Attorneys await decision on Stanford's bond

[June 30, 2009]  HOUSTON (AP) -- Attorneys for Texas financier R. Allen Stanford are hoping a federal judge will side with them and allow their client to be free on bond while he awaits trial on charges he swindled investors out of $7 billion.

Prosecutors want U.S. District Judge David Hittner to revoke Stanford's $500,000 bond and keep him in jail. Stanford has been in custody since being indicted June 18.

Hittner is expected by mid-afternoon Tuesday to rule on the fate of Stanford's bond, granted last week. He listened to arguments during a four-hour court hearing Monday.

At the hearing, prosecutor Gregg Costa argued Stanford's international ties make him a serious flight risk and differentiate him from other high-profile fraud defendants, including former Enron Corp. executives Jeffrey Skilling and Ken Lay, who were freed on bond before their trials.

Stanford holds dual U.S. and Antiguan citizenship, has a primary home outside the United States, has an international network of wealthy acquaintances who would help him and might have access to vast wealth hidden around the world, Costa said.

These are "flight risk indicators that are virtually unprecedented for a white collar defendant," he said.

But Dick DeGuerin, Stanford's attorney, said his client, who is broke because all his assets have been seized, has a good reason not to flee.

"When we win this case, and we will win this case, Mr. Stanford will be restored of much of what he has been stripped of," DeGuerin said. "That is a tremendous financial incentive to stay."

Stanford and three executives of his now defunct Houston-based Stanford Financial Group are accused of orchestrating a massive fraud by misusing most of the $7 billion they advised clients to invest in certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua.

DeGuerin denied prosecutors' claims Stanford has access to secret wealth stolen from investors and rejected comparisons of his client to convicted Wall Street swindler Bernard Madoff, sentenced in New York to 150 years in prison Monday for running a massive Ponzi scheme.

DeGuerin also told Hittner his client now lives in Houston, has strong family ties here and on several occasions tried to turn himself in to authorities.

Stanford wore a navy suit during Monday's hearing and gave a thumbs up to family members in the courtroom. During a detention hearing last week, Stanford wore an orange prison jumpsuit.

He was considered one of the richest men in America with an estimated net worth of more than $2 billion. But DeGuerin said his client's family and friends had to scramble to gather the $100,000 in cash needed for his bond.

Stanford and executives Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt pleaded not guilty last week to charges filed in a 21-count indictment.

Also indicted is Leroy King, the former chief executive officer of Antigua's Financial Services Regulatory Commission. King, accused of taking bribes from Stanford to overlook irregularities at his bank, is awaiting extradition to the United States.

Stanford and his co-defendants are charged with wire fraud, mail fraud, conspiracy to commit mail, wire and securities fraud and conspiracy to commit money laundering. Stanford, Pendergest-Holt and King are also charged with conspiring to obstruct a Securities and Exchange Commission investigation and obstruction of an SEC investigation.

Investigators say even as Stanford claimed healthy returns for investors, he was secretly diverting more than $1.6 billion in personal loans to himself which were used to pay for his lavish lifestyle, including six private jets, a helicopter and homes in Miami and St. Croix, Costa said.

The indictment also says Stanford and the other executives misrepresented the Antigua island bank's financial condition, its investment strategy and how it was regulated.

The SEC filed a lawsuit in February accusing Stanford and his top executives of committing crimes similar to those in the indictment.

[Associated Press; By JUAN A. LOZANO]

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