Victims of Stanford fraud to be heard

HOUSTON — Individuals who believe they are victims of an alleged $7 billion fraud that prosecutors say was perpetrated by Texas financier R. Allen Stanford’s business empire will have a chance to tell their stories at a court hearing next month, a judge ruled Tuesday.

U.S. District Judge David Hittner issued an order saying he will allow the “thousands of potential victims throughout the world” to speak to the court or submit written statements before he accepts a plea agreement in the case between prosecutors and James M. Davis, the ex-chief financial officer of Houston-based Stanford Financial Group.

Davis pleaded not guilty during his arraignment Monday to conspiracy to commit mail, wire and securities fraud; mail fraud; and conspiracy to obstruct a Securities and Exchange Commission investigation.

But his attorney has said the former Stanford finance chief will plead guilty to these charges during a court hearing Aug. 6.

Davis was charged last month as part of the federal government’s criminal case against Stanford and executives Laura Pendergest-Holt, Gilberto Lopez and Mark Kuhrt.

They are accused of orchestrating a massive Ponzi scheme by advising clients to invest more than $7 billion in certificates of deposit from the Stanford International Bank in the Caribbean island of Antigua and then misusing the money, in part to pay for Stanford’s lavish lifestyle.

Hittner ordered the Justice Department to set up a Web site to notify potential victims about next month’s plea hearing. The Web site also gives information about how victims can, through July 31, call or e-mail their comments about Davis’ plea agreement and whether they wish to speak at the court hearing.

The judge also asked that Ralph Janvey, the court-appointed receiver in a Securities and Exchange Commission civil case filed in February against Stanford and the top officers of his now-defunct company, include a link to the Justice Department Web site on his own site.

Hittner said his order is allowed under the Justice For All Act, a federal law that allows crime victims to be heard at a court hearing related to a release, plea, sentencing or parole proceeding.

Prosecutors say Davis has been cooperating with investigators for months. David Finn, Davis’ attorney, said his client feels remorse for what he did and is helping investigators in their attempts to locate missing money that was taken from investors.

Prosecutors say nearly $1.2 billion of the $7 billion Stanford and his co-defendants are accused of bilking from investors can’t be accounted for.

Under Davis’ plea agreement, prosecutors can, but are not required, to recommend a reduced sentence if they believe his cooperation has been valuable.

An eight-page April 21 letter from prosecutors to Finn, which details the plea agreement, was posted on the Justice Department Web site. The letter states Davis’ participation in the fraud resulted in the loss of more than $400 million and involved more than 250 victims.

Stanford, Pendergest-Holt, Lopez and Kuhrt pleaded not guilty last month to various charges, including wire and mail fraud, in a 21-count indictment issued June 18. Stanford is being held without bond while the other three are free on bond.

Also indicted is Leroy King, the former chief executive officer of Antigua’s Financial Services Regulatory Commission. King, accused of taking bribes from Stanford to overlook irregularities at his bank, is awaiting extradition to the United States.

On the Net:

Justice Department Web site: www.usdoj.gov/criminal/vns/caseup/davisj.html

Court-appointed receiver Web site: www.stanfordfinancialreceivership.com/index.shtml