Stanford's bank properly audited – accountant

There was nothing "extravagant" about millions that were paid to the
outside auditor of jailed Texas tycoon R. Allen Stanford's Caribbean bank, an accountant
told jurors Thursday at the financier's fraud trial.

Prosecutors allege the bank was at the center of a Ponzi scheme that took billions
from investors.

But Morris Hollander, a forensic accountant hired by Stanford's defence team, testified
that his review of financial statements and other documents seemed to show the bank
was being properly audited by the businessman's outside auditor, C.A.S. Hewlett,
and the bank was adhering to international accounting rules.

When questioned by a prosecutor, however, Hollander said he had not seen any of
the bank's actual accounting books and records. He said his conclusions were based
only on his review of prepared annual reports and other documents that authorities
allege were fabricated by Stanford.

Stanford is accused of orchestrating a 20-year scheme that bilked more than US$7
billion from investors through the sale of certificates of deposit from his bank
on the Caribbean island nation of Antigua.

Prosecutors allege Stanford bribed Hewlett, who was based in Antigua, with more
than US$4.6 million from a secret Swiss bank account over a 10-year period, to help
him hide the massive fraud. Defence attorneys say the money was payment for auditing
services.

"Are these amounts (the $4.6 million) extravagant ... if you were auditing
the bank?" Ali Fazel, one of Stanford's attorneys asked.

"In my view they are not extravagant," Hollander said.

Prosecutors have also alleged Stanford used up to US$2 billion from deposits as
personal loans and investors were not made aware of the loans.

Hollander said based on international accounting standards, the loans did not need
to be reported to investors because they were actually investments in Stanford's
businesses, which included two airlines and a company that maintained his fleet
of private jets.

Prosecutor Andrew Warren said that from 2003 to 2008, Stanford's various companies
lost US$711 million.

"Would people have bought the CDs if they had known the size of loans to Mr.
Stanford?" Warren asked.

Stanford's attorneys have said he was trying to consolidate his businesses to pay
back investors when authorities seized his companies.

Hollander said his review of prepared reports showed the proposed consolidation
indicated Stanford's various companies had a total value of US$8.59 billion by the
end of 2008. Prosecutors allege nearly all of that money was already gone by that
point and the proposed consolidation was just a way to hide the fraud.

"Does consolidation allow you to create billions of dollars out of thin air?"
Warren asked.

"Not consolidation by itself," Hollander said.

Hollander spent much of his time going over the bank's reports and explaining financial
terms to jurors, sometimes in painstaking detail.

That prompted federal prosecutor Gregg Costa to say during a jury break that the
testimony was moving at a "glacial pace" and to suggest the defence team
was delaying the trial — in its fifth week — so it could have more time
to prepare for when Stanford takes the stand. Fazel replied that "assumes Stanford
will testify."

Defense attorneys said at the start of the trial the financier would testify. After
testimony ended Thursday, Fazel told U.S. District Judge David Hittner a final decision
hasn't been made.