Ultimately, all of the efforts to hide the more than 20-year fraud were futile, James M. Davis, the former chief financial officer for Stanford's companies, told jurors during his third day of questioning by prosecutors in Stanford's fraud trial.
"The writing was on the wall," said Davis, who has pleaded guilty in the case.
Prosecutors claim Stanford bilked investors out of more than $7 billion in a massive Ponzi scheme centered on the sales of certificates of deposit, or CDs, from the bank on the island nation of Antigua. Stanford's attorneys contend the financier was a savvy businessman whose financial empire, headquartered in Houston, was legitimate. They have suggested Davis, who worked 21 years for Stanford, is behind the fraud.
Davis, 63, the prosecution's star witness who began testifying last week, told jurors Monday that by 2007, he wanted to quit working for Stanford, unable to handle the stress.
"The fraud that I was participating in was killing me," he said.
Davis said Stanford initially ignored his request to step down. He said they later came to an agreement for Davis to quit by the end of 2009, but by that time, authorities had stepped in.
Authorities allege Stanford used depositors' money to operate his businesses, pay for his lavish lifestyle and bribe regulators and auditors. They also say he lied to depositors by telling them their money was being safely invested.
Stanford is on trial for 14 counts, including mail and wire fraud, and faces up to 20 years in prison if convicted.
At the end of 2007, the bank owed depositors $6.6 billion, Davis said, but it had only enough funds to pay back $1.5 billion. New sales of CDs had for years been able to cover withdrawals. In 2008, sales dramatically dropped and customers were withdrawing their CDs in droves, sparked by the Great Recession, he said.
By December 2008, the bank had only $88 million in cash.
Even as the bank was crashing, Davis said, Stanford was telling the holders of CDs in a December 2008 monthly report that he had put in more than $541 million of his own money into the bank to increase its value to more than $1 billion. He reassured investors that the bank was "strong, safe and fiscally sound," Davis testified.
"How concerned were you becoming?" asked prosecutor William Stellmach.
"I was very concerned, probably near emotional and mental extreme stress level concerns," Davis said.
In an effort to hide the fraud, Stanford resorted to creative bookkeeping, Davis testified.
Stanford spent $63.5 million for land in Antigua for an ultra-exclusive island resort he had been proposing, Davis said. The financier then inflated the land's value to $3.2 billion as a part of a proposal to include that with the bank's assets, he said.
By January 2009, the U.S. Securities and Exchange Commission wanted proof of all of the bank's assets and investments. Davis said by February he falsified documents that showed the bank had $6.3 billion in assets related to real estate and investments in private companies.
"It was a lie," said Davis, who later at the end of his questioning by prosecutors cried.
Davis testified that later in February he threw a computer and thumb drive into a lake at his home in Mississippi in an attempt to destroy incriminating evidence. The evidence was later recovered by authorities.
Stanford's bank and other companies were seized by authorities later in February.
When Stanford's attorneys began questioning Davis Monday afternoon, they tried to portray him to jurors as a "liar" and "crook" and questioned his character.
Davis said he lied and stole from depositors but that he was telling jurors the truth.
"Can you tell the jury how we know when you are telling the truth?" Robert Scardino, one of Stanford's attorneys, said.
Scardino suggested a $990,000 loan Davis testified he took from Stanford in 2008 was not a loan but funds Davis stole from CD holders. Davis denied that.
Scardino also questioned Davis about several extramarital affairs he admitted to having, including one with Laura Holt, one of the three other Stanford executives also indicted in the case, and one with a baby sitter who became his second wife.
"You're willing to deceive and betray people aren't you?" Scardino asked.
Davis pleaded guilty to three fraud and conspiracy charges in 2009 as part of a deal he made with prosecutors in exchange for a possible reduced sentence. Stanford's attorneys are to continue questioning him.
Stanford was once considered one of the United States' wealthiest people, with an estimated net worth of more than $2 billion. He's been jailed without bond since being indicted in 2009.