Stanford investors knock US Government

The Stanford Victims Coalition said that the United States Government has shown nothing less than gross negligence in its handling of accused schemer R. Allen Stanford and Stanford Financial Group.

"It is utterly inconceivable our recovery could be jeopardised in any way as Stanford is recklessly medicated to the point of addiction and delirium while in federal custody," the coalition said in a statement.

Stanford, 60, was scheduled to go on trial later this month on charges he ran a US$7-billion Ponzi scheme involving bogus certificates of deposit.

But experts for both the prosecution and defence agreed last week that Stanford has been so heavily medicated in prison that he is unfit to stand trial.

United States District Judge David Hittner, who ordered Stanford held without bail in 2009, agreed to delay the trial while Stanford is weaned from the drugs.

The length of the delay has not been determined - defence attorneys want a two-year continuance while prosecutors want a much shorter one - but the longer the delay, the longer the alleged victims must wait for any potential recovery.

Many have had their life's savings frozen since the scandal broke in February 2009.

Soon after his arrest on criminal charges in June, 2009, Stanford was transferred to a privately-run federal detention centre outside Houston, where he was severely beaten in an altercation with another inmate in September of that year.

Stanford was hospitalised and underwent surgery, and placed on medication.

He was eventually transferred to the Federal Detention Center in downtown Houston to await his trial, but the medication continued, according to court papers.

While prosecutors have suggested Stanford may be faking his condition, even a government doctor acknowledged in court last week that Stanford is "delirious", and unable to assist in his own defence while he is on the drugs.

Defence psychiatrist Victor Scarano testified last week that the drugs include the anti-anxiety medications clonazepam and mirtazapine in extremely high doses, and that it could take six months to wean him from the drugs.

Judge Hittner has asked both sides to file briefs this week on where the detoxification should take place. Defence attorneys have asked that Stanford be freed on bond and transferred to a private facility in Houston.

Recovering money

In the meantime, some 28,000 alleged victims remain in limbo.

Their best hope to recover any of their money is through criminal forfeiture that would be tied to Stanford's trial. That's because the largest chunk of money - some US$500 million - is tied up in foreign bank accounts that are nearly impossible to access without a guilty verdict, according to a source close to the case.

A separate civil fraud case by the Securities and Exchange Commission against Stanford is also largely on hold pending the criminal trial.

A court-appointed receiver had recovered less than US$100 million for Stanford's victims as of July, 2010.

"Hundreds of millions of dollars will sit in foreign bank accounts until Stanford is successfully prosecuted and instead of doing everything it can to expedite the distribution of what little is left of the Stanford empire, the Government is causing further harm to the investors," coalition of investors said.

- CMC