By Patsy R. Brumfield / Daily Journal
HOUSTON, Texas – James M. Davis, former CFO, comes under fire as defense attorney Robert Scardino begins pushing to show that Davis was the architect of the fraud that cost investors billions.
It’s Day 12 in the government’s case against Davis’ ex-boss, R. Allen Stanford.
(For multiple daily updates from court, go to djournal.com and click on the Allen Stanford Trial News icon. Also, to watch live Tweets from the courtroom, follow me @realnewsqueen #stanfordtrial. With that hashtag, you also can get other courtroom reporters Tweets.)
11:55 – Judge, jury return from break.
(Scardino to Davis … remember question about acquiring $6M from Soc Gen acct, Dec. 2008?) Yes, sir (You said I never did that?) I never took $6M. (I said you stole it?) I did not steal $6M. (Exhibit – … Stellmach says it’s govt exhibit?) Yes. (Prepared as a summary of transactions, as opposed to the actual document. It’s the govt’s summary?) Yes sir. (Look there … says wire transfers Soc Gen to Stanford entities.) Yes sir. (Summaryu shows Dec. 31, 2008, $6M transferred to Bank of Antigua?) I see that. (About time you were trying to borrow $880K from RAS?) From Stanford, $990K. (Tell us what this is?) A signatory Soc Gen private banking authorized sigs document. (Shows people who have control and authority of that account?) Yes sir. (Signature card?) For Bank of Antigua LTD account (James Davis?) Authorized? Yes. (Your account?) No RAS company Bank of Antigua. (Where is he a signatory?) He owns the bank. (Does he have authority on account? ) No (You and Ms. Pendergest only ones?) What sheet says. (Doubt it’s correct?) Appears to be correct.
(Exhibit – what is this?) Acct. of Soc Gen, statement of account, advice of a debit transaction. Acct. 731. Indicates debit, money out. (Next pg – part of same exhibit – what is that?) An email from myself to asst at Soc Gen. Got my name on top. Kind of garbled there. (Email at Soc Gen?) To do book transfer from SFG to Bank of Antigua for $6M. (Back to other exhibit – that is the 732 acct you have control of?) Yes. (Then, you’re asking person at Soc Gen Bank to transfer $6M out of 731 slush fund into an acct you have control of?) I’m a signatory. (For $6M?) Yes, to RAS account. That’s his company, Bank of Antigua LTD 100%.
(Docs shown, show you transferred money out of 731 slush fund, you call it, into account you have personal control over?
12:09 – JURY OUT
judge – DAVIS, answer just the questions. If yes or no, that’s it. You can’t o it. I know there ‘s a frustration problem. You want to get information out. I’m sure govt will take it up on re-direct. Stellmach – visit with your witness and we’ll get jury back. JUDGE – I want you to go up and reinforce your witness. Scardino – I hope it takes effect. STELLMACH – Talking to DAvis on stand.
12:15 – Jury back. Let’s proceed, judge says.
(Mr. Davis, no confusion – 731 acct with you and RAS as signatories. 732 – acct with you and Holt as signatures. Dec. 31, 2008 you instructed Freedli to put $6M into acct controlled by you and Holt.) Yes, that we were signatures. (Exhibit – recognize that?) I recognize the companies listed, the bank.(Shows opening Soc Gen Acct 731?) Davis can’t read on screen… looks at original document…. Scardino at flip chart. (What is that?) Signature card (Who has authority on it and to move money?) Yes sir, Davis and RAS (732 is completely separate?) Yes. (What did you do with $6M?) I didn’t do anything wiht it. (Where is it?) Sent to Bank of Antigua, don’t know what they did with it. (It’s your account isn’t it?) No it isn’t (Didn’t control account?) Did not come to my personal account. (Deny that you instructed transfer of $6M to acct with signature authority?) At Soc Gen? From 731 from 732, I did send that $6M. (Where is it?) Went to Bank of Antigua’s control? (Back that up with dox?) It’s document you showed, transfer of $6M to the bank. Whole stack of docs in Investment and Research Dept. of Holt and her team, managing that money that exists with details of where that money was invested. (Explanation for that $6M? Holt got money?) No sir, it went into Bank of Antigua acct that RAS owned. (Your name on it, two people can decide where money goes out of the account – you and Holt?) Yes (You take this during time when you need money …you were negative in balances? Right/) Yes. (Testified that more watned out of bank than putting in of SIBL?) Yes. (Things going down with world economy?) Yes (seems like good time to draw $6M out of Swiss account?) Not yes or no quesiton.
(Mr. Davis, before you came here to testify, knew questions asked about money you got? Didn’t you?) Yes sir. (You went over that with govt prosecutors?) I answered quetions they asked. (Money on cell phone, talked to them?) Yes. (About a $400K wire transfer we haven’t discussed yet?) Yes. (Revelaed that in a month or so?) Yes. (Did you tell them about $6M that you authorized into your account?) No sir. (Have no docs to show where it went except into your pocket?) No sir. (No docs because you didn’t tell anybody?) I answered questions. Didn’t specifically remember talking about the transfer?)
(Know where $6M is?) Yes sir, I do.
(Will come back to that … when you realized that govt.. FBI to interview. You hired a lawyer… remember that/) Yes sir, I remember hiring a lawyers. (David Finn?) Yes I did. (He’s a lawyer in Dallas?) Yes sir. In Texas. (Live in Dallas at time?) No sir. (Got a referral to Finn?) Yes sir. (Remember about when contacted Finn?) Was first week of March 2009. (March? Review docs of engagement or fee agreement to refresh your memory?) We did not pass documents at that time, talked to him on the phone. (Creates atty/client relationship? KNow that?) Yes. sir (Worked with lawyers before?) In corporate legal world. (Land, contracts?) Attys used in accounting and legal departments in Stanford companies. (Mr. Maas?) Name sounds familiar.
(When contacted Finn, had concern about investigation for criminal activity?) I had a lot of concerns, why I hired him. (About two days, been telling jury you’ve been a crook for 16 years or more?) Is this a trick question. (Must lead you to it… telling jury that whole operation was a fraud?) We were the fraud. (So your position, when hired Finn, was it the same – a crook past 16 years?) I don’t understand. (Hire a lawyer because FBI wants to interview you?) Yes sir, I needed a lawyer. (Needed a criminal lawyer. Did you tell him you’d been a crook for 16years?) Yes (Involved complicated business transactions for 16 years?) OBJECT – SUSTAINED (You watned your lawyer to do a good job for you?) I hope he will. (Will? Hope he would? Must tell him what was going on?) Yes sir. (So Finn… together, went over all these transactions you worked through with govt?) No, I did not. (Annual reports? Point is, how much time spent from engaged Finn and worked for govt.?) About an hour. My wife and I saw in his office and decided in meeting and have him call Rose Romaro at SEC, yes sir. It was pretty quick. (Instructions to lawyer, I want to be witness for government?) OBJECT – SUSTAINED. (DECISION TO be witness for govt after hour?) Yes. (Then, how much time to be their witness? Agreement?) Don’t know exactly. Two and half, three months. (Refresh your memory? Exhibit – recognize this?) Yes sir, I do. Plea agreement between govt and myself. (Govt exhibit – Look at back. Who signed?) I signed it.
(Let me show you … exhibit … recognized it?) Yes sir. (As proffer agreement?) I do. (Date signed?) 19th of March, 2009. (Signed it?) I did and my attorney and U.S. represnetaties and SEC, and FBI. (Lot of sigs?) Yes, appears so. (Said contacted him in early March? By 19th, cooperating with governemtn?) Signed agreement, yes sir. (Meant .. know what proffer agreement is?) Yes sir. (Were you afraid, scared back then?) Really scared. (REALLY SCARED? You ahd FBI all over you?) Yes sir. (Prison for rest of your life?) Yes sir, what it looked like. I’m 63. (Testimony … man go to church … so things you do you think are wrong are a great concern to you. You feel guilt?) Yes sir. (So when all comes down and hired Finn, felt great deal of guilt?) I had done wrong, yes sir. (Earlier you described yourself?) I’m a liar, hypocrite, adulterer, fraudster, coward. (When not working for you, you turned against others? What agreed to do … with relationships in your life?) I agreed to tell the truth. Agreed to tell the truth. (Hire lawyer, in two weeks enter into proffer. Understand what that is?) I believe I know. (What means to you?) I go in and honestly and truthfully and complete answer questions posed to me.
(Was it explained.. you tell govt wht you know and if govt thinks it’s enough, they make a deal with you?) Yes. (Part of it, whatever you tell them, the govt agrees not to use it in subsequent prosecutions?) JUDGE – COUNSEL, EXPLAINING WHAT IT IS? Scardino – yes. (You tell what you know … two weeks after hire lawyer. Start telling them, right?) Quicker. (Where meeting for proffer?) Fort Worth? In SEC offices. (Understand that part of the proffer is that to tell truth or all deals are off?) Yes sir. (If tell something incriminating, they agree not to use it against you, if no deals made?) Possibly note. (So, this was the beginning of your relationship with govt prosecutors?) Yes sir. (Trying to convince them that you had enough information against other defendants…so they would use you?) On advice of atty, signed it. (Beginning to relationship… to evaluate you as a witness?) Can’t say what they were thinking.
(Telling jury you didn’t know what proffer was?) Not completely. Signing to tell the truth. (Did you say I’m going to tell jury I’m a liar?) I believe I understood that. (Acknowledge that you were going to say a liar, hypocrite, fraudster, coward?) OBJECT – GO ON (Beginning of relationship with govt. ) Yes. (Move on with FBI, prosecutors for more interviews?) Yes. (Part of agreement, to tell truth. Ifyou don’t, whatever deal you made goes away?) Yes sir. (Continued on, made a deal with govt,, plea agreement?) Yes sir, I signed a plea agreement.
(Just a minute to find it …recognize this?) Yes sir. (What is it?) Copy of plea agreement I signed in August 2009. (Agreed to do?) Tell the truth. (What else?) 20 pages here. (Yes there are. You agreed to plead guilty to certain federal offenses?) I did. (What?) 1 Ct. conspiracy to commit sec fraud, mail fraud, conspiracy to obstruct SEC investigation. (Has govt prosecuted co-defendants with obstruction?) Don’t know. (Part of deal is to testify against the others? Isn’t it?) I haven’t discussed those prosecutions of others. (In agreement, when trying to make deal, to testify against whomever they decided to do so.?) Agreed to cooperate. (Agreed to testify against Holt, your oold girlfriend?) Haven’t agreed exacty to that but agreed to cooperate. (Need separate agreement?) No sir. (Do whatever they ask you to do?) Cooperate. Pled guilty to those three counts. (Testify at behest of govt?) Yes sir. (This case and other cases?) I’m going to cooperate with govt.
(Govt. will do something for you, in return?) I’ve already signed the plea agrement. (Here … out of the goodness of your heart?) No sir, Do you mean if I want to go to prison for rest ofmy life? No sir. (Trying to avoid that?) Pled to 30 years. I don’t want to get 30 years. (Want govt to do something for you?) I don’t want to spend 30 years in prison. (They’e agreed to do what for you?) They’ve agreed to speak to the judge as … may in fact… as to my level of cooperation. Up to them. (If do good enough job, they will try to do something for you?) They might. (No promises?) Right. (You made a bad deal?) NO sir, made a good deal. (Up to them? It’s a bad deal. Need to say something for them, or won’t get talk to Jduge Hittner?) Here to tell the truth. (Convinct prosecutors that you did good enough job so they will write what… a letter? Real familiar with this?) Heard of it. (Understanding?) That they at their decision would communicate my level of cooperation. (More technical than that? Under law, judge is authorized to reduce your sentence if judge gets this letter. If he doesn’t get THIS LETTER, he can’t apply reduction of your sentence?) OBJECTION – BOOKER – JUDGE … REPHRASE
(You’re looking for govt to ask judge to reduce your sentence?) I’m hoping not to spend 30 years in prison.
JUDGE – Booker is U.S. Supreme Court decision. Makes guidelines advisory. Up to govt whether to do it or not.
(It’s complicated, I admit. In federal court, it’s on a chart or scale. Nubmers assigned and higher number, the more serious the sentence is?) Yes. (When cooperate, govt will ask for a lower number rather than higher number, right? Go to bat for you with the judge, say “substantial assistance”? Magic words?) OK. I’m familiar with that. (If you provide it, they will go to bat for you and ask judge to reduce your sentence.?) That’s their prerogative. (If testify not consistent to their theory of the case, all this goes out the window?) If I tellthe truth, if I tellthe truth, if I tell the truth. (Plea agreement shows sentencing levels? Lists points for offenses …?) Yes sir, I see that. Think it also states exactness, truthfulness? (In opinion of govt?) OBJECTION – SCARDINO I’LL MOVE ALONG
(Don’t expect to get anything for telling jury you’re a liar and a crook? Did you expect something in return?) I hoped that something will becoming in return… for telling the truth. (Stellmach – first question… if he asked if you’re guilty and you say no I’m not, what happens to this agreement?) Nullified. (Then it’s back to 46 … four points higher than life in prison. You better go to the government for a deal?) (All thos goes away and Judge Hittner sentences you… as he said. He can give you life, if he wants to.) OBJECTION – SENTENCING AT DISCRETION OF JUDGE –
JUDGE – I THINK LUNCH BREAK.