HOUSTON ? Defense attorneys for R. Allen Stanford say the Texas financier's business empire was real and not built on lying and stealing as prosecutors have alleged.
Robert Scardino, one of Stanford's attorneys, told jurors during opening statements Tuesday in the fraud trial that the financier was a resourceful businessman who for 22 years paid investors every penny that he promised them.
Stanford is accused of bilking investors out of $7 billion in a massive Ponzi scheme through the sale of certificates of deposit from an Antiguan bank he owned. He's charged with 14 counts, including mail and wire fraud, and could face up to 20 years if convicted.
Prosecutors told jurors earlier that Stanford lied and stole from investors and his financial empire was built on fraud.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
R. Allen Stanford lied to investors and stole their hard-earned savings so he could live the lavish lifestyle of a billionaire, a prosecutor said Tuesday at the Texas financier's trial.
Prosecutor Gregg Costa told jurors in Houston federal court that Stanford used investors' money to buy homes and yachts and fund cricket matches.
"He treated depositors' savings like it was his own personal piggy bank," Costa said.
The prosecution says the business empire was built on smoke and mirrors and he bilked investors out of more than $7 billion over 20 years as part of a massive Ponzi scheme centered on sales of certificates of deposit from an Antiguan bank he owned.
Stanford, who denies the claims and says his businesses were legitimate, is charged with 14 counts, including wire and mail fraud, and faces up to 20 years in prison if convicted.
His attorneys were to make their opening statements later Tuesday to the panel of 12 jurors and three alternates. Stanford, 61, is expected to testify during the trial, which will likely last at least six weeks.
Once considered one of the U.S.'s wealthiest people, with an estimated net worth of more than $2 billion, Stanford snatched up luxury homes and cars, private jets and yachts, and became so prominent in his adopted country of Antigua, where he took on dual citizenship, that he was knighted by the Caribbean island's government and became known as "Sir Allen."
Stanford's business empire was run through the Houston-based Stanford Financial Group, but at its heart was Antiguan-based Stanford International Bank. The bank mainly sold certificates of deposit, or CDs, that promised substantially higher rates of return than U.S. banks and promised investors their money was safe.
Prosecutors say Stanford used money from the sale of the CDs, which were sold to clients from more than 100 countries, to pay off those purchased earlier once they matured and to support his other businesses, which included other banks, a brokerage firm that sold the CDs, an airline, cricket grounds and restaurants. They say Stanford used up to $2 billion of investor funds as personal loans to support his lifestyle, and that he and three former executives at his companies who also face charges covered up their misdeeds by fabricating the bank's records and bribing Antiguan regulators.
"He used it (investors' money) to fund his own pet businesses, to the tune of $2 billion," Costa said Tuesday.
The prosecutor said that included more than $300 million of depositors' saving to two airlines Stanford ran in the Caribbean, $20 million to an entity whose purpose was to pay expenses related to Stanford's yacht and $37 million to a company whose purpose was to promote cricket tournaments in which Stanford gave out million-dollar prizes.
In court documents filed earlier this month, Stanford's attorneys argued that he intended to pay CD investors through his other companies if authorities hadn't seized them and begun selling them off.
"This fraud (theory by the government) is just wrong," Ali Fazel, one of Stanford's attorneys, said at that hearing. "Our defense is we didn't do anything wrong."
A gag order bars lawyers from publicly discussing the case.
Stanford has been in jail since his arrest 2 1/2 years ago because he was deemed a flight risk. His trial was delayed after he was declared incompetent due to an addiction he developed in jail to an anti-anxiety drug and underwent treatment for eight months last year. He was also evaluated for any long-term effects from being injured in a September 2009 jail fight.
U.S. District Judge David Hittner declared Stanford fit for trial last month.
Once Antigua's richest citizen, primary banker and its largest private employer, Stanford had his assets seized and now has court-appointed attorneys after an insurance policy that had been paying for his defense was revoked.
Stanford is on his fifth set of lawyers since being indicted. Previous attorneys accused him of being difficult.
The three other indicted former executives are to be tried in June. A former Antiguan financial regulator was also indicted and he awaits extradition to the U.S.
Stanford and the former executives are also fighting a Securities and Exchange Commission lawsuit filed in Dallas that makes similar allegations.
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