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Allen Stanford's Next Move: Seek a Trial Delay

Thursday, 22 Dec 2011

Now that a judge has ruled accused Ponzi mastermind R. Allen Stanford competent to stand trial, his defense team has moved on to plan "B": a bid to delay the trial by three months.

Allen Stanford
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Allen Stanford

Stanford's lead court-appointed attorney, Ali Fazel, told CNBC he thought his side had put on a convincing case that Stanford was unable to assist in his own defense, but U.S. District Judge David Hittner disagreed following a two-and-a-half day hearing in Houston.

"We are disappointed and believe our court fillings along with our highly qualified experts outline our positions very well," Fazel wrote in an email to CNBC.

The defense called four doctors to say Stanford had suffered traumatic brain injuries in a 2009 jailhouse assault, and suffered amnesia. The evidence included video taken immediately after the assault that showed Stanford could not even remember his own name.

Prosecutors claimed Stanford recovered from his injuries, and a prison psychologist testified Stanford was faking amnesia.

But even before the hearing began on Tuesday, the defense team was ready with a fallback plan: a motion filed this week to delay the trial until late April if Stanford was found to be competent.

The judge said he would rule on the motion by Wednesday or Thursday of next week.

The defense argues there simply is not enough time for Stanford to review millions of pages of documents in time for the trial, which is currently set for January 23. He has been unable to adequately prepare for trial for most of the past year, the motion says, because he was legally incompetent according to the judge's own ruling.

"We will only have a competent defendant for a month," the motion says.

When he ruled Stanford unfit for trial this past January, Judge Hittner nonetheless ordered both sides to prepare for trial.

Defense attorneys say it was improper for Hittner to set a trial date before the competency question was resolved.

The government has not yet responded to the defense motion for a continuance, but experts say it is doubtful Judge Hittner would agree to anything more than a slight delay.

The trial has already been postponed twice.

In addition to deciding Stanford's guilt or innocence in what prosecutors say is one of the biggest investment frauds in U.S. history, the trial is seen by many as the only hope for investors to recover much money.

That is because much of Stanford's assets are believed to be offshore, making them nearly impossible to seize without a forfeiture order resulting from a criminal trial.

Attorneys for Stanford, who last week was ruled competent to stand trial following eight months in drug treatment, asked for the delay to give their client more time to prepare. He faces 14 counts in the scheme centered on allegedly bogus certificates of deposit. The trial is currently set for January 23.

"The public's interest in a speedy trial is particularly acute in this case in which thousands of individuals who purchased CDs from Stanford have lost billions of dollars," writes Assistant U.S. Attorney Gregg Costa in a court filing today. "This trial will decide not just whether Stanford is guilty of the criminal charges but also whether hundreds of millions of dollars of investor funds currently frozen in foreign countries will be forfeited and returned to the victims."

Prosecutors say the alleged Stanford fraud is the second largest in U.S. history, surpassed only by Bernard Madoff's Ponzi scheme.

U.S. District Judge David Hittner has promised a ruling this week on Stanford's motion for a three-month continuance.

While Costa said the government does not oppose a shorter delay of four to six weeks, he says a longer delay ignores the interests of the public and the alleged victims.

Those investors--some 28,000 of them--have often found themselves lost in the shuffle of a case that has been marked by bizarre twists and unusual delays.

Stanford was indicted in June, 2009 and detained as a flight risk, but he was severely beaten by another inmate and then became addicted to prescription drugs while in custody. On Thursday, Hittner ruled Stanford has sufficiently recovered from his injuries and his addiction, and is fit for trial.

Meanwhile, the investors are locked in a dispute with the Securities Investor Protection Corporation (SIPC), which insures U.S. brokerage accounts, over whether their losses should be covered.

With the insurance coverage and Stanford's trial still undecided, the investors have recovered just pennies on the dollar, nearly three years after the alleged scam was first exposed.