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Wednesday, June 19, 2024 | Back issues
Courthouse News Service Courthouse News Service

Stanford Must Forfeit $330M to Ponzi Victims

HOUSTON (CN) - A jury ordered convicted fraudster Allen Stanford to forfeit $330 million, which will go toward victims of his $7 billion Ponzi scheme.

During a brief forfeiture trial this week, convened immediately after conclusion of the criminal case, prosecutors showed that the $330 million in Stanford's 29 foreign bank accounts came from his criminal enterprise.

Stanford was convicted of leading a $7 billion Ponzi scheme by selling certificates of deposit with phony interest rates issued by his Antigua-based Stanford International Bank.

U.S. Postal Inspector Clayton Gerber, the only witness prosecutors called for the forfeiture hearing, explained his "cash tracing" of Stanford International Bank accounts in Canada, Switzerland, the Cook Islands and the Isle of Man.

The jury credited this testimony in their verdict before U.S. District Judge David Hittner Thursday. The following day, prosecutors filed a brief with the court arguing that hearsay evidence is admissible in a forfeiture proceeding. Another new addition to the docket is a letter from the Justice Department about the disposition of forfeited assets.

In February 2009 the SEC charged Stanford and three of his companies with orchestrating the multibillion-dollar Ponzi scheme, defrauding nearly 30,000 investors from 113 countries.

The SEC froze his companies' assets and appointed a receiver to recover assets for investors.

The SEC claimed that Stanford's Antigua-based bank Stanford International Bank perpetrated the fraud by selling certificates of deposit with unsubstantiated high interest rates. These rates allegedly were earned through SIB's unique investment strategy, which supposedly allowed the bank to achieve double-digit returns on its investments for 15 years.

The government also accused Stanford of diverting $1.6 billion from the CDs into personal loans.

Stanford, 61, has been jailed since June 17, 2009 when he turned himself in to the FBI in Houston, hours after a grand jury returned a sealed indictment.

Stanford's long-anticipated trial was delayed after an inmate broke bones in his face and gave him a concussion in a fight over a telephone at a Houston federal jail, on Sept. 24, 2009. A judge later declared him incompetent to help his defense due to a brain injury he suffered in the fight.

Stanford also claimed that government doctors had overmedicated him with high dosages of Klonopin, an anti-anxiety drug, for more than 13 months after the fight.

In February 2011 Stanford was sent to a federal prison hospital in Butner, N.C., where he was treated for drug dependency, and evaluated for any long-term injuries from the jailhouse fight.

He was sent back to Houston federal prison in November 2011, and on Dec. 22 Judge Hittner ruled him mentally competent to stand trial.

Stanford's defense tried delay the trial, claiming he cannot remember some of the events in his life before the 2009 prison fight.

But a forensic psychologist who treated him at the prison hospital testified that he was competent, was thinking clearly after being taken off the drug and that his brain was not damaged by the fight, according to contemporary news reports.

Stanford's trial started on Jan. 23 after he pleaded not guilty to the 14-count indictment.

Often described in lawsuits as a "former bankrupt gym owner from Mexia, Texas," Stanford rose from that bankruptcy to being listed in Forbes magazine as one of the world's richest men, with a personal fortune of $2.2 billion.

Mexia is a town of 6,600 southeast of Dallas where Stanford's father still lives.

Stanford was knighted in Antigua, owned a local airline, a newspaper, two restaurants and a cricket stadium, where he campaigned to revive the sport in the Caribbean.

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