Stanford ordered to forfeit all funds in seized accounts

March 8 (Bloomberg) -- R. Allen Stanford, who was convicted of running a $7 billion investment fraud, must forfeit all funds seized by the U.S. government, a federal jury in Houston said, finding that the money constituted proceeds of the scheme.

The jury of eight men and four women returned their verdict today in their second day of deliberations in the forfeiture proceeding, which began less than three hours after they returned guilty verdicts March 6 on 13 of 14 criminal counts against Stanford, 61.

Prosecutors said Stanford defrauded investors who bought certificates of deposit from his Antigua bank. The jury granted total forfeiture on 29 accounts prosecutors said are worth $330 million.

“We won’t say it’s what we expected,” Ali Fazel, one of Stanford’s attorneys, said after the forfeiture verdict.

Before the decision was announced, Stanford sat with his lawyers at the defense table, laughing occasionally. As the verdict was read, he looked over at his mother, Sammie, and his daughter Randi. The two women later left the courthouse carrying the suit and dress shirt Stanford had worn in court.

Stanford was ordered to forfeit money deposited in 29 bank accounts in London, Zurich, Geneva and elsewhere, which prosecutors said was the product of criminal activity.

‘Proceeds Remain Proceeds’

“Proceeds remain proceeds,” Andrew Warren, a federal prosecutor, told the jury in a closing statement. “It’s CD depositor money, money that should be forfeited.”

Stanford was found guilty of lying to investors about the nature and oversight of the certificates of deposit issued by Antigua-based Stanford International Bank Ltd. and sold in the U.S. by his Houston-based securities firm, Stanford Group Co.

After a six-week trial, the jury convicted him on four counts of wire fraud and five counts of mail fraud, each of which carries a top sentence of 20 years in prison. He was also convicted of conspiracy and obstructing a U.S. Securities and Exchange Commission probe. He was found not guilty of one wire fraud count. U.S. District Judge David Hittner set June 14 for sentencing.

Stanford, who didn’t testify, maintains his innocence. His defense lawyers argued that the Stanford organization had enough assets to honor its commitments until the SEC sued in February 2009 and won a court order freezing his holdings and appointing a receiver to liquidate them.

‘Missed Any Issues’

Robert Scardino, Stanford’s other attorney, said he and Fazel will ask the court to have other lawyers review their work to see if they made any mistakes or “missed any issues.”

Fazel said there are many grounds for appeal.

Stanford, who sustained head injuries in a 2009 inmate assault at a jail in Houston, developed an addiction to prescription anti-anxiety drugs and spent almost nine months in a federal prison hospital. His lawyers tried to delay the trial, arguing that their client was suicidal and might never sufficiently recover from the beating to face a jury.

Hittner declared Stanford legally competent and ordered the trial to go ahead.

“That will be an issue,” Fazel said. “It will be a lengthy appeal.”

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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