March 7 (Bloomberg) -- R. Allen Stanford’s jury, a day after finding the Texas financier guilty of leading a $7 billion international fraud, heard evidence on federal prosecutors’ request that he forfeit $300 million in assets.
The jury of eight men and four women yesterday convicted Stanford on 13 of 14 charges including four wire fraud counts and five mail fraud counts carrying maximum penalties of 20 years in prison. No sentencing date has been set.
The forfeiture trial that continued today started about 2 1/2 hours after jurors rendered their verdict. Prosecutors want the panel to decide how much money Stanford must give up now that they’ve said he is guilty.
“Fifty percent of a prosecutor’s job is to obtain the conviction,” said Paul Pelletier, a former Stanford prosecutor who is now with Boston-based Mintz Levin Cohn Ferris Glovsky & Popeo PC. “The other 50 percent is to recover for the victims, and forfeiture goes a long way towards that goal.”
Stanford, the founder of Houston-based Stanford Financial Group, denied federal government allegations that he lied to investors about the nature and oversight of the certificates of deposit issued by the bank and sold in U.S. by his securities firm, Stanford Group Co.
U.S. Postal Inspector Clayton Gerber today traced the flow of money from Stanford investors to accounts in Switzerland and, ultimately, to a bank in the Cook Islands near New Zealand, where they were held in what Gerber identified as the Baby Mama Trust.
The trust held proceeds from the 2009 sale of a Key Biscayne, Florida, home owned by Rebecca Reeves-Stanford, with whom the financier had two out-of-wedlock children.
Gerber said that home was bought in 2005 with money from the sale of a Boca Raton home that Stanford purchased for Reeves-Stanford in 2002 for $1.1 million using CD holders’ money transferred to a Swiss bank account.
On cross-examination by co-lead defense counsel Ali Fazel, Gerber said he didn’t have opening balances for all of the bank accounts about which he testified. While some of those accounts were opened before 2000, his review only reached back to about that year, he said.
“Aren’t you making assumptions as to what monies were there to begin with?” Fazel asked.
“No,” the postal inspector said.
Stanford funds now held in the U.K., Switzerland, Canada and Antigua belong to his bank depositors, Justice Department lawyer Andrew Warren told the jury yesterday at the outset of the forfeiture proceeding.
“It includes the SocGen slush fund about which you’ve heard a lot about already,” Warren said, referring to money held at a Swiss unit of Paris-based Societe Generale SA. “Every single dollar the U.S. is seeking is CD depositors’ money that stems from Mr. Stanford’s crimes and belongs to the victims of his fraud.”
Fazel responded that the government can’t prove that every dollar in every Stanford account spanning more than 20 years is subject to seizure as a product of fraud.
“The question is whether all the money -- including money in his children’s accounts -- is the result of ill-gotten gains, and we maintain it is not,” Fazel said.
The jury must find that specific Stanford assets were obtained with criminal proceeds in order to force him to give them up, Pelletier said. Funds recovered through this process will be returned to Stanford fraud victims.
Lead prosecutor Gregg Costa declined to discuss the case after yesterday’s verdict, citing a gag order imposed on counsel for both sides by U.S. District Judge David Hittner, who presided over the six-week trial.
The jury began deliberating on Feb. 29. Hittner ordered them to resume deliberations on March 5 after the panel sent him a note saying it was deadlocked.
The panel acquitted Stanford only of the claim he committed fraud in 2006 by using interstate wire communications to buy $9,000 in Super Bowl tickets for the chief of the Antiguan regulatory authority responsible for monitoring his Stanford International Bank Ltd.
“We are disappointed in the outcome,” Fazel said after the verdict. “We expect to appeal.”
While a defense lawyer told jurors in an opening statement on Jan. 24 that they would hear from Stanford, he was never called to the witness stand. Once ranked 205 on Forbes magazine’s 2008 list of the richest Americans, with a net worth of $2.2 billion, Stanford has been jailed as a flight risk since being indicted in June 2009.