Stanford Convicted by Jury in $7 Billion Ponzi Scheme
R. Allen Stanford, shown arriving at the courthouse in Houston on Tuesday, was convicted of 13 out of 14 counts of fraud.
HOUSTON — A federal jury on Tuesday convicted R. Allen Stanford, a Texas financier, on 13 out of 14 counts of fraud in connection with a worldwide scheme that lasted more than two decades and involved more than $7 billion in investments.
Mr. Stanford listened to the verdict silently, barely tilting his head down while closing his eyes. His mother and other family members wept, while investors watching in the gallery also cried while expressing relief. He now faces a possible life sentence.
The jury decision followed a six-week trial and came three years after Mr. Stanford was accused of defrauding nearly 30,000 investors in 113 countries in a Ponzi scheme involving $7 billion in fraudulent high-interest certificates of deposit at the Stanford International Bank, which was based on the Caribbean island of Antigua.
Prosecutors argued that Mr. Stanford had lied for more than two decades, promoting safe investments for money that he channeled into a luxurious lifestyle, a secret Swiss bank account and business deals that consistently lost money.
The prosecutors heavily relied on James M. Davis, Mr. Stanford’s former roommate from Baylor University, who served as his chief financial officer. Mr. Davis testified that the Stanford business empire was a fraud complete with bribes for Antiguan regulators and schemes to hide operations from federal investigators. He described how Mr. Stanford had sent him to London to send a fax to a prospective client from a bogus insurance company office to reassure him that his investment would be safe.
The ruling came after jurors on Monday sent the judge a note, one of several since deliberations began Feb. 29, saying they had been unable to reach a unanimous verdict on all 14 counts. The judge ordered them to continue deliberating.
In the end, the jury cleared Mr. Stanford of only one of several counts of wire fraud, but found him guilty of every other count of conspiracy to commit mail fraud, launder money and obstruct justice.
“We’re disappointed in the outcome and we expect an appeal — absolutely,” said Ali Fazel, one of the defense lawyers.
Cassie Wilkinson, an investor who said that she and her retired husband had to go back to work because of their losses, cried after the verdict was announced.
“I’m just relieved, happy and I’m sad,” she said. “As an investor, you have to wonder whether you were just stupid or taken advantage of. This removes the doubt. It is a vindication.”
Mr. Stanford, who wore a charcoal suit and no tie in court on Tuesday, is no longer the swaggering financier who only three years ago had an estimated fortune of over $2 billion, a knighthood awarded by Antigua and a collection of yachts, jets and mansions. He owned his own professional cricket team and stadium and, according to prosecutors, he treated Antigua like his personal business haven, with politicians and regulators in tow, through bribes and political campaign contributions.
“There really is no dispute that Allen Stanford lied,” a federal prosecutor, William J. Stellmach, told the jurors in his closing argument, “lining his pockets with billions of dollars of other people’s money.” Another prosecutor, Gregg Costa, compared Mr. Stanford to Bernard L. Madoff, who is in a federal penitentiary for orchestrating an even larger Ponzi scheme until his empire collapsed four years ago.
The defense denied those charges, basing its case on the fact that Mr. Stanford’s clients had been paid on schedule until the Securities and Exchange Commission made the first accusations three years ago, destroying the value of his businesses.