Department of Justice
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FOR IMMEDIATE RELEASE
Tuesday, March 6, 2012
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Allen Stanford Convicted in Houston for Orchestrating $7 Billion Investment Fraud Scheme

WASHINGTON – A Houston federal jury today convicted Robert Allen Stanford, the former Board of Directors Chairman of Stanford International Bank (SIB), for orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion from SIB to finance his personal businesses.

The guilty verdict was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Kevin Perkins of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell; Special Agent in Charge Lucy Cruz of the Internal Revenue Service-Criminal Investigations (IRS-CI).

Following a six-week trial before U.S. District Judge David Hittner, and approximately three days of deliberation, the jury found Stanford guilty on 13 of 14 counts in the indictment.

Stanford, 61, was convicted of one count of conspiracy to commit wire and mail fraud, four counts of wire fraud, five counts of mail fraud, one count of conspiracy to obstruct a U.S. Securities and Exchange Commission (SEC) investigation, one count of obstruction of an SEC investigation and one count of conspiracy to commit money laundering. The jury found Stanford not guilty on one count of wire fraud.

At sentencing, Stanford faces a maximum prison sentence of 20 years for the count of conspiracy to commit wire and mail fraud, each count of wire and mail fraud, and the count of conspiracy to commit money laundering, and five years for the count of conspiracy to obstruct an SEC investigation and the count of obstruction of an SEC investigation.

The investigation was conducted by the FBI’s Houston Field Office, the U.S. Postal Inspection Service, the IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration. The case was prosecuted by Deputy Chief William Stellmach of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Gregg Costa of the Southern District of Texas and Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section.

12-293 Criminal Division

Stanford Indictment

Financier Stanford convicted in $7 billion fraud
By JUAN A. LOZANO, The Associated Press, 3:26 p.m. Tuesday, March 6, 2012
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HOUSTON — Texas tycoon R. Allen Stanford, whose financial empire once spanned the Americas, was convicted Tuesday on all but one of the 14 counts he faced for allegedly bilking investors out of more than $7 billion in massive Ponzi scheme he operated for 20 years.

Jurors reached their verdicts against Stanford during their fourth day of deliberation, finding him guilty on all charges except a single count of wire fraud.

Stanford, who was once considered one of the wealthiest people in the U.S., looked down when the verdict was read. His mother and daughters, who were in the federal courtroom in Houston, hugged one another, and one of the daughters started crying.

"We are disappointed in the outcome. We expect to appeal," Ali Fazel, one of Stanford's attorneys, said after the hearing. He said the judge's gag order on attorneys from both sides prevented him from commenting further, and prosecutors declined to comment after the hearing.

Prosecutors called Stanford a con artist who lined his pockets with investors' money to fund a string of failed businesses, pay for a lavish lifestyle that included yachts and private jets, and bribe regulators to help him hide his scheme. Stanford's attorneys told jurors the financier was a visionary entrepreneur who made money for investors and conducted legitimate business deals.

Stanford, 61, who's been jailed since his indictment in 2009, will remain incarcerated until he is sentenced.

He faces up to 20 years for the most serious charges against him, but the once high-flying businessman could spend longer than that behind bars if U.S. District Judge David Hittner orders the sentences to be served consecutively instead of concurrently.

With Stanford's conviction, a shorter, civil trial will be held with the same jury on prosecutors' efforts to seize funds from more than 30 bank accounts held by the financier or his companies around the world, including in Switzerland, the United Kingdom and Canada. The civil trial could take as little as a day.

Stanford was once considered one of the wealthiest people in the U.S. with an estimated net worth of more than $2 billion. But he had court-appointed attorneys after his assets were seized.

During the more than six-week trial, prosecutors methodically presented evidence, including testimony from ex-employees as well as emails and financial statements, they said showed Stanford orchestrated a 20-year scheme that bilked billions from investors through the sale of certificates of deposit, or CDs, from his bank on the Caribbean island nation of Antigua.

They said Stanford, whose financial empire was headquartered in Houston, lied to depositors from more than 100 countries by telling them their funds were being safely invested in stocks, bonds and other securities instead of being funneled into his businesses and personal accounts.

The prosecution's star witness — James M. Davis, the former chief financial officer for Stanford's various companies — told jurors he and Stanford worked together to falsify bank records, annual reports and other documents in order to conceal the fraud.

Stanford had wanted to testify and jurors were told he would do so, but his attorneys apparently convinced him not to take the witness stand.

Stanford's attorneys told jurors the financier was trying to consolidate his businesses to pay back investors when authorities seized his companies. Stanford's attorneys highlighted his work to build up Antigua's economy as well as his philanthropic efforts on the island. Stanford, the largest private employer on the island nation, was widely known as "Sir Allen" after being knighted by Antigua's government.

The financier's attorneys accused Davis of being behind the fraud and of lying so he could get a reduced sentence. Davis pleaded guilty to three fraud and conspiracy charges in 2009 as part of a deal he made with prosecutors.

Three other indicted former executives of Stanford's companies are to be tried in September. A former Antiguan financial regulator accused of accepting bribes from Stanford was also indicted and he awaits extradition to the U.S.

The financier's trial was delayed after he was declared incompetent in January 2011 due to an anti-anxiety drug addiction he developed in jail and he underwent treatment. He was also evaluated for any long-term effects from being injured in a September 2009 jail fight. Stanford was declared fit for trial in December.

Stanford and the former executives are also fighting a U.S. Securities and Exchange Commission lawsuit filed in Dallas that makes similar allegations.

Stanford guilty of bilking investors of billions
By Anna Driver, Reuters

HOUSTON (Reuters) - Allen Stanford was convicted on Tuesday of running a $7 billion Ponzi scheme, a verdict that caps a riches-to-rags trajectory for the former Texas financier and Caribbean playboy.
It was a vindication for the U.S. government, which closed down Stanford's financial empire in February 2009 but had failed for years to address signs that the business was built on air. The Stanford case was the biggest investment fraud since Bernard Madoff's.

Stanford was found guilty on 13 of 14 criminal counts, including fraud, conspiracy and obstructing an investigation by the U.S. Securities and Exchange Commission.

As Stanford, 61, was led out of the courtroom after the verdict, he touched his fist to his heart and looked at the bench where his mother and two daughters sat. He has been jailed since his June 2009 arrest.
"We're disappointed in the outcome," said Stanford attorney Ali Fazel. "We do expect an appeal." He said he expects sentencing in several months.

The charges carry a potential prison sentence of more than 200 years if the terms are served consecutively, but Stanford is more likely to face a maximum of about 20 years if, as is typical in white-collar cases, he is sentenced to concurrent prison terms.

The verdict came less than a day after the Houston federal jury said it could not reach a decision, and U.S. District Judge David Hittner instructed jurors to keep deliberating.

Still, the verdict may prove only a moral victory for Stanford's victims. Most have received none of the money back they invested in Stanford's certificates of deposit, though prosecutors are trying to seize more than $300 million in offshore assets tied to Stanford and other entities that have been frozen.
"For all the investors I think there is a sense of relief that they weren't just fools," said Cassie Wilkinson, a Houston investor in Stanford funds who attended the six-week trial. "There was a jury of 12 people who found the same thing - that we were just conned."

Stanford's unraveling was one of the most closely watched fraud cases since Madoff's. Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors have called a $64.8 billion Ponzi scheme. He is serving a 150-year prison sentence.

'PERSONAL ATM'

Stanford's personal fortune was once valued at $2.2 billion.
At trial, prosecutors told how he repeatedly raided the bank he owned in Antigua, Stanford International Bank, using it as his "personal ATM."

He bought a castle in Florida for one of his girlfriends and his oldest daughter lived in a million-dollar condominium in Houston. He wore custom-made suits and bankrolled a $20 million prize for an international cricket tournament.

A few hours after the verdict, jurors returned to the courtroom to consider the government's demand that more than $300 million in about 30 bank accounts tied to Stanford and other entities be forfeited. The money is held in accounts in Geneva, the United Kingdom and Canada in the names of Stanford and other entities, according to the government.

"Every single dollar that the U.S. is seeking to forfeit is CD depositor money that stems from Mr. Stanford's crimes and belongs to the victims of his crimes," said prosecutor Andrew Warren. The jury is to hear more testimony in the forfeiture case on Wednesday.

In a telephone interview after the verdict, Kevin Sadler, lead counsel for Ralph Janvey, the court-appointed receiver charged with returning money to Stanford investors, called the verdict an "important milestone" and said it should help in prosecutors' efforts to seize the frozen assets.

At the trial, the government's star witness, former Stanford aide James Davis, testified that he and Stanford faked documents and made up financial reports. They funneled millions of dollars from Stanford International Bank to a secret Swiss bank account that Stanford tapped for his personal use, Davis testified.

Stanford's lawyers portrayed their client as a visionary who was not involved in his firm's daily activities. They blamed Davis for any fraud and argued that Stanford's businesses were viable until the government shut down Stanford Financial Group in Houston in February 2009. Left with no money, Stanford was declared indigent by the court and his defense was paid for with public funds.

Wendell Odom, a criminal defense attorney in Houston who observed much of the trial, said Stanford's attorneys did a good job of discrediting Davis, who has pleaded guilty to three criminal counts, by getting him to admit to being a liar. But they failed to develop an alternative theme for the jury. "There was just too much evidence," he said.

BRAIN INJURY

While in jail awaiting trial, Stanford was beaten by another inmate, leaving him with a brain injury and an addiction to an anti-anxiety medication. After eight months at a prison hospital, he was deemed competent to stand trial despite arguments from his lawyers that he had lost his memory.

Before his trial began on January 23, Stanford's lawyers said their client wanted to tell his story to the jury, but he ultimately did not testify.

Stanford grew up in Mexia, Texas. He studied finance at Baylor University, where Davis, who later become chief financial officer of Stanford Financial Group, was his roommate.

In the 1980s, he became a Houston real estate investor. He later opened an offshore bank on the Caribbean island of Montserrat and, after banking regulations there tightened, he moved his operation to Antigua. The bank specialized in aggressively selling certificates of deposit, his former employees testified. They targeted clients in Latin America, especially Venezuela, and oil company workers on the U.S. Gulf Coast.

In Antigua, he became a philanthropist and sponsor of cricket, the national sport, and was known as "Sir Allen" after being knighted there in 2006. By 2008, Stanford made No. 205 on Forbes magazine's list of the wealthiest Americans.

But questions surfaced about how Stanford International Bank's CDs could persistently pay above market rates. By February 2009, investors were trying to withdraw their money and, on February 17 of that year, the government descended on his headquarters in Houston and shut it down.

Antigua stripped him of his knighthood and seized his local assets.
(Reporting by Anna Driver, Eileen O'Grady and Chris Baltimore; Editing by Martha Graybow and Matthew Lewis)