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Investors: Stanford verdict won’t restore $7B loss
Question of the Day
HOUSTON — Investors taken in by Texas tycoon R. Allen Stanford expressed relief and a sense of vindication after a federal jury convicted the jet-setting financier of swindling them out of more than $7 billion. But they said the verdict will never replace the loss of their life savings.
“He sentenced them to a life of hardship and poverty, and they have no chance to ever recover from what has happened to them,” British retiree Kate Freeman said in a telephone interview from her home in Antigua. She lost $820,000 in Stanford’s Ponzi scheme. “I don’t think (the verdict) will make a lot of difference with regard to victims seeing any money any sooner.”
Prosecutors hope to seize about $300 million from more than 30 Stanford-controlled accounts in countries including Switzerland, Britain and Canada in a civil trial that will resume Wednesday. The civil trial is being heard by the same jury that convicted Stanford Tuesday on 13 of 14 charges, including conspiracy, wire and mail fraud. He was acquitted on a single count of wire fraud that accused him of bribing a regulator with Super Bowl tickets.
“Of course we wanted him to be convicted,” she said. “In an ideal world, that would mean we would get some of our money back. But it doesn’t work that way.”
The recovery process has been complicated by conflicts between authorities in securing Stanford’s assets, which are scattered across several countries. While Stanford once had a net worth estimated at more than $2 billion, he received court-appointed attorneys after his assets were seized or frozen.
Prosecutors say Stanford used investors’ money to fund a string of failed businesses, bribe regulators and pay for luxuries such as yachts and private jets. His attorneys portrayed Stanford as a visionary entrepreneur who made money for investors and conducted legitimate business deals.
The most serious charges against Stanford carry up to 20 years in prison, and if he is ordered to serve his sentences consecutively, the 61-year-old could spend the rest of his life behind bars. In a similar but unrelated case, disgraced financier Bernard Madoff was sentenced to 150 years in prison for orchestrating the largest Ponzi scheme in history.
U.S. District Judge David Hittner will likely set Stanford’s sentencing date after the civil trial, which started after the verdict Tuesday and could last as little as a full day.
Stanford, whose financial empire once spanned the Americas, looked down when the verdict was read in federal court in Houston. His mother and daughters hugged one another, and one daughter started crying.
“We are disappointed in the outcome. We expect to appeal,” Stanford attorney Ali Fazel said after the hearing. He said he couldn’t comment further because of a gag order.
Prosecutors and Stanford’s family declined to comment.
During the more than six-week trial, prosecutors presented testimony they said showed how Stanford took billions of dollars over 20 years from certificates of deposit, or CDs, at his bank on the Caribbean island nation of Antigua. They said he lied to investors from more than 100 countries, telling them their funds were being safely invested.
Stanford did not testify in his own defense.
His attorneys told jurors the financier was trying to consolidate his businesses to repay investors when authorities seized his companies. They accused the prosecution’s star witness — James M. Davis, the former chief financial officer for Stanford’s various companies — of being behind the fraud and lying to get a reduced sentence.
Three other former Stanford executives are scheduled for trial in September. A former Antiguan financial regulator was indicted and awaits extradition to the U.S.
The financier’s trial was delayed after he was declared incompetent in January 2011 due to an anti-anxiety drug addiction he developed in jail. He underwent treatment and was declared fit for trial in December.
A U.S. Securities and Exchange Commission lawsuit that also accuses Stanford and his former executives of fraud is pending.
By Andrew P. Napolitano
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