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BATON ROUGE, La. – The receiver for the Stanford companies has sued Adams & Reese LLP and Breazeale, Sachse & Wilson LLP for $1.8 billion, alleging that the New Orleans and Baton Rouge law firms helped R. Allen Stanford misappropriate the money, the Baton Rouge Advocate reports.
The lawsuit claims the loss was caused by the wrongful conduct of the law firms and other defendants, who it says are liable for all the damages caused to the Stanford group of companies, as well as reasonable attorneys’ fees.
In addition to the law firms, the other defendants in the lawsuit are Adams & Reese attorneys Robert Schmidt and James Austin; Claude Reynaud Jr., a partner in Breazeale and former director of Stanford Trust Co.; and former Stanford Trust directors Cordell Haymon and Thomas Frazier.
Stanford’s company had offices in Baton Rouge.
Among other things, the federal lawsuit filed in Dallas, Texas, alleges that the law firms helped Stanford commit fraud, enabling the promoter to misappropriate at least $1.8 billion. The total included $300 million that the lawsuit said Baton Rouge-based Stanford Trust Co. should have held in certificates of deposit from Stanford International Bank Ltd.
Breazeale managing partner Scott S. Hensgens said Tuesday that the allegations in the receiver’s lawsuit appear to be virtually identical to those in a lawsuit filed in February 2011 by the Official Stanford Investors Committee.
The major difference is that the 2012 lawsuit, unlike the 2011 one, is not a class action, Hensgens said.
“I don’t understand the legal theory under which they think we’re responsible for anything, much less the entire amount of the damages,” Hensgens said.
Hensgens said the most recent lawsuit is likely the result of a series of adverse rulings in the earlier lawsuit by Federal District Judge David C. Godbey that severely affected the plaintiffs’ claims.
In that lawsuit, the investors committee sued Adams & Reese and Breazeale, Sachse for $337 million.
At the time it was filed, Hensgens described the lawsuit as frivolous and part of a shotgun approach that included suing St. Jude Children’s Research Hospital in Memphis, Tenn., and several related charities. The investors committee wanted $7.3 million that Stanford companies contributed to the charities.
In a statement issued Tuesday, Hensgens said Breazeale, Sachse occasionally represented Stanford Trust Co. on a very limited basis on issues specific to Louisiana law, such as state and local tax and regulatory issues.
“We believe that this lawsuit is a frivolous attempt to recoup unfortunate losses incurred by the Stanford Financial Group’s investors for alleged actions that, if they occurred, were taken by individuals far removed from BSW and Mr. Reynaud and without anyone at BSW’s knowledge,” Hensgens said.
Charles P. Adams Jr., general partner at Adams & Reese, could not be reached for comment.
The latest lawsuit says the law firms enriched themselves at their other clients’ expense by encouraging clients to invest in the alleged Ponzi scheme.
“Through these referrals, the two firms curried favor with their powerful new client, Stanford Financial, while enjoying the lucrative legal work that Stanford Financial sent them to reward them for adding to Stanford Financial’s bottom line,” the lawsuit says.
Hensgens said Breazeale, Sachse never referred clients to Stanford, and he doesn’t believe Reynaud did either.
Neither Breazeale nor Reynaud had any knowledge of improper or illegal activities on behalf of the Stanford Trust Co. or R. Allen Stanford, Hensgens said.
R. Allen Stanford is on trial in Houston for 14 counts, including mail and wire fraud, and could be sentenced to more than 20 years in prison if convicted. Once considered among the U.S.’s wealthiest people with an estimated net worth of more than $2 billion, he has been jailed without bond since being indicted in 2009.
The Advocate reported that about $1 billion of the more than $7 billion in losses occurred with investors in the Baton Rouge, Lafayette and Covington areas, Baton Rouge attorney Phillip W. Preis and state Rep. Bodi White, R-Central, estimated.Many of the investors have hired lawyers in an attempt to recover some of their lost investments. The investors have turned to federal officials in an attempt to have the federal government step in to help those who have lost large sums of money invested with Stanford companies.
Stanford’s defense attorneys have tried to show the financier was a savvy businessman whose financial empire, headquartered in Houston, was legitimate. They said he was trying to reorganize his businesses to pay back investors when authorities seized his companies.
The latest lawsuit claims Reynaud helped Stanford Financial, the Houston-based administrator for all Stanford businesses, get the Louisiana Office of Financial Institutions’ approval to buy Baton Rouge-based Southern Trust Co.
Reynaud allegedly submitted a letter from Antigua’s finance minister testifying to the integrity and professional competence of Stanford Financial even though, the lawsuit claims, Reynaud knew the letter was actually written by Stanford Financial. The lawsuit also claims Reynaud knew of Stanford’s suspicious activities in Montserrat.
Southern Trust became Stanford Trust Co., eventually funneling hundreds of millions of dollars into Stanford Financial, the lawsuit says.
The lawsuit says Adams & Reese issued a legal opinion letter to the Office of Financial Institutions that essentially approved of Stanford Trust’s relationship with Stanford International Bank and Stanford Group Co. — a relationship that the lawsuit says was “incestuous and deeply conflicted.” The lawsuit alleges that the opinion helped Stanford hold OFI at bay and enabled Stanford to commit the fraud that cost investors at least $300 million.
HOUSTON, Texas – It's Week 3 on Monday for the U.S. vs R. Allen Stanford.
Former CFO James M. Davis, who once lived west of Baldwyn, continues on the stand as the government's witnesss closest to Stanford's dealings - and the government allegations that the two of them, with a few others, fabricated company financial numbers and duped thousands of depositors to buy CDs in Stanford International Bank Ltd. in Antigua (pro - an.TEE,guh)
Last week, Davis pounded home that virtually every cent taken in and spent by any Stanford business entity did so with CD investor purchases through SIBL – all without the knowledge of any of the investors, potential investors, most employees and regulators.
Looking at notes, a few things I've lacked time or space to tell you about:
• Defense subpoenaed Davis' attorney David Finn to answer questions about Davis' plea agreement with the government.
Of course, Finn cannot answer anything that's confidential and privileged between himself and Davis. So, what does that leave?
One of my smart federal court sources says the defense may be trying to prove to Judge David Hittner that Davis expects something "specific" from his "substantial assistance" to the government. His plea agreement states that if he does what the government desires across this and at least one other criminal case (Laura Pendergest-Holt et al), they will recommend additional leniency to the judge, who decides the sentence.
How they will seek to get Finn's help in casting doubt on the agreement isn't clear, so we'll just wait and see what the defense has got next week during a special hearing for Finn.
• Did Allen Stanford's mother verbally or otherwise accost Davis after Friday's testimony?
Don't know, but I got that question from somebody who may have been telegraphing to me that it happened, rather than really asking if it had.
Mrs. Sammi Stanford, the mom, is a regular in court, usually sitting on the front or second row with Stanford's latest girlfriend, I'm told named Evelyn. His daughter, Randi, also is usually there every day, at least for part of the action.
Mrs. Stanford would have sat through 1 1/2 days of DAvis testimony, which has been pretty damning to her son, if the jury believes it. I gotta say she's a Texas lady and may very well have been thoroughly put out that her son's top gun turned on him to save his own hide.
Next week, we'll see if anything else flares up.
• Not sure how long Davis will be on the stand, but the kind person, allowing me to stay at her apartment near the federal courthouse, hopes it will be a short week for him (and me.)
What's likely?
Well, the US probably has another day or 1 1/2 days for Davis, then the defense takes over. Defense attorneys, especially Robert Scardino, have pretty much blistered other government witnesses during cross-examination so far. He fairly shredded a poor ex-Stanford accountant across a couple of days. I think the man needed help to exit the courtroom after it was all done.
If things run true to court, the defense likely will drill Davis at least a couple of days.
Then, it's govt re-direct, defense re-cross, govt rebuttal, defense re-rebuttal on and on and on until things get kind of silly and wrap up.
I'm guessing Thursday for his wrapup.
Of course, the govt must end its case in chief before the defense gets its turn. Wish I were going to be here for Stanford's own testimony. Looks like most of the big-name reporters will take a breather after Davis and not come back until Stanford. We've got The Financial Times, Bloomberg, Reuters, AP and lots of local TV, as well as public radio.
Meanwhile, I'll try to figure out alternate ways to keep us all in the trial loop.
HOUSTON, Texas - Stanford Financial Group accountant Henry Amadio began today to show a federal jury that CD deposits in Stanford International Bank were company chief R. Allen Stanford's piggy bank.
He also identified payslips for an SFG account in Switzerland's Societe Generale bank, where the Antigua-based bank's internal auditor – CAS Hewlett – appears to have been paid a lot of money outside his known income to work for Stanford.
Amadio said he'd never been given any information about the Swiss account or put any of those figures on important annual financial reports, which informed clients and potential clients about what was going on with SIBL assets and investments.
Defense attorneys will get their shot at Amadio this afternoon and they'll have to do their best to discredit him or confuse him or something to lessen the blow his testimony caused this morning.
At this point, it will be interesting to see who knew about this account, who used it and for what purpose.
• Come back for blogs and news updates. Read my Tweets on Twitter.com @REALNEWSQUEEN. If you use Twitter, use a hashtag #stanfordtrial to keep up with all the reporters' blips.
.. patsy
HOUSTON, Texas – Oh sure, I knew the possibility of rainfall in downtown Houston.
This is a semi-tropical climate with many balmy days and nights.
But, I said to myself as I packed in Tupelo, I’ll get an umbrella with I get there. Didn’t happen.
And so, much to much my fear and loathing, I awoke Tuesday to the obvious signs of a serious rain. Just because the federal courthouse is only four blocks away doesn’t mean I can skip along without umbrella and without consequences.
Let’s just say I refused to look in a mirror until I got back to my daughter’s apartment about 6:30 and realized how unattractive I had been all day. A tragic realization, to say the least.
Fortunately, an extra umbrella now resides here for my poorly planned use.
• • •
I’m calling this Day 8 of the Allen Stanford trial, although that’s really by court time, not the calendar. In calendar time, it would be Day 10. Regardless, this trial is expected to run 6-8 weeks and I pity anybody who’s got to sit in the audience for long.
I am no stranger to courtroom benches, but there’s something about these that would make anybody’s “natural cushion” feel abused. They are really hard. I’m thinking about taking a pillow today, although I’m sure courthouse security will look at me with disdain.
Among the folks who’ve been “regulars” here with the half-dozen reporters on the back couple of rows are Stanford’s mother, his girlfriend Evelyn and daughter Randi. I also got a Twitter question yesterday about whether his former fiance’, Andrea, was there.
Frankly, I wasn’t sure although I’d been told by a reporter that Andrea was in the Caribbean romancing a Cricket player. Good for her, I thought.
But the questioner sent me a photo of Andrea, and I half-told myself that perhaps she was in the courtroom. So, today, if I see this brunette woman, I will ask someone near me who should know.
Stanford was arrested at her Virginia home back in 2009 and she faithfully attempted to help him make bond, visited him in jail etc. for some time. Not sure when she may have, if indeed she did, decide that beaches and a man with a financial future were better options.
• • •
The government is doing a pretty good job here, but the defense attorneys are exceptionally good. Technically, they are “public defenders” because we citizens are paying the freight since Stanford apparently has no assets with all that receivership, liquidation and stuff.
But his attorneys are first rate, at least the two I’ve seen question witnesses to this stage.
The government’s case, to this point, has been so-so but Tuesday’s witnesses helped raise the bar that Stanford was borrowing money from his own bank, which got money from CD sales, to build his ritzy Caribbean dream development.
As his attorneys pushed for, the jury also was told that the tactic may not have been so unusual – that a business owner would borrow from one enterprise to fund another, with the ultimate plan of making it big in the latter and repaying the former. I’m not sure that would have assuaged anybody who lost their life savings and retirement funds in the $7.2 billion collapse.
Not sure who’s going to be on the stand today, but I’m hoping we’re closer to hearing from ex-Union Countian James M. Davis, Stanford’s college roommate and former chief financial officer. Right now, Stanford’s lawyers take every opportunity to press that Davis was the one making the financial decisions.
We’ll see.....
For repeated updates, follow me on Twitter.com @REALNEWSQUEEN or read frequent posts and news @NEMS360.com
Stay tuned... patsy
HOUSTON, Texas – It's a dreary, rainy morning in downtown Houston, where R. Allen Stanford has his seventh day of trial.
Silly me, I left my umbrella in Tupelo, so I hope I'll get a break in the clouds to allow me dry passage the few blocks away to the federal courthouse by 9:30 or earlier. Proceedings begin at 10 and wrap up at 6.
Judge David Hittner is quite the rock star in his 8th-floor courtroom.
Judges in state trials, like Lee County circuit, are involved with how things go and make important rulings of law, but in federal court, the judge can be very participative – asking questions directly of witnesses, talking to the jury, telling the lawyers this and that.
Hittner is quite the rock star, indeed.
Monday, he even made a joke as a former Stanford-Memphis research analyst explained to the jury about commodities, anything that comes out of the ground, like gold, coffee, etc.
"You mean like orange juice? Like 'Trading Places?'" Hittner said to Mark Collinsworth, on the stand.
"Trading Places" took me a minute, then I remembered that crazy movie with Dan Ackroyd and Eddie Murphy when the story's two old dudes take homeless Murphy in to become a commodities trader and fire Ackroyd. It's all about manipulating the orange-juice futures, and that was the judge's joke.
Collinsworth went into much detail about the Memphis office, out of which Stanford CFO James Davis and Chief Investment Officer Laura Pendergest-Holt operated much of the time. He said LPH could "bust" a lower-level investment decision any time. He also accused her of double-dipping by allocating Stanford money to her husband's hedge fund, from which he made money and she collected a fee on the front end.
MC said he saw Stanford in Memphis twice, and that Davis was completely in charge of their activities, chiefly selling and managing accounts from Stanford International Bank Ltd. certificates of deposit. He said while he was "rotating" in and out of SIBL's base in Antigua, which he described as a bit of a joke, he never saw any major insurance company reps, like Lloyds of London.
He also said Davis and Holt told the advisers/analysts never to speak publicly about their so-called Tier 2 investments, which were aggressively played in stocks and other arenas.
He said he began to have questions about the company's finances in 2008 when Holt told him their real estate holdings were making big returns, even though MC knew the national real estate market was going into the tank. On cross-examination, Stanford's atty Ali Fazel (who is very good, by the way), got MC to admit he knew little or nothing about the state of international real estate in which Stanford may have had investments.
MC started his testimony late Friday and was on the stand nearly all of Monday. His face got redder and redder as the time passed.
About 4 p.m. former Antiguan bank regulator Althea Crick took the stand. The government is calling all the witnesses at this stage of the trial, but Fazel is doing a very good job so far in turning their testimony to bolster his client's defense that Davis was to blame for the financial intrigues, false reports and ultimate illegality for which Stanford is on trial.
Crick is a tough cookie. She said she didn't take any guff from Stanford, when he basically told her to cooperate with him or else. She insists she said no repeatedly to his offer of upgrading airfare tickets to the U.K. "Always go first class," she said he told her.
And she says she stood her ground across several years as Stanford and his political allies on Antigua sought to take over her banking-regulation office and get rid of her. Ultimately, she said the back-room intrigue was just more than she wanted to play and she quit to go into private practice.
Stanford's no shrinking violet, if anybody thought that. Despite his attorneys' claims back in December that he wasn't competent to stand trial or help in his own defense because of a mental lapse while addicted to anti-depressants, Stanford looks fit and fully engaged in what's going on. He closely watches witnesses, he reads documents, he comments to Fazel and others at the defense table. During breaks, he stands up and appears to be offering suggestions to his attorneys.
When Crick was asked to identify Stanford in the courtroom, he immediately stood up and brought himself to full 6-foot-plus height and looked directly at her.
Today, prosecutors will continue to ask Crick questions. She is very deliberate with her answers, and a few times Hittner has had to say, "Just yes or no. Let's move along."
Once the government's done with her initially, the defense takes over and that could be a war. I expect Crick to hold up fine, but we'll see.
This back-and-forth questioning is a bit like a ping-pong match. Govt. asks questions, defense asks questions, govt. rebuts, defense rebuts, govt. re-rebuts, defense re-rebuts, more and more. With MC yesterday, it almost made you pull your hair out, and in the end the back and forth got to be a little bit silly as everybody got tired.
When James Davis comes to the stand will depend on how long this Q&A tennis match goes with Crick.
We reporters on the back row hope it's soon, like tomorrow.
Stay tuned... patsy
Eccentric billionaire Howard Hughes is buried in Glenwood Cemetery near downtown Houston, Texas, where the Stanford trial resumes Monday. This gravesite also includes a few other family members. It's one of the few graves surrounded by a strong, metal fence.
Sorry, I couldn't resist a little Kris Kristofferson here in Houston, Texas, today.
After a cold start, the day's likely to heat up to just shy of 80. Not sure what Mother Nature's doing in Northeast Mississippi but it can't be this balmy. My hairspray is getting a workout.
Got here with the Grandpuppy about 7 p.m. Friday after a long ride from Tupelo. Thanks to my friend Pamela and the massive, 16 1/2 hour audiobook set of "The Girl With the Dragon Tattoo." Great, complicated story. Should serve me well on the way back, whenever that is.
Of course, I'm in Texas to cover what's next with the Stanford trial. Expect former CFO James M. Davis to take the stand, but not immediately Monday. Two others are on tap, so I'll be reporting that likely crazy on DJournal.com. Click on our Stanford Trial News icon for more. I'll also have daily coverage in the Daily Journal. I'll do my best to give you the nitty-gritty backstage info you can't get anywhere else.
Meanwhile, went to see the King Tut exhibit at the Houston Museum of Fine Art. It was lovely but not as expansive as the related exhibit I saw in New Orleans back in the 1970s. Perhaps one of the most fascinating pieces in the Houston show is a massive stone statue head of Tut's strange monotheistic father, Akhenaten, also known as Amenhotep IV.
Stick with me, readers, and I'll do my best to tell you some interesting stuff from here.
Yee-Haw! ... patsy
(Details come from in-courtroom tweets by Anna Driver of Reuters, LT Langford with Houston Chronicle, other media observers. At one point Thursday, Judge David Hittner stopped all Tweeting by non-media. If you're a Twitter follower, look for all Tweets #stanfordtrial.)
Reports about today's witnesses ...
1. Leo Mejia - hired by Stanford to make sales brochures for his Guardian Bank in Montserrat. Courtroom tweets say Mejia testified that he saw Stanford changing numbers of the annual report. But he admitted he had no direct knowledge of the business. Defense notes that Stanford's insurance business dated back into 1940. Defense says Guardian left Montserrat because of Hurricane Hugo. Judge notes that Mejia was in advertising, not a banker.
Apparently, Mejia got sharp pressure from defense questions and fairly "ran" out of the courtroom when he was dismissed, reporters noted.
2. Jason Green - former Stanford financial adviser in Baton Rouge, La. Says he's being sued by former customers, not SEC yet. Detailed bonus system for CD brokers. Said "growth" was a priority at Stanford. Stanford very "hands on" in developing promotional material. Stressed Stanford wanted U.S. clients with $1M or a $200K annual income.
Stanford set up teams to compete for CD sales. Names like "Stanford Superstars," "Miami Money Machine," Green testifies. Says he feared a run on Stanford Int. Bank in 2008 when economy tanked because investors were cashing in so fast. Says Stanford wanted company to be the world's largest privately held financial firm.
When Stanford needed money in 2008, he said he'd go to the Libyans – They love me.
3. Govt. shows jury video from October 2008 broker meeting in Miami. (This was four months before U.S. SEC sued and Stanford empire began to crash.)
Stanford tried to reassure brokers. Tells staff, "we got to hold our clients hands ... we have to stay calm."
Green said Stanford obsessed about CD sales growth, then spent Christmas 2008 in wine country with golfer VJ Singh. In December 2008, Stanford said the business lost $600M in one day.
By February 2009 (month when SEC filed federal complaint against Stanford et al), Green said money was flowing out the door from CD redemptions and Stanford halted early withdrawals.
On Feb. 11, Green said he e-mailed Stanford on behalf of other advisers to say something more must be done to restore confidence. He never heard back. "The silence was deafening," he said.
(I'll be on the road Friday, so watch our Stanford site for live Tweets from the courtroom. I'll be there myself on Monday.... patsy)
What other news reports say about Day 2 of the Allen Stanford fraud trial in Houston, Texas:
• The BBC ...
Allen Stanford is accused of defrauding investors of $7bn (£4.5bn) through a Ponzi scheme out of his bank in the Caribbean island of Antigua.
But his defence team says that the 61-year-old never intended to defraud anyone.
Prosecutors also say that Mr Stanford, as well as three of his former executives, fabricated company documents and bribed officials in Antigua to cover up their illegal activities.
But Mr Stanford, who once had an estimated net worth of more than $2bn, argues that his businesses were legal.
Mr Stanford once landed in a helicopter at Lord’s cricket ground in London and secured a lucrative series of matches between the England team and his Stanford superstars.
• ABA JOURNAL ...
Federal prosecutors say onetime Texas billionaire R. Allen Stanford made false representations to investors to persuade them to purchase so-called certificates of deposit at an offshore bank he controlled.
However, his defense team is expected to point the finger at the feds and the global economic downturn at the federal fraud trial in Houston and contend that heavy-handed government intervention destroyed the value of the ventures into which Stanford put some $7 billion in investor funds, Bloomberg reports.
Rather than misappropriating money, as prosecutors claim, Stanford funded startup companies and real-estate ventures, among other ventures, in order to provide high returns to investors in the Antiguan bank CDs, his lawyers insist. But for the interference of federal regulators, who stepped in as Stanford’s accountants were recording these assets on company books, destroying their value with a much-publicized investigation, investors’ money wouldn’t have been lost, the defense contends.
“There was a consolidation project under way, not just something they were talking about, but that they were doing,” defense attorney Ali Fazel said at a hearing last week. “The government’s contention that this is fraud is just wrong.”
• REUTERS
Texas financier Allen Stanford used lies and bribes to steal the hard-earned savings of his customers, prosecutors said on Tuesday.
“He told them lie, after lie, after lie,” prosecutor Gregg Costa told the jury at the start of Stanford’s trial on criminal fraud charges in federal court in Houston.
Stanford, 61, dressed in a grey suit and white shirt, pleaded not guilty to a 14-count indictment. “I plead not guilty to every count,” the former billionaire said in an emphatic voice.
He rocked in his chair, listening intently as Costa laid out the government’s case of a sprawling $7 billion Ponzi scheme originating with Stanford International Bank in Antigua. Stanford used it as “his own private piggy bank,” Costa said.
“Really, that is the perfect name for the bank, because the bank was there to enrich Mr. Stanford.”
Robert Scardino, one of Stanford’s lawyers, told the jury that the Texas native was an astute businessman whose business was ruined when the government seized it in 2009.
“Stanford was kind of an absentee CEO, a visionary,” Scardino told jurors.
He argued that every dime investors put into CDs issued from the Antigua bank was repaid over the course of 22 years.
“He paid every penny that was promised,” Scardino said. “Never once failed, no evidence of a fraud.”
• WALL STREET JOURNAL
R. Allen Stanford founded a legitimate business that was brought low by wrongheaded regulators, his lawyers told a jury as his long-delayed criminal trial opened in federal court here on Tuesday.
Mr. Stanford is accused by prosecutors of running a $7 billion Ponzi scheme.
In part because of a gag order imposed by U.S. District Court Judge David Hittner, and in part because of injuries Mr. Stanford suffered in jail that he claims left him with memory loss, his defense strategy hasn’t previously been clear.
Bloomberg/BusinessWeek notes Stanford’s entourage, once featuring his several paramours/wives/their childen, has dwindled to occasional courtroom appearances by his mother and a lone female admirer, who says she also visits him regularly in prison.
Houston attorneys Ali Fazel and Robert Scardino, Stanford's lead defense counsel, said they'll use thousands of bank and business records to show jurors the financier never intended to defraud anyone. They claim no investor lost money until the government stepped in and seized the businesses, destroying their value. Stanford International Bank stumbled in the same global financial meltdown that tripped up banks worldwide in late 2008, they said.
• • •
The U.K.’s Daily Mail reminds readers of the trial and gives U.S. readers a corresponding British Pound total – £4.6billion – to compare with the $7.2 billion American reporters use to note claims of an alleged Ponzi scheme on investors.
The Mail also recalls Stanford’s long-ago announcement of the Twenty20matches with the ECB, Stanford landing in a helicopter at the cricket field, and photographed with legends of the game standing by a huge box apparently full of cash.
• • •
Houston Public Radio’s KUHF reporter Andrew Schneider reports on legal analysis about the Stanford scandal:
Geoffrey Corn teaches criminal law and procedure at South Texas College of Law. Corn says the amount of money involved and the extent of Stanford’s offshore dealings make the case unusually complex.
“And that’s the challenge, I think of the prosecutors in a case like this is to demystify and to boil it down to its bare elements, which is, ‘You lied to get people to give you money, and then you used that money to lie to the people who had already given you money that that was their profit.’ The classic pyramid scheme. Not to mention siphoning huge amounts off for your personal gain.”
Stanford faces 14 criminal counts, including fraud, conspiracy to launder money and obstruction of a federal investigation.
“In proving the case at trial, you’re looking at something that looks a lot more like the Enron case.”
Adam Gershowitz teaches criminal law and procedure at the University of Houston Law Center.
“You’re looking at a case where there’s a lot of documents in which Stanford is going to say, ‘No, this is perfect legitimate business operations, and the government doesn’t understand it,’ and they’re going to be put to the burden of showing that this is a criminal enterprise, while the defendant simply says the paperwork shows something different.”
• • •