Stanford Will Remain in Jail Until Trial, Judge Rules

July 9 (Bloomberg) -- R. Allen Stanford must remain jailed until he can be tried on charges he swindled investors of as much as $7 billion, a U.S. judge ruled.
Stanford, the Texas financier accused of defrauding investors through bogus certificates of deposit sold by his Antigua-based Stanford International Bank Ltd., had asked U.S. Judge David Hittner to reconsider an order revoking his bail. Stanford has been in federal custody since June 18, when he was arrested following an indictment on fraud and conspiracy charges that could imprison him for life, if he’s convicted.
“Having considered the motion and the applicable law, the court determines that the motion should be denied,” Hittner said in an order posted today on the court’s electronic docket.
On June 30, Hittner ruled that Stanford’s network of international contacts, presumed access to millions of unaccounted-for dollars and globe-trotting lifestyle made him a flight risk. The judge revoked a $500,000 bond granted Stanford by a magistrate judge and ordered him held in prison until his trial, which could be a year away.
Stanford, who denies all wrongdoing, faces civil and criminal charges linked to what the government claims was a Ponzi scheme that paid depositors “improbable, if not impossible” returns by taking money from new investors to repay early investors. Stanford is also accused of siphoning as much as $1.6 billion of investor deposits to fund a lavish lifestyle.
Another Appeal
Dick DeGuerin, Stanford’s criminal-defense lawyer, appealed today’s decision to the U.S. Court of Appeals in New Orleans. He said he would continue trying to win Stanford’s release on bail.
“Given the new evidence we presented in our motion to reconsider, I’m surprised and disappointed that it was overruled without a hearing,” DeGuerin said in a statement released by his office.
DeGuerin asked the appellate court to review the case on an expedited schedule.
In a motion yesterday arguing that Stanford deserved bail, DeGuerin complained that his client can’t readily aid his own defense because he’s incarcerated at a county jail in Conroe, an hour’s drive from his law office in downtown Houston. Today, DeGuerin filed a request for Stanford to be transferred to the federal detention center near his office.
“We think the judge has again made the correct decision, Justice Department spokesman Ian McCaleb said in an e-mail following today’s ruling.
Misrepresented Facts
On July 7, DeGuerin filed papers asking Hittner to reconsider his denial of Stanford’s bail, saying the government had misrepresented key facts on Stanford’s ability and motive to flee during two days of hearings. Stanford, who has dual U.S. and Antiguan citizenship, has surrendered his three passports, including one that was found in the government’s possession three days after prosecutors told Hittner its whereabouts were unknown.
DeGuerin argued that while Stanford traveled frequently on business and had homes and influential business contacts abroad, the financier’s primary residence remained in the U.S. DeGuerin also stressed that Stanford, formerly worth roughly $2 billion, is penniless as the result of a court-ordered freeze of all his assets until the civil case is resolved.
The U.S. Securities and Exchange Commission sued Stanford, two associates and three of his companies in February, alleging they defrauded investors by misrepresenting the safety and regulation of the bank’s investment portfolio. Stanford investors were told their funds were held primarily in cash and readily liquid equivalents. The government contends the funds were invested largely in private equity and overvalued real estate.
Finding Assets
Court-appointed receivers in the U.S. and Antigua have located about $1 billion in cash and investments in Stanford- controlled bank accounts in the U.K., Switzerland, Canada and Antigua.
Although they are still determining the value of the private-equity investments and real-estate holdings, the receivers say anticipated recovery will fall far short of what’s needed to repay holders of $7.2 billion in outstanding certificates of deposit at Stanford International Bank.

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