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Banking and Finance

Jury Selection in Stanford Trial Set to Begin Jan. 23

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:

Another Setback for Stanford Receiver

Stanford Trial Delayed Again until January 2012

Judge to Stanford Receiver: Stop Looking for Pot of Gold and Start Repaying Investors

SEC Files Lawsuit Against SIPC in Dispute Over Coverage of Stanford Ponzi Scheme

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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