Dick DeGuerin has asked to be released from the case but Hittner has required DeGuerin stay on until another lawyer enters unconditionally on Stanford's behalf.

Today's appellate ruling came just hours after prosecutors Gregg Costa and Paul Pelletier asked the court to deny Stanford's request to move the case. They said the request for appellate intervention was premature and that allowing attorneys into the case conditionally would cause delay.

The prosecutors said Hittner did not display bias against Sydow and that the matter of fees could be resolved in other courts.

Stanford has not been able to pay his lawyers because his personal assets were frozen along with his company's assets in a civil suit filed in Dallas by the Securities and Exchange Commission. Attorneys for several Stanford-related entities and individuals are attempting to be paid through unfrozen assets or an insurance policy.