By Patsy R. Brumfield/NEMS Daily Journal
HOUSTON, Texas – The government on Wednesday sought to shore up James Davis’ crucial testimony against R. Allen Stanford after defense attorney Robert Scardino Jr. verbally flailed the former Baldwyn entrepreneur across two days of heated questioning.
Stanford is on trial in federal court, accused of masterminding a $7.2 billion fraud against investors in certificates of deposits through his Stanford International Bank Limited in Antigua.
On questions from the government, Davis – Stanford’s former friend and chief financial officer – wrapped up his testimony by saying:
• He obstructed the Securities and Exchange Commission’s investigation of SIBL by throwing computer evidence into the lake at his home west of Baldwyn. This statement sought to remind the jury that he hadn’t gotten a “pass” from the government on destruction of evidence.
• That whatever funds flowed through Swiss bank accounts, everything came from the CD depositors, who did not know their funds were being otherwise used or invested in risky Stanford ventures, contrary to what they were told by investment advisers or company publications.
• If a proposed consolidation of Stanford businesses had occurred in 2009, it would have wiped out all Stanford’s loans to depositors. The plan never was implemented because the operation was shut down by government agents in spring 2009.
Why did you call this plan “smoke and mirrors,” prosecutor William Stellmach asked him.
“Because the CD money that actually was spent on various projects over the years” that allegedly was reported to the public and investors “in actuality was being handled the opposite, through meetings and presentations … all put together for promoting CD sales, to tell people that their money was safe,” Davis said emotionally. “They were bamboozled by a smoke and mirror show. It was a drama.”
• That records existed to back up his claims about transactions and the bank’s financial situation. The defense claimed the jury would “just have to believe you,” meaning Davis, a self-admitted liar.
At one point, Davis told Stellmach it could all be proved. “Just follow the money,” he said as he pointed to Stanford, seated at the defense table.
Did you and Stanford ever discuss not reporting his loans because international reporting standards didn’t require it, Stellmach asked him.
“No sir,” Davis answered.
Did the $6 billion loaned to Mr. Stanford also include the $2 billion he funneled through Swiss accounts, Stellmach asked.
“It was in addition, it was separate,” Davis said.
“Who ran the company? Who owned the company? Who profited from this conduct?” the government asked.
“Mr. Stanford,” Davis responded.
The exhausted-looking Davis was excused from the stand about 11 a.m., but Scardino said the defense may want to recall him when its case is presented starting next week.
Judge David Hittner said he will decide if Davis’ recall is appropriate then.
Stanford’s trial is expected to last several more weeks in Houston, where he built his financial empire.
A parallel prosecution against Baldwyn native Laura Pendergest-Holt, who was Stanford’s chief investment officer, two other executives and a former Antiguan bank regulator is set for September.