STANFORD TRIAL: Defence claims ex-CFO was behind alleged scheme

Lawyers for the Texas tycoon, R. Allen Stanford, claimed on Tuesday that it was his former chief financial officer, not their client, who was the mastermind behind an alleged US$7 billion Ponzi scheme.



Stanford is on trial for allegedly defrauding tens of thousands of investors at his Antigua-based Stanford International Bank (SIB) through bogus certificates of deposit.



Stanford’s defence team told federal jurors that letters, emails and other documents showed that former CFO James M. Davis was the scheme’s mastermind.



“You better say something here so (the prosecutors) will go to bat for you,” said Robert Scardino, one of Stanford's lawyers, during cross-examination.



“I'm here to tell the truth,” responded Davis, the prosecution's star witness, on day four of his testimony.



Scardino said Davis, who worked for Stanford for 21 years, was the sole person who created documents that inflated the value of SIB’s holdings to US$6.3 billion when, in reality, it was about to collapse.



But Davis said Stanford instructed him to falsify the figures.



Scardino also showed the court letters, signed only by Davis, which prosecutors charge were Stanford’s requests to pay bribes out a secret Swiss bank account to SIB’s external auditor.



“Mr Stanford's signature doesn't appear on that?” Scardino asked.



“No, sir,” Davis replied.



The defence attorney also charged that Davis stole US$6 million that had been transferred from the secret Swiss bank account in December 2008 to another Stanford bank in Antigua.



“I didn't steal $6 million dollars,” Davis said. “It's the account of Stanford's company in the Bank of Antigua. He owns the bank.”



During cross-examination on Monday, Stanford’s attorneys told the court that Davis could not be trusted and that he was not telling the truth on the witness stand.



Davis has told jurors that he lied and helped to conceal a “massive” Ponzi scheme.



But he said that he was telling the truth about Stanford’s complicity.

Prosecutors charged that Stanford used depositors’ money to operate his businesses, pay for his lavish lifestyle, and bribe regulators and auditors.



They also charged that Stanford lied to depositors by telling them their money was being safely invested. Stanford has repeatedly denied any wrongdoing.



Stanford faces 14 counts, including mail and wire fraud, in the criminal case. He faces up to 20 years in prison if convicted.



In a plea agreement with prosecutors, Davis pleaded guilty to three fraud and conspiracy charges in 2009 in exchange for a possible reduced jail sentence and an agreement to be the witness for the prosecution.



CMC