Persuades judge in civil trial to move him from prison cell to house arrest; 'wreck of a man'
R. Allen Stanford, appearing as his own counsel, convinced a judge that he should be moved from a from jail to closely monitored house arrest so he can prepare for a hearing.
Stanford made his argument today before U.S. District Judge Nancy Atlas in Houston. She is presiding over a dispute between the financier and Lloyd's of London underwriters. The insurers rejected the financier's claim for directors' and officers' coverage, saying there was criminal activity at his businesses.
“It's a horrifically bad situation I've been thrust into,” said Stanford, who has been held without bail since his arrest last June on fraud charges. “I'm not asking for any sympathy. I'm just telling you the facts.”
Stanford was recently badly beaten and is demoralized, and he has lost feeling in the right side of his face and near-field vision in his right eye, lawyers Robert Bennett and Harvard University law professor Alan Dershowitz wrote in a document requesting the move..
Stanford allegedly led a $7 billion swindle centered on the sale of certificates of deposit through his Antigua-based bank. He has denied both civil and criminal charges against him and is being held awaiting a January trial.
He and three co-defendants in the criminal case sued the Lloyd's underwriters last year after the insurers denied the coverage, citing the guilty plea of former Chief Financial Officer James M. Davis as proof of criminal activity at the Houston-based Stanford Financial Group of companies.
Atlas told Stanford that U.S. District Judge David Hittner, who is presiding over the criminal fraud case in Houston, will decide whether to free the financier.
Hittner has twice denied requests for bail. A third was filed with him this month Mr. Bennett and Mr. Dershowitz.
“Mr. Stanford's pretrial incarceration has reduced him to a wreck of a man,” the attorneys said in court papers.
Atlas said she has no control over her colleague.
“But I will urge Judge Hittner to reconsider,” Atlas said. She proposed an arrangement subjecting Stanford to “very, very, very tight house arrest” so he can prepare his insurance case. “I would not be opposed to that,” she said.
Atlas set today's hearing after the financier wrote to her about his dispute with the Lloyd's underwriters and the resignation of his attorneys in that case.
Bennett, who was in court, told Atlas that he wouldn't participate in today's proceedings on Stanford's insurance case.
“I'd like to sit with him, but I can sit in the back,” he said. The judge let him stay alongside his client.
Atlas started by explaining legal procedures to Stanford.
“Do you understand me?” she asked.
The financier, with one hand and both ankles shackled, stood and replied, “I believe I do, your honor.”
Atlas said Bennett might represent Stanford in the insurance case. At the moment, the financier is without a lawyer in that dispute. He has no right to court-appointed counsel in that case because it's civil, not criminal.
It has been “next to impossible” to prepare his defense from jail, Stanford told Atlas.
“In a case of this magnitude, yes,” the judge replied.
Stanford is in the Federal Detention Center in Houston, where he was transferred from a privately owned jail in the fall.
Three successive lead criminal-defense lawyers were fired or quit including Houston's Dick DeGuerin and Kent A. Schaffer. Attorney Michael Essmyer has asked Hittner to be relieved too, citing strategic disagreements with his client and with co- counsel Bennett.
Attorney Lee H. Shidlofsky, representing the three criminal case co-defendants in the insurance dispute, earlier asked Atlas for permission to cut ties with the financier, also saying conflicts had arisen.
Lloyd's lawyers yesterday cited Stanford's history in a response to his letter to the court.
“Stanford has cycled through more than 10 different law firms (all of his own choosing and all at underwriters' expense) in the course of the SEC and criminal actions,” attorneys Barry A. Chasnoff and Daniel McNeel Lane Jr. of Akin Gump Strauss Hauer & Feld LLP wrote.
The insurers said they have paid $6 million to the financier's lawyers, including $4 million to “attorneys who are no longer representing Stanford in the criminal action because Stanford has fired them without any rational explanation.”
The insurance case is Pendergest-Holt v. Certain Underwriters at Lloyd's of London, 09-cv-3712, U.S. District Court, Northern District of Texas (Dallas).
The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank Ltd., 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).
