Judge delays fraud trial for financier Stanford

January 6, 2011 6:30:42 PM PST
The upcoming trial of former Texas billionaire and financier R. Allen Stanford, accused of bilking investors out of $7 billion in a Ponzi scheme, was delayed after a federal judge determined on Thursday the financier is not mentally competent to go forward with his case. Stanford's trial had been set to begin on Jan. 24 but U.S. District Judge David Hittner agreed to delay its start until the financier can be treated for several medical problems that are affecting his competency.

The judge did not say how long the delay could last. The jailed financier's attorneys are asking for at least a two-year delay to deal with his medical problems as well as various legal issues related to getting ready for trial. The attorneys have only been on the case since October. Prosecutors, who agree a delay is needed, say two years is unreasonable.

Hittner made his decision after a daylong hearing in which three psychiatrists testified Stanford is not competent in part because of a brain injury he suffered during a jail fight in September 2009.

Psychiatrists Victor Scarano, Steven Rosenblatt and David Axelrad painted a picture of Stanford as a man who is in the throes of a major depression and is dealing with the untreated after-effects of a traumatic brain injury that have left him unable to think clearly or help his attorneys prepare for his trial. They also said Stanford is being overmedicated for his depression and has become addicted to an anti-anxiety medication called Clonazepam.

"In no way is he able to work in a rational manner to assist his counsel," said Scarano, who along with Axelrad, was hired by the defense. Rosenblatt was hired by prosecutors to evaluate Stanford.

The psychiatrists told Hittner that Stanford needs to go through detox to get off the Clonazepam and also has to undergo neurological evaluations for his brain injury before it can be determined if he is competent to stand trial. That process could take up to two months or longer.

Stanford has had other health issues, including problems with his heart rate, since being jailed.

Prosecutors suggested the financier might be faking mental illness as a way to get out of jail pending his trial. Stanford has been jailed since his June 2009 indictment and has sought unsuccessfully numerous times to be freed on bond. Hittner has previously determined he is a flight risk.

Ali Fazel, one of Stanford's attorneys, asked Hittner to allow the financier to go through his detox at a private medical facility and then be allowed to continue his recovery at an apartment Stanford's family would pay for. Prosecutors said Stanford is still a flight risk and he should be treated within the federal prison system. Hittner said he would rule later on how Stanford will receive his medical treatment.

During the hearing, prosecutor Gregg Costa argued that e-mails Stanford has written to family and his lawyers while in jail, as well as court motions and legal arguments he made as part of a lawsuit he eventually lost to have his insurance company pay for his legal fees, show the financier is competent and able to help his lawyers prepare his defense.

Costa also pointed out that Scarano's testing of Stanford showed the financier had superior intelligence and scored average or above average in tests that looked at such things as his memory and his abstract reasoning abilities.

"He thinks his ticket to getting out is this mental issue," Costa said.

Prosecutor Andrew Warren tried to downplay Stanford's depression, saying that "it was normal for a man who had (been) a billionaire who is now incarcerated to be experiencing symptoms of depression."

Stanford and three ex-executives of his now-defunct Houston-based Stanford Financial Group are accused of orchestrating a colossal pyramid scheme by advising clients from 113 countries to invest more than $7 billion in certificates of deposit at the Stanford International Bank on the Caribbean island of Antigua, promising huge returns. Stanford's businesses had headquarters in Houston.

Stanford's attorneys say he ran a legitimate business and didn't misuse bank funds to pay for a lavish lifestyle, as prosecutors allege.

Stanford and the executives have pleaded not guilty to various charges, including money laundering and wire and mail fraud.

They are also fighting a Securities and Exchange Commission lawsuit filed in Dallas that makes similar allegations.

A gag order issued by the judge in September bars lawyers from publicly discussing the case outside the courtroom.