Stanford illness halts trial
Tax lawyer testifies about secret loans and Allen Standford falls ill.
HOUSTON, United States, Wednesday, February 22, 2012 - Proceedings were halted for the day on Tuesday (February 21) as former Antigua-based financier cum financial fraudster R. Allen Stanford fell ill.
His bout of illness followed earlier revelations that Internal Revenue Service auditors knew about hundreds of millions of dollars borrowed from his Antiguan bank to fund an array of private ventures, according to a tax lawyer who worked on the audits.
“In 1999, the IRS position was these were valid loans and should be treated as valid loans” between the bank and Stanford and between Stanford and his other companies, Larry Campagna, a tax partner with Chamberlain Hrdlicka, testified in the financier’s defense today in federal court in Houston before.
After Stanford became ill, US District Judge David Hittner adjourned the case and asked the jury to return tomorrow.
Prosecutors claim Stanford secretly borrowed $2 billion from investor savings at Antigua-based Stanford International Bank Ltd. to finance an extravagant lifestyle and speculative ventures ranging from Caribbean airlines, real estate developments and cricket tournaments. CD buyers were told their funds were held in safe, liquid investments.
U.S. securities regulators seized Stanford’s operations on suspicion of fraud in February 2009. Stanford, 61, is fighting charges he defrauded investors of $7 billion through what the government claims were bogus Antiguan CDs. His trial is in its fifth week in federal court in Houston.
Campagna told jurors that IRS auditors were already in Stanford’s offices examining his personal and corporate tax returns when Chamberlain Hrdlicka was hired to appeal some IRS rulings in 2003. Under questioning by prosecutors, the tax attorney said the auditors weren’t necessarily given “free rein” to look at any documents they wanted.
“Nobody at the IRS has unlimited access to anything,” he testified.
Campagna said the IRS didn’t seek fraud penalties on any of the Stanford returns auditors examined for the years 1999 through 2003. He said the company was still negotiating with the IRS over subsequent years’ returns when the businesses were seized by regulators.
Jurors also heard testimony by genealogical researcher Karen Pittman, a college librarian Stanford paid to investigate his ancestry for links to Stanford University founder Leeland Stanford.
Pittman said she found evidence she felt indicated the two men shared a common ancestor in England during the 1600s. Under questioning by prosecutors, she said that after two years of research, she couldn’t “definitively” state the two men were related.
Earlier in the trial, prosecutors told jurors that Stanford University has denied any linkage between its founder and the Texas financier. Allen Stanford often touted such blood ties in promotional materials given to investors.