Allen Stanford built fraudulent scheme to support lavish lifestyle: US trial

Allen Stanford faces up to 20 years in prison if convicted of 14 counts of fraud, money laundering, conspiracy and obstruction AFP

Houston (Texas): March 1, 2012

Financier and cricket mogul Allen Stanford mocked his “gullible” investors as he built a $7 billion Ponzi scheme to fund a lavish lifestyle, US prosecutors said in closing arguments Wednesday.

“He regarded his depositors’ money as his personal piggy bank,” prosecutor William Stellmach told jurors in Houston, Texas, accusing Stanford of buying up regulators and bank examiners to keep his 20-year-long fraud going.

“Even his own employees had no idea he had systemically stolen more than two billion dollars of his depositors’ money to fund his own pet projects and failing businesses,” Stellmach said.

“He only disclosed about 20 percent of the bank’s true assets to them.”

Stanford faces up to 20 years in prison if convicted of 14 counts of fraud, money laundering, conspiracy and obstruction.

The 61-year-old has pleaded not guilty to bilking 30,000 investors from more than 100 countries through bogus investments with Stanford International Bank.

The mustachioed ex-tycoon has spent the past three years in jail after being deemed a flight risk shortly after his February 2009 arrest.

Badly beaten in a jailhouse brawl, the flamboyant Texan was temporarily declared unfit for trial after he became addicted to painkillers while also on antidepressants.

He tried to have his case completely dismissed after claiming that the beating and drugs destroyed his memory, but a judge refused to believe him.

Stellmach, who accused Stanford of holding himself above the law, opened his summation by asking jurors if they thought it was acceptable to lie.

“That’s what this trial is about, after all. After you review all the evidence, all the documents, all the talk, it really boils down to Allen Stanford’s lies,” he said.

Stellmach also reviewed Stanford’s general disdain for his what he characterized as his “gullible” investors.

The prosecutor quoted testimony from a former employee who said Stanford was delighted by rising sales of the bank’s bogus certificates of deposit which promised high returns from ‘safe’ investments.

Jason Green, a former top salesman with the company, testified that Stanford bragged: “It’s amazing what people will risk just to earn an extra two percent.”

Investigators could not find 92 percent of the $8 billion the bank said it had in assets and cash reserves.

Defense attorney Robert Scardino insisted that Stanford had paid back every single investor in full, despite prosecution witnesses who said they were denied their funds prior to the government takeover of Stanford’s companies.

Scardino claimed that missing funds belonging to the more than 30,000 investors who lost everything by investing with Stanford were actually lost through the ineptitude of government receivers.

“How many people lost money to Allen Stanford?” he asked jurors. “You know what? The number is zero. People didn’t start losing money until the government receivers came in and took over.”

Scardino insisted that the real blame also lay at the feet of former chief financial officer James Davis, who he said perpetrated the entire fraud while Stanford naively placed his trust in his former college roommate.

“The government’s entire case is built on ‘wyhtbd’ or why-you-have-believe-Davis,” Scardino said.

“I thought it was curious when the prosecution talked about all the lies Stanford supposedly told when their star witness has got to be one of the biggest liars you ever heard.”

Prosecutors dismissed this claim as ridiculous.

“So Davis, the guy who’s supposedly running this thing, made publicly announced plans to walk away and retire to his 12-foot aluminum fishing boat, and left Stanford, the victim, to cruise the Caribbean in his 112-foot luxury yacht?” Stellmach questioned.

“Davis must have been one heck of a philanthropist to go to all that trouble to only steal 14 million dollars, while letting his boss get away with more than two billion.”

Prosecutor Greg Costa ended the government’s case by exhorting the jurors, “Don’t let him (Stanford) pull one last great con job and take your attention away from the overwhelming fraud he committed.”

Jurors started deliberations immediately, but were dismissed without reaching a verdict by day’s end.

Judge David Hittner will be in court through 2 pm (2000 GMT) Thursday. If jurors reach a verdict by then, it will be read. If they reach a verdict after that time, it will not be read until Hittner returns to court Monday.

In Antigua, Stanford was the island’s largest employer and the recipient of a 2006 knighthood, but after the allegations against him surfaced, much of his support dwindled and the England and Wales Cricket Board severed ties with him. (AFP)