The former Caribbean money man's trial date is approaching here in Houston next month, but it's unclear if it will proceed as scheduled.
During the past year, Stanford has been changing lawyers more often than Lady Gaga changes outfits, and he's now left with court-appointed counsel that argues the erstwhile billionaire is unable to stand trial because he's doped up on pain medication.
Stanford has, by white-collar crime standards, received harsh treatment. He's been denied bail and remained in a privately run prison since his arrest in the summer of 2009. He was severely beaten by other inmates, which is why he's on medication. A judge has refused to allow him to tap his company's insurance policy for the legal defense of officers and directors, which has prevented him from mounting the sort of high-dollar defense that we saw from, say, Enron's Ken Lay and Jeff Skilling.
In the past two years, though, Stanford himself has ceased to be the story. The most amazing aspect of the Stanford saga is how little money has been recovered. As the court-appointed receiver has chased assets around the globe, he's found Stanford's accounts stunningly empty.
In an attempt to scrape together a tiny sliver of the more than $7 billion that authorities believe was lost in the Stanford case, the receiver earlier this month sued four of Stanford Financial's top officers, who haven't been named in earlier civil or criminal actions. That effort, if successful, would recover no more than $12.4 million, though the former employees will undoubtedly challenge the receiver's recovery effort. Attorneys for at least one of them told Bloomberg News their client intends to contest the receiver's claim.
While it falls under the receiver's legal responsibility, as a practical matter, I'm not sure that, spread amongst all the aggrieved Stanford investors, it's enough money to be worth the effort.
The other untapped pool for possible recoveries in a case like this is other investors, those who bought Stanford's certificates of deposit and sold them, pocketing the return, before the company unraveled.
Not like in Madoff case
The trustee tracking down assets on behalf of Bernard Madoff's investors recently scored an unexpected windfall after a Florida philanthropist who'd invested with the con artist agreed to return more than $7 billion her husband had collected as profit on Madoff investments over the years.
But that's not likely to happen in the Stanford case. A judge has already ruled that former investors who collected returns from Stanford's certificates of deposit have been allowed to keep the proceeds, according to an earlier court ruling. They, after all, bought into the alleged scam just like the other victims.
Warnings long before
To add insult to investors' losses, U.S. diplomatic cables released last week show that as far back as 2006, officials had concerns that Stanford might be involved in an international scheme of bribery and money laundering. The cables, released amid the latest flood of secret U.S. government documents from the WikiLeaks website, shows ambassadors and other officials made an effort to avoid being photographed or have other contact with Stanford.
The warnings made the rounds in diplomatic circles almost three years before the Securities and Exchange Commission accused Stanford of running a massive fraud and got a judge to appoint the receiver to recover assets for investors.
It's not clear if the State Department shared its concerns with other agencies, though the SEC had also been alerted to possible wrongdoing. In the ensuring years, while the agencies failed to act, Stanford's empire grew, ensnaring hundreds of new investors.
Now, those investors await Stanford's trial, seeking justice in place of restitution, because it's about all they have left.
For them, there is no medication to ease their pain.
Loren Steffy is the Chronicle's business columnist.