Government continues case against Stanford

By Patsy R. Brumfield/NEMS Daily Journal

HOUSTON, Texas – The government continues its multi-billion-dollar fraud case today against fallen financier R. Allen Stanford.
Antiguan bank regulator Althea Crick told the Houston jury on Tuesday that she thinks Stanford pulled his Guardian International Bank out of the Caribbean island of Montserrat because its operating license was about to be revoked.
“It would seem so,” she told prosecutor Andrew Warren after a series of questions over documents surrounding disagreements over the Montserrat licenses and whether they were revoked.
Yet questions lingered about whether the licenses ever existed.
The defense sought to show, through Crick, that Stanford made significant investments on her island and promoted the region’s cricket resurgence.
Crick said she didn’t know much about cricket, other than it was not like baseball, as defense attorney John Parras said earlier.
Crick, chairwoman of the board of Antigua’s financial regulator, also insisted that Stanford International Bank Ltd’s documents were wrong to claim banking regulators banned SIBL from disclosing its investments and assets to the public.
Monday, the defense sought to make points that it was Stanford CFO James Davis whose behavior should be called into question.
But Assistant U.S. Attorney Andrew Warren had Crick read the jury a promissory with SIBL for $59.5 million, plus interest.
Was that ever disclosed to your agency, Warren asked her.
“Not to my knowledge,” Crick answered.
Hours later, former Stanford employee Arnold Knoche of Houston read to the jury two promissory notes for Stanford through SIBL, one for $59.5 million and another for $330 million, both plus interest.
Do you think, if you were a certificate of deposit holder through SIBL, that you’d want to know that the owner had taken such loans, prosecutor Gregg Costa asked the retired CPA.
“I would,” Knoche responded.
Knoche also said Davis was not in charge of the company, it was Stanford.
“He was very involved. He knew what was going on,” he said of Stanford.
Perhaps the highlight of the day’s testimony was a video of Stanford telling locals why he was spending his own money to build a fantastic resort opportunity in Antigua.
From annual financial reports, Costa had Knoche show jurors that SIBL asserted that its investments were in conservative securities, stocks, bonds, treasury bills – not megal-land developments that Stanford was building in the Caribbean island of Antigua, where SIBL was headquartered.
Interestingly, Knoche said throughout the 16 years he worked for Stanford from Texas real estate projects to the Antiguan construction projects, ultimately at a $300,000-per-year salary, he never bought an SIBL CD.
No one asked him why.
The defense scored points when Knoche admitted he didn’t know if international financial reporting standards required disclosure of Stanford’s loans. But the government came back with the moral argument that, regardless, investors were entitled to know.
Knoche agreed, as did Crick earlier in the day.
Going forward
It’s not clear who will take the stand this morning in the downtown Houston federal courthouse wtih Judge David Hittner presiding.
Crick noted on the stand that she had repeated run-ins with Stanford over control of Antiguan financial regulation. She indicated he made it difficult enough politically for her that she walked away at some point.
She contradicted herself a couple of times under cross-examination, which could come up when defense attorneys make closing arguments weeks from now.
Prosecutor Andrew Warren tried to introduce a claim that Antiguan bank auditor C.A.S. Hewlett, whom Crick almost worked with one time, was on Stanford’s payroll and wrote reports vouching for SIBL’s good status.
Defense attorneys spent considerable time Tuesday trying to impress the jury about Stanford’s dream of a fast-paced Antigua as the playground of “the richest of the rich” who lived and played where Stanford made his fortune.
Knoche agreed that his former boss “wanted only the best of the best” for whatever he did there.
However, he said he had no idea the money could have come from CD purchases. He said that would not have been appropriate, if true.
patsy.brumfield@journalinc.com