JAMES DAVIS, former chief financial officer of Stanford Financial Group, yesterday pleaded not guilty to criminal charges related to the alleged $7 billion (€5 billion) fraud at the group.
However, his lawyer David Finn confirmed that Mr Davis planned to enter a formal guilty plea within two weeks in a deal with the authorities. Victims must be notified of any deal before it can be accepted by the courts.
“This thing was smoke and mirrors and duct tape for at least the last 15 years,” Mr Finn said.
Mr Davis, the second-highest ranking executive at the group, has been charged with conspiracy and fraud. He remained subdued throughout the proceedings and spoke softly in the small and tightly packed courtroom.
Mr Finn told the court Mr Davis had co-operated with prosecutors for several months, meeting last week alone with the Federal Bureau of Investigations, Internal Revenue Service, the Department of Justice and the Securities and Exchange Commission. Mr Davis was released on a $500,000 bond, requiring a $5,000 cash deposit, and he had to surrender his passport. Mr Davis (60) waived his right to a grand jury hearing to decide whether there was probable cause to bring the charges against him, signalling his plans to co-operate with prosecutors.
The charges against Mr Davis seek forfeiture of up to $1 billion in alleged fraud proceeds.
If convicted, Mr Davis could face up to 30 years imprisonment and up to $750,000 in fines. Mr Finn said that, by co-operating, his client hoped for a lighter deal, though there are no guarantees. Federal prosecutors have been building a case against Allen Stanford, the head of the group, and other top executives since at least February, when US regulators shut down his Houston offices.
A criminal indictment unsealed in June alleged Sir Allen and his co-defendants sold $7 billion worth of certificates of deposit through Stanford International, pledging high rates of return.
The defendents then allegedly misappropriated most of the funds. – Copyright The Financial Times Limited 2009
