Stanford jury weighs $300 million forfeiture after verdict

Appeal Arguments

Stanford’s lawyers soon will begin marshaling their arguments for appeal, former federal prosecutor Douglas T. Burns, now a white-collar criminal defense lawyer in New York who isn’t involved in the case, said in a phone interview.

“They’re going to scour through the trial record for any mistakes made” by Hittner, he said. The defense team may also challenge the judge’s December ruling denying a requested postponement.

Stanford sustained head injuries in a September 2009 jailhouse inmate assault and later developed an addiction to anti-anxiety medication resulting in a near nine-month term at a federal prison hospital in North Carolina.

His lawyers had argued he wasn’t fit for trial and that they had insufficient time to prepare their case.

“They could say the judge erred and made an abuse of discretion,” Burns said.

‘Fantasy’ Claims

Kevin Sadler, lead lawyer for Stanford’s court-appointed receiver, Ralph Janvey, said the financier’s conviction may bolster the receiver’s lawsuits alleging fraudulent transfers against former Stanford financial advisers and investors who “persist” in claiming no fraud occurred at Stanford’s operations, he said.

“This conviction makes it impossible for that kind of fantasy to be sustained anymore,” Sadler said. “As silly as it sounds, people are still asserting that.”

Houston investor Cassie Wilkinson ran to court after receiving a call at the gym that the jury had reached a verdict. Wilkinson, who attended most of the trial, said she lost about $500,000 on Stanford CDs.

“It is a relief that 12 jurors saw it the way we did,” she said afterward. “The bottom line is still we’ve lost. But it is justice, and there’s been no justice for the victims.”

The government presented testimony at trial from investors who bought the allegedly fraudulent CDs as well as from the executives who helped sell them.

Davis Testimony

The witnesses included government officials and former Stanford Group Co. Chief Financial Officer James M. Davis, who pleaded guilty to fraud-related charges in 2009 and testified for five days against Stanford. Davis, whose relationship with Stanford traces back to when they were Baylor University roommates, told the jury he knew the boss was committing fraud and didn’t stop it.

Prosecutors told the jury in their closing argument that Stanford wasted investor money on failing businesses, yachts and cricket tournaments. They said he secretly borrowed as much as $2 billion from his bank and sought to build an island resort for billionaires.

By 2008, the bank owed investors $7 billion that didn’t exist, prosecutor William Stellmach said.

“Stanford had been digging that hole for years with his lavish lifestyles and loser companies,” he said.

Sufficient Assets

Stanford’s defense lawyers argued that his banking disclosures complied with internationally accepted accounting standards. They also contended he had sufficient assets in an array of private enterprises to repay all investors. They said Stanford was consolidating those companies onto the bank’s balance sheets when the SEC sued him for fraud and seized his businesses in February 2009.

The defense presented former Stanford employees who said they saw no evidence of fraud at the company. Some testified in support of the defense’s contention that Stanford was an absentee visionary who left the details of running his operation to Davis.

Stanford co-counsel Robert Scardino used part of his closing argument to challenge Davis’s credibility, calling him “one of the biggest liars you ever heard about or read about.”

Stanford was declared indigent and given a taxpayer- financed defense because all of his assets were frozen by court order in February 2009 when he was sued by the U.S. Securities and Exchange Commission.

Receiver Liquidation

The U.S. judge in Dallas overseeing that case appointed a receiver to marshal and liquidate Stanford’s holdings to repay investors. While Stanford waited in jail for his criminal trial to begin, the receiver sold his businesses, boats, six airplanes and stakes in a boutique hotel and golf course.

Stanford also lost the honorary knighthood given to him by the Antiguan government for his economic development efforts there. Antigua’s parliament stripped him of the title in November 2009.

The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).

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