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Stanford Still Not Competent for Ponzi Trial - Lawyer

Despite nine months of court-ordered drug treatment, accused Ponzi schemer Allen Stanford is not yet competent to face charges he ran a $7 billion Ponzi scheme, his attorney told CNBC.

Allen Stanford
Allen Stanford

As a result, thousands of Stanford investors remain in limbo, nearly three years after the alleged scheme was exposed.

Stanford, who was released from a prison medical center earlier this month but remains in federal custody, was scheduled to be arraigned today on revised charges filed in May. But defense attorney Ali Fazel said in an e-mail that Stanford cannot be arraigned "until his competency status changes."

As a result, today's arraignment has been postponed.

In January, U.S. District Judge David Hittner ruled Stanford incompetent to stand trial after the 61-year-old financier became addicted to prescription drugs while in federal custody. Doctors testified that Stanford may also have suffered brain damage after being severely beaten by another inmate in 2009. Hittner ordered Stanford to undergo drug treatment at the Bureau of Prisons medical center in Butner, NC. With the treatment apparently completed earlier this month, Stanford was moved back to a federal detention in Houston. Because Hittner ruled he is a flight risk, Stanford is being held without bail pending his trial.

When that trial will take place remains uncertain. It is currently scheduled to begin January 20 according to a source close to the case, but questions about Stanford's competency would appear to make that date increasingly unlikely.

Specifics of Stanford's condition are difficult to come by in a case that is shrouded in an unusual amount of secrecy.

Earlier this month, a civil attorney for Stanford, Stephen Cochell, said in a court filing that his client "continues to suffer from short-term and long-term memory loss." That filing — despite being in a different court and a separate case — drew an angry rebuke from Hittner, who barred Cochell from further contact with his client in the civil case until after the criminal case is complete.

Attorneys in the criminal case are barred from discussing Stanford's condition under a broad gag order imposed by Hittner, who has also sealed much of the court docket since Stanford's medical problems came to light.

As a result, more than 28,000 investors remain in the dark. A court-appointed receiver attempting to recover assets has said much of that effort depends on the outcome of Stanford's criminal trial, since the vast majority of the funds are in foreign accounts that are inaccessible without a resolution in the case.

So far, investors have recovered just pennies on the dollar.