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The trial of disgraced financier R. Allen Stanford is set
to begin Jan. 23
as prosecutors claim the once-billionaire swindled investors out of more than
$7 billion in one of the largest Ponzi schemes in history. Delayed by over a
year as questions arose about Stanford's competency following a prison beating
and ensuing memory loss and prescription drug issues, United States District
Judge David Hittner found Stanford competent to stand trial in December 2011
and ordered Stanford and his legal team to prepare for trial in January 2011.
Since that decision, Judge Hittner has rejected several last-ditch
efforts by Stanford's team to delay the trial, including an unsuccessful
request to withdraw
from representing Stanford. Much is at stake in the trial's outcome,
which is expected to last at least a month.
Stanford was indicted in June 2009 as his once-prominent
Stanford International Bank Ltd. ("SIB") crumbled under economic
pressure and increasing investor redemptions. Investors had been promised
that their funds would be used to purchase certificates of deposit issued by
SIB that promised above-average annual returns. Overseeing a financial
empire that once made him one of the richest Americans, Stanford was a
prominent figure in Antigua, where he was knighted in 2006 and enjoyed
relations with Antiguan financial regulators that allegedly included bribes to
divert attention away from his alleged fraud. After his scheme came to
light in late 2008, Stanford was charged in 2009 with 14 counts of conspiracy,
fraud, and obstruction.
Stanford's defense will likely focus on shifting blame to
former Stanford chief investment officer James Davis, who has been cooperating
with prosecutors since pleading guilty in August 2009. This strategy has
been evident since Stanford was charged, as he has insisted in several
interviews that the responsibility to oversee the investment portfolio was
solely that of the CFO. Davis is expected to testify against Stanford.
Stanford was also charged by the SEC in
a parallel civil enforcement action in early 2009, and a receiver was appointed
to recover assets for the estimated 20,000 investors. The receiver, Ralph
Janvey, has faced numerous difficulties in that process, and the federal judge
overseeing the process has expressed concerns that the receiver's efforts were
duplicative of efforts by the US Department of Justice. Additionally, investors
have increasingly voiced their frustration that they have not seen any
distributions from Janvey's recovery efforts despite the passage of nearly three
years since the scheme's discovery.
A guilty verdict would provide a much-needed boost to
Janvey's efforts. As much of Stanford's operations operated outside of
the United States, asset recovery efforts from international entities have been
hampered without a finding of criminal conduct on Stanford's part. It has
been estimated that at least $100 million remains subject to this predicament.
Previous Stanford coverage:
Setback for Stanford Receiver
Delayed Again until January 2012
to Stanford Receiver: Stop Looking for Pot of Gold and Start Repaying
Files Lawsuit Against SIPC in Dispute Over Coverage of Stanford Ponzi
For more news and analysis of Ponzi schemes, visit
Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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