Stanford defence says Stanford was successful without fraud

ST JOHNS, Antigua, Thursday, January 26, 2012 — Attorneys for embattled Texas financier Allen Stanford have mounted a defence that contends their client was a savvy businessman whose financial empire was legitimate and who never failed to pay what was owed to investors.

This is the hand that the court appointed defence lawyers played when Stanford’s court case went to trial this week after several years of delays.

Prosecutor Gregg Costa told jurors in the Houston federal court that Stanford used investors’ money to buy homes and yachts and fund cricket matches, stealing their hard-earned savings so he could live the lavish lifestyle of a billionaire.

The prosecution says Stanford’s business empire was built on smoke and mirrors and he bilked investors out of more than US$7 billion over 20 years as part of a massive Ponzi scheme centred on sales of certificates of deposit from an Antiguan bank he owned.

However, Stanford, denies the claims and says his businesses were legitimate, is charged with 14 counts, including wire and mail fraud. He faces up to 20 years in prison if convicted.

Robert Scardino, one of Stanford’s attorneys, told jurors the financier was a clever and resourceful businessman who for 22 years paid investors every penny that he promised them.

“We’re going to prove to you that (his business empire) was real and it existed,” Scardino said.

Scardino told jurors that Stanford didn’t need to steal depositors’ money and use it as personal loans.

“If he needed money, could go to a bank and borrow up to US$1 billion,” he said.

Scardino suggested to jurors that the chief financial officer for Stanford’s company, James Davis, is the real culprit behind the financial fraud alleged by prosecutors. Davis has pleaded guilty and is expected to testify on behalf of prosecutors during the trial.

Davis “ran the company, he managed the business, he handled the money,” Scardino said. “Stanford was kind of an absentee CEO, the visionary, the guy who had the ideas.”

In court documents filed earlier this month, Stanford’s attorneys argued that he intended to pay CD investors through his other companies if authorities hadn’t seized them and begun selling them off.

Stanford, 61, is expected to testify during the trial, which will likely last at least six weeks.

Once considered one of the United State’s wealthiest people, with an estimated net worth of more than US$2 billion. His business empire was run through the Houston-based Stanford Financial Group, but at its heart was Antigua-based Stanford International Bank. The bank mainly sold certificates of deposit, or CDs, that promised substantially higher rates of return than US banks and promised investors their money was safe.

Prosecutors say Stanford used money from the sale of the CDs, which were sold to clients from more than 100 countries, to pay off those purchased earlier once they matured and to support his other businesses, which included other banks, a brokerage firm that sold the CDs, an airline, cricket grounds and restaurants. They say Stanford used up to US$2 billion of investor funds as personal loans to support his lifestyle, and that he and three former executives at his companies who also face charges covered up their misdeeds by fabricating the bank’s records and bribing Antiguan regulators.

The prosecutor said that included more than US$300 million of depositors’ savings to the Caribbean Star and Caribbean Sun airlines, US$20 million to an entity whose purpose was to pay expenses related to Stanford’s yacht and US$37 million to a company whose purpose was to promote the Stanford 20/20 cricket tournaments, which gave out million-dollar prizes.

A gag order bars lawyers from publicly discussing the case. Click here to receive free news bulletins via email from Caribbean360. (View sample)