HOUSTON, Texas – James Davis’ voice trembled as he answered questions Thursday about his admitted role in an $7 billion Ponzi scheme alleged through Antigua-based Stanford International Bank.
The 61-year-old Baldwyn native entered guilty pleas in U.S. District Court and now faces up to 30 years in prison on three counts he conspired to commit mail, wire and securities fraud; committed mail fraud; and conspired to obstruct a Securities and Exchange Commission into his employer, Stanford Financial Group, SIB’s parent company.
He also agreed to forfeit $1 billion, which apparently will come from disclosures about where Stanford assets are located, and will be required to pay up to $7 billion in restitution on Counts 1 and 2.
Did you intentionally do these things you’re accused of? Judge David Hittner asked Davis.
“Yes, your honor,” was his answer.
Did you know what you were doing? Hittner asked.
“Yes, your honor,” the silver-haired Davis said again, as his wife, Lori, looked blankly from the courtroom audience.
Although Davis is scheduled to be sentenced Nov. 10, his attorney, David Finn of Dallas, said his client isn’t likely to be sentenced until after other Stanford prosecutions are complete. No trial dates are set yet.
Davis remains free on bond. Hittner agreed that some Stanford victims will be allowed to speak when Davis is sentenced.
“Obviously, we’re hopeful that the government, the investors and ultimately the judge will take into consideration the fact that we have been cooperating,” Finn told reporters. “And as far as I can tell at this point, we are the only folks associated with this Stanford nightmare that are accepting responsibility and actively trying to assist the government and the investors.”
He also said federal investigators have dived into Northeast Mississippi waters looking for documents to prosecute the Stanford financial defendants.
“Everything the government has asked us to do, every single thing, we’ve done,” Finn said, “including going to the old farm in Mississippi and helping the FBI dive team dive into tanks and ponds to look for and retrieve evidence.”
Davis was SFG’s chief financial officer before Stanford’s “House of Cards,” as Finn described it, came tumbling down in February. Thousands of SIBL certificate of deposit investors lost life savings in the crash. A Dallas-based receiver, who has frozen all the defendants’ assets, is seeking to build a victims fund, but whether anyone will recover anything isn’t known.
Finn said the Davises are living with family in Michigan and that Davis, once a millionaire, just got a manual-labor job on the family farm, earning $10 an hour.
Accused in the case with Davis are Stanford’s CEO, R. Allen Stanford; Chief Investment Officer Laura Pendergest-Holt, also of Baldwyn; two other executives; and an Antiguan regulator. Other than the regulator, whose extradition is expected soon, they all pleaded not guilty. Davis is the first to change his plea.
Stanford was expected in the courtroom Thursday, but he was taken to a Conroe, Texas, hospital for treatment of an irregular heartbeat and high pulse.
One prosecutor, outside the courtroom, was overheard describing Stanford’s condition as “court-itis.”
Davis was charged separately from Stanford and the others, apparently because he offered to cooperate with investigators. Finn said Davis is the one who “blew the whistle” on the scheme.
“He came in and said, ‘I did wrong, I knew I was doing wrong, I did it for a long time. I allowed myself to be used by this Stanford fellow, who’s a larger-than-life action figure,’ as you’ve probably figured,” Finn told reporters.
“But ultimately, he knew he did wrong.”
The Davises did not make any public statements before or after the hearing.
Gregg Costa, assistant U.S. attorney, told the judge the prosecution will reassess its sentence recommendation for Davis, if his cooperation turns out to be substantial.
Patsy R. Brumfied/NEMS Daily Journal