With No Pay Guarantee from Insurance, Lawyers Quit on Stanford; Public Defender Named

Former billionaire Allen Stanford, accused of running a $7 billion Ponzi scheme, will be represented by a public defender for now after telling a court he had no money to pay for an attorney.

“The man needs an attorney, he’s got an attorney, and now we’re going to proceed to go to trial,” U.S. District Judge David Hittner said Tuesday after ordering the Public Defender’s Office to take the case.

Stanford’s assets have been frozen since February, when the securities regulators filed civil charges against him.

Thin, unshaven and wearing a prison-issue orange jumpsuit, Stanford made his first court appearance in about two months.

A few family members attended the proceeding along with Stanford’s girlfriend, who was reprimanded by a court official for trying to talk to the accused swindler.

Michael Sokolow from the Federal Public Defender’s Office in Houston will be Stanford’s lead attorney. He replaces Houston attorney Dick DeGuerin, who asked to withdraw in July after failing to secure a guarantee of payment.

Robert Luskin of Patton Boggs in Washington, D.C., said in July that he and a team of lawyers were prepared to take over Stanford’s defense but that payment was also an issue.

Patton Boggs and other law firms have their eye on a directors and officers insurance policy covering Stanford and a number of his businesses. If those funds become available, Patton Boggs would be prepared to take the Stanford case.

Proceeds from the policy have not been paid because the receiver in the Stanford case, Ralph Janvey, has argued that the insurance funds assets were meant for investors.

Janvey has threatened the insurer, Lloyd’s of London, with contempt if they make payments to Stanford and others under the policy. Now it is up the judge in the civil case to rule whether the insurance policy is part of the Stanford estate.

Asked by Hittner whether he had funds available to pay his defense attorneys Stanford replied: “I think I have funding in the insurance policy.”

Stanford, who once traveled the world by private jet and owned yachts and luxury homes in Texas, the Caribbean and Florida, has been in jail since June, when criminal charges were filed against him.

Prosecutors say Stanford and others sold fraudulent certificates of deposit to clients through his offshore bank in Antigua. He has denied any wrongdoing.

The criminal case is filed in federal court in Houston under case number 4:09-cr-00342 USA v. Stanford et al.

(Reporting by Anna Driver in Houston; editing by John Wallace and Ted Kerr)