By Patsy R. Brumfield/NEMS Daily Journal
HOUSTON, Texas – Stanford Financial Group’s chief financial officer, James Davis, planned to be the first employee laid off in a massive staff reduction just before the financial empire collapsed in 2009, a defense witness testified Thursday.
Joan Stack, who was Stanford’s global chief of human resources, told a federal jury that owner R. Allen Stanford planned the company-wide 50 percent layoff because of financial problems.
Davis, who lived near Baldwyn and worked out of SFG’s Tupelo and Memphis offices, also told her he planned to cut his own $1 million salary to $300,000 and take the rest in a severance payout, Stack said.
The Houston Chronicle reports that Stack told Davis such a move would not look good and they talked about a phased-in retirement for him.
Stanford, 61, is on trial in Houston, where he built his financial services empire. He is accused of 14 counts surrounding an alleged $7.2 billion Ponzi scheme on investors in certificates of deposit sold through Stanford International Bank Ltd. in Antigua.
Scores of Mississippians are among the 22,000 investors worldwide who lost their savings when SIBL crashed.
Davis went to work for his former Baylor University roommate in 1988 and said early in the trial that Stanford ordered the investor fraud almost from the beginning of Davis’ employment.
During four days on the witness stand, Davis said he told Stanford he wanted to leave the company. He aid the stress of the alleged frauds “was killing me.”
Stack also said that SFG’s Tupelo employees only worked for Davis and Baldwyn native Laura Pendergest-Holt, who was SFG’s chief investment officer.
Stack told the jury that the Tupelo office was “very insular” with staff who either already knew each other, went to church together or were related to Davis, The Houston Chronicle reported.
She claimed the Tupelo staff did not have the experience to do what they were hired to do.
She said Davis told her he had Stanford’s permission to buy houses in Antigua for staff to live in while they rotated in and out of SIBL. But when Stanford found out about it, he was upset, she recalled.
Stack also claimed that Stanford was upset to learn that Davis had one employee making $1 million a year, although she didn’t say who it was.
She said Davis led her to believe that Holt managed all levels of Stanford assets and that Stanford was thinking about replacing Davis with Mark Kuhrt, already working as SFG’s global controller.
Holt, Kuhrt, another ex-executive and a former Antiguan bank regulator face a September trial on accusations they were involved with the Ponzi scheme.