Stanford found guilty by Texas jury
US Federal jury convicts Stanford in $7 Billion Ponzi fraud.
HOUSTON, Texas, Wednesday March 7, 2012 – The refusal by the judge presiding over the trial of Allen Stanford to accept a hung jury has resulted in a conviction for the former Antigua-based financier.
United States District Judge David Hittner ordered the federal jury in the case to continue deliberating after jurors on Monday sent the judge a note, one of several since deliberations began February 29, saying they were unable to reach a unanimous verdict on all 14 counts.
Yesterday (March 6), the jury convicted Stanford, on 13 out of the 14 counts of fraud he had been charged with in connection with a worldwide fraud that lasted more than two decades and involved more than US$7 billion in investments. The one charge that he was not found guilty of was a single count of wire fraud.
Stanford, 61, who was once considered one of the wealthiest people in the US with an estimated fortune of US$2 billion, looked down when the verdict was read. His mother and daughters, who were in the federal courtroom in Houston, hugged one another, and one of the daughters started crying.
The jury decision came three years after Stanford was accused of defrauding nearly 30,000 investors in 113 countries in a Ponzi scheme involving fraudulent high-interest certificates of deposit at the Stanford International Bank, which was based on in Antigua. Prosecutors argued that Stanford had lied for over two decades, promoting safe investments for money that he channelled into an unimaginably luxurious lifestyle, a secret Swiss bank account and half-baked business deals that consistently lost money.
It took three years to bring Stanford to trial because he was severely beaten in a 2010 brawl with another federal inmate in a prison outside Houston and then became addicted to prescription anti-stress drugs. He underwent a year of therapy before Judge Hittner ruled that he was fit to stand trial. The defence had said he could not properly defend himself because he had lost much of his memory.
Stanford, who has been jailed since his indictment in 2009, will remain incarcerated until he is sentenced.
He faces up to 20 years for the most serious charges against him, but the once high-flying businessman could spend longer than that behind bars if Hittner orders the sentences to be served consecutively instead of concurrently.
With Stanford's conviction, a shorter, civil trial will be held with the same jury on prosecutors' efforts to seize funds from more than 30 bank accounts held by the financier or his companies around the world, including in Switzerland, the United Kingdom and Canada. The civil trial could take as little as a day. Stanford and his former executives are also fighting a US Securities and Exchange Commission (SEC) lawsuit filed in Dallas.
Prosecutors in the criminal trial portrayed the Stanford business as a Ponzi scheme in which he and five conspirators gave investors false financial statements indicating that the certificates of deposit were invested in conservative assets when $2 billion was actually lent to Stanford. All along, auditors, along with the head of the Antiguan Financial Services Regulatory Commission, received bribes to cover up the scheme and misinform the SEC, they said.
For Stanford´s lawyers, the financier has been a victim of an overly aggressive federal government willing to imprison him before proving his guilt. While Madoff was released on US$10 million bail before his trial, prosecutors successfully argued that Stanford, who also held an Antiguan passport, could flee before a trial.
Stanford's attorneys told jurors the financier was trying to consolidate his businesses to pay back investors when authorities seized his companies. Stanford's attorneys highlighted his work to build up Antigua's economy as well as his philanthropic efforts on the island. Stanford, the largest private employer on the island nation, was widely known as "Sir Allen" after being knighted by Antigua's government.
During the more than six-week trial, prosecutors methodically presented evidence, including testimony from ex-employees as well as emails and financial statements, they said showed Stanford orchestrated a 20-year scheme that bilked billions from investors through the sale of certificates of deposit, or CDs, from his bank in Antigua.
Prosecutors relied heavily on the testimony of James Davis, Stanford´s old roommate from Baylor University, who served as his chief financial officer. Davis testified that the Stanford business empire was a fraud complete with bribes for Antiguan regulators and schemes to cover up operations from federal investigators. During the trial he described how Stanford had sent him to London to send a fax to a prospective client from a bogus insurance company office to reassure him that his investment would be safe.
"There really is no dispute that Allen Stanford lied," federal prosecutor William Stellmach, told the jurors in his closing argument, "lining his pockets with billions of dollars of other people´s money." Fellow prosecutor Gregg Costa compared Stanford to Bernard Madoff, who is in a federal prison for his even bigger Ponzi scheme.
The defence denied those charges, basing their case on the fact that Stanford´s clients were paid on schedule until the SEC made the first allegations three years ago, destroying the value of his businesses. His lawyers repeatedly pointed out that his investment literature said a loss of principal was possible and that Stanford´s assets still had value when his businesses were shut down by the federal government. In their opening arguments, they suggested that Stanford would testify in his own defence, but after days of preparing him, the defence decided to rest its case without putting Stanford on the stand.
His lawyers sought to portray Stanford as detached when it came to financial details, which he supposedly left to Davis, who pleaded guilty to charges of fraud and conspiracy to obstruct an SEC investigation into the Stanford business.
The defence argued that Davis often acted without Stanford´s knowledge even as they argued that the Stanford bank was fulfilling its promises to investors until the government stepped in and shut the firm down.
In his testimony, Davis portrayed his former boss and friend as a charismatic, bullying manager who manipulated him to lie and cheat investors. He described how Stanford invited him to drive with him in his new Mercedes-Benz on a highway outside Houston and floored the accelerator until the car reached 170 miles an hour. "He instilled intimidation and fear," Davis said.
During cross-examination, Scardino accused Davis of manipulating financial statements and requesting that bribes be sent to an Antiguan auditor without Stanford´s knowledge. Davis countered that it was Stanford who engineered the fraud for more than two decades. Near the end of his testimony, he shook his finger at Stanford and said that anyone who wanted to know the truth about the Stanford enterprises had only to "follow the money, just follow the money."